Fed Chair Jerome Powell says that the US economy is doing well despite geopolitical tensions and tariffs

Federal Reserve Chair Jerome Powell recently expressed optimism about the U.S. economy, stating it is on “firm footing” as it enters 2026. During a news conference, he noted that the economy’s resilience continues to “surprise” the Federal Open Market Committee (FOMC). 

Powell described economic expansion as “solid,” specifically highlighting resilient consumer spending and a boost from the AI data center buildout.

While core inflation remains above the 2% target (estimated at roughly 3%), Powell is confident it will return to target once the temporary impact of tariffs wanes later this year.

Hiring has slowed, but Powell noted signs of stabilisation in the unemployment rate, which recently dipped to 4.4%.The Fed held interest rates steady at 3.5%–3.75% in January 2026. Powell indicated that future rate cuts (loosening policy) will depend on seeing inflation clearly trend downward.

In a direct stand against political pressure, Powell emphasised that maintaining the Federal Reserve’s independence is critical for its credibility and for making decisions based on data rather than politics. 
Powell also acknowledged a “disconnect” between negative consumer sentiment in surveys and actual robust spending on the ground, noting that many households are “feeling the squeeze” on affordability despite the growing economy.

By Anthony Solly