At the recent Jackson Hole conference, Federal Reserve Chairman Jerome Powell's speech attracted widespread attention. He hinted that the Fed might reconsider cutting interest rates, a statement that reflects the complexity of the current economic situation.

Despite a series of major policy adjustments in the U.S. economy, it has shown remarkable resilience. The labor market is nearing full employment, and while inflation remains above the 2% target, it has significantly declined from its post-pandemic peak. However, Powell also pointed out some newly emerging risk factors.

The unemployment rate has slightly increased compared to last year, rising by nearly 1 percentage point. At the same time, GDP growth is expected to slow down, with a projected growth rate of 1.2% in the first half of 2025, down from 2.5% in 2024. This slowdown in growth is primarily due to weakened consumer spending and structural changes such as tightened tariffs and immigration policies.

The latest employment data shows that non-farm payrolls have only increased by an average of 35,000 jobs per month over the past three months, significantly lower than the monthly average increase of 168,000 expected for 2024. Nevertheless, the unemployment rate remains low at 4.2%, and overall labor market indicators are relatively stable. However, it is worth noting that labor growth has slowed due to immigration restrictions, which has increased the downside risks to the economy.

In terms of inflation, tariff policies have driven up the prices of certain goods, with the core PCE inflation rate currently at 2.9% and core goods prices rising by 1.1%. However, Powell believes that these effects may be temporary. Given the current state of the labor market, the likelihood of persistent inflation risks (such as a wage-price spiral) seems low, but it remains crucial to maintain stable inflation expectations.

From a policy perspective, the current policy interest rate is now closer to neutral levels compared to last year, having decreased by about 100 basis points. This provides the Federal Reserve with more policy flexibility, allowing it to more cautiously weigh various economic factors and adjust its policy stance in a timely manner when necessary.

Overall, Powell's speech reflects the Federal Reserve's cautious attitude towards the current economic situation, as well as its flexibility in the policy-making process. The future direction of the Federal Reserve's policies will continue to be closely monitored by the market.