The Federal Reserve "will be patient" on tightening monetary policy and is "listening carefully" to the stock market's concerns over decelerating growth, Fed Chairman Jerome Powell said Jan. 4.
Powell spoke amid a rocky week in the markets, which tumbled earlier in the week amid concerns that global growth was slowing and tariffs were increasingly harming U.S. manufacturers.
While Powell highlighted ongoing momentum in U.S. economic data, he said the Fed "wouldn't hesitate to change" its tightening plans, including the monthly trimming of its $4.1 trillion balance sheet that is currently on auto-pilot. The comments marked a departure from Powell's Dec. 19 remarks, when he had said he does not "see us changing" the Fed's balance sheet cuts.
The Fed is "always prepared to shift the stance of policy" in light of changing economic circumstances, he said, noting that the Fed backed off some rate hikes in 2016 as the data weakened.
"No one knows whether this year will be like 2016, but what I do know is that we will be prepared to adjust policy quickly and flexibly," Powell said at an American Economic Association annual conference.
Stocks jumped as Powell was speaking, with the S&P 500 increasing 2.63% to 2,512.20 as of 10:56 a.m. ET. Investors were also reacting to a U.S. jobs report that beat consensus estimates, with the country adding 312,000 jobs in December 2018 and wages rising 3.2% year over year.
Powell described it as a "very strong report" and welcomed the pickup in wages, which he said "at this time does not raise concerns" about an unhealthy inflation increase.
Powell was also asked about President Donald Trump's growing criticisms of the Federal Reserve and reports that Trump has considered firing Powell. The Fed chief said he had "no news for you" on the matter. Asked whether he would attend a face-to-face meeting with Trump, Powell said "nothing's been scheduled" but that meetings between presidents and Fed chairs are not unusual.
And on whether Powell would resign if Trump asked him to, the Fed chief responded: "No."