By Michael S. Derby
(Reuters) – Federal Reserve Chair Jerome Powell mentioned on Thursday the U.S. central financial institution has time earlier than it must adapt its policymaking pondering because of the return of President-elect Donald Trump to the White Home.
“I think it’s too early to reach judgments here” and “we don’t really know what policies will be put in place,” Powell mentioned at a Dallas Fed occasion.
Powell mentioned the Fed will watch to see what elected officers do – Republicans received management of each homes of Congress within the Nov. 5 elections. “I think we have time to make assessments about what the net effects of policy changes will be on the economy before we react with policy,” he mentioned.
Trump, who defeated Democratic Vice President Kamala Harris within the presidential election, has vowed to impose stiff tariffs on imports and a sweeping crackdown on immigration, each of which have the potential to reignite inflation after the Fed had introduced it again beneath management. On the similar time, Trump’s financial agenda additionally dangers additional driving up deficit spending, though his proposed tax cuts might produce increased financial progress for some time.
The Republican former president was a daily critic of the Fed throughout his 2017-2021 time period within the White Home and broke with long-standing precedents to actively criticize the central financial institution’s financial coverage selections. Trump and his allies have additionally weighed the concept of subordinating Fed decision-making to their political authority, a actuality many economists concern might erode belief within the Fed and enhance the dangers of upper inflation.
In his remarks on Thursday, Powell mentioned Fed officers merely want extra coverage readability earlier than they’ll begin updating financial forecasts and coverage expectations, noting that for the central financial institution’s outlook, “the answer isn’t obvious until we see the actual policies … We reserve judgment until we actually know what we are talking about.”
