In his prepared text for the speech in Rhode Island, Powell said:
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Fed Chair: downside risks to employment shifted balance of risks, prompting last week’s rate cut
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Rate cut was another step toward a more neutral policy stance
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Two-sided risks mean there is no risk-free path; policy not on preset course
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Policy stance still modestly restrictive, well-positioned to respond to potential developments
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Economic growth has moderated, downside risks to employment have risen
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Inflation has risen, remains somewhat elevated
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Consumer spending has slowed, businesses say uncertainty weighs on outlook
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Labor market less dynamic, somewhat softer
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Unusual and challenging decline in both supply and demand for workers
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12-month PCE inflation was probably 2.7% in August, core PCE 2.3%, both up from prior year and driven by goods prices
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Goods price increases largely reflect tariffs, not broader price pressures
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Reasonable base case is that tariff-driven inflation effects will be relatively short-lived
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Disinflation for services continues; most long-term inflation expectations consistent with 2% goal
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Tariff increases will likely show up as somewhat higher inflation over several quarters
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Will make sure one-time increase in prices does not become ongoing inflation problem
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Public trust in economic, political institutions has been challenged, those in public service must focus tightly on critical missions
This article was written by Greg Michalowski at investinglive.com.