Powell Says the Fed Is in No Hurry to Adjust Rates Amid Trump Policy Uncertainty

Jerome H. Powell, chair of the Federal Reserve, said the central bank is focused on the “net effect” of President Trump’s sweeping economic agenda amid high uncertainty about which policies will actually be enacted, as he reiterated that officials are still not in a “hurry” to adjust interest rates.

“As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves,” Mr. Powell said at an event on Friday. “We do not need to be in a hurry, and are well positioned to wait for greater clarity.”

If inflation stays sticky but the economy remains strong, the Fed chair said the central bank can “maintain policy restraint for longer.” But if either the labor market were to weaken more than expected, or inflation were to rapidly decline, Mr. Powell said officials can “ease policy accordingly.”

His comments underscore the delicate balancing act that Fed is trying to navigate at a tenuous moment for the economy.

In an interview on Friday, Austan D. Goolsbee, president of the Chicago Fed and a voting member on this year’s policy-setting committee, warned that a situation in which inflation stayed sticky while growth deteriorated at the same time would be a “harder problem” for the Fed to solve and something that is increasingly “on the radar screen” as a result of the policies that Mr. Trump is pursuing.

“Tariffs on intermediate goods are a negative supply shock,” he said, referring to goods that are used to make other products and services for consumers. “If there were large negative supply shocks that were to hit the economy, they would have a tendency to both drive down employment and drive up prices.”