Powell says Fed is awaiting ‘greater clarity’ on Trump policies before making next move on rates

Federal Reserve Chair Jerome Powell announced that the central bank is adopting a cautious approach regarding potential interest rate adjustments, opting to await greater clarity on President Donald Trump’s recent policy initiatives before making further monetary decisions.

Speaking at the University of Chicago Booth School of Business forum, Powell emphasized the heightened uncertainty stemming from the administration’s significant policy changes in areas such as trade, taxes, government spending, immigration, and regulation. He highlighted the importance of understanding the net effect of these policies on the economy, noting that while tariffs may temporarily increase prices, their long-term implications on inflation and economic growth remain uncertain.

Powell underscored that the Federal Reserve is not in a hurry to alter monetary policy and plans to wait for more clarity on the potential impacts of these policies, especially concerning tariffs. He stated, “We are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry and are well-positioned to wait for greater clarity.”

The Federal Reserve’s cautious stance reflects its commitment to its dual mandate of maintaining low inflation and high employment. The central bank aims to navigate the current economic uncertainties carefully, ensuring that any policy adjustments are well-informed and conducive to sustainable economic growth.

In summary, Chair Powell’s remarks indicate that the Federal Reserve is taking a measured approach in response to the new administration’s policies, opting to await greater clarity before making any decisions on interest rate adjustments.