Minutes of the Federal Reserve's Monetary Policy Meeting in July 2025

In a nutshell: No interest rate cut, differences remain, hawkish bias, waiting for JH.

Policy Statement

Despite the ongoing fluctuations in net exports affecting the data, recent indicators show that economic activity growth has slowed in the first half of this year. The unemployment rate remains low, and the labor market conditions remain solid. Inflation rates are still slightly rising.

(Translator's note: The GDP data before the statement release shows a decline in Q2's PDFP.)

The committee strives to maximize employment and achieve a 2% inflation rate in the long term. The uncertainty of the economic outlook remains very high. The committee is concerned about the risks it faces in fulfilling its dual mandate.

To support its objectives, the committee decided to maintain the target range for the federal funds rate at 4.25% to 4.5%. When considering the magnitude and timing of any additional adjustments to the federal funds rate target range, the committee will carefully assess future data, evolving outlooks, and the balance of risks. The committee will continue to reduce its holdings of U.S. Treasury securities, agency debt, and agency mortgage-backed securities. The committee is firmly committed to supporting maximum employment and will work to restore the inflation rate to the 2% target.

When assessing the appropriate stance of monetary policy, the committee will continue to monitor the impact of new information on the economic outlook. If there are risks that could hinder the committee from achieving its goals, the committee will be prepared to adjust the stance of monetary policy as deemed appropriate. The committee's assessment will consider a wide range of information, including labor market conditions, inflation pressures and inflation expectations, as well as financial and international developments.

The following voted in favor of this monetary policy action: Chairman Jerome Powell, Vice Chairman John Williams, Michael Barr, Susan Collins, Lisa Cook, Austan Goolsbee, Philip Jefferson, Alberto Musalem, and Jeffrey Schmidt. Voting against were Michelle Bowman and Christopher Waller, who preferred to lower the federal funds rate target range by 0.25 percentage points at this meeting. Adriana Kugler was absent and did not vote.

Opening Remarks of the Press Conference

Questioner: Thank you. Thank you, Chairman Powell. There are many people in the market, not to mention the government, who are inclined to lower interest rates in September. At this point, is this expectation unrealistic?

Powell: As you know, today we decided to keep our policy rate at the current level, which I describe as moderately restrictive. As I mentioned, the inflation rate is slightly above 2%, even excluding the effects of tariffs. The labor market is solid, the unemployment rate is at historical lows, financial conditions are loose, and the economy's performance is not what one would expect from a restrictive policy that is improperly suppressing it.

So in my view, as well as in the view of almost the entire committee, the economic performance does not seem to be as it should be under a restrictively limiting policy that improperly suppresses it, and a moderately restrictive policy seems to be appropriate.

That said, there are also downside risks in the labor market. In the coming months, we will receive a large amount of data that will help us assess the risk balance and the appropriate setting of the federal funds rate.

Questioner: Just a follow-up question. When you say "in the coming months," does that include the possibility that between now and the September meeting, you will essentially receive two rounds of employment and inflation data? Is that likely enough for you to make a decision on interest rate cuts at that time?

Powell: You are right, we do have - this is a period between meetings, and before the September meeting, we will receive two complete rounds of employment and inflation data. We have not made any decisions for September yet. We will not do this in advance. When making decisions at the September meeting, we will take into account this information as well as all other information we have received.

Questioner: Thank you, Mr. Chair. You removed the phrase "uncertainty has diminished"—or rather that concept—from this statement. Does that mean uncertainty has increased? I wonder, the government has reached some agreements with several major trading partners, and we seem to know what the tariff rates will be now. Does knowing this rate increase the certainty of your policy changes? Or do you need to wait to see the economic impact?

Powell: Basically, our statement regarding uncertainty reflects the situation from the last meeting. At the last meeting, uncertainty had decreased, but this time it has remained more or less stable, so we removed "has weakened further" because it hasn't weakened further, so it's not a big deal.

Your second question?

Questioner: Several bills have already been passed, and it seems we know what the tariff rates will be with major trading partners. Doesn't this increase certainty? Or are you waiting for the economic effects to manifest?

