BY HOWARD SCHNEIDER
WASHINGTON- US Federal Reserve Chair Jerome Powell has sent strong messages when he felt they were needed, going on television to pledge maximum support for the economy when the COVID-19 pandemic struck, using a terse 2022 speech for a stern message about inflation, and jumping in to backstop financial markets after the 2023 failure of Silicon Valley Bank.
But with Powell and the Fed left guessing just as much as the rest of the world about where President Donald Trump is taking the economy, the Fed chair indicated on Friday this is not the moment for a “Fed put” – Wall Street’s term for actions to shore up free-falling stock markets – even as household wealth evaporates with real risks to economic activity.
“There’s a lot of waiting and seeing going on, including by us, and that just seems like the right thing to do at a time of elevated uncertainty,” Powell said, making it apparent the Fed won’t be rushing to cut interest rates as it would if there was a crisis calling for an obvious central bank response.
Indeed job growth in March remained strong, data out on Friday showed, though Powell was careful to note the figures were tallied before Trump’s tariff announcements.
“It’s not clear at this time … the appropriate path for monetary policy,” he said. “We’re going to need to wait and see how this plays out.”
Though stock price moves can affect the economy by changing household wealth and shifting expectations, the dynamics of Trump’s first weeks in office have created such a blizzard of conflicting signals that the Fed, so far, can’t pick a lane. – Reuters
