NEW YORK—Federal Reserve Chairman Jerome Powell made it clear that the new Administration’s “significant” policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation will have a sharp impact on the path of monetary policy.
Speaking at the University of Chicago Booth School of Business 2025 U.S. Monetary Policy Forum here, Powell said that while there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high.
“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,” Powell said.
Powell stressed that policy is not on a preset course.
“If the economy remains strong but inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. Our current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate,” Powell said.
Powell added that at the last FOMC meeting, the group began its second five-year review of its monetary policy framework.
“We will consider changes to our consensus statement (Statement on Longer-Run Goals and Monetary Policy Strategy) and to our communications as part of this review,” Powell said. “The consensus statement articulates our framework for the conduct of monetary policy in pursuit of the goals assigned to us by Congress. We will consider lessons of the past five years and adapt our approach, where appropriate, to best serve the American people, to whom we are accountable. The 2% longer-run inflation goal will be retained and is not a focus of the review.”