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Jerome Powell Jackson Hole Speech 2025: In his eighth keynote address at the annual Jackson Hole symposium in Wyoming, Federal Reserve Chair Jerome Powell reiterated the US central bank's commitment to rely on incoming data to make policy decisions. In his 21-minute speech, the US central banker touched upon a range of topics, including the potential impact of US President Donald Trump's trade tariff policy on consumer inflation. 

"Monetary policy is not on a preset course," said Powell, stating that Federal Open Market Committee members will make these decisions "based solely on their assessment of the data and its implications for the economic outlook and the balance of risks".

Powell vowed to "never deviate from that approach". His speech at the annual event -- attended by central bankers, policymakers and economists from around the globe -- comes at a time when the world's largest economy faces significant policy-driven shifts and rising uncertainties, with investors weighing the potential impact of Trump's often confusing tariff decisions on the global economy. 

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US economy showing resilience but facing shifting risks: Powell 

Noting that the US economy has been resilient despite new challenges -- including higher tariffs and tighter immigration policies, with its labour market remaining near maximum employment and inflation still at elevated levels though having eased significantly from post-pandemic highs, Powell said that the "balance of risks appears to be shifting".

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Labour market balance unusual and fragile

The labour market is in a “curious kind of balance", he said, with a sharp slowdown in job growth and labour force participation offset by stable unemployment around 4.2 per cent.

He also warned of rising downside risks to employment, with potential for rapid deterioration if those risks materialise.

US growth has slowed 

US GDP growth slowed to 1.2 per cent in the first half of 2025, down from 2.5 per cent in 2024, he pointed out.

This is primarily due to weak consumer spending and supply constraints, reflecting a slowdown in potential output, he said. 

Tariffs are pushing prices higher, said Powell.

While the Fed expects these effects to be mostly “one-time” price level shifts, there is still uncertainty about the timing and potential for more persistent inflation pressures, he highlighted. 

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Inflation expectations remain anchored

Longer-term inflation expectations remain well anchored despite inflation being above target for over four years, he said, underlining the central bank’s commitment to prevent temporary inflation shocks from becoming lasting inflation problems.

Fed policy not on a pre-set course

He said the future policy moves will depend solely on incoming data and risk assessments.

He also pointed out that the Fed policy rate is now closer to neutral by 100 basis points compared to a year ago.

Revised monetary policy framework reflects new economic realities

The Fed updated its statement on longer-run goals and monetary policy strategy -- its widely followed projections -- to better reflect today’s economic environment.

Flexible inflation targeting returns

The framework has dropped the “makeup” strategy of aiming for inflation moderately above 2 per cent following undershoots, acknowledging that the post-pandemic inflation surge was unintentional and not consistent with previous assumptions, he highlighted. 

A shift in employment language

The Fed has removed references to “shortfalls” from its framework, instead acknowledging that employment can run above real-time estimates of maximum employment without necessarily jeopardising price stability, Powell said.

Preemptive action remains possible if labour market tightness risks inflation, he added.

Commitment to transparency

The Fed remains committed to conducting public reviews of its policy framework every five years, said Powell.

Powell closed by recognising the tradition and value of the annual event as a key forum for central bankers and economists to confront evolving economic challenges.

"Each year, this symposium offers the opportunity for Federal Reserve leaders to hear ideas from leading economic thinkers and focus on the challenges we face," he said in his concluding remarks. 

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