Powell: You are right, this is a very dynamic time for these trade negotiations, and many events have occurred during the inter-meeting period. However, we are still a distance away from seeing the dust settle. Clearly, we are gaining more and more information, and I think at this point, people's estimates, our estimates, and external estimates of the possible effective tariff levels have not changed much. But at the same time, there are still many uncertainties to be resolved. So, yes, we are learning more and more. But it feels like we are far from the end of that process. That is not for us to judge, but it feels like there will be more events happening in the future.

Questioner: Hi, Mr. Chairman. I'm Neal from Axios. In the GDP report we received this morning, domestic private final purchases slowed to the weakest pace in 22 years, and there is weakness in interest rate-sensitive sectors such as residential investment and commercial construction. Given the current economic conditions, aren't these signs that monetary policy is currently too tight?

Powell: The data on GDP and PDFP (Private Domestic Final Purchases) is basically exactly what we expected. You have to look at the bigger picture. So, as I mentioned in my opening remarks, economic activity data, GDP, we believe is a narrower but better signal for the future and for the direction of the economy, has fallen to just above 1%. I believe GDP was 1.2% in the first half of the year. Last year it was 2.5%. So it has indeed declined.

But if you look at the labor market, you will see that, according to many, many statistics, the labor market is still in a balanced state. Metrics like turnover rates, job vacancies, not to mention unemployment rates, are in many ways very similar to what they were a year ago. So you do not see a softness in the labor market.

You indeed see a slowdown in job creation, but also a slowdown in labor supply. So, you have a labor market that is in balance, although part of the reason is that the demand and supply for workers are both declining at the same rate, which is why the unemployment rate remains roughly stable, this is also why I say we do see downside risks in the labor market. Our two mission variables, right, are inflation and maximizing employment. Stabilizing prices and maximizing employment, rather than growth. So the labor market looks solid, inflation is above target, even when you look through the tariff effects, we believe it is still slightly above target. That is why our position is as it is now.

But as I mentioned, the downside risks in the labor market are evident.

Questioner: So, regarding the labor force, considering the supply situation of the mobile labor force, is there a number in this employment report we will receive on Friday that you consider to be balanced employment growth?

Powell: Mainly the unemployment rate. Indeed, in terms of the number of new non-farm jobs, the demand for workers has declined, but the breakeven number has also declined simultaneously. As long as—this keeps the labor market in a balanced state. However, it reaches equilibrium through a decrease on both the supply and demand sides, which I believe does imply downside risks, so we will certainly be paying close attention.

Questioner: Thank you. Colby Smith from The New York Times. Two of your colleagues have called for a 25 basis point cut today, and I would like to know which of their arguments you find most convincing, and how you weigh your own views against those of the committee members who believe the Federal Reserve should keep rates unchanged for the remainder of the year based on the June forecast.

Regarding the SEP (Summary of Economic Projections) for June, is it still the best representation of the committee's core ideas?

Powell: Regarding dissent, what you want is a clear explanation of your ideas and the arguments you put forward from everyone, including dissenters. We got that today. Essentially, this was a very good roundtable discussion where everyone thoughtfully considered the issue and laid out their positions.

As I mentioned, most members of the committee believe that inflation is slightly above target, while maximizing employment is at its target level. In my view, this calls for a moderately restrictive stance right now. We have two dissenters, and we hope they will express their thoughts. We certainly heard that today at the roundtable.

You asked about the SEP in June. You know, I won't — you're right, that's how it's written, and it's very likely — I can't point to it six weeks later to express people's thoughts. You can't do that. We are not running a new SEP, and I don't want to replace what the SEP might look like with my own estimates. We are not. What I'm saying is, we haven't made a decision about monitoring all incoming data and asking ourselves whether the federal funds rate is in the right place.

Questioner: Regarding the policy of "moderate restriction", does this mean that once the conditions for interest rate cuts are met, there is limited room for cuts unless there is significant weakness in the labor market?

