CHICAGO: The head of the US Central Bank has said it will hold on to any interest rate changes at the moment when the economic prospects become increasingly uncertain after major shifts in trade policy under President Donald Trump.

US Federal Reserve President Jerome Powell said Wednesday that Fed would wait for more data on the direction of the economy before changing interest rates, characterizing recent market volatility as a logical reaction to Trump administration’s dramatic shift in customs policy.

“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our political attitude,” Powell said in prepared remarks at the Chicago economic club. His remarks noticed a potentially tough situation that develops too fat, with inflation being pushed higher by customs while growth – and potentially dealing – is weakened.

Fed trying to keep inflation stable at 2%while also maintaining maximum employment.

“I think we are moving away from these goals, probably for the balance this year. Or at least no progress,” Powell said, referring to the impact of tariffs that have proven to be bigger – at least as announced – than even the most serious scenarios that became pencil to initial bold planning estimates. He noted that the United States began the year around full employment and with inflation that is expected to continue to fall to the central bank’s goals.

The prospects have now become extremely uncertain, Powell said with “fundamental changes” in politics that offer businesses and economists that are not clear parallels to study.

In his first public comments on recent economic volatility, Powell said he felt that bond and stock markets were working well with the swings of security values ​​reflecting investors who adapt to the new landscape.

When asked if there is a “bold put” – where the central bank would step in if the markets fall – said Powell, “No, with an explanation … Markets treat what is going on … markets are struggling with a lot of uncertainty, and that means volatility. But that said, markets work … Conditional that you want such a challenging situation, markets, markets, what they are assumed to do, they work. That they will act as if you would expect you to expect them to be expected to do so.

American shares that were already down to the session before Powell spoke expanded their losses afterwards.

“I think people expected Powell to be neutral, and he was Hawkish instead,” said Jim Carroll, senior wealth adviser at Ballast Rock Private Wealth in Charleston, South Carolina, about the additional losses in shares after Powell’s appearance. “When asked if there is such a thing that a fat set to the stock market was his answer ‘no’.”

Increased uncertainty

In his prepared remarks, Powell said US economic growth seems to be slower, with consumer costs growing modestly. A haste with imports to avoid customs rates is probably also to weigh the estimates of gross domestic product, with mood worsening.

“Despite increased uncertainty and downward risks, the US economy is still in a solid position,” Powell said. But “The data that is so far in hand suggests that growth has subsided in the first quarter of last year’s solid pace.”

External analysts see that growth continues to slow down during the year, while “households and businesses report a sharp decline in mood and increase uncertainty about the prospects, which largely reflects trade policy concerns,” Powell said, referring to the rapid changes in import duties imposed by President Donald Trump.

Fed’s benchmark interest rate is currently set in an interval between 4.25% and 4.5%, where it has been since December after a number of interest rates late last year.

Since then, the progress of recovering inflation to Fed’s 2% target has slowed down.

Despite the uncertainty and back and forth the nature of Trump’s customs reviews, a verdict on their probable influence will be central to the upcoming bold debate on whether to leave the benchmark interest rate unchanged, lower it-or even consider interest rates.

“Tariffs are very likely to generate at least one temporary increase in inflation. Inflation effects may also be more persistent,” Powell said. “Avoiding this result depends on the size of the effects how long it takes for them to pass fully to prices, and in the end it is to emphasize that a goal has been anchored that bold officials have begun to emphasize.

While measurements of inflation expectations over short -term periods “have moved up markedly” due to customs, Powell said that the long -term expectations that FED look most close to remain in accordance with FED’s inflation target.

When Fed also kept an eye on employment, Powell said the labor market remained “in solid state” and “at or near maximum employment”.

But if the fat is caught between rising inflation and a rising unemployment rate, “we would consider how far the economy is from each goal and the potentially different time horizons that these respective gaps would be expected to close.”