Fed’s Powell Says Central Bank Adopts Cautious Stance on Rate Cuts

(MENAFN) U.S. Federal Reserve Chair Jerome Powell declared Wednesday the central bank remains in deliberate wait-and-see mode regarding future monetary policy as officials delivered their third rate reduction of 2025 amid intensifying internal disagreement.

Powell told reporters during a post-meeting press conference the central bank is "well positioned to determine the extent and timing of additional adjustments based on the incoming data, the evolving outlook of the balance of risks."

"We'll carefully evaluate that incoming data, and also, I would note that having reduced our policy rate by 75 basis points since September and 175 basis points since last September, Fed funds rate is now within a broad range of estimates of its neutral value and we are well positioned to wait and see how the economy evolves," he noted.

The Fed trimmed its benchmark federal funds rate by 25 basis points Wednesday to a 3.5% - 3.75% target range, matching widespread market expectations. The move represents the third cut this year after officials maintained rates steady through five consecutive meetings before reducing them in September.

The institution emphasized its attention to dual mandate risks, noting elevated downside employment threats and decelerating job creation throughout the year.

The Fed chair identified President Donald Trump's expansive tariffs as a primary inflation catalyst. "It's really tariffs that's causing most of the inflation overshoot," he said.

Yet Powell projected tariffs would most likely generate a "one-time" price surge. "Our job is to make sure that it is," he said.

He appeared to eliminate prospects of future rate increases, stating, "I don't think that a rate hike ... is anybody's base case at this point. I'm not hearing that."

Powell conceded Wednesday's rate-cutting decision was complicated.

Nine of 12 governors supported the move, with Stephen Miran backing a 50 basis point reduction and Jeffrey Schmid and Austan Goolsbee opposing any change. The last time three dissenting votes occurred was September 2019.

Despite substantial disagreement surrounding the decision, Powell said consensus exists regarding dual mandate dangers.

"A very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation," said Powell, calling it a "very challenging situation."

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