By Innovation Times Business & Economy Desk
October 14, 2025 | Washington, D.C.
Federal Reserve Chair Jerome Powell has indicated that the central bank’s tightening program may be approaching its end, suggesting the U.S. economy is showing signs of stabilization after more than two years of aggressive interest rate increases.
Speaking at the National Economic Club in Washington on Monday, Powell said the Federal Reserve is “nearing the point where further policy firming may no longer be necessary,” though he stopped short of providing any direct guidance on when rate cuts or adjustments might occur.
“The full effects of our previous tightening are still moving through the economy,” Powell said. “We are monitoring incoming data carefully to ensure inflation continues to move sustainably toward our 2 percent goal.”
The remarks come as inflation continues to cool but remains slightly above the Fed’s target, while job growth has slowed and consumer spending shows signs of fatigue. The combination of moderating inflation and weaker labor data has fueled speculation that the central bank may soon pivot to a more neutral stance.
Analysts say Powell’s comments signal the Fed’s growing confidence that its monetary tightening cycle — one of the most aggressive in decades — has largely achieved its goal of reining in inflation without tipping the economy into recession. However, uncertainty remains about the timing of any policy shift.
“Powell’s message was one of cautious optimism,” said Lydia Grant, a senior economist at CapitalView Research. “He is clearly preparing markets for a pause, but not yet signaling any intention to cut rates prematurely.”
The Fed has raised its benchmark federal funds rate 11 times since 2022, pushing borrowing costs to their highest level in more than two decades. The central bank’s balance sheet reduction program, aimed at unwinding pandemic-era stimulus, has also contributed to tighter financial conditions across credit markets.
Market reactions were mixed following Powell’s remarks. U.S. Treasury yields eased slightly, while major stock indexes ended the day higher as investors interpreted his tone as a sign that the end of the tightening cycle is near.
Economists now expect the Federal Open Market Committee (FOMC) to maintain current rates at its next meeting, while keeping the option open to resume hikes if inflation shows signs of accelerating again.
“The Fed is walking a fine line,” said Andrew Kim, chief market strategist at Horizon Analytics. “They want to declare victory on inflation, but they also don’t want to reignite price pressures by signaling a policy reversal too soon.”
