Powell says Federal Reserve can wait on any interest rate moves

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The Federal Reserve can stay patient and wait to see how tariffs and other economic policies of the Trump administration play out before making any changes to interest rates, Chair Jerome Powell said Wednesday.

Transcript

00:00The new administration is in the process of implementing substantial policy changes in

00:13four distinct areas, trade, immigration, fiscal policy, and regulation.

00:22These policies are still evolving, and their effects on the economy remain highly uncertain.

00:27As we learn more, we will continue to update our assessment.

00:32The level of tariff increases announced so far is significantly larger than anticipated,

00:37and the same is likely to be true of the economic effects, which will include higher inflation

00:43and slower growth.

00:45Both survey and market-based measures of near-term inflation expectations have moved up significantly,

00:51with survey participants pointing to tariffs.

00:55Survey measures of longer-term inflation expectations, for the most part, appear to remain well-anchored

01:00as well.

01:03Tariffs are highly likely to generate at least a temporary rise in inflation.

01:09Inflationary effects could also be more persistent.

01:13Avoiding that outcome will depend on the size of the effects, on how long it takes for them

01:18to pass through fully to prices, and ultimately, on keeping longer-term inflation expectations

01:23well-anchored.

01:25Our obligation is to keep longer-term inflation expectations well-anchored, and to make certain

01:31that a one-time increase in the price level does not become an ongoing inflation problem.

01:38As we act to meet that obligation, we will balance our maximum employment and price stability mandates,

01:44keeping in mind that, without price stability, we cannot achieve the long periods of strong

01:49labor market conditions that benefit all Americans.

01:54We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.

01:59If that were to occur, we would consider how far the economy is from each goal and the potentially

02:05different time horizons over which those respective gaps would be anticipated to close.

02:12We continue to analyze the incoming data, the evolving outlook, and the balance of risks.

02:17We understand that elevated levels of unemployment or inflation can be damaging and painful for

02:22communities, families, and businesses.

02:25We will continue to do everything we can to achieve our maximum employment and price stability

02:29goals.

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