Federal Reserve (Fed) Chair Jerome Powell stuck to his cautious guns on Friday, warning that policy uncertainty makes it difficult for the Fed to enact policy adjustments.

Key highlights

Uncertainty around Trump Administration policies and their economic effects remains high.

Most longer-term inflation expectations remain stable, consistent with 2% goal.

Net effect of trade, immigration, fiscal, and regulation policy is what matters for the economy anf monetary policy.

Fed policy is not on preset course. We can maintain policy restraint for longer if inflation progress stalls or ease if labor market unexpectedly weakens or inflation falls more than expected.

Labor market solid, broadly in balance. Inflation somewhat above 2% goal but moving closer to target.

US economy in a good place, despite elevated uncertainty.

Zero lower bound is probably not the base case anymore.

We'll be looking at focus on zero lower bound in review.

We will be looking at idea of moderate inflation overshoot.

There is no need to redefine price stability.

It's not appropriate to react to one-time price spikes.

It's still very uncertain about what will be tariffed and for how long.

If this turns into a series of actions, or if tariffs are larger, or expectations start to move, that would influence how the Fed reacts.

It is not simply what is happening with tariffs, but with growth and other changes to economic policy.

The costs of being cautious are very, very low.

The economy is fine; it doesn't need us to do anything.

Some factors suggest productivity burst to be one-time.

Fed staff marking up potential growth estimates for now.