#PowellRemarks

Federal Reserve Chair Jerome Powell said on Friday in remarks that pointed to the potentially difficult set of decisions ahead for the U.S. central bank.

"We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation," undermining both of the Fed’s mandates of 2% inflation and maximum employment, Powell said in prepared remarks to a business journalists’ conference in Arlington, Virginia.

Powell spoke as global markets continued a swoon that has wiped some 10% off major U.S. stock indexes since Trump announced a raft of new tariffs on trading partners around the world on Wednesday. Powell did not address the selloff directly, but acknowledged that the Fed faced the same uncertainty engulfing investors and company executives. Stocks added to the days losses after Powell’s remarks were published.

The Fed, he said, has time to wait for more data to decide how monetary policy should respond, but the central bank’s focus will be on ensuring that inflation expectations remain anchored, particularly if Trump’s import taxes touch off a more persistent jump in price pressures.

"While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent," Powell said.

"Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem," he said. 

Powell said it was not the Fed’s role to comment on the Trump administration’s policies but rather to react to how they might affect an economy that he and his colleagues regarded just a few weeks ago as being in a "sweet spot" of falling inflation and low unemployment.