Federal Reserve Maintains Inflation-Fighting Focus

Jerome Powell Makes No Promise to Ease Policy, Fed to Stay Focused on Inflation

April 4, 2025 - Federal Reserve Chairman Jerome Powell yesterday signaled that the central bank is unlikely to ease monetary policy anytime soon, prioritizing the fight against inflation above all else.

In a press conference following the Fed's latest policy meeting, Powell emphasized the need for continued vigilance in the face of still-elevated price pressures. While acknowledging that some recent economic data has been encouraging, the chairman stressed that the Fed's primary objective remains to bring inflation back down to its 2% target.

"We're not seeing the kind of inflation we want to see, and we're not seeing the kind of wage growth that would give us confidence that we're on a sustainable path," Powell said. "We need to stay focused on the task at hand, and that's bringing inflation back down to where it needs to be."

Powell's comments were met with a lukewarm reception from financial markets, which had been hoping for a hint of a policy pivot. The Dow Jones Industrial Average and S&P 500 both fell modestly in response to the news, while Treasury yields edged higher.

The Fed's decision to maintain its hawkish stance comes as the US economy continues to slow, with GDP growth expected to come in at around 1.5% for the first quarter. However, Powell and his colleagues remain concerned that the labor market is still too strong, with the unemployment rate hovering near historic lows.

"We're not seeing the kind of labor market slack that would give us confidence that we're not at risk of overheating," Powell said. "We need to keep a close eye on labor market conditions, and we need to make sure that we're not inadvertently creating conditions that could lead to higher inflation down the line."

In the absence of any near-term policy easing, investors are now looking to the Fed's June meeting for potential clues about the central bank's future intentions. For now, however, it appears that the Fed is content to maintain its current course, prioritizing the fight against inflation above all else.