Powell issues rare warning on lofty asset valuations as Fed weighs data-driven path

US Federal Reserve Chair Jerome Powell flagged that asset valuations are “quite high” by several measures, a rare remark from a Fed chief on market pricing that underscored the central bank’s cautious stance after last week’s rate cut. 

Speaking in Providence, Rhode Island, Powell said the Fed monitors overall financial conditions to judge whether policy is transmitting as intended, noting that equity prices have surged to record highs since the Federal Open Market Committee lowered rates by 25 basis points on September 18. 

While he stressed that the current environment does not pose a threat to financial stability, Powell’s warning on stretched valuations came alongside remarks about a cooling labor market, sticky inflation and the risk of stagflation—factors that leave the path of future rate moves highly data-dependent.