() The Fed’s first rate cut in nine months came as no surprise Wednesday, but the real insights came in Jerome Powell’s press conference afterward.

The Fed chair weighed in on three of the most debated forces in today’s economy: immigration, artificial intelligence and President Donald Trump’s tariffs.

Powell’s message was one of caution. Officials are facing rising inflation on one side and a cooling labor market on the other two forces pulling policy in opposite directions.

“There’s no risk-free path,” Powell said. “It’s quite a difficult situation for policymakers.”

Here’s what he had to say about Trump’s tariffs, the impact of lower immigration and the rise of artificial intelligence.

Trump tariffs are driving up goods inflation

President Trump’s sweeping tariffs have contributed to the recent uptick in inflation, which accelerated to 2.9% in August from a year earlier.

“Higher tariffs have begun to push up prices in some categories of goods, but their overall effects on economic activity and inflation remain to be seen,” Powell told reporters.

That uncertainty is one reason the Fed has held off on cutting rates, despite Trump’s urging. Powell stood behind the central bank’s recent policy decisions at Wednesday’s press conference, while noting the pass-through of tariffs into inflation has so far been “slower and smaller” than expected.

The hope is that the tariff effect on inflation will be relatively short-lived, an assumption Powell called “a reasonable base case.” But he cautioned that “it is also possible that the inflationary effects could instead be more persistent.”

So far, much of the tariff burden has been absorbed by companies rather than passed on to consumers, though Powell warned that could change.

“All of those companies and entities in the middle, they’ll tell you that they have every intention of passing that through in time, but they’re not doing that now,” Powell said.

Apple is one company that appears to be holding off. On Friday, CEO Tim Cook said there were no tariff-driven price increases for the new iPhone, even though some models cost more, and the company has incurred hundreds of billions in tariff-related costs.

Food prices are another area to watch. Grocery inflation accelerated 3.2% in August from a year earlier the fastest pace since Oct. 2023, according to the Consumer Price Index.

Immigration slowdown is affecting the labor market

Job growth has stalled in recent months, and it’s not just weaker demand supply factors are part of the story too.

Powell said lower immigration and weaker labor force participation have slowed labor force growth, while demand for workers has fallen “quite sharply.”

“This speedy decline in both supply and demand has certainly gotten everyone’s attention,” Powell said, calling the trend “unusual.”

Employment growth has slowed to a crawl, averaging just 29,000 jobs per month over the past three months, compared to 113,000 a month during the same period in 2024. That downside risk to the labor market is the main reason the Fed chose to cut rates.

When asked whether tariffs were to blame for the hiring slowdown, Powell said “it’s certainly possible,” but emphasized the bigger story is immigration.

“If you’re looking at why employment is doing what it’s doing, that’s much more about the change in immigration,” Powell said Wednesday.

On the one hand, slower job growth due to weaker supply could mean employer demand isn’t as soft as the topline numbers suggest a potential silver lining. But on the other, immigration-driven supply constraints are outside the Fed’s control. And cutting rates to support hiring risks pushing wages higher, adding to inflation pressures if supply remains tight.

AI not a major factor yet, but recent grads are struggling

Today’s job seekers aren’t just competing with other humans they’re also up against artificial intelligence. But there’s considerable debate about how much the technology is already reshaping the labor market.

Powell weighed in on Wednesday, saying there are “some effects” from AI, but he guessed it’s “not the main thing” driving current employment trends.

“It’s probably a factor,” he said. “Hard to say how big it is.”

Recent college grads have felt the squeeze, a potential warning sign if AI disruptions accelerate, since many expect the bottom rung of the career ladder to break first.

Some business leaders, like Salesforce’s Marc Benioff, haven’t been shy about AI’s impact. On a recent podcast, Benioff said the technology allowed him to cut 4,000 customer support roles this year.

Overall, the job market has softened. At 4.3%, the unemployment rate is the highest since 2021, though still low by historical standards. The upside: layoffs haven’t surged. The downside, Powell noted, is that the job-finding rate is “very, very low.”

His concern: If layoffs start climbing while hiring stays weak, “that could very quickly flow into higher unemployment.”