The federal reserve to remain pending in the midst of generalized economic uncertainty

By Christopher Rugaber

NEW YORK (AP) – The Federal Reserve is likely to maintain its key interest rate unchanged in the coming months while it is waiting for a general “uncertainty” resulting from President Donald Trump policies to be resolved, said President Jerome Powell in the written remarks on Friday in New York.

Powell said the Trump administration has made policy changes in several areas, including trade, taxes, public spending, immigration and regulations, and added that “the net effect” of these changes is what will be important for the economy and the Fed interest rate policies.

“Although there have been recent developments in some of these areas, in particular trade policy, uncertainty about changes and their probable effects remains high,” Powell said. “While we analyze the incoming information, we focus on the separation of the noise signal as the perspectives evolve. We do not need to be in a hurry and we are well placed to wait for greater clarity. »»

Most economists say that Trump’s plans to slap prices on a wide range of imports, including 25% of the goods in Canada and Mexico, which it partially delayed on Thursday, will increase slow prices and growth. But many also expect tax reductions and deregulation to stimulate the economy.

Powell said the economy remains mainly healthy despite “high uncertainty”. He characterized the report on Friday jobs, which showed that employers have added 151,000 jobs and that the unemployment rate reached 4.1%, as in accordance with “solid” gains of the last six months.

He also noted that there were signs that consumer spending slowed down to healthy gains in the second half of last year, and said that surveys with consumers and businesses “indicate increased uncertainty about economic prospects”.

The beige book of the Fed, a collection of hundreds of companies anecdotes, mentioned the uncertainty 47 times in its latest edition published Wednesday, up 17 times in January. The Fed publishes the Beige Book Eight times a year.

Powell spoke at a conference organized by the Booth School of Business at the University of Chicago.

President Donald Trump’s pricing policy and pricing policy and the government’s rapid fire -firing dismissals have created a peak in uncertainty among companies and caused a sharp drop in consumer confidence. Many economists have marked their estimates of the growth of the economy at 1% at an annual rate in the first three months of this year, compared to 2.3% in the last quarter of last year.

Wall Street traders, therefore, increased their rate cut forecasts, with long -term prices that they are now expecting three rate drops by the Fed this year, against only about a month. These rate reductions could help reduce borrowing costs for mortgages, car loans, credit cards and commercial loans.

However, like the governor of the Fed, Christopher Waller, noted on Thursday, there are cuts of “good news” and “bad news” cuts. Reductions of “bad news” occur if the Fed reduces the concern rates that the economy slows down, while the reductions of “good news” are those which reflect the meaning of the Fed that inflation amounts to its 2%objective.

Waller added that he was still thinking that it will be possible for the Fed to design “good news” rate reductions later this year, although he has rejected the potential for reducing the next Fed meeting this month.

After having reduced its key rate three times last year to around 4.3%, Powell indicated in January that the Fed suspended from it all new decreases in the middle of signs that inflation had remained blocked above its objective. The favorite inflation gauge from the central bank shows that prices increased by 2.5% in January compared to a year ago. Excluding the volatile food and energy categories, basic prices increased by 2.6%, the smallest increase since June.

Originally published: March 7, 2025 at 9:35 pm PST