Overview

• Jerome Powell said the balance of risks is shifting, citing rising downside risks to employment as hiring slows and the labor market enters a "curious" equilibrium.
• He noted tariff-driven price increases are now clearly visible and could build in coming months, though the base case remains a temporary price-level effect with high uncertainty.
• Stocks jumped and Treasury yields fell after the speech, with CME FedWatch showing roughly 90% odds of a 25-basis-point cut next month.
• Powell emphasized decisions will be data-dependent and unveiled a revised policy framework that refocuses on a 2% annual inflation target rather than averaging over time.
• The remarks came as President Trump intensifies pressure for lower rates and calls for Governor Lisa Cook to resign, while Powell reiterated the Fed’s commitment to independent, data-driven policy.