Federal Reserve Chairman Powell noted that inflation has fallen but remains above target, while the labor market is slowing without showing major slack. Growth has cooled, and new trade and immigration policies are reshaping both supply and demand, raising uncertainty. Tariffs are lifting prices, but the Fed sees these effects as likely temporary unless they feed into wages or expectations. The Fed is balancing upside risks to inflation against rising downside risks to jobs. Policy is still restrictive, but now closer to neutral, allowing flexibility. Powell stressed that decisions will remain data-driven and not preset. Importantly, the Fed dropped its 2020 framework’s “makeup” inflation strategy and shifted back to flexible inflation targeting, emphasizing that stable inflation expectations are key. The revisions clarify that maximum employment can run above estimates without forcing preemptive hikes, but the Fed will act if price stability is threatened.