Powell: Let me say, my own estimate is "moderately restrictive"; there are a range of views about what the neutral interest rate is for our economy at this moment. Others might say it is more restrictive or even less restrictive. At some point, as we move back towards a more neutral stance, we will make judgments along the way. We do not have a preset path. It's not so mechanistic to say that we have derived the neutral rate with great confidence and that is our destination. No one knows what the neutral rate is. We understand how it works. How the economy will respond over time to slightly accommodative policies.

Questioner: I am Nick from The Wall Street Journal. Chairman, my question is, what have you learned about the generation of inflation and the price transmission process in the past few months? Specifically, the CPI report from June showed evidence of tariff-induced goods inflation. The tariff landscape has only just begun to solidify with some recent agreements. Considering that there is a lag between the announcement of tariffs and their appearance in goods prices, is two months long enough to assess their impact and be confident that tariffs will not affect the broader inflation process?

Powell: I think you have to see this as still very early stages, so what we are seeing now is that a large amount of tariff revenue is being collected, about $30 billion a month, which is much higher than before. The evidence seems primarily to be that the portion of reduced prices paid by exporters is very small, while companies or retailers, the institutions upstream of consumers, are currently paying most of it. As you know, it started appearing in consumer prices in the June report, and we expect to see more. From surveys, we found that companies feel they fully intend to pass this on to consumers. But, you know, the fact is that in many cases they may not be able to.

So, I think we must observe and learn from experience how much of this happens and over what period of time. I believe we have learned that this process may be slower than initially expected. However, we never anticipated it would be quick. We think we still have a long way to go to truly understand how it will develop. So, this is our current thinking.

Questioner: If I may follow up. Is the hesitation to delve deeply into core goods inflation based on the judgment that the expectations during the pandemic proved to be more adaptable than anyone at the Federal Reserve anticipated, or is it due to uncertainty about the restrictiveness of policy?

Powell: You could say that we have somewhat ignored commodity inflation by not raising interest rates. We did not react to the new inflation. However, I will not insist on this. But I think the basic situation, as I mentioned, a reasonable basic situation is that these are one-time price effects. Of course, in the end, this will not turn into inflation because we will ensure that it does not. We will ensure through our tools that this does not turn into severe inflation from one-time price increases.

However, we want to do this effectively, which means we want to seize the opportunity. If you act too early, you may end up not fully solving the inflation problem and have to come back. That is inefficient. If you act too late, you may cause unnecessary damage to the labor market.

Therefore, there will ultimately be no significant inflation issue. What we need to do is to accomplish this task in an effective manner. But in the end, there is no doubt that we will take the necessary measures to control inflation. Ideally, we can achieve this effectively.

Questioner: I am Michael McKee from Bloomberg Television and Radio. That major bill, without the adjectives, do you expect it to provide economic stimulus in 2026? Will this be a reason to keep interest rates unchanged or reduce the expected number of rate cuts next year?

Powell: Of course, let me start with a routine disclaimer, we do not make any judgments on fiscal legislation. When you say that the bulk of the bill is to make existing tax laws permanent, I don't think we consider it particularly stimulative. There should be some stimulative effect, but it should not be significant in the coming years.

Questioner: Just following up, I don't want to put this in the context of you and the president. Let me ask it this way. Are you concerned about the cost of maintaining high interest rates over the long term in terms of interest expenses?

Powell: We have a mission, which is to maximize employment and price stability. We will not consider the costs that our interest rate changes bring to the government. We must be able to focus on the target variables that Congress has assigned to us, using the tools they have given us to achieve these goals. That is what we do.

We do not take into account the fiscal needs of the federal government. No central bank in a developed economy would do this, and if we did, it would not benefit our credibility or the credibility of U.S. fiscal policy. Therefore, this is simply not a factor we consider.

Questioner: Hi. I'm Victoria Guido from Politico. Regarding the Federal Reserve headquarters renovation project that the government has been investigating, do you think their interest in this issue is directly related to the president's push for you to lower interest rates?

Powell: That's not something I can comment on. What I can say is that we had a pleasant meeting with the President, and it was an honor to host him. It's not often that the President comes to the Federal Reserve, let alone visits a building. But it was a very good visit.

