Jerome H. Powell, the Federal Reserve chair, highlighted a cautious approach to monetary policy in light of President Trump's economic agenda's uncertainty. Powell stressed the importance of discerning meaningful signals from market noise and maintaining existing interest rate levels. The Fed aims to balance inflation control with labor market conditions and economic activity. With rates expected to remain steady, decisions may evolve in response to economic weakening or inflation changes, indicating a careful monitoring strategy by the Fed as it navigates potential challenges.
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.
If inflation stays sticky but the economy remains strong, the Fed chair said the central bank can maintain policy restraint for longer.
Speaking at the same event earlier on Friday, Michelle Bowman, a Fed governor, said that as inflation returns to the central bank's 2 percent target, the labor market and economic activity will become a larger factor in policy discussions.
But its decisions after that point may get more fraught, especially if the economy weakens and price pressures rise to the extent that economists fear.
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