On Wednesday, July 30, 2025 FOMC Chair Jerome Powell gave his schedule July 2025 FOMC Press Conference. (link of video and related materials)
Below are Jerome Powell’s comments I found most notable – although I don’t necessarily agree with them – in the order they appear in the transcript. These comments are excerpted from the “Transcript of Chair Powell’s Press Conference“ (preliminary)(pdf) of July 30, 2025, with the accompanying “FOMC Statement.”
Excerpts from Chair Powell’s opening comments:
Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today’s meeting, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent and to continue reducing the size of our balance sheet. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks.
Changes to government policies continue to evolve, and their effects on the economy remain uncertain. Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation could be short-lived—reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.
Excerpts of Jerome Powell’s responses as indicated to various questions:
NEIL IRWIN. Hi, Chairman. Neil with Axios. This morning, we got a GDP report in which final domestic private purchases decelerated, slowest pace since ’22, there was a weakness in the interest-sensitive sectors and residential investment, commercial structures. Are those not signs that monetary policy is a little too restrictive right now given current economic conditions?
CHAIR POWELL. So, the GDP and PDFP numbers came in pretty much right where we expected them to come in. You’ve got to look at the whole picture. So, certainly, as I mentioned in my opening remarks, economic activity data, GDP, Private Domestic Final Purchases, which we think is a narrower but better signal for future for where the economy is going, has come down to a little better than 1 percent, 1.2 percent I think, in the case of GDP for the first half, whereas it was two and a half last year. So that has certainly come down. But, if you look at the labor market, what you see is by many, many statistics, the labor market is kind of still in balance. It’s things like quits, you know, job openings and let alone the unemployment rate, they’re all very — by many measures, very similar to where they were a year ago. So, you do not see a weakening in the labor market. You do see a slowing in job creation, but also in a slowing – a slowing in the supply of workers. So, you’ve got a labor market that’s in balance, albeit partially because both demand and supply for workers has — is coming down at the same pace and that’s why the unemployment rate has remained roughly stable, which is why I said there — we do see downside risk in the labor market. I mean, our two mandate variables, right, are inflation and maximum employment, stable prices and maximum employment, not so much growth. So, the labor market looks solid, inflation is above target. And, even if you look through the tariff effects, we think it’s still a bit above target. And that’s why our stance is where it is. But, as I mentioned, you know, downside risks to the labor market are certainly apparent.
NEIL IRWIN. So, on labor, given the fluid labor supply situation is there a number for this jobs report we get on Friday that would look to you like equilibrium job growth?
CHAIR POWELL. You know, the main number you have to look at now is the unemployment rate because, if it’s true that the, you know, demand for workers in the form of, let’s call it — say, payroll jobs, that number has come down, but so has the break even number, kind of in tandem. So, you know, as long as the — that puts the labor market in balance. The fact that it’s getting into balance due to declines in both supply and demand, though, I think does — it is suggestive of downside risk. So, we’re — of course, we’ll be watching that carefully.
also:
NICK TIMIRAOS. Nick Timiraos, The Wall Street Journal. Chair Powell, my question is about what have you learned over the last few months about the inflation generating and price pass-through process. And, just to drill down, the June CPI report showed evidence of tariffinduced goods inflation. Now, the tariff landscape is only starting to be settled with some of these more recent deals. Given the lags between when tariffs are announced and when they show up in goods prices, is two months a long enough horizon to evaluate the impact and be confident that tariffs aren’t impacting the broader inflation process?
CHAIR POWELL. I think you have to think of this as still quite early days. And so I think what we’re seeing now is substantial amounts of tariff revenue being collected on the order of 30 billion a month, which is, you know, substantially higher than before. And the evidence seems to be mostly not paid, paid only to a small extent through exporters lowering their price and companies or retailers, sort of people who are upstream, institutions that are upstream from the consumer, are paying most of this for now. Consumers are — it’s starting to show up in consumer prices. As you know, in the June report, we expect to see more of that. And we know from surveys that companies feel that they have every intention of — of putting this through to the consumer. But, you know, the truth is they may not be able to in many cases. So I think it’s — we’re just going to have to watch and learn empirically how much of this and over what period of time. I think we have learned that the process will probably be slower than expected at the beginning, but we never expected it to be fast. And we think we have a long way to go to really understand exactly how we’ll be. So that’s how we’re thinking of it right now.
NICK TIMIRAOS. So, if I could follow up, is the reticence to look through core goods inflation being driven by the judgment that during the Pandemic expectations proved more adaptive than anyone at the Fed expected? Is it being driven by uncertainty over how restrictive policy is?
CHAIR POWELL. You could argue we are a bit looking through goods inflation by not raising rates. You know, we haven’t reacted to new inflation. But, I mean, I wouldn’t insist upon that. But I don’t think — I think the base case, I said — as I said, a reasonable base case is that these are one-time price effects. Of course, in the end, there will not be. This will not turn out to be inflation because we’ll make sure that it’s not. We will, through our tools, make sure that this does not move from being a one-time price increase to serious inflation. We want to do that efficiently, though, efficiently. And that means we want to do it — if you move too soon, you wind up maybe not getting inflation all the way fixed and you have to come back. That’s inefficient. If you move too late, you might do unnecessary damage to the labor market. So, there won’t be, in the end, a big inflationary problem. What we’re trying to do is accomplish that in a way that is efficient. But, in the end, there should be no doubt that we will do what we need to do to keep inflation under control. Ideally, we do it efficiently.
MICHAEL MCKEE. Michael McKee from Bloomberg Television and Radio. The One Big Bill, leaving aside the adjectives, do you expect it to add stimulus to the economy in 2026? And would that be an argument for remaining on hold or cutting back on the number of rate cuts you would expect for next year?
CHAIR POWELL. So, of course, let me just — ritual disclaimer that we don’t express any judgments or anything, right, on fiscal legislation or other legislation for that matter. But I would say, when you think that, you know, the biggest part of the bill was making permanent existing law on taxes, I don’t think we see it as particularly stimulative. There should be some stimulative effect, but it shouldn’t be significant over the next couple of years.
MICHAEL MCKEE. And, to follow up, what do you — well, I don’t want to put this in terms of you and the president so let me ask it this way. Do you have concerns about the cost to the government of keeping rates elevated for longer in terms of interest rate charges?
CHAIR POWELL. No, that’s — you know, we have a mandate and that’s maximum employment and price stability. And it is — it’s not something we do to consider the cost to the government of our rate changes. We have to be able to look at the goal variables Congress has given us, use the tools they have given us to achieve those goals. And that’s what we do. It’s — we don’t consider the fiscal needs of the federal government. No advanced economy central bank does that. And it wouldn’t be good for — if we did do that, it wouldn’t be good neither for our credibility nor for the credibility of U.S. fiscal policy. So it’s just not something we take into consideration.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 6364.28 as this post is written
