Powell Reaffirms Fed's 'Modestly Restrictive' Policy After Rate Cut

01:02 PM EDT, 09/23/2025 (MT Newswires) -- Federal Reserve Chair Jerome Powell said Tuesday that the stance of monetary policy remains "modestly restrictive," and the Federal Open Market Committee is prepared to respond to evolving economic conditions.

"The increased downside risks to employment have shifted the balance of risks to achieving our goals," Powell said in prepared remarks to the Greater Providence Chamber of Commerce.

"We therefore judged it appropriate at our last meeting to take another step toward a more neutral policy stance, lowering the target range for the federal funds rate by 25 basis points to 4% to 4.25%," he said. "This policy stance, which I see as still modestly restrictive, leaves us well positioned to respond to potential economic developments."

Powell's comments come less than a week after the FOMC's rate cut amid mixed comments from other Fed officials, leaving open the question of how many additional cuts may be needed depending on labor market trends.

"The recent pace of job creation appears to be running below the 'breakeven' rate needed to hold the unemployment rate constant," Powell said. "But a number of other labor market indicators remain broadly stable," including job openings and unemployment claims, he said.

Powell also said that "uncertainty around the path of inflation remains high," noting the tariff increases may take several quarters to work through the economy.

"We will carefully assess and manage the risk of higher and more persistent inflation," Powell said. "We will make sure that this one-time increase in prices does not become an ongoing inflation problem."

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