On Wednesday, October 29, 2025 FOMC Chair Jerome Powell gave his scheduled October 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 October 29, 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 lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent.
Higher tariffs are pushing up prices in some categories of goods, resulting in higher overall inflation. A reasonable base case is that the effects on inflation will be relatively shortlived—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. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem.
In the near term, risks to inflation are tilted to the upside and risks to employment to the downside—a challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate. With downside risks to employment having increased in recent months, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance.
With today’s decision, we remain well positioned to respond in a timely way to potential economic developments. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks. We continue to face two-sided risks. In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it. Policy is not on a preset course.
Excerpts of Jerome Powell’s responses as indicated to various questions:
STEVE LIESMAN. Steve Liesman, CNBC. Mr. Chairman, can you characterize the meeting in terms of, you said, strongly differing views. Was this a close call, this cut? Or was it a close call maybe the other way, because you had dissents on both sides? Thanks.
CHAIR POWELL. So I was referring to the discussion about — to the extent it related to December. You saw we had two dissents, one for 50 and one for no cut. So that was a strong, solid vote in favor of this cut. The strongly differing views were really about the future, what does that look like? And I think people are saying, they’re noticing stronger economic activity. Forecasters generally, broadly, have raised their economic growth forecast for this year and next year, and in some cases quite materially. In the meantime, we see a labor market that’s kind of, I don’t want to say stable, but it’s not clearly in motion, it’s not clearly declining quickly in any case. It may be just continuing to gradually cool. And again, people have different — they had different forecasts and expectations about the economy and different risk tolerances. And so, there’s — you read the SEP, you read the speeches, you know there are differing views on the Committee and to the point where I said what I said.
STEVE LIESMAN. Just a follow-up on the balance sheet, if you stop it, the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn’t shrink as a percent of GDP and become a tightening factor?
CHAIR POWELL. So, you’re right, the place we’ll be on December 1 is that the size of the balance sheet is frozen, and as mortgage-backed securities mature, we’ll reinvest those in treasury bills, which will foster both a more treasury balance sheet, and also a shorter duration. So that’s — in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they’re going to continue to grow organically and because the size of the balance sheet is frozen, you have further shrinkage in reserves. And reserves is the thing that we’re — that we’re managing that has to be ample. So, that’ll happen for a time, but not a tremendously long time. We don’t know exactly how long, but at a certain point, you’ll want to start — you’ll want to start reserves to start gradually growing to keep up with the size of the banking system and the size of the economy. So we’ll be adding reserves at a certain point, and that’s the last point. Even then we’ll be — we didn’t make decisions about this today, but we did talk today about the composition of the balance sheet. And there’s a desire that the balance sheet be — right now it’s got a lot more duration than the outstanding universe of treasury securities and we want to move to a place where we’re closer to that duration. That’ll take some time. We haven’t made a decision about the ultimate endpoint, but we all agree that we want to move more in the direction of a balance sheet that more closely reflects the outstanding treasuries. And that means a shorter duration balance sheet. Now, this is something that’s going to be — take a long time and move very, very gradually and I don’t think you’ll notice it in market conditions. But that’s the direction of things.
also:
CHRIS RUGABER. Great, thank you. Chris Rugaber, Associated Press. So there’s a big investment boom in AI infrastructure right now, as you know, and wondering if the existence of such a boom would indicate that rates are not that restrictive after all. And could further rate cuts at this point perhaps fuel an excess level of investment there, or market bubbles. How is the Fed thinking about that?
CHAIR POWELL. So I don’t — I don’t think that the — you’re right, there’s a — there’s a lot of data centers being built, and other investments being made around the country and around the world, and big U.S. companies are just investing a lot of resources in thinking about how AI, which will be based on those data centers, run through data centers, is going to affect their businesses. So it’s a big deal. I don’t think that the spending that happens to build data centers all over the country is especially interest sensitive. It’s based on longer run, it’s — longer run assessments that this is an area where there’s going to be a lot of investment and that’s going to drive higher productivity and that sort of things. I don’t — I don’t know how those investments will work out, but I don’t think they’re particularly interest sensitive compared to some of the other sectors.
CHRIS RUGABER. And then, just a quick follow-up. You mentioned that you do have data that you’re looking at for inflation and growth in the absence of government data. Could you give us a sense, I think we know a lot about the jobs data that’s out there, can you give us a sense of what you’re looking at to track inflation in the absence of government data? Thank you.
