Powell said that Fed staffers believe federal data could be overstating job creation by up to 60,000 jobs a month—which suggests the jobs market might be shrinking.

Powell said most consumer consumption comes from the rich. "The top third accounts for way more than a third of the consumption ... So it’s a good question how sustainable that is.”

The final U.S. Federal Reserve meeting of the year this week precedes a turbulent 2026 that will see key policymaker changes, including the arrival of a new leader to be named by President Donald Trump,

Fed chief Jerome Powell said the rate of U.S. inflation should peak in the first three months of 2026 and then start to slow again. Barring, that is, additional U.S. tariffs, Powell said. The previous tariffs contributed to a rise in inflation this year,

"It will be difficult for Powell to send a credibly hawkish signal at the press conference," analysts at Bank of America said in a note.

Federal Reserve Chair Jerome Powell said Wednesday that the current overshooting of the central bank's 2% inflation target is mostly the result of President Donald Trump's import tax hikes.

Federal Reserve Chair Jerome Powell said the three rate cuts this year have put the central bank's benchmark interest rate closer to a "neutral" level, meaning it is neither boosting nor holding back the economy.

It all comes down to the reason behind the weakness in unemployment and Powell’s diagnosis of the “low-hire, low-fire” economy of 2025.