During his FOMC press conference, the Fed chairman stated that a weak labor market would justify further rate cuts. However, they will keep interest rates stable if the labor market remains strong, even if inflation remains high.
Your comments came after the Federal Reserve meeting, where the FOMC decided to keep interest rates unchanged in the target range between 3.50% and 3.75%. The committee noted that the unemployment rate has shown signs of stabilization, while inflation remains somewhat elevated.
In his inaugural statement, Jerome Powell reiterated that indicators suggest that labor market conditions may be stabilizing after a period of gradual softening. He noted that the unemployment rate was 4.4% in December and has varied little in recent months. However, the Fed chair added that job growth has remained low and total non-farm payrolls decreased at an average rate of 22,000 jobs per month over the past three months.
In his statement, Jerome Powell also noted that the three rate cuts implemented last year have brought them into a plausible neutral range and should help stabilize the labor market as inflation resumes its downward trend. Therefore, it is likely that the FOMC will keep interest rates stable, taking a wait-and-see approach.
Jerome Powell reiterated that the impact of Trump's tariffs will likely consist of a one-time increase, noting that most of the inflationary cost is due to tariffs, not demand. He stated that they expect the tariff impact on goods to peak in mid-2026.
The Fed chair briefly referred to the entity's independence when addressing the case of U.S. President Donald Trump against Fed Governor Lisa Cook, describing it as the most important legal case in the history of the Fed. This occurred while explaining the reason for his attendance at the hearing held last week. He also reaffirmed the independence of the Fed, warning that it will be difficult to restore confidence in the institution if there are indications that they are establishing a monetary policy that benefits a specific group.
Meanwhile, he declined to comment on the statements he made on January 11 after the Department of Justice (DOJ) launched a criminal investigation against the Fed chair. At that time, he stated that the investigation was due to the Fed's refusal to lower rates according to Trump's preference. Interestingly, when asked what advice he would give to his successor, he urged them to stay out of politics.
The Federal Reserve chair also commented on the rise in gold prices, urging market participants not to read too much into the precious metal's increase. He added that they do not perceive a strong signal from the rise in gold and silver prices.
Bitcoin remained at a low level during Jerome Powell's press conference. TradingView data shows that the flagship cryptocurrency is trading just above the psychological level of $89,000, down on the day despite having reached previous highs of $90,000.
