Overview

• Jerome Powell warns that the U.S. economy may face more frequent and persistent supply shocks, complicating monetary policy decisions.
• The Fed is reconsidering key elements of its 2020 framework, including its flexible average inflation targeting approach and employment language.
• Powell emphasized the importance of anchoring long-term inflation expectations at 2% to maintain economic stability.
• The review also focuses on improving communication to better convey uncertainty in the face of evolving economic conditions.
• Despite easing U.S.–China trade tensions, remaining tariffs and policy volatility continue to pose risks to inflation and employment goals.