Fed Chair Powell Signals Steady Rates Amid Economic Uncertainty Stocks Rise
1min read Federal Reserve Chairman Jerome Powell delivered a key speech at the U.S. Monetary Policy Forum in New York City, emphasizing the central bank's cautious approach to economic policy amidst ongoing uncertainties. Powell reiterated the Fed's stance on maintaining interest rates, stating that the central bank is not in a hurry to make adjustments and is well-positioned to wait for more clarity on economic data.
Powell highlighted the resilience of the U.S. labor market, noting that employers added 151,000 jobs in February and an average of 191,000 jobs per month since September. The unemployment rate, which edged up to 4.1%, has remained within a range of 3.9% to 4.2% over the past year. He also pointed out that wage growth has slowed, which helps balance labor demand and supply, thereby mitigating inflationary pressures.
Addressing inflation trends, Powell acknowledged the decline in inflation from above 7% in mid-2022 to 2.5% in January. However, he cautioned that recent data still shows inflation slightly above the Fed's 2% target. Powell emphasized that the path to sustainably returning inflation to the target has been uneven and is expected to remain so, reiterating the Fed's strategy of not overreacting to short-term volatility.
Powell also discussed recent trade policies, particularly import tariffs affecting trade relations with Mexico, Canada, and China. He noted that these changes have contributed to market volatility and complicated economic projections. Despite these challenges, Powell reiterated that the Fed would keep its primary interest rate steady in the coming months, following a 100 basis points reduction in late 2024, keeping the rate within the 4.25% to 4.5% range.
Powell's remarks underscored the Fed's commitment to stability, balancing inflation control with economic growth. The central bank's cautious approach aims to navigate the uncertainties and maintain economic health, ensuring that its policies are well-aligned with evolving economic conditions. This strategy is crucial in an environment where policy actions and external factors can have significant impacts on the economy.
