Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
Asia Stocks Pause as Tech Earnings, Fed Signals, and Dollar Weakness Drive Markets 
Bank of Japan Signals Cautious Path Toward Further Rate Hikes Amid Yen Weakness 
Wall Street Slips as Tech Stocks Slide on AI Spending Fears and Earnings Concerns 
China Home Prices Rise in January as Government Signals Stronger Support for Property Market 
Indonesian Stocks Plunge as MSCI Downgrade Risk Sparks Investor Exodus 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
Oil Prices Surge Toward Biggest Monthly Gains in Years Amid Middle East Tensions 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
Gold and Silver Prices Plunge as Trump Taps Kevin Warsh for Fed Chair 
U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
Oil Prices Hit Four-Month High as Geopolitical Risks and Supply Disruptions Intensify 
U.S.–Venezuela Relations Show Signs of Thaw as Top Envoy Visits Caracas 
Asian Currencies Trade Flat as Dollar Retreats After Fed Decision 
Federal Reserve Chair Jerome Powell cautioned Tuesday that the U.S. economy faces a delicate balancing act with “no risk-free path” as the central bank works to control inflation while supporting jobs. Speaking at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon in Rhode Island, Powell noted that growth has moderated, with GDP expanding at about 1.5% in the first half of the year, compared to 2.5% last year.
The labor market, once a pillar of economic strength, has shown clear signs of cooling. Powell described a “marked slowing in both the supply of and demand for workers,” an unusual development that has pushed the unemployment rate up to 4.3% in August. Payroll growth has also weakened, averaging just 29,000 new jobs per month over the past quarter, signaling rising risks to employment.
Inflation, meanwhile, remains above the Federal Reserve’s 2% target. Total personal consumption expenditures (PCE) prices rose 2.7% year-over-year in August, compared to 2.3% a year earlier. Core PCE, which excludes food and energy, climbed 2.9%. Powell attributed much of the recent uptick to higher tariffs rather than broader inflationary pressures, adding that these effects should be temporary as prices adjust over several quarters.
Acknowledging the shifting risks, the Fed recently cut the benchmark federal funds rate by 25 basis points to a range of 4% to 4.25%. Powell explained that downside risks to employment outweighed inflation concerns, though he stressed the Fed must act carefully. “If we ease too aggressively, we could leave the inflation job unfinished. If we maintain restrictive policy too long, the labor market could soften unnecessarily,” he said.
Powell emphasized that monetary policy remains flexible, with no “preset course,” and reiterated the Fed’s commitment to maximum employment and price stability. His comments highlight the central bank’s challenge of navigating a slowing economy while ensuring inflation returns sustainably to its 2% target.
