Federal Reserve Chair Jerome Powell said Tuesday that the U.S. labor market remains in a state of stagnation, marked by low hiring and firing rates through September, though the broader economy may be on a somewhat stronger path than previously expected.

Powell noted that policymakers will take a meeting-by-meeting approach to any further interest rate cuts, as they try to balance a soft labor market with inflation that remains above the 2% target.

In prepared remarks delivered at the National Association for Business Economics (NABE) conference, Powell said: Based on the data available to us, the outlook for employment and inflation has not changed much since the September meeting four weeks ago, during which the Fed cut the benchmark rate by a quarter percentage point.

He added that data available before the government shutdown indicated economic activity may be running somewhat stronger than expected.

No risk-free path

Powell emphasized that there is no risk-free path for monetary policy as the Fed seeks to balance its dual mandate of maximum employment and price stability. He noted a nearly even split among policymakers on when the next rate cut should occureither later this month or in Decemberand among those who believe one more cut, or none, would be sufficient before year-end.

He cautioned that these expectations could shift as new data emerge, saying: I would reiterate that these projections should be understood as a set of possible outcomes whose probabilities change as new information comes in, guiding our decision-making from meeting to meeting. We will set policy based on the evolving economic outlook and the balance of risks, not on any pre-set course.

Labor market stagnation despite lack of official data

Although the September jobs report was delayed due to the government shutdown, Powellwho devoted much of his speech to discussing the Feds balance sheet policysaid he relied on a combination of public and private data to form a clearer picture of the labor market.

While official employment data for September have been delayed, the evidence we have suggests that both layoffs and hiring remain low, and that households perceptions of job availability, as well as firms perceptions of hiring difficulty, continue to decline, Powell said.

Tariffs driving inflation higher

Powell also noted that elevated inflation partly reflects higher prices for goods affected by tariffs, rather than broad-based inflationary pressures in the economy.

The Fed is set to receive updated inflation data on October 24, after the Bureau of Labor Statistics was instructed to release the Consumer Price Index (CPI) report on schedule despite the ongoing shutdown.

Next Fed meeting at the end of October

The Federal Reserves next policy meeting is scheduled for October 2829, with markets widely expecting another quarter-point rate cut.