The Federal Open Market Committee decided to lower the policy interest rate by a quarter percentage point to 4% to 4.25%, citing shifts in the balance of risks between employment and inflation.
Edged up in August
12-month basis
First half of year
"My colleagues and I remain squarely focused on achieving our dual-mandate goals of maximum employment and stable prices for the benefit of the American people."
The Chair opened by acknowledging that while unemployment remains low, it has edged up with job gains slowing and downside risks to employment rising. Simultaneously, inflation has risen recently and remains somewhat elevated, leading to today's decision to lower the policy rate.
Job Creation Slowdown
"Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past three months."
Immigration Impact
"A good part of the slowing likely reflects a decline in the growth of the labor force due to lower immigration and lower labor force participation."
Tariff Effects
"Higher tariffs have begun to push up prices in some categories of goods, but their overall effects on economic activity and inflation remain to be seen."
Price Level vs. Ongoing Inflation
"Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem."
On Fed Independence
Question: How can you maintain the public's perception the Fed is politically independent?
Chair Powell: "It's deeply in our culture to do our work based on the incoming data and never consider anything else... We don't frame these questions at all or see them in terms of political outcomes."
On Future Rate Cuts
Question: Under what circumstances would a larger than 25 basis points rate cut be warranted?
Chair Powell: "There wasn't widespread support at all for a 50 basis point cut today... I feel like our policy has been doing the right thing so far this year."
Access the complete verbatim transcript of the Federal Reserve Chair's press conference, including all questions and answers.
Chair Powell: Good afternoon. My colleagues and I remain squarely focused on achieving our dual-mandate goals of maximum employment and stable prices for the benefit of the American people.
While the unemployment rate remains low, it has edged up. Job gains have slowed, and downside risks to employment have risen. At the same time, inflation has risen recently and remains somewhat elevated. In support of our goals, and in light of the shift in the balance of risks, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point.
We also decided to continue to reduce our securities holdings. I'll have more to say about monetary policy after briefly reviewing economic developments...
[Transcript continues with full verbatim content...]