Fed Chair Powell: Shifting balance of risk 'may warrant adjusting our policy stance'

Inflation & Tariffs - The Fed acknowledges that higher tariffs have started to increase prices in certain categories [2] - July's core PCE is observed at 2.9%, a 0.1% increase from June, with notable upward pressure on goods and downward pressure on housing and non-housing services [2] - The effects of tariffs on consumer prices are now clearly visible and expected to accumulate in the coming months, although the base case assumes these effects will be relatively short-lived [3] - It will take time for the tariffs to fully impact supply chains [3] Labor Market - Job growth slowdown is more significant than previously estimated, with substantial downward revisions [4] - The labor market is in a curious balance, characterized by slowing supply and demand for workers [5] - The break-even rate required to maintain a stable unemployment rate has been sharply reduced due to immigration policies [5] - Risks to the labor market could lead to rapid increases in layoffs and unemployment, prompting caution regarding rate levels [6] Monetary Policy & Economic Outlook - The shifting balance of risk may warrant adjustments to the Fed's policy stance [1] - Current policy is modestly restrictive, but the stability of the unemployment rate allows the Fed to proceed cautiously [1] - Inflation risks are to the upside, while employment risks are to the downside [1] - The Fed aims to take a balanced approach to its dual mandate [2] - Economic growth has slowed notably in the first half [6]