Federal Reserve press conference, 2025-09-17 — Chair Jerome Powell

Question (Christopher Rugaber, Associated Press): Great. Thank you. Chris Rugaber at Associated Press. As you know, Fed Governor Stephen Miran has continued—kept his position at the White House even as he’s joined the Fed Board. This is the first time, I believe, the Fed’s Board has had someone with executive-branch ties in decades. Does this compromise the Fed’s independence from day- to-day politics? And, relatedly, how can you maintain the public’s perception the Fed is politically independent with this dynamic? Thank you.
Answer: So we did welcome a new Committee member today, as we always do, and the Committee remains united in pursuing our dual-mandate goals. We’re strongly committed to maintaining our independence, and beyond that I really don’t have anything to share.

Question (Christopher Rugaber, Associated Press): And then just as a quick follow-up—I’m sorry. Can you—you and other Fed officials have spoken extensively about the impact of tariffs on inflation, although, perhaps, with many companies appearing to “eat” the tariffs, tariffs may be impacting the labor market and other parts of the economy instead. Do you see that as a possible outcome here—that tariffs are the reason we’re seeing some slowing, particularly in the labor market? Rather than in inflation? Thank you.
Answer: You know, it’s certainly possible. You know, we’re beginning to see—we have begun to see [increased] goods prices showing through into higher inflation. And, actually, the increase in goods prices accounts for most of the increase in inflation or, perhaps, all of the increase in inflation over the course of this year. Those are not very large effects at this point. And we do expect them to continue to build over the course of the rest of the year and into next year. And it’s also possible that there may be effects on employment. But I would say, if you’re looking at why employment is doing what it’s doing, that’s much more about the change in immigration. So the supply of workers has, obviously, come way down. There’s very little growth, if any, in the supply of workers. And at the same time, demand for workers has also come down quite sharply and to the point where we see what I’ve called a “curious balance.” Typically, when we say things are “in balance,” that sounds good. But, in this case, the balance is because both supply and demand have come down quite sharply, now demand coming down a little more sharply because we see—we now see the unemployment rate edging up.

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos with the Wall Street Journal. Chair Powell, do economic conditions and the balance of risks no longer warrant a restrictive policy setting?
Answer: So I don’t think we can say that. What we can say is this: that over the course of this year, we’ve kept our policy at a restrictive level—and people have different views, but a clearly restrictive level, I would say. And we were able to do that over the course of this year because the labor market was in very solid condition, with strong job creation and all those things. I think if you go back to April and now look at the revised job-creation numbers for May, June, July, and August, you can kind of—I can no longer say that. So what that means is that the risks, which—the risks were clearly tilted toward inflation. I would say they’re moving toward equality. Maybe they’re not quite at equality—we don’t need to know that. But we do know that they’ve moved meaningfully toward greater equality—the risks between the two goals—and that suggests that we should be moving in the direction of neutral. And that’s what we did today.

Question (Nick Timiraos, Wall Street Journal): Under what circumstances would a larger than 25 basis points rate cut be warranted? And how seriously was that option entertained at your meeting this week?
Answer: There wasn’t widespread support at all for a 50 basis point cut today. You know, I think we’ve done—we’ve done very large rate hikes and very large rate cuts in the last five years, and you tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place. That’s not at all what I feel, certainly now. I feel like our policy has been doing the right thing so far this year. I think we were right to wait and see how tariffs and inflation and the labor market evolved. I think we’re now reacting to the much lower level of job creation and other evidence of softening in the labor market and saying, well, those risks are maybe not fully balanced but moving in the direction of balance now, and so that warrants a change in policy.

