On Wednesday, September 17, 2025 FOMC Chair Jerome Powell gave his scheduled September 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 September 17, 2025, with the accompanying “FOMC Statement” and “Summary of Economic Projections” (pdf) dated September 17, 2025.
Excerpts from Chair Powell’s opening comments:
In the labor market, the unemployment rate edged up to 4.3 percent in August but remains little changed over the past year at a relatively low level. Payroll job gains have slowed significantly to a pace of just 29 thousand per month over the past three months. A good part of the slowing likely reflects a decline in the growth of the labor force, due to lower immigration and lower labor force participation. Even so, labor demand has softened and the recent pace of job creation appears to be running below the “breakeven” rate needed to hold the unemployment rate constant. In addition, wage growth has continued to moderate while still outpacing inflation. Overall, the marked slowing in both the supply of and demand for workers is unusual. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen. In our SEP, the median projection for the unemployment rate is 4.5 percent at the end of this year and edges down thereafter.
Inflation has eased significantly from its highs in mid-2022 but remains somewhat elevated relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.7 percent over the 12 months ending in August and that, excluding the volatile food and energy categories, core PCE prices rose 2.9 percent. These readings are higher than earlier in the year as inflation for goods has picked up. In contrast, disinflation appears to be continuing for services. Near-term measures of inflation expectations have moved up, on balance, over the course of this year on news about tariffs, as reflected in both market- and survey-based measures. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2 percent inflation goal. The median projection in the SEP for total PCE inflation is 3.0 percent this year and falls to 2.6 percent in 2026 and to 2.1 percent in 2027.
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 lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4-1/4 percent and to continue reducing the size of our balance sheet.
also:
In the near term, risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. With downside risks to employment having increased, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance.
Excerpts of Jerome Powell’s responses as indicated to various questions:
MICHAEL MCKEE. Michael McKee from Bloomberg Radio and Television. I’m a little confused by your explanation of the Fed cutting rates because of unemployment if you think that most of what’s happening in the employment area is related to immigration, which your rate cuts wouldn’t address. How do you see that as more important than inflation, which has remained almost a full percentage point above your target?
CHAIR POWELL. Well, I was – I was saying that what’s happening in the labor market has more to do with immigration than it has to do with tariffs. That was the question I was answering.
So I wouldn’t say that all of what’s happening in the labor market is due to tariffs. I mean, you clearly have a slowing due to immigration. You clearly have a slowing in demand, which is now perhaps more than that in supply. And we know that because the unemployment rate has ticked up. So that’s how – that’s what I meant by that.
MICHAEL MCKEE. If I could follow up, every year since 2015 the SEP has forecast that you would hit your target two years later. And this year, this SEP says you’re going to hit your target two years later. Two percent does not seem to be in sight. Does that suggest that the 2 percent target is not really achievable? And does this present any credibility problems for you in telling people that that’s what you’re going to do, if you can never reach it?
CHAIR POWELL. Well, I mean, you’re right. It does say we’re going to get to 2 percent inflation in 2028 – at the end of ’28. But that’s – you know, that’s literally how you put the projections together. You’re writing down a rate path which is designed to create, over the course of the SEP, you know, time frame, 2 percent inflation, and maximum employment too. So that’s all that is. You know, we don’t – no one really knows where the economy will be in three years, but the nature of the exercise is to write down policy that you believe would return to the 2 percent goal over the – at least by the end of the exercise.
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EDWARD LAWRENCE. Thanks, Mr. Chairman. Edward Lawrence from Fox Business.
So we saw the preliminary benchmark revisions, down 911,000. The revisions for June were the first negative revisions we’ve seen since December of 2020. You know, how can the Fed base important decisions on rate and what to do with the interest – with the interest rates on data that seems to be, as you’ve called it in the past, noisy?
