Jerome Powell Really Doesn’t Want to Talk Fiscal Policy

Federal Reserve Chair Jerome Powell on Thursday said it was too soon to discuss how future fiscal policy could impact the central bank’s path ahead, holding to a line he’s used since the latest presidential election.

Powell echoed comments he made following the Federal Reserve Open Markets Committee meeting last week. During that meeting, the central bank’s policy-making body cut its influential federal funds rate by a quarter point to stabilize employment and keep appropriate pressure on inflation.

While he refused to get ahead of himself and discuss how fiscal policy may impact future interest rate cuts, Powell on Thursday said the economy was currently doing “very well.”

But the chair during a Thursday appearance in Dallas declined to discuss how tariffs, immigration, and other aspects of policies proposed by President-Elect Donald Trump could change the economy.

“We don’t actually really know what policies will be put in place,” Powell said when asked if central bankers will factor in any policy changes at their next meeting. “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.”

Why Are Trump and Powell At Odds?

Powell has been on a collision course with Donald Trump, as the president-elect has threatened the Fed’s independence and criticized the central bank’s decisions during the latest bout of high inflation.

Powell was asked about immigration, which Fed studies have shown has boosted the economy by growing the labor force. He did not specifically comment on Trump’s proposals for mass deportations or limiting immigration. He did, however, say that more workers mean more economic output.

Tariffs, another major economic tenet of Trump’s campaign, were another topic Powell didn’t directly comment on. He said it would be hard to determine what the tariffs themselves—along with any economic retaliation from other countries—would do to the U.S. economy.

Could Rate Cuts Slow For Other Reasons?

Powell forecasted that inflation would continue fluctuating within recent ranges but said he still expects price pressures to approach the central bank’s 2% annual goal. His comments came just after Wednesday’s report on the Consumer Price Index, which showed year-over-year inflation rising in October, and a Thursday morning report showing rising wholesale inflation.

Despite his confidence, Powell remained cautious about moving too quickly in hopes of stabilizing the labor market and limiting inflation.

“Inflation has come down a lot, and the labor market is not quite stabilized, but it’s in a good place,” he said. “I think in this situation, what it calls for is us to move carefully, and as we get near the plausible range of neutral levels, it may be the case that we slow the pace of what we’re doing just to increase the chances that we get this right.”