Chair Jerome Powell says the Federal Reserve is prepared to respond to the Trump administration’s trade conflicts to protect the U.S. economic expansion if it decides that would be necessary.
Powell is speaking at a conference in Chicago on how the central bank can make its interest rate policy more effective at a time when inflation has remained chronically below the Fed’s target level.
Powell calls persistently low inflation the “pre-eminent monetary policy challenge of our time,” because it limits the Fed’s ability to support the economy by cutting rates.
The chairman doesn’t specify in his remarks what the Fed might do to help bolster the U.S. economy, which is being buffeted by tariffs the Trump administration has imposed on China and has threatened to impose on Mexico.