The Federal Reserve kept interest rates at the current target range of 4.25% to 4.50% at the conclusion of its January meeting, but policymakers warned that inflation remains "somewhat elevated." The pause comes after the central bank cut rates three consecutive times to end 2024.
At his press conference, Federal Reserve Chair Jerome Powell emphasized that the central bank is in no hurry to adjust its policy stance, particularly as the economy remains strong.
There is a wide range of possibilities when it comes to the potential effects of tariffs, according to Fed Chair Powell.
"The range of possibilities is very, very wide," he said. "We don't know for how long or how much, what countries. We don't know about retaliation. We don't know how it's going to transmit through the economy to consumers. That really does remain to be seen."
"The best we can do is what we've done, which is study up on this and look at the historical experience, read the literature and think about the factors that might matter," Powell continued. "And then we'll just have to see … how it goes.
Fed Chair Powell said Wednesday that he has had "no contact" with Trump since the president said last week that he would "demand that interest rates drop immediately."

"I'm not going to have any response or comment whatsoever on what the president said," Powell said at his press conference on Wednesday. "It's not appropriate for me to do so."

"The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work," Powell added.
‘Real progress' on inflation needed before policy changes are made, Powell says
Fed Chair Powell said Wednesday that the central bank will need to see "real progress on inflation or some weakness in the labor market before we consider making adjustments.

The Fed kept rates unchanged in January after three straight meetings that ended in cuts.

Fed Chair Powell reiterated the central bank's commitment to achieving a 2% inflation rate.
When discussing the Federal Open Market Committee's plans to conduct a new review on its monetary policy framework this year, Powell said its inflation target is not subject to change.
"The committee's 2% inflation goal will be retained and will not be a focus of the review," Powell told reporters Wednesday.(Cay) Newsmaker23

Source: CNBC