Washington: US Federal Reserve Chair Jerome Powell stated that the central bank is adopting a wait-and-see approach regarding future monetary policy decisions, following the third policy rate cut in 2025.

According to Anadolu Agency, Powell emphasized at a post-meeting news conference that the central bank is well-positioned to determine the extent and timing of additional adjustments based on incoming data and the evolving outlook of the balance of risks. He highlighted that the Fed has reduced its policy rate by 75 basis points since September and 175 basis points since the previous September, situating the Fed funds rate within a broad range of its neutral value estimates.

The Fed cut its benchmark federal funds rate by 25 basis points within the 3.5% - 3.75% target range, marking the third rate cut this year. This follows a period of five meetings where the rate was held unchanged before a cut in September. The central bank expressed attentiveness to the risks affecting both sides of its dual mandate, noting increased downside risks to employment and a slowdown in job gains.

Powell identified President Donald Trump's tariffs as a significant source of inflation, suggesting they are causing most of the inflation overshoot. However, he indicated that the tariffs might lead to a "one-time" spike in pricing, with the Fed's role being to ensure it remains so. He also hinted at ruling out the possibility of a rate hike in future meetings.

The decision to lower interest rates was supported by nine of the twelve governors, with Stephen Miran advocating for a more substantial 50 basis point cut and Jeffrey Schmid alongside Austan Goolsbee voting for no change. The last occurrence of three dissenting votes in a Fed meeting was in September 2019. Powell acknowledged the complexity of the decision to lower interest rates but noted widespread agreement on the risks to both parts of the dual mandate, describing it as a very challenging situation.