2025-02-15 Weekly Financials
US Side
Federal Reserve Chairman Jerome Powell emphasized the Fed’s “dual mandate” of achieving maximum employment while ensuring price stability during his Semiannual Monetary Policy Report to the Congress on February 12. While acknowledging that over the past two years inflation has steadily moved toward the 2% target, he described it as still somewhat elevated, with recent fluctuations indicating ongoing volatility.
According to the latest data, the U.S. inflation rate rose 3% year-over-year in January, surpassing market expectations of 2.9% and remaining unchanged from the previous month. On a monthly basis, inflation increased by 0.5%, exceeding the anticipated 0.3% and up from the prior reading of 0.4%. Despite these variations, the Fed remains committed to its long-term 2% inflation objective.
On monetary policy, Powell noted that the current federal funds rate of 4.25%-4.5% has eased from previous peaks, alleviating some economic constraints. However, given the persistent uncertainty surrounding inflation, the Fed opted to pause the rate-cutting cycle to avoid reigniting inflationary pressures. He emphasized that the U.S. economy remains strong, with no immediate necessity for further rate reductions. Nonetheless, Powell reiterated that the Fed’s primary goal is to achieve maximum employment while maintaining price stability, and it stands ready to adjust monetary policy should the labor market weaken unexpectedly or inflation fall more rapidly than anticipated.
Separately, U.S. President Donald Trump took to social media to suggest that interest rates should be lowered in coordination with upcoming tariff measures. Powell did not respond to Trump’s comments.