Questioner: Are there any factors in the project they proposed that make you reconsider any aspect of the project?

Powell: This project was conceived and developed nearly a decade ago. We have gone through a very long process, obtaining historical preservation approval from the National Capital Planning Commission and communicating back and forth many times. This has been very constructive. We have started construction, and the work is progressing smoothly. I am pleased that the president has repeatedly expressed that what he truly wants to see is for us to complete this construction as soon as possible. This is our focus. This is also what we need to do.

Questioner: Thank you, Mr. Chairman. I'm Andrew Ackerman from The Washington Post. Inflation rebounded after reaching 2.1% last September; what insights do you draw from that? Why do you believe that financial conditions are restrictive when inflation has stopped declining for nearly a year, and the neutral interest rate is below 4%?

Powell: Inflation, when you talk about these 12-month inflation indicators, you are always battling residual seasonal factors. For example, we might have two months of high inflation, sometimes at the beginning of the year, and then inflation turns lower, a lot of which could be due to artificial factors. That’s why we look at the 12-month numbers.

I believe that inflation has mostly returned to 2%. Some things, like catch-up inflation, for example, the insurance costs that are only now being reflected by inflation, actually reflect inflationary pressures from two or three years ago. So, this process must be experienced.

In addition, currently three to four percentage points of our core inflation comes from tariffs. So, we can't really separate it out. We won't have a separate inflation specifically for tariffs. We will always deal with overall inflation. But as I mentioned, the composition has indeed changed. And if you look back over the past few years, it was all about service inflation, which is very sticky. Now service inflation is declining quite well. Goods inflation performed well before. And now goods inflation is rising. So, the situation has really changed. This is partly due to tariffs. It is also partly because we have implemented restrictive policies, and we have seen - the results are gradually manifesting in the service economy.

Questioner: One more thing I would like to ask is, if data agencies were to cut 8% of their personnel and authorized spending as proposed by the government, would you feel confident that they can continue to effectively fulfill their mission?

Powell: I will not comment on the government's proposal. As I said, I believe we are obtaining the data we need to do our work, and I think good data is helpful not only to the Federal Reserve but also to the government and the private sector, and this is very important. People in the economy also use this data extensively. Therefore, it is very important for our economy, certainly for the work of the Federal Reserve and other government agencies, that we continue to improve our data capabilities. This is what we have been doing for 100 years, and we have been getting better and better. Accurately capturing the output of an economy exceeding $20 trillion in real-time is very difficult, and the U.S. has been leading in this area for 100 years. In my view, we really need to continue doing this.

Questioner: Thank you, Mr. Chairman. I am Edward Lawrence from Fox Business News. How concerned are you that the data we have seen shows no significant upward trend in inflation over the past six months, and that the "wait-and-see" inflation strategy is actually providing cover for companies to raise prices?

Powell: How worried am I - let me say it again.

Questioner: It’s the strategy of "watching and waiting" —

Powell: What do you mean by a "wait-and-see" strategy?

Questioner: Regarding interest rate cuts. You are waiting to see if tariffs will affect inflation. So this is a "wait-and-see" strategy —

Powell: That is - when the policy is restrictive, it will move towards neutral when we start to lower interest rates.

Questioner: The one-time price increase caused by tariffs may lead to more inflation. But does this provide a cover for companies to raise prices?

Powell: It may not be our policy stance that gives —. Some companies will definitely take advantage of tariffs and all about how — you know, companies will raise prices whenever they can, so you saw this during President Trump's first term with those tariffs. Washing machines were tariffed, but dryers were not. But you know, the price of dryers also went up, just like washing machines. So companies typically act collectively, if you understand what I mean, that will happen.

We haven't seen many situations like that. What I mean is that what we are seeing now are the initial signs of what commodity inflation will ultimately impact. And, I'll say it again, they may be smaller than people estimate, or they may be larger than people estimate. They won't be zero. Consumers will pay a part. Businesses will pay a part. Retailers will pay a part. But, you know, we can only wait and see.

