Fed Chair Powell stresses patience on rate cuts, policy uncertainty: 'We do not need to be in a hurry'

Federal Reserve Chair Jerome Powell reiterated on Friday that the central bank is not in a hurry to cut interest rates as policy uncertainty continues to weigh on markets and cloud the outlook for the US economy.

“As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves,” Powell said Friday during a speech in New York.

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

On Friday, February’s jobs report offered some relief to investors concerned about the health of the US economy, as 151,000 jobs were added last month, more than the 125,000 jobs seen in January. The unemployment rate ticked up slightly to 4.1% from 4%.

“Many indicators show that the labor market is solid and broadly in balance,” Powell said in reaction to the data. “Smoothing over the month-to-month volatility, since September, employers have added a solid 191,000 jobs a month on average.”

Markets were still pricing in three interest rate cuts following Friday’s jobs report.

In reference to the uncertainties caused by the Trump administration’s policies, Powell again emphasized these changes were coming not only as a result of tariffs, but across immigration, regulation, and fiscal policy shifts, too.

“The new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,” Powell said Friday during a speech in New York. “It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.”

On Friday, a number of Wall Street firms — including JPMorgan, Goldman Sachs, and Morgan Stanley — reduced their respective growth targets, referencing the anticipated effects of restrictive trade and immigration policies.

“If our narrative entering the year was ‘slower growth, stickier inflation’ then we now think ‘slower growth, firmer inflation,'” Morgan Stanley economist Michael Gapen wrote in a note to clients, lowering his full-year GDP target to 1.5% from 1.9%.

Powell said Friday, “The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue.”

In recent weeks, surveys and sentiment indicators have been the main source of investor concern, marking the return of “bad news for the economy is bad news for stocks.”

ISM Manufacturing prices paid came in at the highest since June 2022 while new orders fell into contraction, suggesting a “stagflationary” environment in which growth slows but price increases remain elevated.

That data arrived on top of bleak survey results for the month of February, with declining consumer confidence and sentiment results weighing on markets.

Despite recent growth concerns, Powell said the economy has been growing “at a solid pace.”

“Sentiment readings have not been a good predictor of consumption growth in recent years,” Powell said Friday. “It remains to be seen how these developments might affect future spending and investment.”

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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