May 7, 2025
Jerome H. Powell
May 7, 2025 FOMC Press Conference
- The chair said the first-quarter GDP decline was likely driven by businesses importing goods ahead of potential tariffs, and that private domestic final purchases grew at a solid 3 percent rate in the first quarter.
- The chair said payroll job gains averaged 155,000 per month over the past three months, with the unemployment rate at 4.2 percent and wage growth moderating but still outpacing inflation.
- The chair said total PCE prices rose 2.3 percent over the 12 months ending in March, while core PCE prices rose 2.6 percent, and that near-term inflation expectations have moved up due to tariff concerns.
- The chair said the tariff increases announced so far have been significantly larger than anticipated, and if sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.
- The chair said the FOMC continued its five-year review of the monetary policy framework, focusing on inflation dynamics, with plans to wrap up the review by late summer.
From the opening statement
Press conference
CHAIR POWELL. Good afternoon. My colleagues and I remain squarely focused on achieving our dual-mandate goals of maximum employment and stable prices for the benefit of the American people. Despite heightened uncertainty, the economy is still in a solid position. The unemployment rate remains low, and the labor market is at or near maximum employment. Inflation has come down a great deal but has been running somewhat above our 2 percent longer- run objective.
In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged. The risks of higher unemployment and higher inflation appear to have risen, and we believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments. I will have more to say about monetary policy after briefly reviewing economic developments. [Cough] Pardon me.
Following growth of 2.5 percent last year, GDP was reported to have edged down in the first quarter, reflecting swings in net exports that were likely driven by businesses bringing in imports ahead of potential tariffs. This unusual swing complicated GDP measurement last quarter. Private domestic final purchases, or PDFP—which excludes net exports, inventory investment, and government spending—grew at a solid 3 percent rate in the first quarter, the same as last year’s pace. Within PDFP, growth of consumer spending moderated while investment in equipment and intangibles rebounded from weakness in the fourth quarter. Surveys of households and businesses, however, report a sharp decline in sentiment and elevated uncertainty about the economic outlook, largely reflecting trade policy concerns. It remains to be seen how these developments might affect future spending and investment.