Jerome Powell: No Risk-Free Path for the Fed

Fed Chair Jerome Powell noted that the central bank sees no risk-free path for its next monetary policy steps, as inflation remains high and the labor market weakens. In a speech in Rhode Island, Powell emphasized the challenge of balancing the Fed's dual goals—maximum employment and price stability. He reiterated that there is 'no risk-free path.' This statement aligns with his remarks following the Fed's last meeting, where a rate cut of 25 basis points was decided, and two more cuts of 25 basis points each by the end of the year are considered likely. Fed Governor Stephen Miran, who recently called for a larger rate cut, views the current rates as too restrictive. According to him, the current interest rate policy threatens additional layoffs. Meanwhile, Powell reaffirmed the importance of a balanced approach in the face of a weakening labor market and persistently high inflation. In this situation, several Fed officials called for caution. The President of the Federal Reserve Bank of St. Louis, Alberto Musalem, supported the last rate cut but warned against too many further cuts. The President of the Federal Reserve Bank of Atlanta, Raphael Bostic, also expressed reservations about further rate cuts due to ongoing inflation concerns. The next Fed meeting is scheduled for the end of October, and uncertainty remains high.