Federal Reserve press conference, 2025-05-07 — Chair Jerome Powell

Question (Steve Liesman, CNBC): Steve Liesman, CNBC. Thank you, Mr. Chair, for taking my question. A lot has happened since the last meeting. There have been tariffs put on, tariffs taken off, and meanwhile, there was a bill advancing in Congress. And I just wonder if I could press you on the last part of your statement. Are you any closer now to deciding which side of the mandate is going to need urgent care first?
Answer: Well, so, as we noted in our—in our statement—postmeeting statement, we’ve judged that the risks to higher employment and higher inflation have both risen. And this, by the way, of course, is compared to March. So that’s what we can say. I don’t think we can say, you know, which way this will shake out. I think there’s a great deal of uncertainty about, for example, where tariff policies are going to, to settle out and also, when they do settle out, what will be the implications for the economy for growth and for employment. I think it’s too early to know that. So, I mean, ultimately, we think our policy rate is in—is in a good place to stay as we await further clarity on tariffs and, ultimately, their implications for the economy.

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos for the Wall Street Journal. Chair Powell, there’s naturally a lot of [inaudible] around 2021 in supply shocks. But there are some who argue that the current situation has notable differences. Energy costs are down. Housing imbalances look nothing like they did four years ago. Labor demand appears to be gradually cooling, with wage growth running below 4 percent. What do you see right now that could nourish higher inflation beyond a rise in goods prices this year?
Answer: I think the underlying inflation picture is, is good. It’s what you see, which is inflation now running a bit above 2 percent. And we’ve had basically decent readings in housing services and nonhousing services, which is a big part of it. So that part, I think is, is moving along well. But there’s just so much that we don’t know. I think—and we’re in a good position to wait and see, is the thing. We don’t have to be in a hurry. The economy is—has been resilient and is doing fairly well. Our policy is well positioned. The costs of waiting to see further are fairly low, we think. So that’s what we’re doing. And, you know, we’ll, we’ll see. The Administration is entering into negotiations with many countries over tariffs. We’ll know more with each week and month that goes by where—about where tariffs are going to land—you know, land, and we’ll know what the effects will be when we start to see those things. So we think we’ll be learning. I can’t tell you how long it will take. But, for now, it does seem like it’s, it’s, it’s a fairly clear decision for us to wait and see and watch.

Question (Howard Schneider, Reuters): Hi. Howard Schneider with Reuters, and thanks for the time. I’m wondering—I mean, given the complexity about the first-quarter GDP and what lies ahead, I’m just wondering what your intuition tells you about the underlying direction of the economy right now. Many of your colleagues have said they feel growth is slowing. If so, do you have any sense of by how much, to what degree the slowdown may be? What does your gut tell you about how things are evolving out there?
Answer: My gut tells me that uncertainty about the path of the economy is extremely elevated [laughter] and that the downside risks have increased. The risk is—as we pointed out in our statement, the risks—the risks of higher unemployment and higher inflation have risen, but they haven’t materialized yet. They really haven’t. They’re not, really not in the data yet, so that—and that tells me more than by intuition because I think—I think it’s obvious, actually, that the right thing for us to do is to—we’re in a good place. Our policy’s in a very good place, and the right thing to do is, is await further clarity. And I—you know, there’s— usually, things clarify, and that—the appropriate direction becomes clear. That’s what usually happens, right? Right now, it’s very hard to say what that would be. In the meantime, the economy is doing fine. Our policy isn’t—you know, it’s not highly restrictive. It’s somewhat restrictive. It’s 100 basis points less restrictive than it was in, you know, last summer. So we think it’s—we think it’s in a good place, and we think the appropriate thing is for us to wait and see and get more clarity about, about the direction of the economy.

Question (Jo Ling Kent, CBS News): Just a quick follow-up: President Trump now says he does not plan to remove you as Chair. When you heard that, what did you think?
Answer: I don’t have anything more for you on that. I’ve pretty much covered that issue. Thank you.