Powell’s Take: Monetary Policy and the Fed’s Framework Review
https://www.federalreserve.gov/newsevents/speech/files/powell20250822.pdf
This year, the economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. There is significant uncertainty about where all of these polices will eventually settle and what their lasting effects on the economy will be.
Changes in trade and immigration policies are affecting both demand and supply. In this environment, distinguishing cyclical developments from trend, or structural, developments is difficult. This distinction is critical because monetary policy can work to stabilize cyclical fluctuations but can do little to alter structural changes.
https://www.federalreserve.gov/newsevents/speech/files/powell20250822.pdf
This year, the economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. There is significant uncertainty about where all of these polices will eventually settle and what their lasting effects on the economy will be.
Changes in trade and immigration policies are affecting both demand and supply. In this environment, distinguishing cyclical developments from trend, or structural, developments is difficult. This distinction is critical because monetary policy can work to stabilize cyclical fluctuations but can do little to alter structural changes.
Related:
Powell Is on the Cusp of Taking a Big Gamble with the U.S. Economy
https://www.nytimes.com/2025/08/21/business/jerome-powell-fed-jackson-hole.html
https://www.nytimes.com/2025/08/21/business/jerome-powell-fed-jackson-hole.html
President Trump’s efforts to control the Federal Reserve and the Bureau of Labor Statistics are among a series of moves that pose a larger threat, economists warn.
https://www.nytimes.com/2025/08/22/business/trump-federal-reserve-bls.html
https://www.nytimes.com/2025/08/22/business/trump-federal-reserve-bls.html
How Long Can This Uncanny Stock Market Prosper?
https://www.nytimes.com/2025/08/22/business/stock-market-nvidia-trump.html
https://www.nytimes.com/2025/08/22/business/stock-market-nvidia-trump.html
The Failure of Fed’s FAIT Framework
https://vivekjayakumar.blogspot.com/2025/08/the-failure-of-feds-fait-framework.html
https://vivekjayakumar.blogspot.com/2025/08/the-failure-of-feds-fait-framework.html