CHAIR POWELL. So, on the QCEW, the revision that we saw was almost exactly what we expected. It was amazing how close the expectation was so, and the reason for that is for the last bunch of quarters there’s been a – almost a predictable overcount. And I think the – you know, the Bureau of Labor Statistics really does understand this. And they’re working hard to fix it. It’s got to do – of course, it has something to do with low response rates. But it’s also got to do with what’s called the birth-death model, because a good amount of job creation happens around new companies, and how many go out of business, how many are founded. And it’s just really hard. You can’t survey for that. You’ve got to have a model that predicts that. And it’s quite difficult to do, especially when the economy is undergoing big changes so, and they’ve been working on that and are making progress on it. But, you know, the data we get is still well good enough for us to do our work. To the extent we have issues around data right now it’s about low response rates. That’s happened all over – all over, really. Response rates are just lower to surveys now, both in and out of the government. And it’s no great secret. You know, we want higher response rates. And we need those to have, you know, less volatile data. And the way to get that is to make sure that the agencies that collect the data have sufficient resources to drive higher response rates. It’s not a complicated problem. But that’s what it takes. It’s not a mystery. That’s what it takes. The other thing I’ll say, Edward, is in the case of the job creation, the first – the response rate is quite low for the first month, or lower for the first month. By the time you get to the second or third month, you’re still collecting responses for that last month – for that prior month. And you get the place where the data are much more reliable by the second, and certainly the third, month. So it’s not that we don’t get the data. It’s just that we get it a little later.
EDWARD LAWRENCE. 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 had that information would it have changed your mind related to where the interest rates should be? Should there have been a cut earlier?
CHAIR POWELL. 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.
HOWARD SCHNEIDER. Thanks. Howard Schneider with Reuters. So, as you mentioned a minute ago, some margins of the job market would suggest that the slide’s already happening. The Black unemployment rate in August was above 7 percent, declining workweek, difficulty among college graduates finding work, high – rising youth unemployment. Why do you think a quarter percentage point now is going to arrest that?
CHAIR POWELL. Well, I hadn’t say that I thought a quarter point would make a huge difference to the economy. But you’ve got to look at the whole path of rates, right? And markets already – has already been baking in expectations. I mean, our market works through expectations, right? So I think our policy path really does matter. And I think it’s important that we use our tools to support the labor market when we do see signs like that. I did mention that, you know, you see minority unemployment going up, you see younger people – people who are more vulnerable economically, more susceptible to economic cycles. That’s one of the reasons, in addition to just overall lower payroll job creation, that shows you that at the margin the labor market is weakening. I would also point to labor-force participation. Some part of the significant decline in labor-force participation over the last year has probably been cyclical in nature, rather than just the usual aging process. So we put all this together and we see that that the labor market is softening. And we don’t need it to soften any more, don’t want it to. So we use our tools. And, you know, it starts with a 25 basis point rate cut, but we – you know, the market’s also pricing in a rate path. I’m not blessing what the market’s doing at all. I’m just saying it’s not just one action.
HOWARD SCHNEIDER. And, as a follow-up to that, the growth mix right now seems very concentrated in investment and, on the consumer spending side, in the higher income groups. Do you feel that that’s an unsustainable mix for the economy moving forward?
CHAIR POWELL. 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 spend – 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 1.5 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.
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ARCHIE HALL. Thank you. Archie Hall from The Economist. You mentioned earlier that job creation is running below your guess at its break-even rate. I’d be curious to hear a bit more about that and where you think the break-even rate is.
CHAIR POWELL. 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 – 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 whatever – wherever it was – 150,000, 200,000 – a few months ago, it’s come down quite significantly. And that’s because very – a very – a lower amount of people are joining the labor force, the labor force 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.
ARCHIE HALL. A follow up, if I may. You mentioned 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 it could be upside risk to the labor market if those activity measures are right?
CHAIR POWELL. 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.
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MATT EGAN. Thanks, Chair Powell. Matt Egan from CNN. We recently learned that average FICO credit scores are down this year by two 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?
CHAIR POWELL. 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.
MATT EGAN. Just a follow up. This rate cut is coming at a time when the stock market is at or near all-time highs. And some valuation metrics are elevated historically. Is there a risk that cutting rates could overheat financial markets, potentially fueling a bubble?
CHAIR POWELL. You know, we’re tightly focused on our goals, right? And our goals are maximum employment and price stability. And so we take the actions that we take with an eye on those goals. Separately – and that’s what we – why we did what we did today. Separately, we monitor financial stability very, very carefully. And, you know, I would say it’s a mixed picture. But households are in good shape. Banks are in good shape. Overall, households are still in good shape in the aggregate. And I know that people at the lower end of the income spectrum are under pressure, obviously. But from a financial stability perspective, we monitor that picture. We don’t have a view that there’s a right or wrong level of asset prices for any particular financial asset but we monitor the whole picture, really, looking for structural vulnerabilities and I would say those are not elevated right now.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 6631.96 as this post is written
