Federal Reserve Chair Jerome Powell said inflation remains a concern and signaled that interest rates will stay mildly restrictive, underscoring the central bank’s cautious stance despite signs of easing in some areas.
Speaking after the Fed held rates at 3.50% to 3.75%, Powell said policymakers are not seeing enough progress in key parts of inflation, particularly in services.
He made it clear the central bank is not ready to shift policy quickly.
Inflation remains uneven despite goods improvement
Powell said goods inflation is finally showing signs of cooling. But that progress is not broad-based.
He pointed to non-housing services as a major problem area. Inflation in this segment has not come down and remains a source of concern.
Housing-related services are also being closely tracked. Powell said the Fed wants to see continued easing there along with broader support from other categories. The overall message is mixed. Some parts of inflation are improving. Others remain sticky.
Labor market no longer driving inflation
Powell said the labor market is no longer a major source of inflationary pressure. This marks a shift from earlier concerns when strong job growth and wage gains were seen as key drivers of rising prices.
However, he avoided suggesting that employment risks outweigh inflation concerns. He said it is difficult to argue that one side of the Fed’s mandate is more at risk than the other.
That reflects a balanced but cautious stance.
Fed to keep policy restrictive as risks persist
Powell said it is important to keep interest rates at a mildly restrictive level for now.
Inflation is still well above the Fed’s 2% target. And progress has been slower than expected in critical areas. He stressed that the central bank will continue to act in line with its mandate and in the interest of the public.
Policy decisions will remain flexible, with no fixed path ahead.
Powell signals continuity amid leadership and legal questions
On leadership, Powell said he would serve as chair on an interim basis if needed until a successor is confirmed.
He also said he has no intention of leaving the Federal Reserve Board while a Department of Justice investigation remains ongoing. The comments suggest continuity in leadership even as uncertainty persists around the Fed’s future direction.
The broader signal from Powell is firm. Inflation progress is incomplete. Policy will stay tight. And the Fed is not ready to ease until clearer and broader disinflation takes hold.