Source: Sharecast
Powell acknowledged signs of fragility in the US labour market, suggesting it may no longer be the bedrock of resilience it once appeared to be. He also downplayed the inflationary impact of Donald Trump's "reciprocal" tariffs, indicating they are likely to exert only modest pressure on consumer prices.
The Fed head said the evolving risk landscape and baseline economic outlook could justify a recalibration of the Fed's stance, hinting at a growing openness to easing, should incoming data continue to soften. Powell also noted that despite slowing job growth, the unemployment rate has remained low.
"This unusual situation suggests that downside risks to employment are rising," Powell said. "And if those risks materialise, they can do so quickly in the form of sharply higher layoffs and rising unemployment."
"With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
Reporting by Iain Gilbert at Sharecast.com