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Powell says Fed will be flexible, patient with monetary policy

Jerome Powell

Federal Reserve Chairman Jerome Powell said the central bank will be flexible with its monetary policy this year, depending on how the economy performs.

"There is no preset path for policy," Mr. Powell said Friday at the American Economic Association's annual meeting in Atlanta, where he was joined on stage by his predecessors, Janet Yellen and Ben Bernanke. "And particularly with the muted inflation readings that we've seen coming in, we will be patient as we wait to see how the economy evolves. But we're always prepared to shift the stance of policy and to shift it significantly if necessary in order to promote our statutory goals of maximum employment and stable prices."

At its meeting last month, the Federal Open Markets Committee raised the federal funds rate by a quarter point — to a range of 2.25% to 2.5% — for the fourth time in 2018. But members also reduced the number of projected rate hikes in 2019 to two from three. Now, they project, on average, the federal funds rate to rise to 2.9.% by the end of 2019 and to 3.1% by the end of 2020.

"We will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labor market strong and to keep inflation near 2%," Mr. Powell said Friday.

The U.S. economy added 312,000 payroll jobs in December, well ahead of projections, according to a Department of Labor report that came out shortly before Mr. Powell spoke. He cited it as a good sign but also noted recent stock market volatility.

"We're listening sensitively to the message that markets are sending and we're going to be taking those downside risks into account as we make policy going forward," Mr. Powell said.

President Donald Trump has criticized publicly Mr. Powell and the Fed's policy of gradually raising interest rates. Mr. Powell was asked if he would resign should Mr. Trump make the request. He simply responded, "No."