Powell Says Dissents Show ‘Tension’ Over Fed’s Goals
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Officials introduced new language to the post-meeting statement referring to the “extent and timing of additional adjustments to the target range.” This is language the Fed has previously used to signal a pause in policy moves. That message was strengthened by Powell, who said policy is “well positioned” for officials to wait for more clarity on where the labor market and inflation are headed.
Aside from the two dissents who favored keeping rates steady, there were hints that other policymakers didn’t support the decision. Only four reserve banks put in requests for a cut in the discount rate, which is the rate the Fed charges for emergency loans to commercial banks. There were also six policymakers who submitted economic projections showing they preferred for their benchmark to end 2025 at a range of 3.75% to 4%, which is where it was before today’s move.
Powell reiterated his message that there is no risk-free path for policy given the challenges to both of the Fed’s goals for prices and employment. In explaining the rate cut, the Fed chair said it appears that most of the above-target inflation seen today is driven by tariffs, and he said the labor market faces significant downside risks.
Treasury yields and the Bloomberg Dollar Spot Index slid as Powell’s remarks suggested that Fed officials have left rates in a position that can both combat inflation and support the labor market. Interest-rate swaps continue to show that traders see roughly two more quarter-point reductions next year.