Powell: Economy Robust Despite Uncertainty, Inflation Above 2%

Federal Reserve Chairman Jerome Powell delivered his semiannual monetary policy report testimony to Congress, emphasizing the central bank's commitment to achieving its dual mandate of maximum employment and stable prices. Despite heightened uncertainty, Powell asserted that the U.S. economy remains robust. The unemployment rate is low, and the labor market is at or near maximum employment levels. Inflation, while having decreased significantly, is still slightly above the Fed's 2% long-term target.

Powell acknowledged the growing economic uncertainty, particularly stemming from the Trump administration's tariff policies. He noted that the impact of these tariffs on the economy is still unclear, and the Fed is adopting a wait-and-see approach before implementing any policy changes. This cautious stance reflects the Fed's commitment to closely monitoring the economic landscape and understanding the full effects of evolving policies.

The Fed chair's testimony also highlighted the internal divide within the Fed regarding monetary policy. Despite differing views among policymakers, Powell reiterated the central bank's responsibility to prevent ongoing economic disruptions. He emphasized that the Fed is well-prepared to observe economic developments before taking any decisive actions.

Powell's comments come at a time when economic uncertainty has been elevated due to geopolitical tensions and the risk of higher inflation. However, he maintained that the economy is in a solid position, with the unemployment rate remaining low at 4.2% in May. This assessment suggests that while there are challenges ahead, the economy is resilient and capable of weathering the current uncertainties.