'We Don't Need to Be in a Hurry': Powell Calls for Patience in Speech

In his speech today at the U.S. Monetary Policy Forum in New York City, Federal Reserve Chairman Jerome Powell emphasized the central bank's cautious approach in the midst of lingering economic uncertainties. Powell reaffirmed that the Federal Reserve is ready to maintain the current interest rates, adopting a 'wait-and-see' approach as it monitors the impact of recent policy changes and economic indicators. "We don't need to rush and are in a good position to wait for more clarity," he said Powell emphasized the strength of the U.S. labor market, noting that employers added 151,000 jobs in February, bringing the average job growth to 191,000 per month since September. The unemployment rate has slightly increased to 4.1%, still within a narrow range from 3.9% to 4.2% over the past year.

He noted that the wage growth rate has slowed to a more sustainable pace, balancing labor supply and demand, thereby reducing inflationary pressures from the labor market. He said, "With slower wage growth and more balanced labor supply and demand, the labor market is no longer a significant source of inflationary pressure." Inflation trend Speaking about inflation, Powell noted that inflation has significantly decreased from its peak in mid-2022 of over 7% to 2.5% as of January. He cautioned that recent figures still slightly exceed the Federal Reserve's 2% target. Powell said: "The path to sustainably returning inflation to target is fraught with challenges and we expect this to continue" He emphasized the importance of not overreacting to short-term fluctuations and reiterated the central bank's commitment to closely monitoring inflation trends to ensure they align with long-term objectives. He said, "Inflation can fluctuate monthly and we do not overreact to one or two levels of inflation higher or lower than expected" Trade policy and currency prospects Powell has referred to recent trade policies, including announcements by the Trump administration and subsequent delays in high import tariffs affecting trading partners such as Mexico, Canada, and China. These policy changes have contributed to market volatility and added complexity to economic prospects. Powell emphasized the need to clarify these areas before making any adjustments to monetary policy, while stating that the central bank is in a good position to wait for clearer economic outlooks. With these factors, Powell pointed out that the Federal Reserve is likely to keep the key interest rate unchanged in the coming months. The central bank had previously cut the benchmark interest rate by 100 basis points to a range of 4.25% to 4.5% by the end of 2024 and maintained this policy into January. Crypto has responded to Powell's comments with cautious optimism. Investors seem reassured by the Federal Reserve's patient approach, although concerns remain about potential stagnation and Trump's cryptocurrency summit underway.