Powell Says Fed Rates Are Borderline Restrictive

• Current Fed rates are characterized as 'mildly restrictive' or 'high end of neutral'.
• Disinflation is partly due to the 'runoff' of one-time tariff effects, not solely standard restrictive monetary policy.
• The Fed is balancing inflation risks (upside) with labor market risks (downside), aiming for a policy that is restrictive but 'not too restrictive'.

Federal Reserve Chair Jerome Powell stated that current interest rates are at the high end of neutral or mildly restrictive. He attributed a significant portion of recent disinflation to the 'runoff' of tariffs imposed last year, which had a one-time price-raising effect. The Fed is balancing the need for restrictive policy to combat inflation with concerns about downside risks to the labor market.