Question (Colby Smith, New York Times): Colby Smith with the New York Times. Should we be viewing today’s cut as the Committee taking out some insurance against the possibility that the labor market is at risk of weakening, or is it the Committee’s view that the dynamics of a downturn are already in place? I guess I’m just, you know, trying to square the shift in the rate forecast in the SEP towards more cuts than just three months ago with the fact that the forecast for unemployment didn’t change.
Answer: Yeah, I think you could think of this, in a way, as a risk-management cut, because if you look at the SEP, actually the projections for growth this year and next actually ticked up just a little bit and inflation and unemployment didn’t really move. So what’s different now? What’s different now is that you see a very different picture of the risks to the labor market. You’ve seen—you know, we were looking at 150,000 jobs a month at the time of the last meeting, and now we see the revisions and we see the new numbers. And I didn’t—I don’t want to put too much emphasis on payroll job creation, but it’s just one of the things that suggests that the labor market is really cooling off. And that tells you that it’s time to take that into account in our, you know, in our policy.

Question (Colby Smith, New York Times): So just looking at the SEP once again, the median participant has inflation higher than previously expected by the end of next year and the Fed not getting back to the 2 percent target until 2028. So I guess I’m just wondering how you characterize the risk to price pressures of kicking off a series of cuts at this point.
Answer: Yeah, so I would look at it this way. We fully understand and appreciate that we need to remain fully committed to restoring 2 percent inflation on a sustained basis, and we will do that. At the same time, we’ve got to weigh the risks to the two goals. And I would say since—really, since April, to me the risks of higher and more persistent inflation have probably become a little less. And that’s partly because the labor market has softened, GDP growth has slowed. And so I would just say that the risks there have been less than one might think. And in terms of the labor market, what we’re seeing is, unemployment is still low—it’s still at a relatively low rate, but we’re seeing downside risks.

Question (Steve Liesman, CNBC): Thank you for getting to my follow-up question, which was, is the dispersion in the outlook a sign of uncertainty of policy in the—in the meetings to come? Thank you.
Answer: You know, it is such an unusual situation. Ordinarily, when the labor market is weak, inflation is low; and when the labor market is really strong, that’s when you’ve got to be careful about inflation. So we have a situation where we have two-sided risk, and that means there’s no risk-free path. And so it’s quite a difficult situation for policymakers. And it’s not at all surprising to me that you have a range of views. It’s not so much about having different views for the path of the economy, but—it’s partly that, but it’s also partly about what’s the right thing to do in light of this—of the tension between the two goals. How do you weight them? How worried are you about one versus the other? And so it’s natural. I think it would actually be surprising if you didn’t have a pretty wide range of views based, you know, in this kind of highly unusual situation, and we do. But, you know, we get together, we discuss—we have a great discussion, and then we decide what to do and we act. But you’re right that it is—it’s a wide dispersion of views, and I think that’s understandable and natural in the current situation.

Question (Victoria Guida, Politico): Hi. Victoria Guida with Politico. You’ve talked a lot about Fed independence and the importance of it over the years, but as markets have questions about what exactly President Trump’s intentions are with the Fed, what would you point to as the things they should be watching to determine that the Fed is still making decisions based on, you know, the economic outlook rather than political considerations?
Answer: Look, it’s deeply in our culture to do—to do our work based on the incoming data and never consider anything else. That’s just—everybody here who’s at the Fed really feels strongly about that way. So, you know, you’ll know it by the way we talk about what we’re doing, by the speeches that people give, by the decisions that we make. You’ll know that we’re just still going to do that. That’s all we do. And we don’t—we don’t frame these questions at all or see them in terms of political outcomes. I think when you get to another part of Washington, everything is seen through the lens of, does it help or hurt this political party, this politician? You know, that’s the framework. And I think people find it hard to believe that that’s just—that is not at all the way we think about things at the Fed. We’re taking a longer perspective. We’re trying to, you know, serve the American people as best we can. So I think— I think you would be able to tell. I don’t—I don’t believe we’ll ever get to that place. You know, I would say we’re doing our work exactly as we always have now, and people are— they’re making their arguments, and we’re having, really, a great discussion around these challenging issues. So—

Question (Edward Lawrence, Fox Business): But if—well, for the benchmarks, if that holds, it’s 51 percent of the jobs that we thought were there weren’t really there. It shows a weaker market—job market coming into this year. If you would have had that information, would it have changed your mind related to where the interest rates should be? Should there have been a cut earlier?
Answer: You know, we have to live life looking through the windshield rather than the rearview mirror, as you know. And all I can tell you is we see where we are now, and we take appropriate action. And we took that appropriate action today.

