Jerome H. Powell, chair of the Federal Reserve, mentioned the central financial institution is targeted on the “internet impact” of President Trump’s sweeping financial agenda amid excessive uncertainty about which insurance policies will truly be enacted, as he reiterated that officers are nonetheless not in a “hurry” to regulate rates of interest.

“As we parse the incoming info, we’re targeted on separating the sign from the noise because the outlook evolves,” Mr. Powell mentioned at an occasion on Friday. “We don’t should be in a rush, and are effectively positioned to attend for higher readability.”

If inflation stays sticky however the financial system stays robust, the Fed chair mentioned the central financial institution can “keep coverage restraint for longer.” But when both the labor market have been to weaken greater than anticipated, or inflation have been to quickly decline, Mr. Powell mentioned officers can “ease coverage accordingly.”

His feedback underscore the fragile balancing act that Fed is attempting to navigate at a tenuous moment for the economy.

Talking on the identical occasion earlier on Friday, Michelle Bowman, a Fed governor, mentioned that as inflation returns to the central financial institution’s 2 p.c goal, the labor market and financial exercise “will develop into a bigger issue” in coverage discussions.

The Fed is predicted to carry rates of interest regular at 4.25 p.c to 4.5 p.c when officers collect March 18-19, extending a pause that has been in place since January. However its choices after that time could get extra fraught, particularly if the financial system weakens and value pressures rise to the extent that economists worry.

How considerably Mr. Trump’s tariffs will affect the financial system will not be but recognized. The president has already flip-flopped on levies he positioned on Mexico and Canada this week, however has saved the menace alive by issuing solely a short-term reprieve. Sweeping retaliatory tariffs are additionally nonetheless on the desk, as are different penalties on aluminum, metal and different merchandise. The scale of the potential affect relies upon not solely on the period of the insurance policies but in addition how fervently different international locations defend themselves with retaliatory measures and the way companies and customers adapt to greater prices.

The Fed is having to contemplate these implications alongside different insurance policies Mr. Trump is pursuing, together with mass deportations and steep cuts to authorities spending, that are anticipated to tug down development. Tax cuts and deregulation efforts, which make up the opposite a part of the president’s financial agenda, could act as an offset and assist to bolster enterprise exercise, however to what extent is unclear.

What has given officers on the Fed some consolation is that the financial system Mr. Trump inherited has a strong basis. The truth is, new information launched on Friday confirmed that hiring held steady in February, because the unemployment fee ticked as much as 4.1 p.c. That sturdiness could imply it is going to require a really vital blow for the financial system to be knocked right into a recession.

Nonetheless, the volatility alone has been sufficient to immediate concern concerning the financial outlook, with measures monitoring shopper sentiment suggesting there was a major deterioration in how assured People are feeling. Many economists have additionally lowered their forecasts for development, and policymakers have taken discover, too.

Patrick T. Harker, president of the Philadelphia Fed, warned on Thursday that whereas unemployment was nonetheless low and the financial system was nonetheless rising, “there are threats to this.”

«We’re beginning to see that confidence is beginning to wane,” he mentioned at an occasion hosted by his regional financial institution.

Pointing to latest measures of sentiment and different “mushy information,” Christopher J. Waller, a Fed governor, added on Thursday that these gauges counsel “possibly issues aren’t going be fairly nearly as good on the true facet of the financial system.”

On Friday, nevertheless, Mr. Powell sought to strike a extra optimistic tone, saying that “regardless of elevated ranges of uncertainty, the U.S. financial system continues to be in a very good place.” Sentiment information, in the meantime, “haven’t been a very good predictor of consumption development lately.”

The expansion scare comes as People are additionally bracing for greater shopper costs, a poisonous mixture that can make the Fed’s job tougher.

After failing to identify the pandemic-era inflation downside shortly sufficient, and with value pressures from that episode nonetheless lingering, the Fed is being cautious to not make the identical mistake once more. Since Mr. Trump was re-elected, officers on the central financial institution have raised their forecasts for inflation for the 12 months and a few have extra not too long ago drawn a direct hyperlink to the president’s insurance policies.

Mr. Powell famous that buyers who’re elevating their expectations about inflation cited tariffs as a “driving issue,» whilst he burdened that longer-run measures that are extra indicative of the trajectory for inflation have been “secure.” In a moderated dialogue after his speech, he steered that tariffs would find yourself impacting costs to some extent, however that the coverage response would rely on whether or not it was only a one-off improve or if there have been a collection of shocks.

Earlier this week, John C. Williams, president of the New York Fed and a high ally of Mr. Powell, mentioned he anticipated tariffs to stoke greater inflation as these results “filter into costs that buyers pay.”

Even Mr. Waller, who beforehand mentioned the Fed can “look via” the consequences of tariffs, acknowledged on Thursday that the affect of the latest levies dangers being “a lot bigger» than he initially anticipated.

The newest Beige Ebook launched by the Fed this week, which tracks financial circumstances throughout the nation, confirmed companies bracing for a similar. Most surveyed throughout the 12 districts that make up the Federal Reserve system mentioned they deliberate to boost costs because of tariffs, with some even pre-emptively doing so.

Towards this backdrop, officers have been constant of their assist of the Fed holding agency on fee cuts till it sees extra proof that inflation is shifting again all the way down to the central financial institution’s goal or the labor market unexpectedly weakens.

Monetary markets are betting these circumstances can be met by its June assembly, permitting the Fed to decrease charges by 0.75 proportion level this 12 months.