The Fed is stuck in neutral as it watches how Trump’s policies play out

cnbc.com:

The popular narrative among Federal Reserve policymakers these days is that policy is «well-positioned» to adjust to any upside or downside risks ahead. However, it might be more accurate to say that policy is stuck in position.

With an abundance of unknowns swirling through the economy and the halls of Washington, the only gear the central bank really can be in these days is neutral as it begins what could be a long wait for certainty on what's actually ahead.

«In recent weeks, we've heard not only enthusiasm — particularly from banks, about possible shifts in tax and regulatory policies — but also widespread apprehension about future trade and immigration policy,» Atlanta Fed President Raphael Bostic said in a blog post. «These crosscurrents inject still more complexity into policymaking.»

Bostic's comments came during an active week for what is known on Wall Street as «Fedspeak,» or the chatter that happens between policy meetings from Chair Jerome Powell, central bank governors and regional presidents.

Officials who have spoken frequently described policy as «well-positioned» — the language is now a staple of post-meeting statements. But increasingly, they are expressing caution about the volatility coming from President Donald Trump's aggressive trade and economic agenda, as well as other factors that could influence policy.

«Uncertainty» is an increasingly common theme. In fact, Bostic titled his Thursday blog post «Uncertainty Calls for Caution, Humility in Policymaking.» A day earlier, the rate-setting Federal Open Market Committee released minutes from the Jan. 28-29 meeting, with a dozen references to the uncertain climate in the document.

The minutes specifically cited «elevated uncertainty regarding the