Question (Howard Schneider, Reuters): As a follow-up to that: The growth mix right now seems very concentrated in investment and, on the consumer spending side, in higher-income groups. Do you feel that that’s an unsustainable mix for the economy, moving forward?
Answer: I wouldn’t say that. I mean, you’re right. Those are two—we’re getting unusually large amounts of economic activity through the AI build-out and corporate investment. I don’t know how long that will go on. No one does. In terms of spending, you saw the consumer spending numbers were well above expectations, and that may well be skewed toward higher-earning consumers. There’s a lot of anecdotal evidence to suggest that. Nonetheless, it’s spending. So, I mean, I think the economy is—you know, it’s moving along. Economic growth is going to be 1½ percent or better this year, maybe a little better. Forecasts have been coming up, as you can see. So labor market is— unemployment is low, but—you know, downside risks—but it’s still a low unemployment rate. So that’s how we see it.

Question (Stephanie Ruhle, MSNBC): But not an independent review?
Answer: We’re certainly open to, you know, to always trying to do better.

Question (Neil Irwin, Axios): Mr. Chairman, Neil Irwin with Axios. There’s been some debate lately on whether AI is already starting to affect the labor market in terms of lower labor demand, higher productivity by contrast. Do you buy that? And if that is true, does that have implications for the monetary policy setting?
Answer: So there’s great uncertainty around that. I think my view—which is also a bit of a guess, but widely shared I think—is that you are seeing some effects, but it’s not the main thing driving it. And so a particular focus on young people coming out of college and, yeah, there may be something there. It may be that companies or other institutions that have been hiring younger people right out of college are able to use AI more than they had in the past. That may be part of the story. It’s also part of the story, though, that, you know, job creation more broadly has slowed down. The economy has slowed down. And so it’s probably a number of things. But, yeah, it’s probably a factor. Hard to say how big it is.

Question (Andrew Ackerman, Washington Post): Thanks, Mr. Chairman. What evidence do you see of tariffs showing up in inflation?
Answer: Well, if you—you can take goods—just sort of the broad goods category, and last year goods inflation was negative. If you go back 25 years, that was the typical thing was that goods inflation was—goods prices generally went down, even adjusting for quality. So that was not the case during the pandemic, of course. Goods inflation went very high. But we had essentially returned to zero or slightly negative inflation. Now, I think goods inflation over the course of the past year is 1.2 percent, which doesn’t sound like a lot, but it’s a big change. So we think—I mean, analysts have different views, but we think it’s contributing, you know, 0.3 or 0.4, something like that, to the current core PCE inflation reading, which is 2.9 percent. So it’s contributing. What seems to be happening is that, you know, the tariffs are not—mostly not being paid by exporters, mostly being paid by, really, the companies that sit between the exporter and the consumer. So if you buy something and you sell it through retail or you use it to make a product, you’re probably taking a lot of those costs on and not able to pass it fully along to the consumer yet. That appears to be what we’re seeing. All of those companies and entities in the middle, they’ll tell you that they have every intention of passing that through in time, but they’re not doing that now. To the consumer, the pass-through has been pretty small. It’s been slower and later—slower and smaller than we thought. But the evidence is very clear that there’s some pass-through.

Question (Catarina Saraiva, Bloomberg): And then I wanted to ask about a Gallup poll that showed that Americans now have more confidence in the President than the Federal Reserve when it comes to doing what’s right for the economy. Why do you think that is? And what’s your response? What’s your message to the public?
Answer: Our response is we’re going to do everything we can to use our tools to achieve the goals that Congress has given us. And we’re not going to get distracted by anything. So I think that’s what we’re going to do. We’re just going to keep doing our jobs.

