Fed Chair Jerome Powell issued an optimistic outlook on the economy following the central bank’s decision to maintain interest rates between 3.50% and 3.75%. That sent the odds of a 25 bps rate cut at the next Federal Open Market Committee (FOMC) meeting on March 18 down to 13.9% from 16.7% on CME’s FedWatch tool.
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“The outlook for economic activity has clearly improved since the last meeting,” Powell said during a press conference. He added that consumer spending has remained resilient, while the economy has shown surprising strength.
Powell Sees Tariff-Driven Inflation Subsiding in Coming Months
As for inflation, Powell said the Trump administration’s tariffs will likely result in a one-time price increase that will peak near the middle of the year and then come down.
In addition, Powell stressed that labor market risks are still present, evidenced by low job openings and hiring rates. Furthermore, the effects of AI could displace some jobs in the near term, with recent college graduates at risk.
Powell’s term as Chair is set to end on May 15. When asked what advice he would offer to his successor, he responded with a suggestion to stay out of politics.