Powell says the Fed awaits ‘greater clarity’ about Trump’s policies before making the next move on the rate
The Chairman of the US Federal Reserve of Jerome Powell testifies before the hearing of the Banking Committee, Housing and Urban Affairs in Senate on a “report on semi -annual monetary policy Congress” at Capitol Hill in Washington, USA, February 11, 2025.
Craig Hudson | Reuters
New York – Federal Reserve President Jerome Powell He said on Friday that the central bank could wait to see how the aggressive actions of President Donald Trump were playing before he moved again at interest.
WITH It’s nervous Through Trump’s proposals for tariffs and other questions, Powell reiterated the statements that he and his colleagues recently advised patience about monetary policy in the midst of high levels of uncertainty.
The White House “is in the process of implementing significant policy changes in four different areas: trade, immigration, fiscal policy and regulation,” he said in a speech for the US Forum of Monetary Policy. “The net effect of these policy changes will be important for the economy and path of monetary policy.”
Noticing that “the uncertainty about changes and their probable effects remains high” Powell said that the Fed “focused on the separation of the signal from the noise as the prospect of developing. We should not be in a hurry and are well positioned to wait for more clarity.”
The comments look at least somewhat in contrast to the growing market expectations to reduce interest rates this year.
Since markets have developed Trump’s changes on his agenda – specifically his tariff plans – traders are at the price of three quarterly decreasing percentage points by the end of the year, starting from June, according to the CME group Fedwatch measure.
However, Powell comments indicate that the Fed will be in a way of waiting and watching before it copies further relieving politics.
“Politics is not on a pre -set course,” he said. “Our current attitude politics is well positioned to deal with the risks and insecurity that we face in the implementation of both sides of our double term.”
The policy forum is sponsored by the Clark Center for Global Markets, University of Chicago, and has included several Fed officials in the audience. Most Central Bank policy creators have recently said that the economy is expected to keep the economy and that inflation will reduce to the Fed aim of 2%, but the climate rate is still unclear because Trump’s policy is more clearly considered.
In his estimation, Powell also spoke mostly positively about the macro environment, saying that they are now in a “good place” with a “solid labor market” and an inflation returning back to Target.
However, he noted that recent surveys of feelings showed concern about the path of inflation, mostly the product of Trump’s Tariff conversations. AND Fed’s preferred meter He showed a 12-month inflation with 2.5%, or 2.6% when food and energy are excluded.
“The path to a sustainable return of inflation to our target was messy and we expect it to continue,” Powell said.
The remarks also arrived the same day that he reported that the Ministry of Labor Gain of 151,000 in pay lists for February. Although the total amount was slightly below market expectations, Powell said that the report was more evidence that “the labor market was solid and wide in balance.”
“The salaries grow faster than inflation and a sustainable pace than before in the recovery of pandemic,” he said.
The average hourly earnings increased by 0.3% in February and increased by 4% on an annual basis. The job report also indicated that the unemployment rate increased to 4.1% because the household employment failed.