Question (Claire Jones, Financial Times): Claire Jones, Financial Times. Given the range of views expressed prior to the meeting, I think there was a lot less dissent today than a lot of people expected. It’d be good to know just what you think the drivers were of coming to the very strong consensus in the meeting. And also, on the flip side, to just explain why the dot plots are really so scattered between—you know, someone even expecting rates to end up higher by the end of the year, to five cuts. I mean, what were the kind of range of views you had about, on one side, why there was so much support for a cut today, and, on the flip side, why there’s so much divergence about what comes next?
Answer: So I think there’s quite a wide assessment that the situation has changed with respect to the labor market, whereas we could still say—and did say—in July, at the time of the July meeting, that the labor market was in solid condition, and we could point to 150,000 jobs per month, and many other things. I think that the new data that we’ve had—and it’s not just payrolls, it’s other things as well—suggests that there really is meaningful downside risk. I said there was downside risk then, but I think that that downside risk is now a reality. And there’s clearly more downside risk. So I think that was—I think that’s broadly accepted. And so that meant different things for different people. You know, some wrote down—almost everyone wrote down support of this cut. And some supported more cuts, and some didn’t, as you will see from the dot plot. So it’s just the way—that’s just the way it is. I mean, people have—you have people who take this work very seriously, think about it all the time, do their work, discuss it with our colleagues. You know, we endlessly discuss this between ourselves. And then we have a meeting where we put it all out on the table. And this is what you get. And you’re right, there is a—there’s a range of views in the dots. And I think that’s, like I said, very unsurprising given the quite unusual—historically unusual nature of the challenges that we face. But let’s remember, though, the unemployment rate’s 4.3 percent. The economy is growing at 1½ percent. So it’s not a bad economy, or anything like that. We’ve seen much more challenging economic times. But from a policy standpoint, the standpoint of what we’re trying to accomplish, it’s challenging to know what to do. There are, as I mentioned earlier, there are no risk-free paths now. It’s not incredibly obvious what to do. So we have to keep our eye on inflation. At the same time, we cannot ignore and must keep our eye on maximum employment, which is—those are our two equal goals. And you will see that there are just a range of views on what to do. Nonetheless, we came together today at the meeting and acted with a high degree of unity.

Question (Archie Hall, The Economist): Thank you. Archie Hall from the Economist. You mentioned earlier that job creation is running below your guess at its breakeven rate. I’d be curious to hear a bit more about that and where you think the breakeven rate is.
Answer: You know, so there are many different ways to calculate it and none of them is perfect, but, you know, it’s clearly come way down. There are—you could say it’s somewhere between zero and 50,000, and you’d be right or wrong. I mean, there’s just many different ways to do it. So wherever it was—150,000, 200,000 a few months ago—it’s come down quite significantly. And that’s because a very—a lower amount of people are joining the labor force. The labor force is really not growing much at this point. And that’s a lot of where the supply of labor was coming from over the last three—two or three years, so we’re not getting that now. We’re also—we’ve gotten much lower demand. You know, it’s interesting that supply and demand have really come down together so far, except now we do have inflation—sorry, unemployment ticking up outside, just one tick outside of the range where it’s been for a year. Four point three percent is still a low level, but, you know, I think this level of—this speedy decline in both supply and demand has certainly gotten everyone’s attention.

Question (Archie Hall, The Economist): A follow-up, if I may. You mention the downside risk to employment a fair amount, but it’s striking that measures of kind of activity and output for the third quarter, those that we have, seem pretty strong. The Atlanta Fed’s GDPNow is very strong. You mentioned strong PCE numbers as well. How do you square those things? Is there—is there a chance actually there could be upside risk to the labor market if those activity measures are right?
Answer: Well, that would be great. We’d love that to happen. So I don’t know that you see a big tension there, but it’s gratifying to see that economic activity is holding and—you know, so it’s a good, a good bit from consumption. It looks like consumption was stronger than expected—what we got earlier this week, I guess. And also we’re getting, you know—a fairly narrow sector is producing a lot of economic activity, which is the AI build-out and, you know, business investment. So, you know, we watch all of it. And I would say we—you know, we did move up, the median for growth for this year actually moved up in the SEP between the June and September SEPs, so—and, really, the inflation and labor market didn’t change much. It’s really the risks that we’re seeing to the labor market that were the focus of today’s decision.