CHAIR POWELL. So, it’s a lot of things. And it doesn’t replace government data, but you know all of these. It’s, I’ll just mention some of the many, many names, PriceStats, Adobe, and others, and for wage inflation, there’s ADP data, on spending, you’re going to ask about spending at some point, there are lots of other things that we look at. But it’s, again it’s — it’s many — many different sources and again, including what we get out of the Beige Book, which will be sort of come out mid-cycle as always. And it doesn’t replace the government data, but it gives us a picture. Again, I think if something material were happening, if there were material developments, I think we would pick that up. I don’t think we’ll be able to have a very granular understanding of the economy while this — while this data is not available.
also:
MICHAEL MCKEE. Michael McKee from Bloomberg Television and Radio. Do you have any concerns that equity markets are, or are close to being overvalued at this point?
CHAIR POWELL. You know, we don’t look at any one asset price and say hey, that’s wrong. It’s not our job to do that. We look at the overall financial system, and we ask whether it’s stable and whether it could withstand shocks, right? So, banks are well capitalized, while some households are clearly under stress, in the aggregate, households are in good shape financially. Relatively — relatively manageable levels of debt. At the lower income spectrum you are seeing rising defaults, particularly in sub-prime auto, but nonetheless, in the aggregate pretty good. And you don’t see — so you don’t see too much leverage in the banking system or the financial system. It’s a mixed picture, but it’s not an overly troubling picture, and again, I’m not — it’s not appropriate — we don’t set asset prices, markets do that.
MICHAEL MCKEE. Well, are you — you must be well-aware by lowering interest rates you’re contributing to additional asset price increases. And I wonder how you balance the idea that lowering rates would help the labor market with the reality that it seems more likely to be stimulating increased investment in AI, which is the rationale for thousands of job cuts that have been announced in the last few weeks.
CHAIR POWELL. Yeah, I don’t — I don’t think interest rates are an important part of the AI — the data center story. I think — people think there are great economics in building these data centers, and they’re making a lot of money building them and I think they have very high present value and all this sort of thing, it’s not really — it’s not about 25 basis points here or there. We use our tools to support the labor market and to create price stability. That’s what we do. That’s our two jobs, right? So, we’re here to — by lowering rates at the margin that will support demand, and that will support more hiring. And that’s why we do it. Now, no 25 basis point, or even 50 basis point hike is going to be a dispositive thing, but ultimately lower rates will support more demand, and that’ll support hiring over time, and of course we also have to be careful about this, which is what we’ve been doing because we know where inflation is and we know — I’ve told you the story, this complicated story, but this is the best assessment that we can make and but because there’s uncertainty around inflation and the path ahead for inflation, that’s why we’re going — that’s why the pace we’re going has been a careful one.
VICTORIA GUIDA. Hi, Victoria Guida from Politico. On AI, I’m just wondering, it seems like a lot of the economic growth that we’ve been seeing is fed by investments in AI. So, how worried are you about what the sudden contraction in tech investment would mean for the overall economy, is there enough strength in other sectors? And specifically, are there any lessons that you take from the 1990s in how you might approach what’s happening right now?
CHAIR POWELL. Yeah, this is different in the sense that these companies, the companies that are so highly valued actually have earnings and stuff like that. So, you go back to the ’90s and the dot-com, they were — these were ideas rather than companies. And we’re — so there’s a clear bubble there, whereas the — I won’t go into particular names, but they actually have earnings and it looks like they have business models and profits and that kind of thing. So, it’s really a different thing. You know, the investment we’re getting in equipment and all those things that go into creating data centers and feeding the AI, it’s clearly one of the big sources of growth in the economy. Consumer spending, also though has been — is much bigger than that and has been growing, and has defied a lot of, you know, negative forecasts, continuing to do so this year. Consumers are still spending. Now it is — it may be mostly higher-end consumers, or maybe skewed that way, but the consumer spending, and that’s a big, big chunk of what’s going on in the economy, bigger than — substantially bigger than AI. You could point to growth, I mean actually you maybe growth as opposed to level, but consumer spending is a much bigger part of the economy.
VICTORIA GUIDA. And why do you think that the labor market is slowing so much, even though consumer spending is strong?
CHAIR POWELL. Why has it slowed so much? Well, what’s happened is that the supply of workers has dropped very, very sharply due to mainly immigration, but also lower labor force participation. So, and that means there’s less need for new jobs, because there’s — there isn’t this flow into the pool of labor where people need jobs. Because there aren’t those people now, so there’s not a supply of workers showing up for jobs. In addition, demand has also gone down. And so has labor force participation has declined, which is more of a sign, in this case, of demand as well as trend. So I think you’re seeing some softening. The economy is growing at a slower rate than it was, 2.4 percent last year, we think around 1.6 percent this year. It could have been a couple of tenths higher if not for the shutdown. And of course that will reverse, but you’ve still got the economy growing in a moderate pace.
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 6829.31 as this post is written
