Fitting trade-policy uncertainty into the Federal Reserve’s monetary policy framework is a new challenge for the agency, Fed Chairman Jerome Powell said. Speaking from the economic policy summit in Jackson Hole, Wyo., Powell said there are no recent precedents to guide the Fed’s policy response to trade uncertainty.
Powell said that the Fed’s challenge is to do what it can to sustain the economic expansion, noting that monetary policy is a powerful tool to support consumer spending, business investment, and public confidence. However, he warned, “it cannot provide a settled rulebook for international trade.”
Powell’s comments come as the Fed and observers debate the agency’s next move following last month’s quarter-point cut in benchmark interest rates. The Federal Open Market Committee’s next meeting is scheduled for Sept. 17-18.