Fed Chair Powell says interest rates on hold

NEW YORK (AP) - The Federal Reserve is likely to keep its key interest rate unchanged in the coming months as it waits for widespread "uncertainty" stemming from President Donald Trump's policies to resolve, Chair Jerome Powell said Friday at a conference in New York.

Powell said the Trump administration is making policy changes in several areas, including trade, taxes, government spending, immigration and regulation, and added that the "net effect" of those changes are what will matter for the economy and the Fed's interest rate policies.

"While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high," Powell said. "As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and are well positioned to wait for greater clarity."

Most economists say that Trump's plans to slap tariffs on a wide array of imports, including 25% duties on goods from Canada and Mexico that he partially delayed Thursday, will push up prices and slow growth. But many also expect that tax cuts and deregulation could boost the economy.

Powell's comments pushed some traders to pare back their forecasts for how many interest rate cuts the Fed may deliver this year. They had been banking on at least three following a stream of weaker-than-expected reports on the U.S. economy.

But Powell reiterated the Fed is likely on hold for a while. That sent Treasury yields higher in the bond market.

Rate reductions could help bring down borrowing costs for mortgages, auto loans, credit cards, and business loans.

Powell, in a question and answer session, acknowledged that typically tariffs would cause a "one-time" price increase, rather than persistent inflation, and the Fed could ignore such a temporary effect. Treasury Secretary Scott Bessent on Thursday made a similar argument.