In a speech delivered today at the U.S. Monetary Policy Forum in New York City, Federal Reserve Chair Jerome Powell emphasized a measured approach to monetary policy, reinforcing the central bank’s commitment to patience amid ongoing economic uncertainties.
A ‘Wait and See’ Approach
Powell reiterated the Federal Reserve’s readiness to maintain current interest rates, stressing the importance of waiting for greater clarity before making any adjustments.
“We do not need to be in a hurry, and are well positioned to wait for greater clarity,” Powell stated.
This cautious stance signals that the Fed is prioritizing long-term economic stability over short-term market fluctuations, maintaining its focus on data-driven decision-making.
Labor Market Resilience
The Federal Reserve Chair highlighted the strength of the U.S. labor market, noting that employers added 151,000 jobs in February. Since September, the economy has averaged 191,000 new jobs per month. Despite a slight uptick in the unemployment rate to 4.1%, Powell described labor conditions as steady, with the rate remaining within a narrow range of 3.9% to 4.2% over the past year.
He also pointed to moderating wage growth as an encouraging sign of balance between labor supply and demand, reducing inflationary pressures.
“With wage growth moderating and labor supply and demand having moved into better balance, the labor market is not a significant source of inflationary pressure,” Powell said.
Inflation Trends and Monetary Policy Outlook
Powell addressed inflation, which has fallen from a mid-2022 peak of over 7% to 2.5% as of January. While this decline is a positive sign, he noted that inflation remains slightly above the Federal Reserve’s 2% target, cautioning that the path to achieving stable inflation has been inconsistent.
“The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue,” Powell said.
He emphasized the importance of not overreacting to short-term fluctuations and reaffirmed the Fed’s commitment to monitoring inflation trends carefully.
“Inflation can be volatile month-to-month, and we do not overreact to one or two readings that are higher or lower than anticipated.”
Trade Policies and Market Volatility
Powell also addressed the broader economic landscape, including uncertainties tied to trade policies. The Trump administration’s recent announcements and delays on steep import tariffs affecting trading partners such as Mexico, Canada, and China have added volatility to financial markets.
The Fed Chair acknowledged that these policy shifts complicate economic projections, reinforcing the need for a measured approach.
Given these factors, Powell signaled that the Federal Reserve is likely to keep interest rates unchanged in the near term. The central bank had previously cut the benchmark rate by 100 basis points to a range of 4.25% to 4.5% in late 2024 and maintained this policy in January 2025.
Crypto Market Reaction
Powell’s comments were met with cautious optimism within the cryptocurrency market. His patient approach reassured investors, though some concerns remain over potential stagflation and Trump’s ongoing crypto summit.
Bitcoin is currently trading at $88,300, reflecting a steady market response to Powell’s speech.
Powell’s remarks reinforce the Federal Reserve’s cautious stance on monetary policy, emphasizing patience and data-driven decision-making. With inflation trends still evolving and global trade policies in flux, the central bank appears committed to maintaining stability rather than making premature moves.
As economic conditions unfold, investors will continue to monitor how the Federal Reserve navigates these uncertainties in the months ahead.