Questioner: If possible, please follow up. Some additional tariffs have been implemented since February. And, you know, the economy really hasn't collapsed yet. So, how do you explain this to someone who is looking for a house, facing a 7% mortgage rate, and might not be able to afford it? How do you justify it?

Powell: Well, housing is a special case, right? We at the Federal Reserve do not set mortgage rates. What we set is the overnight rate. The rates that influence mortgages are long-term rates, such as the yield on 30-year Treasury bonds, or possibly shorter, but they are not the overnight Federal Reserve rate. It’s not to say we have no impact at all. We do have an impact, but we are not the primary influencing factor.

There are other things happening in the housing sector, one of which is that we have a long-term housing shortage. We have not built enough housing, and this is not something the Federal Reserve can help with. Even after the situation normalizes, this will still be the case.

So, I believe that the best thing we can do for housing is to achieve 2% inflation and maximize employment. That is our contribution to housing. The private sector and Congress have many other tasks to accomplish, but that is the goal we are working towards. We have made significant progress toward that goal. We now have a very good labor market. On inflation, we are very close to 2%. We have seen some commodity inflation that has taken us off target, but so far, it hasn't deviated too far.

Questioner: Hi, Chairman Powell. Thank you. Can you tell us more about what kind of economic data the Fed needs to see before it is ready to cut interest rates? Do you need inflation to almost return to target levels? What else are you looking for in terms of pricing? Do you need to see a softening in the labor market? What are you looking for?

Powell: What I mean is, in the end, it could be any of these things, right? But, you know, if you see the risks to the two targets tending to balance out, if they are perfectly balanced, then that means you should shift to a more neutral policy stance. This is the particular situation we are in, that we face bidirectional risks to both of our targets. When we pause interest rate hikes, inflation is above target, and the labor market is quite good. So, you know, that is a policy - when we pause, the policy is restrictive, and the restriction is to support a return to our inflation target, right.

As the two targets return to balance, you might think that you should move it closer to a neutral position, and the next steps we take are likely in that direction.

What is needed? You know, it will be the overall evidence. As I mentioned, there will be quite a bit of data coming in before the next meeting, will it be decisive? You know, it's really hard to say. We are not making those decisions right now. So, we'll have to wait and see.

Questioner: I want to ask about inflation. For example, some people might point out that if it only stays in the goods sector and does not spread to the service industry, then perhaps this is evidence that the tariff effect will be temporary and one-time. Would this kind of thing affect your thinking? Or do you need to see the numbers drop closer to 2%?

Powell: We will look at everything. You know, as I mentioned, a quite reasonable baseline scenario is that this will be a one-time price increase. Ultimately, we will ensure that this is the case. We just want to do this effectively. And effectively means timing it right. If we lower interest rates too early, perhaps we haven't completed the work on inflation, and history is full of examples like that; if you lower rates too late, then you may cause unnecessary damage to the labor market. So, we are working hard to get that timing right. That is actually what we are doing.

Questioner: I am Clare Jones from the Financial Times. Just a question regarding the dollar. We have seen a significant decline in the dollar this year. I would like to know if there was any discussion about this at the meeting, and to what extent this might complicate your efforts to bring inflation back to target. Thank you.

Powell: This goes back to the division of labor between the Federal Reserve and the Treasury, and I believe you know that only the Treasury talks about this, talks about the dollar.

This is not something that has become a major topic of discussion at the Federal Reserve. I wouldn't say it hasn't been mentioned — when the meeting minutes come out years later, it may reflect some references to the dollar, but it will never be the main focus.

Questioner: Just a follow-up to Andrew's question, I think the estimated data in the CPI is as high as 35%. Is there any discussion about this, and is there consideration for researching alternatives, data scraping, etc., to ensure you have a good understanding of price changes in the U.S. economy? Thank you.

Powell: You know, so we are monitoring the situation. We certainly -- I mean, as you know, during the pandemic, we looked at a lot of new data. People are looking at big datasets that can be obtained from various sources. We all did that. But we really -- government data is really the gold standard of data, and we need it, you know, it's good and we can rely on it. We cannot replace it. But (audio unclear).

