“With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” he said.
Powell stated Wednesday that the Fed requires “real progress on inflation or signs of labor market weakness” before considering any policy adjustments.
He reaffirmed the Fed’s commitment to a 2% inflation target. Addressing the FOMC’s upcoming review of its monetary policy framework, he emphasized that the inflation goal remains unchanged.
“The committee’s 2% inflation goal will be retained and will not be a focus of the review,” Powell told reporters on Wednesday.
Powell on Trump policies
Powell said Wednesday he would not respond or comment on President Donald Trump’s recent remarks that he would demand lower interest rates. He said “it’s not appropriate for me to do so,” adding that he has not had contact with Trump.The US Federal Reserve will however wait to see how President Trump’s policies affect the economy, Fed chair Jerome Powell said Wednesday, shortly after policymakers voted to pause rate cuts. “We’re going to wait and see,” Powell said in response to a question about how the Fed was considering Trump’s economic proposals, which include the imposition of new tariffs and the mass deportation of undocumented workers.
The central bank is studying new directives from the Trump Administration pushing against policies promoting diversity in the government workforce, he said. “We’re reviewing the orders and the associated details” of the new diversity policies and “as has been our practice over many administrations, we are working to align our policies with executive orders as appropriate and consistent with applicable law,” Powell said.
Powell defends climate alliance exit
Powell defended on Wednesday leaving a global central bank climate alliance following Donald Trump’s election as president, a group the Fed had joined when Joe Biden was elected in 2020.
Powell said the Network of Central Banks and Supervisors for Greening the Financial System had seen its mandate expand a lot and the work of the group was “not a good fit for the Fed” anymore and “it was time to acknowledge that.” Powell noted the timing issue and said “I’m aware of how it can look but it was really not driven by politics.”
Powell suggested on Wednesday that the central bank still has room to run with shrinking the size of its balance sheet.
Banking system reserves remain “abundant” and the central bank still has solid control off the federal funds rate, Powell said a press conference following the latest Federal Open Market Committee meeting. As for when the Fed should stop its balance sheet wind down, Powell said “I don’t have anything to say to you about particular dates.”
Powell on Crypto
Powell said on Wednesday the cryptocurrency sector would likely benefit from more rules to govern its conduct.
“We are not against innovation” and banks interacting with the cryptocurrency sector, Powell said at a press conference following the close of the Fed’s policy meeting. But he added, “It would be helpful if there were a greater regulatory apparatus around crypto. … That would be a very constructive thing for Congress to do.”
