Jerome Powell once again took the helm as captain of the US economic ship, assuring that it is sailing on a “steady course,” but the engine — the labor market — is running idle. Speaking at the National Association for Business Economics conference, he acknowledged that hiring and layoffs in the US essentially stalled in September, while inflation was still unwilling to loosen its grip.  

The chairman pointed out that the Federal Reserve is now operating by the principle of making policy decisions appropriate to the current situation. In other words, it is like a driver without GPS: he is heading somewhere until the car encounters a “road closed” sign.

Despite the government shutdown, which deprived economists of access to key data sets, the Fed chairman insists that the “economy may actually be stronger than we thought.” Markets are wondering how he could have come to this conclusion without up-to-date economic data.  

Investors are now almost certain that another rate cut by 25 basis points will be announced at the end of October — Powell cautiously hinted that interest rates are likely to be lowered again. The outcome of the December meeting remains uncertain, but markets are hopeful for a Christmas gift from the central bank.  

Jerome Powell honestly admitted that risks are abundant: “There’s no safe path in policymaking.” Tariffs imposed by Trump’s administration are pushing up import prices, while inflationary pressure now appears moderate. Still, any misstep could cost not only the value of the US dollar but also a hefty dose of caffeine-fueled nerves on Wall Street.