Powell: Trump partly right on economy after Fed rate hike

Jerome Powell, chair of the Federal Reserve, addressed reporters in Washington after the Federal Open Market Committee voted to raise the central bank’s benchmark policy rate. The committee’s action aims to slow demand and return inflation to its 2% target.

Powell acknowledged that elements of former President Donald Trump’s public assessment are correct, noting strong job growth and continued consumer spending as signs of economic resilience. He added, however, that inflation remains above the Fed’s objective and that other indicators point to a more complicated picture.

Officials based the rate increase on data showing inflation has not yet returned to 2% and that price pressures are broad. Powell pointed to tight labor market conditions and wage growth that, if sustained at current speeds, can keep inflation elevated.

Powell rejected the notion that the economy is booming without trade-offs, stressing that higher prices have reduced households’ purchasing power. He said the Fed must weigh both employment and inflation outcomes when setting policy and will follow incoming consumer price, payroll and spending data when deciding future steps. The committee did not announce a fixed timetable for further changes.

Financial markets reacted to the decision and Powell’s remarks with volatility in bond and equity trading. Investors reassessed the odds of additional rate increases, and longer-term Treasury yields moved as traders updated expectations. Powell said the Fed’s focus is on restoring price stability rather than targeting market levels.

The Fed has raised rates over several meetings to restrain demand after inflation rose following the pandemic. Policymakers continue to review a wide range of indicators, including various inflation measures, labor market slack, wage trends and consumer behavior, to determine whether policy is sufficiently restrictive to bring inflation back to target.