US Monthly New Residential Sales, May 2025

Economic conditions remain resilient; however, the outlook is still clouded by significant uncertainty, especially as it relates to trade policy. Focusing on the Fed’s congressionally mandated goals of price stability and maximum employment, I see monetary policy as currently well positioned, and I supported last week’s FOMC decision to maintain the target range for the federal funds rate at 4¼ to 4½ percent. I believe a careful, patient, and highly attentive approach to monetary policy remains appropriate at this point, as we learn more about tariffs and other changes in government policies, and actively assess their implications for the economy. The U.S. Economy Remains Solid, Overall The data show an economy that remains solid overall. Labor market conditions point to a modest deceleration in activity, but are generally healthy: unemployment is low, layoff indicators are around pre-pandemic levels, and job gains – while moderating – are close to their trend pace. Balance sheets of both firms and households are also in good shape: first-quarter earnings of nonfinancial corporations were solid, while household fundamentals are favorable overall, supported importantly by robust real disposable income growth. And after rising at the beginning of this year, inflation has recently continued its slow, uneven decline back to the Fed’s 2 percent target, and underlying price pressures appear contained. But there are some early signs of tariff-induced price increases. FED'S COLLINS Says U.S. Economy Is Strong Overall Fed's Collins: Monetary policy is well positioned. It's time for patience and care. Fed's Collins: I supported the Fed's decision to hold steady on rates last week. Fed's Collins: I expect it to be appropriate to lower rates later this year, but much depends on tariffs.

Fed's Powell: Changes to forecasts partly reflect trade policy effects. Fed's Powell: We don't consider federal debt in monetary policy decisions. POWELL: ENORMOUS BENEFITS OF HAVING DOLLAR THE GLOBAL RESERVE CURRENCY POWELL: DOLLAR REMAINS RESERVE CURRENCY, IT'S A DURABLE EQUILIBRIUM, EXPECT IT TO LAST FOR A LONG TIME TO COME POWELL: BOND MARKET FUNCTIONING WELL INFLATION EXPECTATIONS HAVE COME DOWN A BIT FROM APRIL ASKED ABOUT RECENT WEAKNESS IN DOLLAR, SAYS MARKETS HAVE BEEN DIGESTING AN UNUSUALLY CHALLENGING SET OF CIRCUMSTANCE POWELL: OPEN TO THE POSSIBILITY THAT TARIFFS TRANSLATING TO INFLATION WILL BE MORE, OR LESS THAN WE THINK