In a speech delivered today at the U.S. Monetary Policy Forum in New York City, Federal Reserve Chair Jerome Powell emphasized the central bank’s cautious approach amid prevailing economic uncertainties.
Powell reiterated the Federal Reserve’s readiness to maintain current interest rates, adopting a “wait and see” stance as it monitors the impacts of recent policy changes and economic indicators.
“We do not need to be in a hurry, and are well positioned to wait for greater clarity,” he said.
Powell highlighted the robustness of the U.S. labor market, noting that employers added 151,000 jobs in February, bringing the average monthly job gains to 191,000 since September.
The unemployment rate edged up slightly to 4.1%, remaining within a narrow range between 3.9% and 4.2% over the past year.
He observed that wage growth has moderated to a more sustainable pace, aligning labor supply and demand, thereby reducing inflationary pressures from the labor market.
“With wage growth moderating and labor supply and demand having moved into better balance, the labor market is not a significant source of inflationary pressure,” he said.
Inflation trends
Addressing inflation, Powell noted a significant decline from its mid-2022 peak above 7% to 2.5% as of January. He cautioned that recent readings remain somewhat above the Federal Reserve’s 2% objective.
“The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue,” Powell said.
He emphasized the importance of not overreacting to short-term fluctuations and reiterated the central bank’s commitment to closely monitoring inflation trends to ensure they align with long-term goals.
“Inflation can be volatile month-to-month, and we do not overreact to one or two readings that are higher or lower than anticipated,” he said.
Trade policies and monetary outlook
Powell touched on recent trade policies, including the Trump administration’s announcements and subsequent delays on steep import tariffs affecting trading partners such as Mexico, Canada, and China.
These policy shifts have contributed to market volatility and have complicated the economic outlook. Powell emphasized the need for clarity in these areas before making any adjustments to monetary policy, stating that the central bank is well-positioned to wait for greater clarity on the economic outlook.
Given these factors, Powell indicated that the Federal Reserve is likely to keep its key interest rate unchanged in the coming months. The central bank had previously cut the benchmark interest rate by 100 basis points to a range of 4.25% to 4.5% in late 2024 and maintained this policy in January.
Crypto reactions
Crypto has responded to Powell’s comments with cautious optimism. Investors appear reassured by the Federal Reserve’s patient approach, though concerns about potential stagflation and Trump’s ongoing crypto summit persist.
Bitcoin is currently trading at $88,300.
