Fed Chair Powell: Downside risks to employment have risen in recent months

Economic Outlook - The labor market is gradually cooling, and inflation remains elevated, prompting the Federal Open Market Committee to lower the policy interest rate by a quarter percentage point [2] - Economic activity is expanding at a moderate pace, with GDP growth at 1.6% in the first half of the year, down from 2.4% the previous year [3] - Growth in economic activity may be firmer than expected, driven by stronger consumer spending, although business investment continues to expand and the housing sector remains weak [4] Labor Market - The unemployment rate has remained low, but job gains have significantly slowed, reflecting a decline in labor force growth due to lower immigration and participation [5][6] - Layoffs and hiring remain low, with perceptions of job availability and hiring difficulty declining, indicating a softer labor market [6] Inflation Trends - Inflation has eased from mid-2022 highs but remains elevated, with total PCE prices rising 2.8% over the past year, including core PCE prices [7] - Disinflation is continuing for services, while inflation expectations have increased due to tariffs, although long-term expectations align with the 2% inflation goal [8] Monetary Policy - The Federal Reserve's monetary policy actions are focused on promoting maximum employment and stable prices, with the target range for the federal funds rate lowered to 3.75% to 4% [9] - The impact of higher tariffs is contributing to increased prices in certain goods, leading to higher overall inflation [9] - There is a reasonable expectation that inflationary effects may be short-lived, but there is a risk that they could become persistent, which needs to be managed [10]