CHICAGO _Federal Reserve Chairman Jerome Powell said Friday that "it's too early to say" whether a trade war with China would affect monetary policy and the broader economy.
But he acknowledged increased concerns about international trade policy and warned that escalating tariffs could boost inflation.
"Tariffs can push up on prices," Powell said after a speech to the Economic Club of Chicago. "But it's too early to say whether that's going to be something that happens."
Powell stuck to a more reassuring script during his prepared remarks _ his first public speech since taking over as Fed chairman in February. He noted robust employment, low inflation and accelerating economic growth, and said the Fed would continue its strategy of gradually increasing its benchmark interest rate to keep inflation in check.
"Our patient approach has paid dividends and contributed to the strong economy we have today," Powell said.
Last month, President Donald Trump imposed import duties on steel and aluminum and the administration later announced a plan for tariffs on $50 billion worth of Chinese imports annually.
On Wednesday, China retaliated with proposed tariffs on $50 billion worth of U.S. exports.
On Thursday, Trump threatened to impose tariffs on an additional $100 billion in Chinese goods.
Powell said in his speech Friday that tariffs have yet to enter the Fed's equation for setting monetary policy.
"We don't know the extent to which the tariffs will actually come into effect and, if so, how big an effect they will have," he said.
At the first meeting under Powell in March, the Fed raised the federal funds rate by 0.25 percentage points, to a range of 1.5 to 1.75 percent.
Interest rates were cut to near zero in 2008 to stimulate the economy during the recession. The Fed began gradually raising rates in December 2015, making the first of six increases through last month's meeting.
During his speech Friday, Powell said with unemployment at 4.1 percent _ the level in nearly two decades _ the labor market was "in the neighborhood of maximum employment."
And while inflation has remained low, Powell said full employment would push it up to the Fed's target of 2 percent by next year.