Questioner: Hi, Mr. Chairman, I am Jay O'Brian from ABC News. President Trump has obviously mentioned your name frequently. He has personally pressured you. Are you concerned that this behavior might affect the future independence of the Federal Reserve?

Powell: I just want to say that I believe having an independent central bank is a system arrangement that serves the public. As long as it serves the public well, it should continue and be respected.

If it does not serve the public well, then it should not be something we automatically defend. However, what it provides to us and other central banks is the ability to make these very challenging decisions in a way that focuses on data, constantly evolving prospects, risk balances, and all the things we discuss, rather than political factors.

Therefore, governments of developed economies around the world choose to maintain a certain distance between direct political control over these decisions and the decision-makers.

So, if you—if you don’t have this, then of course it would be a huge temptation, like using interest rates to influence elections. And that is something we do not want to do.

So, I think this is widely understood. Of course, it is like this in Congress. And, I mean, I think this is very important, I just want to say that.

Questioner: Good afternoon, Mr. Powell. I am from Bloomberg News (?). You mentioned the slowdown in consumer spending, and I would like to know if you could give us some insight into the committee's discussions around this. We are seeing an increase in delinquency rates among high-income households. How do you think this will evolve in the coming months, and how significant is it for the future vulnerability of the economy?

Powell: Consumer spending has been very, very strong over the past few years, and forecasters, not just us, have repeatedly predicted it would slow down. Now perhaps it has finally slowed down. So, I would say, if you talk to credit card companies, for example, they will tell you that consumer conditions are solid, and spending is at healthy levels. It's not growing rapidly, but it's at healthy levels, and delinquency rates are not an issue. Overall, if you look at the banks, and what banks are talking about in their earnings call, credit performance has been very good. So basically, you have a consumer that is in good condition and spending, but not at a very fast pace. But that is a fact, and again, it is completely consistent with what we expected, the GDP data we received this week.

So, I think it still has a bit of difficulty in interpretation, as you have huge fluctuations in net exports, which may also affect, you know, some of which may also impact consumer spending.

Look, this is one of the data points we are paying closest attention to. There is no doubt that it has slowed down. We are keeping a close eye on it. But we are also focused on the performance of the labor market and inflation, which are the two variables we have been tasked to maximize.

Questioner: Following up on my colleagues' questions, Dr. Waller mentioned that the labor market is on the "margins," pointing out the weaknesses in the private sector. I would like to know, you mentioned that the main number to watch is the overall unemployment rate. But what is the discussion about the state of the private sector job market?

Powell: So, I won't talk about any individual's, you know, any individual's comments, I'm not going to do that. But look, what we know is that job creation in the private sector has certainly declined, as we'll see in the last report on Friday. If you take the adjustments to the QCEW (Quarterly Census of Employment and Wages) seriously, it might be close to zero, but the unemployment rate is still—still very low. So, what this tells you is, you know, that the demand for workers is slowing down, but the supply is also slowing down. So, this—strangely enough, it is in a balanced state. You have a very low unemployment rate, and it has persisted like this for a year because job creation has declined, but we also know, you know, that really due to immigration policies, the inflow into our labor force has significantly slowed down, and these two things are more or less slowing down simultaneously.

If you look for something, like the turnover rate I mentioned, looking at wages, wages are gradually cooling down. I look at the ratio of job vacancies to unemployment numbers. These things have been quite stable - they haven't changed much over the course of an entire year. So, I think if you look at all the data from the labor market, you have a solid labor market.

But I think you have to see the downside risks that exist. It's not that — you don't see the weakness in the labor market, but I think in a world where the unemployment rate is being suppressed because both demand and supply are declining, there are downside risks for you. I think this — is worth keeping a close eye on, and we are doing so.

Questioner: Hi, Chairman Powell. I'm Nancy Marshall-Genzer from Marketplace. There is a question regarding the lack of consensus in today's decision, with two votes against it. Was there any discussion during the meeting? I know you won't discuss what individuals said. But overall, was there a discussion about interest rate cuts in the meeting, and what were the reasons against cutting rates?

