Fed Chair Jerome Powell To Wait On Rate Cuts

The Fed hit pause on interest?rate moves at 4.25% to 4.50% and made it clear they're in no rush to cutespecially with tariff shocks and a surprisingly sturdy jobs market still hanging over the economy.So here's the scoop from Jerome Powell's post?meeting chat: the Fed's happy sitting tight, watching how steel and auto tariffs ripple through prices. He admitted duties will nudge inflation higher, but just how big or lasting that bump will be? Honestly, we don't know yet, he said. Meanwhile, hiring has cooled off a bitmostly because fewer folks are entering the workforcebut layoffs? Still pretty rare. All in all, the jobs scene looks pretty good, Powell shrugged.
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On the inflation front, prices have eased from their peak but haven't quite hit that comfy 2% target. Long-run expectations haven't budged, which is what the Fed wants to see. Despite nodding toward two quarter-point rate cuts next year, Powell stressed we're unlikely to get them before fall. In fact, they've even nudged up their forecast for the ultimate neutral rate to 3.4% by 2027 (up from 3.1%).If you're hoping for an early rate cut, you may need to wait. Powell's we'll see how the data looks this summer stance means every CPI report or tariff update could swing their thinking. Investors and borrowers alike will be watching that consumer?price index and any news on duties like hawks at a falconry show.Expect a summer full of datawatchingespecially price?index updates and trade news. If inflation stays sticky or new tariffs bite harder than expected, those cuts could move even further out. Otherwise, the Fed's patience playbook stays in force for now.
This article first appeared on GuruFocus.

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