Powell says Fed is awaiting 'greater clarity' on Trump policies before making next move on rates

cnbc.com:

NEW YORK — Federal Reserve Chairman Jerome Powell said Friday that the central bank can wait to see how President Donald Trump's aggressive policy actions play out before it moves again on interest rates.

With markets nervous over Trump's proposals for tariffs and other issues, Powell reiterated statements he and his colleagues have made recently counseling patience on monetary policy amid the high level of uncertainty.

The White House «is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,» he said in a speech for the U.S. Monetary Policy Forum. «It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.»

Noting that «uncertainty around the changes and their likely effects remains high» Powell said the Fed is «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.»

The comments seem at least somewhat at odds with growing market expectations for interest rate cuts this year.

As markets have been roiled by Trump's shifting positions on his agenda — specifically his tariff plans — traders have priced in the equivalent of three quarter percentage point reductions by the end of the year, starting in June, according to the CME Group's FedWatch gauge.

However, Powell's comments indicate that the Fed will be in a wait-and-see mode before mapping out further policy easing.

«Policy is not on a preset course,» he said. «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.»

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