Federal Reserve Chair Jerome Powell said Tuesday that the central bank is navigating a delicate balancing act, attempting to control inflation without undermining the job market.
“There is no risk-free path for policy as we navigate the tension between our employment and inflation goals,” Powell stated in prepared remarks for an event hosted by the National Association for Business Economics.
This challenge is compounded by President Donald Trump’s policies on trade, immigration, and government spending, which have placed the central bank in an unusually complex position.
On one hand, the administration’s tariffs are contributing to rising prices, according to Commerce Department data. A recent National Federation of Independent Business survey also showed that more small businesses plan to implement price hikes in the coming months.
On the other hand, the labor market is showing signs of weakening, with anemic job growth in recent months, longer periods of unemployment for many individuals, and more job seekers than available positions.
The Federal Reserve’s task is further complicated by the federal government shutdown, which has suspended the release of official economic data the bank relies on for its assessments. Powell confirmed the Fed is utilizing “a wide variety of public- and private-sector data that have remained available” along with its nationwide network of contacts.
“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting,” he added.
Last month, Fed officials lowered borrowing costs for the first time this year, warning about risks to both their mandates. Powell elaborated on this dilemma, stating, “If we move too quickly, then we may leave the inflation job unfinished… If we move too slowly, there may be unnecessary losses, painful losses, in the employment market.”
The difficulty of steering the economy has sparked internal debate among Fed officials. In July, Fed governors Michelle Bowman and Christopher Waller—both Trump appointees—dissented by backing a rate cut when the decision was to hold steady, marking the first time more than one governor had dissented on a policy decision since 1993. In September, Governor Stephen Miran, a close Trump ally, advocated for a half-point rate cut instead of the quarter-point reduction that was approved.
Acknowledging the internal discussions, Powell concluded, “We have a healthy debate going.”
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