WASHINGTON, October 15, 2025: Federal Reserve Chair Jerome Powell said Tuesday that the U.S. central bank faces increasing difficulty in balancing its dual mandate of achieving price stability and maximum employment, as inflation remains elevated and signs of labor market cooling become more apparent.
Speaking at the National Association for Business Economics, Powell described the current economic conditions as presenting a “tension” between inflation control and labor market stability. He noted that while inflation has moderated somewhat, it continues to exceed the Fed’s 2 percent target, and the job market, though historically strong, is beginning to show signs of softening.
Recent labor data, including a slowdown in hiring and a sustained decline in job openings, indicate reduced momentum in employment growth. Powell cited a notable drop in voluntary quits and hiring rates, pointing to a labor market that is less dynamic than in previous quarters. Fewer workers are leaving jobs voluntarily, and employers are posting fewer open positions, which the Fed considers a signal of caution among businesses.
The Federal Reserve held interest rates steady at its last meeting in September after raising rates 11 times since early 2022 in a campaign to combat inflation. Powell said that while the economy remains resilient overall, the central bank is increasingly reliant on alternative data sources due to delays in official economic reporting caused by the recent partial federal government shutdown.
Inflation remains above target despite rate stability
With some federal data releases postponed, the Fed has turned to private sector analytics and internal assessments to inform its policy decisions. Powell emphasized that despite the disruption in government data, the overall assessment of inflation and employment conditions has remained broadly consistent with earlier forecasts.
Divisions among Federal Reserve policymakers have become more visible in recent months. Minutes from the September meeting showed a split in opinion on the pace and scale of future rate cuts. While several officials supported the September rate hold, others favored an immediate reduction, citing growing downside risks to employment.
Federal Reserve Governor Stephen Miran dissented from the majority at the September meeting, advocating for a more aggressive half-point cut. Meanwhile, New York Fed President John Williams has expressed support for additional reductions in the coming months, referencing weakening labor market trends as a key factor.
Powell stresses need for balanced economic approach
Powell reiterated that the Federal Reserve’s decisions will continue to be guided by incoming data and its implications for inflation and employment. He underscored that monetary policy will be adjusted as needed to fulfill the central bank’s dual objectives but cautioned that navigating the current economic environment involves trade-offs and uncertainty.
Although Powell refrained from offering a clear timeline for future policy moves, he confirmed that the central bank remains attentive to both inflation pressures and signs of labor market deterioration. He added that the risks to achieving the Fed’s goals have become more complex, with the need to manage both persistent inflation and emerging employment concerns.
The Federal Reserve’s next policy meeting is scheduled for later this month. Market expectations are currently aligned with the possibility of at least one additional rate cut before the end of the year. However, Powell emphasized that no decision has been finalized and that the Federal Open Market Committee will base its actions on verified economic indicators.
As of September, the Consumer Price Index remained above 3.5 percent year-over-year, while unemployment stood at 3.9 percent, marking a slight increase from earlier in the year. Powell concluded his remarks by noting that the Federal Reserve will remain focused on maintaining public confidence in its commitment to long-term economic stability. – By Content Syndication Services.