Question (Nicole Goodkind, Barron's): Hi. Nicole Goodkind with Barron’s. Thank you for taking my question. Given the cumulative impact of high interest rates on the housing sector, I’m wondering how concerned you are that current rate levels are exacerbating housing affordability issues and potentially hindering household formation and wealth accumulation for a segment of the population.
Answer: You know, housing is an interest-sensitive activity, so it’s at the very center of monetary policy. When the pandemic hit and we cut rates to zero, the housing companies were incredibly grateful and it was really—they said that was the only thing that kept them going was that we cut so aggressively and provided credit and things like that, and they were able to finance because we did that. The other side of that is when inflation gets high and we raise rates—and you’re right, it does burden the housing industry. And so rates have come down a bit, and as that happens we don’t set the—we don’t set mortgage rates, but our policy rate changes do tend to affect mortgage rates. And that has been happening. And that’ll, of course, raise demand, lower borrowing rates for builders, will help, you know, get builders—will help supply. And so some of that should happen. I think most analysts think that it would have to be pretty big changes for it to matter a lot for the—big changes in rates to matter a lot for the housing sector. And, you know, the other thing is by—you know, by achieving maximum employment and price stability, that’s a strong economy. That’s a good economy for housing. And then the last thing I’ll say is, you know, there’s a deeper problem here that is not a cyclical problem that the Fed can address, and that just is a pretty much nationwide housing shortage, or a lot of places in the country just don’t have enough housing for people. And, you know, all of the areas around metropolitan areas—like Washington, for example—are very built up, and so you’re having to build farther and farther out. And that—so that’s where it is.

Question (Nicole Goodkind, Barron's): And just a quick follow-up. During the last SEP, or the press conference following the last SEP, you seemed to indicate that policymakers lacked conviction about their projections. And I’m wondering if you still feel that way.
Answer: You know, forecasting is very difficult, even in placid times. And, as I’ve mentioned before, forecasters are a humble lot, with much to be humble about. So I think right now is a particularly challenging time, even more uncertain than usual. And so I don’t know any forecaster anywhere really—ask any of the forecasters whether they have great confidence in their forecast right now. I think they’ll honestly say “no.”

Question (Jennifer Schonberger, Yahoo Finance): And at his recent confirmation hearing, Stephen Miran brought up that the Fed actually has three mandates from Congress—not just jobs and stable prices, but also moderate long-term interest rates. So what does Congress mean by “moderate long-term interest rates?” How should we understand that when we see the 10-year Treasury moving? And how do you think about this part of the mandate when policy choices, like rate cuts or balance sheet reductions, affect the long end of the yield curve?
Answer: So we always think of it as the dual mandate, maximum employment and price stability, for a long time, because we think moderate, long-term interest rates are something that will result from stable inflation—low and stable inflation and maximum employment. So we don’t—we haven’t thought about that for a very long time as a third mandate that requires independent action. So that’s where that is. And there’s no thought of—as far as I’m concerned, there’s no thought of considering that, you know, considering that we somehow incorporate that in as something in a different way.

Question (Matt Egan, CNN): Thanks, Chair Powell. Matt Egan from CNN. We recently learned that average FICO credit scores are down this year by 2 points, the most since 2009 during the Great Recession. And delinquencies are high for car loans, personal loans, credit cards. How concerned, if at all, are you about the health of consumer finances? And do you expect today’s cut will help?
Answer: So, you know, we’re aware of that. I think default rates have been kind of ticking up. And we do watch that. They’re not at a level—I don’t believe they’re at a level where, overall, they’re, you know, terribly concerning. But it is something that we watch. You know, lower rates should support economic activity. I don’t know that one rate cut will have, you know, a visible effect on that. But over time, you know, a strong economy with a strong labor market is what we’re—what we’re aiming for, and stable prices. So that should help.