Federal Reserve Chair Jerome Powell said that policymakers are hearing that a significant segment of American consumers are still looking to "economize" their purchases and trading down as they feel the effects of stubborn inflation on their household budget. "They're trading down from brands, and they're buying less, and it's changing their buying habits , and that kind of thing. They're still consuming, but they're feeling it in a different way," he added. Powell noted that estimates based on the latest consumer price index (CPI) inflation data suggest that headline PCE reached 2.9% in December. "These elevated readings largely reflect inflation in the goods sector, which has been boosted by the effects of tariffs .