Jerome Powell, the Federal Reserve chairman, reiterated Thursday that the Fed plans to evaluate the health of the economy before moving ahead with any new interest rate increases.
Patience is the Fed’s new watchword, and Powell used it at least four times in his remarks.
He said that 2018 was “a very good year for the economy,” and that the Fed saw signs of continued momentum in the latest economic data. Financial markets, on the other hand, have shown signs of anxiety about the economic outlook, particularly the slowing pace of international growth.
“We have the ability to be patient and watch patiently and carefully as we watch the economy evolve,” Powell said Thursday in remarks before the Economic Club of Washington, D.C.
He said the Fed would wait to see “which of these two narratives is going to be the story of 2019.”
Richard Clarida, the Fed’s vice chairman, delivered a similar message in a speech Thursday night in New York — including three mentions of patience.
“We begin the year as close to our assigned objectives as we have in a very long time,” Clarida said, referring to the fact that annualized inflation is just below 2 percent and the unemployment rate was 3.8 percent in December. “In these circumstances, I believe patience is a virtue and is one we can today afford.”
Powell was interviewed by David M. Rubenstein, co-founder of the Carlyle Group, a private equity firm in Washington where Powell worked as a partner between 1997 and 2005.
The two men have an easy rapport, and the conversation was unguarded, particularly when Powell was discussing himself rather than the policies of the central bank. Among other details, he told the audience that the food at the Treasury Department was better than the food at the Fed; that he could see any word spelled forward and backward in his head; and that he went by Jay because his father also was named Jerome, “and my mother would call my father Jerome when he was in trouble.”
Rubenstein asked whether people laughed more at his jokes now that he ran the Fed.
Powell responded, “I think my jokes have always been well received, frankly.”
The substance of the conversation closely resembled the contents of other recent remarks by Powell and by other Fed officials. In addition to emphasizing the ruddy health of the U.S. economy, Powell noted that inflation remained steady, allowing the Fed to watch and wait.
He acknowledged some clouds on the economic horizon. Of these, he said the weakness of global growth was probably the most concerning. “The principal worry is really global growth,” he said. “The question will be: How much does that affect us?”
Powell said the partial shutdown of the federal government was not taking a significant toll on broader economic growth. But he added that a continued shutdown would prevent the publication of new economic data. That would leave the Fed with less information as it grapples with increased uncertainty about the economic outlook. The Census Bureau and the Bureau of Economic Analysis, which are part of the Commerce Department, will not release any data during the shutdown, including gross domestic product numbers.
The Fed’s decision to pause, at least for a few months, has pleased financial markets. Stocks fell sharply after the Fed raised its benchmark rate in December, and Powell emphasized that more rate increases were likely. But since the Fed’s change in tone, stocks have been rising again.
The pause also is likely to gratify the Trump administration, which campaigned insistently and publicly for the Fed to stop raising interest rates.
Powell emphasized again Thursday that the Fed was not taking cues from the White House.
He also said that he had not received an invitation to meet with Trump, a plan hatched by White House advisers in December that might have lost its purpose.
Also Thursday, the Fed said it had transferred $65.4 billion in profits to the Treasury in 2018.
The earnings come mostly from the Fed’s holdings of Treasurys and mortgage bonds. The 2018 total was less than the $80.2 billion that the Fed transferred in 2017. The Fed has reduced the size of its balance sheet. It also pays interest on the reserves that commercial banks keep at the central bank, and the rise in interest rates increased those payments, which totaled $38.5 billion last year.