Volkswacht Bodensee - US Fed chair flags policy uncertainty but in no rush to adjust rates

"It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy," Powell told a forum in New York.

"We do not need to be in a hurry, and are well positioned to wait for greater clarity."

Powell's comments come as Trump's return to the White House in January brings swift changes that promise to ripple through the world's biggest economy.

The president has taken aim at illegal immigration while imposing sweeping levies on major trading partners Canada, Mexico and China -- triggering retaliation.

The tariffs sent US markets tumbling and economists have warned that if kept in place, such additional duties could weigh on longer-term economic growth and push up inflation.

But for now, Powell maintained that the US economy remains in a good position, adding that it has been growing at a solid pace while the labor market remained robust.

Government data released Friday showed that the US economy added 151,000 jobs, slightly lower than anticipated, while unemployment crept up slightly.

Despite shifts in trade policy, Powell stressed that the Fed is focused on separating signal from noise as the outlook evolves.

He also remained cautious in assessing the effects of household and business uncertainties over economic prospects.

"It remains to be seen how these developments might affect future spending and investment," he said.

He warned that sentiment readings are not always a good predictor of consumption growth in recent years.

Powell added Friday that even as inflation has cooled significantly from its peak in mid-2022 without a sharp spike in unemployment, the path to lowering levels further is likely to remain bumpy.

Some near-term measures of inflation expectations have recently risen, with consumers and businesses pointing to tariffs as a driving factor.

Yet longer-term expectations remain stable and consistent with policymakers' two percent goal, Powell added.

Besides the effects of trade policy, Powell noted the administration is also in the process of introducing "significant policy changes" in areas like fiscal policy and regulation.

Trump's administration has referred to tariffs as a means to raise government revenue, remedy unfair trade practices and exert pressure on other countries on US priorities.

T.Egger--VB