Jerome Powell’s Warning: The Fed Must Walk a Fine Line Between Rate Cuts and Inflation

FED Chairman Jerome Powell Today: Have you ever thought what would happen when interest rates are reduced excessively, too fast? This was the major question Federal Reserve Chairman Jerome Powell addressed in his recent speech. Powell delivered his inaugural speech on the US economy on Tuesday, 23 September 2025, following a decline in interest rates by the Fed this month. The event was held at the Greater Providence Chamber of Commerce, in Warwick, Rhode Island.

Powell clarified that reducing the rate will assist the economy to grow but making it too aggressive may lead to another challenge, which is the rise in inflation. He cautioned that in case of excessively rapid movement by the Fed, prices can increase at a higher rate than the income of people; therefore, life will be more expensive. Powell made it clear that the Federal Reserve should be cautious and moderate. It should be able to sustain growth and at the same time ensure that inflation does not run out of control.

Jerome Powell On Trump Tariffs: Eye Opening Facts

Guess what? We all know that the US is making money on tariffs, 30- 400 Billion a year!

Sounds like a jackpot, right? But Jerome Powell says it has a twist. The retailers and importers are quietly absorbing the majority of the costs instead of shoppers being required to pay the bills. That is why your checkbook is not a hole yet.

What about Inflation? Barely budged. Powell even made clear to the fact that this tariff increase is more of a one-shot jolt. Prices would be tamed by the year’s end and would go back to their normal course.

In short Tariffs: it hurts, but not forever.

Fed’s Interest Rate Policy and Outlook

• Powell explained that the Fed had kept policy rates tight throughout the year as inflation stayed above target despite a strong labor market.
• The September 17 FOMC decision cut rates by 25 basis points, bringing the federal funds rate to 4–4.25%.
• He stressed that if the Fed eases policy too aggressively, inflation may remain elevated, requiring reversal later.

What’s Next for the Fed? Keeping an Eye on Prices

So, what’s the Fed up to next?
Well, they are putting on their brains. During the next meeting at the end of October, the Fed will take careful measures to analyze all the figures, including jobs, growth, and inflation, before taking any actions. Jerome Powell emphasized that the latest single hikes in prices should not become a chronic issue. The goal? Don’t allow inflation to run high and at the same time watch the economy continue to run. Simply, the Fed desires the prices to act and remain near their long-term objective of 2%. You keep your cake sweet but you do not make it overflow.

Investor’s Tip

Investors should stay patient and focus on long-term goals. Watch inflation trends, interest rate moves, and economic growth carefully. Diversify your portfolio to reduce risk, avoid reacting to short-term market noise, and prioritize steady, well-researched investments. Staying informed and calm can help protect and grow your wealth over time.

(with Inputs)

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