# Powell's Final Press Conference Signals Rate-Cut Pause Amid Inflation Concerns
Federal Reserve Chair Jerome Powell wrapped his final press conference before handing the reins to Bessent, delivering a hawkish message that spooked bond markets and reset rate-cut expectations for 2025. Powell emphasized the central bank's commitment to fighting remaining inflation rather than rushing to ease policy, directly contradicting market bets for aggressive cuts in the coming year.
The Fed chair rejected characterizations of monetary policy as restrictive, arguing that current rates remain appropriate given economic strength. Unemployment sits near 50-year lows. Inflation, while cooling from its 2022 peaks, still hovers above the Fed's 2% target. Powell's comments sent Treasury yields higher across the curve, with the two-year yield pushing above 4.3%. Markets now price in only two rate cuts for 2025, down from six cuts priced in just months earlier.
Powell also addressed the transition to his successor, providing continuity assurances without micromanaging incoming policy decisions. The message centered on data dependence—the Fed will cut rates when inflation moves sustainably toward target, not on a preset calendar. Wage growth and service-sector inflation remain stickier than the Fed initially expected, Powell noted.
His final remarks underscored a central bank intent on avoiding the policy mistakes of the 1970s when premature rate cuts allowed inflation to spiral. The contrast with market sentiment couldn't be sharper. Wall Street has spent weeks building a narrative of an imminent easing cycle. Powell punctured that narrative decisively.
Stock futures initially sold off on Powell's hawkish tone, though equities have proven resilient to Fed tightening rhetoric in 2024. The real test arrives in January when economic data begins to flow and markets recalibrate to a higher-for-longer rate