Powell said the Fed held rates unchanged at 3.5%–3.75% because the economy remains resilient but inflation has re-accelerated from tariffs and a Middle East–driven oil shock. The press conference was dominated by the decision to keep optionality open, growing internal debate over whether the statement should still lean toward cuts, and Powell’s unusually explicit defense of Fed independence amid legal pressure from the Trump administration.
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Powell’s core message was that the FOMC is in a wait-and-see posture: the economy is still growing solidly, the labor market is stable enough to avoid urgency, and inflation is too elevated to justify easing into an energy shock. He emphasized that the committee left the federal funds target range at 3.5%–3.75% because policy is already in a good place—his words repeatedly framed the stance as “appropriate,” near neutral or “mildly restrictive,” and suitable for keeping the Fed prepared to move in either direction. He grounded that stance in a mixed macro read. On growth, he cited resilient consumer spending, brisk business fixed investment, and data-center investment as signs the economy is expanding at around 2% or better. On labor, he pointed to unemployment at 4.3%, low but stable, with job gains soft because of slower labor-force growth from lower immigration and participation. …
Near term, the Fed is on hold and the bar to a cut is high; energy and tariff-driven inflation keep the burden of proof on disinflation, not on the committee. The main tactical risk is that front-end rate-cut expectations get pushed further out if oil stays elevated.
Over the next few meetings, the most likely path is continued pause with a gradually more neutral tone if inflation stops worsening. A sustained decline in energy pressures and evidence that tariff effects are one-off would be needed to reopen easing.
Structurally, Powell is defending the idea that the Fed must stay insulated from political pressure to preserve credibility and low inflation over time. If that boundary erodes, the long-run risk is a weaker central-bank regime even if short-term macro data remains solid.
The FOMC held the target range for the federal funds rate at 3.5%–3.75%.
Direct policy announcement at the start of the remarks.
The economy is still expanding at a solid pace, led by resilient consumer spending and business fixed investment.
Powell repeatedly described growth as solid and cited specific components.
Inflation has re-accelerated and is well above the Fed’s 2% goal, with tariffs and energy prices both contributing.
He cited 3.5% total PCE, 3.2% core PCE, tariffs, and oil.
What went into your decision to remain on the board, what criteria are you weighing, and how long might you stay?
The Chair is staying because of unprecedented legal attacks on the Fed by the administration that threaten the Fed's ability to conduct monetary policy without political considerations. He says this has nothing to do with verbal criticism by elected officials, but rather the legal actions are battering the institution and putting at risk the public's trust in a politically independent central bank. He will leave when he thinks it is appropriate.
What do you say to the criticism that by remaining on the board you're taking a political act and denying President Trump a majority of the board?
The Chair rejects that criticism, saying he is literally staying because of the actions that have been taken, and he had long planned to retire. He says the events of the last 3 months left him no choice but to stay. He notes his intention is not to interfere and that as a former governor, he understands how to work collaboratively with and support the chair.
Given the lack of progress reopening key energy trade corridors since the last meeting, how is the inflation outlook evolving?
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