In a speech at the U.S. Monetary Policy Forum in New York City today, Federal Reserve Chair Jerome Powell emphasized the central bank’s careful strategy amid ongoing economic uncertainties.
Powell reiterated the Federal Reserve’s readiness to maintain interest rates, employing a “wait and see” strategy as it evaluates the impacts of recent policy changes and various economic indicators.
“There’s no need to rush, and we are well-equipped to wait for clearer signals,” he noted.
He highlighted the resilience of the U.S. labor market, stating that 151,000 jobs were created in February, leading to an average monthly job growth of 191,000 since September.
The unemployment rate experienced a slight rise to 4.1%, remaining within a narrow range of 3.9% to 4.2% over the past year.
Powell remarked that wage growth has reached a more sustainable level, striking a balance between labor supply and demand, which has helped mitigate inflationary pressures in the labor market.
“With wage growth stabilizing and a healthier balance between labor supply and demand, the labor market is no longer a significant source of inflationary pressure,” he stated.
Inflation trends
On the topic of inflation, Powell pointed out a significant decline from its mid-2022 peak of over 7% to 2.5% as of January. He warned that recent figures still remain slightly above the Federal Reserve’s 2% target.
“The path to sustainably bringing inflation back to our target has been uneven, and we expect this to continue,” Powell acknowledged.
He underscored the importance of not overreacting to short-term fluctuations and reaffirmed the central bank’s commitment to monitoring inflation trends to ensure they align with long-term goals.
“Inflation can vary significantly from month to month, and we do not overreact to one or two readings that deviate from expectations,” he added.
Trade policies and monetary outlook
Powell also addressed recent trade policies, including announcements from the Trump administration and subsequent delays regarding significant import tariffs impacting countries such as Mexico, Canada, and China.
These policy adjustments have led to market volatility and complicated the economic forecast. Powell stressed the necessity for clarity in these areas before making any changes to monetary policy, stating that the central bank is well-prepared to await further insights regarding the economic outlook.
Given these developments, Powell indicated that the Federal Reserve is likely to keep its key interest rate steady in the immediate future. The central bank had previously lowered the benchmark interest rate by 100 basis points to a range of 4.25% to 4.5% in late 2024 and has maintained this position in January.
Crypto reactions
The cryptocurrency market has reacted to Powell’s statements with cautious optimism. Investors appear reassured by the Federal Reserve’s patient stance, although apprehensions concerning potential stagflation and Trump’s ongoing crypto summit persist.
Currently, Bitcoin is trading at $88,300.
