MNI BRIEF: Powell Says Fed's Dual Mandate May Be In Tension

President Trump's sweeping tariff hikes may put the Fed's dual mandate full employment and price stability "in tension," Powell said, after a speech in which he warned aggressive tariffs could hurt growth and add to inflation. 

"The two goals are, as we say, in tension, or they may be. That's not what we're seeing right now, but the effects at the margin right now would be for higher inflation and perhaps higher unemployment, but that's a marginal effect," he told journalists at a conference in Arlington, Va. "You are not in a situation like we were in the 1970s where those two goals were really both pulling in opposite directions." 

The Fed's operating framework calls for the central bank to think about how far each variable is from its goal and how long it would take for each to get back. "If one of them is further away, then you would focus on that one," he said. 

"It's not clear at this time what the appropriate path for monetary policy will be, and we're going to need to wait and see how this plays out before we can start to make those adjustments." (See: MNI POLICY: Fed Forced Into Hawkish Stance Despite Growth Risk)

Fed Chair Powell referenced the central bank's next meeting May 6-7 and said "it feels like we don't need to be in a hurry."