Speaking at the Economic Club of Chicago, Powell’s speech emphasized the Fed’s dual mandate of maximum employment and price stability, noting the labor market is strong but inflation remains above the 2% target. He stressed that recent data suggests first-quarter GDP growth slowed from last year’s pace, with consumer spending rising modestly and imports weighing on output.

Surveys indicate declining business and household sentiment due to concerns over U.S. President Donald Trump’s trade policy, though outside forecasts still predict positive growth. Powell acknowledged the potential for tariffs to drive inflation higher and slow economic activity, but longer-term inflation expectations remain anchored near 2%.

The labor market shows resilience, with average monthly job gains of 150,000 in early 2024 and low unemployment. Wage growth has moderated but continues to outpace inflation, reducing pressure on prices. Inflation, as measured by the PCE index, rose 2.3% over the past year, while core inflation—excluding food and energy—increased 2.6%.

Powell credited progress in lowering inflation without a sharp rise in unemployment, a historically rare achievement. The central bank boss said the Fed is closely monitoring how new policies on trade, immigration, fiscal spending, and regulation will impact the economy. While tariffs may cause a temporary inflation spike, their persistence depends on how quickly prices adjust and whether long-term expectations stay stable.

Powell told attendees that the Fed’s priority is preventing a one-time price increase from fueling ongoing inflation. “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell explained on Wednesday. “If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

The Fed Chair remarked that there’s a need for patience, noting the central bank will wait for clearer data before adjusting policy. He acknowledged the challenge of balancing employment and inflation goals if they come into conflict, emphasizing that price stability is essential for sustained economic health.

Powell concluded by quoting Ferris Bueller: “Life moves pretty fast,” but the Fed remains focused on achieving its dual mandate. Powell vowed to keep scrutinizing risks and data to safeguard the economy’s long-term health. His remarks cast a shadow over equities and crypto markets, compounding unease from Nvidia’s 2025 Q1 disclosure, which warned of a hefty financial blow ($5.5B) from restricted exports of its H20 graphics chips to China.

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