US monetary policymakers are facing a “challenging situation” in their quest to lower both inflation and unemployment, Federal Reserve Chair Jerome Powell said Tuesday.
The central bank lowered interest rates last week and many investors are betting on two more quarter-point cuts before the end of the year; the OECD on Tuesday said the Fed has room for one cut this year and two in early 2026. But Powell cautioned that multiple cuts are far from guaranteed, warning that aggressive reductions could reignite inflation, diverging from US President Donald Trump’s Fed appointee who on Monday argued for steeper cuts.
Powell also acknowledged the risks of holding rates steady, with tariffs straining the labor market.