Federal Reserve Chair Jerome Powell delivered a significant speech on Wednesday, November 12, 2025, at the Economic Club of Washington, signaling the central bank's patient approach to monetary policy. He stated that current policy settings are "in a good place" to adopt a wait-and-see approach, reinforcing expectations that interest rates will remain stable through the end of 2025. This represents a deliberate shift from previous communications emphasizing vigilance against inflation.
Powell's remarks came amid mixed economic data. The Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, registered 2.4% year-over-year, showing gradual improvement but remaining above the 2% target. Gross Domestic Product (GDP) expanded at a 2.1% annual rate in Q3 2025, representing sustainable growth. The unemployment rate edged up slightly to 4.1%, with job creation remaining positive at approximately 150,000 positions monthly and wage growth moderating to around 3.5% annually.
Separately, in remarks at Harvard University on Monday, Powell addressed risks in the private credit market. He stated the Fed is monitoring the market for stress but does not currently see it as a threat to overall financial stability. "I'm reluctant to say anything that suggests that we're dismissive of the risk," Powell said, adding that officials are "looking for connections to the banking system and things that might, you know, result in contagion. We don't see those right now."
Powell described private credit as "a relatively small part of a very large asset pool, we're watching it super carefully," and noted that regulators are gathering information directly from lenders and firms active in the space. He acknowledged that parts of the market may face difficulties, stating "There'll be people losing money and things like that," but emphasized it "doesn't seem to have the makings of a broader systemic event."
Financial markets responded positively to Powell's policy speech, with major stock indices showing modest gains and Treasury yields stabilizing. Futures markets now price in a high probability of unchanged rates through Q1 2026. The Fed's balance sheet policy of quantitative tightening will continue at its current measured pace.
