NEW YORK — The Federal Reserve is likely to keep its key interest rate unchanged in the coming months as it waits for widespread “uncertainty” stemming from President Donald Trump’s policies to resolve, Chair Jerome Powell said in written remarks to be delivered Friday in New York.
Powell said the Trump administration is making policy changes in several areas, including trade, taxes, government spending, immigration and regulation, and added that the “net effect” of those changes are what will matter for the economy and the Fed’s interest rate policies.
“While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high,” Powell said. “As we parse the incoming information, 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.”
Most economists say that Trump’s plans to slap tariffs on a wide array of imports, including 25% duties on goods from Canada and Mexico that he partially delayed Thursday, will push up prices and slow growth. But many also expect that tax cuts and deregulation could boost the economy.
Powell said the economy remains mostly healthy despite “elevated uncertainty.” He characterized Friday’s jobs report, which showed employers added 151,000 jobs and the unemployment rate ticked up to 4.1%, as in line with the “solid” gains of the past six months.
He also noted that there were signs consumer spending has slowed compared with the healthy gains in the second half of last year, and said surveys of consumers and businesses “point to heightened uncertainty about the economic outlook.”
The Fed’s own beige book, a collection of anecdotes from hundreds of businesses, mentioned uncertainty 47 times in its latest edition released Wednesday, up from just 17 times in January. The Fed publishes the beige book eight times a year.
Powell spoke at a conference organized by the University of Chicago’s Booth School of Business.
President Donald Trump’s on-again, off-again tariff policy and