Fed’s Powell: US economy is solid

Federal Reserve’s Chair Jerome Powell discussed the US economic outlook at the Economic Club of Chicago.

Key Quotes

• Well positioned to wait for greater clarity before considering any changes to policy stance.
• US economy 'solid' despite heightened uncertainty, downside risks.
• At or near maximum employment, inflation a bit above 2% goal, has come down a great deal.
• Growth likely slowed in first quarter of 2025 from last year's solid pace.
• Strong first quarter imports to weigh on GDP growth.
• Sharp decline in business, household sentiment and elevated uncertainty, reflecting trade policy concerns.
• Labour market solid, broadly in balance, not contributing to inflation.
• PCE prices likely rose 2.3% in 12 months through march, core PCE estimated at 2.6%.
• Administration's policies still evolving, effects remain highly uncertain.
• So far larger-than-expected tariffs likely mean higher inflation, slower growth.
• Inflationary effects of tariffs could be more persistent, depends ultimately on inflation expectations.
• Our obligation is to keep longer-term inflation expectations well-anchored.
• May find ourselves in the challenging scenario in which dual-mandate goals are in tension.
• If that occurs, we would consider how far economy is from each goal and potential time horizons for those gaps to close.