Hawkish Powell Looks Beyond September, Despite Two Dissents
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Barring significant deterioration in the labor market, the Fed will likely stay on hold at the September FOMC meeting, as inflation is set to rise over the coming months. If the Fed needs to change the message in the coming weeks on the back of upcoming data, Chair Powell will have a chance to provide new guidance at the Fed’s Jackson Hole symposium on August 21-23.

Hawkish Powell Looks Beyond September, Despite Two Dissents

July 30, 2025

Barring significant deterioration in the labor market, the Fed will likely stay on hold at the September FOMC meeting, as inflation is set to rise over the coming months. If the Fed needs to change the message in the coming weeks on the back of upcoming data, Chair Powell will have a chance to provide new guidance at the Fed’s Jackson Hole symposium on August 21-23.

Trusted Insights for What’s Ahead®

  • Chair Powell’s assessment that inflation is further away from the central bank 2% target relative to where the labor market is with respect to full employment suggests the Fed will likely keep the status quo of a “modestly restrictive” policy stance in the coming months.
  • During his press conference, Chair Powell chose a somewhat hawkish tone. While the Fed’s base case is a one-time rise in prices on the back of tariffs, continuous increases in inflation is a risk, he said, which needs to “be assessed and managed.”
  • In a more dovish direction, the FOMC statement mentioned the recent GDP growth slowdown, but Chair Powell pointed to labor market data as a more reliable source of economic health. As long as the labor market remains near full employment, the Fed will be able to stay in a risk management mode.
  • The ultimate Fed action will de
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Author

Yelena Shulyatyeva

Yelena Shulyatyeva

Senior US Economist

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