WARWICK, R.I.—Federal Reserve Chair Jerome Powell Tuesday said the central bank cut interest rates last week because weakening job conditions now pose a greater risk to the economy than inflation.
Speaking to business leaders at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon here, Powell described the Fed’s challenge as “two-sided risks,” with inflation pressures still present but labor market deterioration worsening. “There is no risk-free path,” he warned.
The move marked the Fed’s first rate reduction of the year and signaled a shift in priorities, as policymakers weigh their dual mandate of supporting employment and maintaining price stability.
“Our policy is not on a preset course,” Powell concluded. “We will continue to determine the appropriate stance based on the incoming data, the evolving outlook, and the balance of risks. We remain committed to supporting maximum employment and bringing inflation sustainably to our 2% goal. Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country.”