What's happened
Federal Reserve Chair Jerome Powell signaled that the economic outlook remains unchanged since September, despite delays in official data caused by the government shutdown. The Fed is considering ending its balance sheet reduction and continues to forecast rate cuts this year, amid divided opinions on inflation and employment risks.
What's behind the headline?
The Federal Reserve's current stance reflects a cautious approach amid conflicting signals. Despite delays in official data due to the government shutdown, Powell's remarks suggest the Fed will continue its rate-cutting trajectory, aiming to support growth without exacerbating inflation. The division within the Fed highlights the challenge of balancing employment risks against inflation pressures. The potential end of balance sheet reduction could ease long-term interest rates, but the delayed data complicates forecasting. The recent inflation figures, with core PCE at 2.9%, indicate persistent price pressures, yet the Fed remains committed to its gradual easing. This stance signals a strategic pivot from aggressive tightening to a more data-dependent approach, with the shutdown adding uncertainty to the policy outlook.
What the papers say
Bloomberg reports Powell's speech emphasizing unchanged economic outlook since September, with a focus on the Fed's rate reduction plans and balance sheet review. The NY Post and AP News highlight the internal divisions within the Fed, noting concerns over inflation and employment risks, and the impact of data delays caused by the government shutdown. The articles collectively underscore the Fed's cautious stance amid economic uncertainties, with critics questioning past bond purchases and the timing of rate cuts. The divergence in perspectives reflects broader debates on inflation management and economic resilience, with some sources emphasizing the potential risks of delayed data and others pointing to ongoing inflation pressures.
How we got here
The Fed's recent stance is rooted in its September meeting, where officials forecasted two more rate cuts this year and one in 2026. The central bank has been balancing concerns over inflation, driven partly by tariffs, against signs of slowing employment. The pandemic-era bond purchases and balance sheet reduction plans are also under review, amid criticism and evolving economic conditions.
Go deeper
Common question
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How Is the US Government Shutdown Affecting the Economy?
The US government shutdown has led to delays in key economic reports, raising concerns about how this might impact economic outlooks and Federal Reserve decisions. Many are wondering what data is delayed, how it affects markets, and what could happen if the shutdown continues. Below, we explore the most common questions about this situation and what it means for the economy.
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Why Is the Fed Rate Decision Delayed?
The US Federal Reserve's recent decision to delay interest rate changes has raised questions among investors and economists alike. The delay is primarily due to disruptions in economic data caused by the government shutdown, which hampers the Fed's ability to assess inflation and employment trends accurately. This uncertainty prompts further questions about how such delays could impact markets and future policy moves. Below, we explore the key reasons behind the delay and what it might mean for the economy.
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Why Is the Fed Pausing Rate Hikes Now?
The Federal Reserve has recently signaled a pause in raising interest rates, sparking questions about what’s happening behind the scenes. With economic data delayed due to a government shutdown and ongoing debates within the Fed, many wonder what this means for inflation, employment, and the future of monetary policy. Below, we explore the key reasons for the pause and what it could mean for the economy moving forward.
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What Does the Federal Reserve's Steady Outlook Mean for Your Wallet?
The Federal Reserve has recently signaled that its economic outlook remains unchanged, despite delays in official data caused by government shutdowns. This cautious stance raises important questions about how future interest rate changes, inflation, and borrowing costs might impact your finances. Below, we explore what the Fed's current position means for everyday Americans and what to expect in the coming months.
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