Powell: We had an economic roundtable discussion where people talked about the economy, yesterday and then about monetary policy. Everyone at the table expressed their views. The discussion around the policy reflects that the majority's opinion remains the same as before, which is that inflation is above target and maximizing employment is right at target. This means that the policy should be somewhat restrictive, to some extent restrictive, because we want inflation to return fully to its target. So, this has been people's position all along, and it still is.

We have two members who believe the time has come to cut interest rates, and they will express their reasons. I won't tell you the reasons. They will release something in the next day or two.

But the situation is what it is. I mean, you know, the arguments are well-founded, everyone at the table has considered the arguments carefully, and it's a good point, this is an unusual situation. The economy is doing well. But this is an unusual situation, you are facing risks regarding your employment mandate and inflation mandate. This is the nature of supply shocks. And perhaps not surprisingly, there will be divergences and differing views on this, as well as different opinions on where the neutral interest rate is, and therefore differing views on how tight policy should be.

So, we have these, and I want to say what you hope for is that people, you know, explain their positions in a very thoughtful and clear manner, and we absolutely did that today. Everyone at the table was like that. From this perspective, I would call it one of the best meetings I can remember.

Questioner: You have mentioned that you would wait to start cutting rates until you are confident that inflation is moving towards the 2% target. Once you gain that confidence, would you support an immediate rate cut?

Powell: I wouldn't put it that way. You know, I've said that this is why we believe that policy should be restrictive, because, you know, inflation is above target. When we have risks to both objectives, and one is further from the target than the other, it is inflation. Maximizing employment is on target. This means that policy should be tightening, because only tight policy can bring down inflation.

If you believe that the risks of the two goals are more balanced, it means that the policy should not be restrictive. It should take a more neutral stance. That would be somewhat lower than our current position. This is the framework that I think I would adopt.

We need to wait and see. Clearly, we will be looking at a lot of data in the next cycle. This is one of those cycles where we have two employment reports and two inflation reports. We'll see where that takes us.

Questioner: Thank you, Mr. Chairman, for taking questions. I am Jeff Cox from CNBC.com. One indicator you often cite is the final sales to domestic purchasers, which dropped from a 1.9% increase in the first quarter to 1.2% in the second quarter, suggesting a softening of potential demand. I’m curious, when you look at this alongside some housing data, which you acknowledged in your opening remarks as being weak—indeed, the housing market is weak—and with today’s GDP inflation data declining to an overall 2.1% and core 2.5%. I wonder, before you feel comfortable about a potential rate cut, how much of a change do you need to see from these data points?

Powell: This will be overall. It's hard to answer this question specifically. I think the domestic final purchases or what people call final sales in the first half of the year is 1.6%. GDP I believe is 1.2%. Throughout the first half of the year, you mentioned the quarters. Those are slower. But GDP fluctuates between quarters and halves, and is often revised afterwards, you know.

Labor market data, we still believe is – continue to believe is the best data regarding the economy. It shows an unemployment rate of 4.1%. It shows wages, you know, still at healthy levels. But getting closer to what we consider long-term sustainable levels, consistent with long-term productivity and 2% inflation. So, the labor market is actually still quite solid.

Inflation is above the target, even ignoring tariffs, it is slightly above the target, along with tariffs. So we are monitoring all of this. And again, trying to do the right thing in a challenging situation, because you are being pulled in two directions, you have to decide which way to go, and at some point, if the risks are roughly equal, then you really want to be in a neutral policy position, and we are not there right now.

Questioner: If data remains at current levels, can you say for sure that you would feel uncomfortable with a rate cut in September?

Powell: I wouldn't say that, no. I just think we need to look at the data; it can go in many different directions. Inflation data and employment data. We will make judgments based on all the data and the risk balance analysis I mentioned.

Questioner: Thank you.

Questioner: Last question, Greg Rob.

Questioner: Thank you, Chairman Powell. I'm Greg Rob from Market Watch. The Treasury Secretary recently stated that if you continue to serve as a governor after your term as chairman ends, it would create confusion in the market. I would like to know if you have any updates for us on this matter?

Powell: No comment. Thank you all very much.