The Blubber

Powell: Fed Can Wait for More Clarity Amid Economic Uncertainty

March 8, 2025 | New York

Federal Reserve Chair Jerome Powell acknowledged growing uncertainty in the U.S. economic outlook but emphasized that the central bank does not need to rush to adjust policy.

“Despite elevated levels of uncertainty, the U.S. economy remains in a good place,” Powell said Friday at an event hosted by the University of Chicago Booth School of Business. “We do not need to be in a hurry and are well positioned to wait for greater clarity.”

Powell pointed to lingering unknowns about the impact of President Donald Trump’s economic policies, particularly on trade and immigration.

“While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high,” he said.

He also noted signs that consumer spending may slow, with surveys of households and businesses indicating rising uncertainty about the economy’s trajectory.

“It remains to be seen how these developments might affect future spending and investment,” Powell added.

Following Powell’s remarks, U.S. government bond yields climbed to their highest levels of the day, reversing earlier declines. Earlier in the session, yields had dropped after a February jobs report reinforced expectations for multiple interest rate cuts later this year.

Inflation Outlook: Progress Remains Uneven

Powell said the Fed expects continued progress on inflation, though the path forward will be uneven.

“The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue,” Powell said.

He highlighted persistent price pressures in housing services and non-housing market-based services, even as inflationary trends moderate in other areas.

Powell also addressed recent increases in short-term inflation expectations, but stressed that most long-term inflation measures remain stable and aligned with the Fed’s 2% target.

Fed Expected to Hold Rates Steady in March

Fed policymakers are widely expected to keep interest rates unchanged at their upcoming March 18-19 meeting.

After cutting rates by a full percentage point in late 2024, officials have signaled they are comfortable staying on hold while monitoring further progress on inflation.

Uncertainty over Trump’s economic agenda is another factor keeping the Fed cautious. Since taking office in January, Trump has imposed new tariffs on China, though his stance on Mexico and Canada has shifted. He has also promised reciprocal tariffs on other U.S. trading partners, alongside stricter immigration enforcement and expanded deportations.

For now, Powell’s message is clear: The Fed is in no rush to move.