ATLANTA - Federal Reserve Chairman Jerome Powell on Friday moved to ease concerns in financial markets, saying that while U.S. economic momentum is solid, the central bank is sensitive to the risks highlighted by investors and will be patient with its monetary policy in 2019.
Speaking after months of volatility in world financial markets, and just hours after a monthly jobs report suggested the U.S. economy remained robust, Powell's soothing comments initially pushed stock indexes higher.
"Particularly with the muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," he told the American Economic Association, adding that the Fed is not on a preset path of tightening policy and suggesting it could pause rate hikes as it did in 2016.
"We are always prepared to shift the stance of policy and to shift it significantly" if needed, said Powell, who spoke on a panel in Atlanta alongside former Fed chiefs Janet Yellen and Ben Bernanke.
"The markets are pricing in downside risks ... and they are obviously well ahead of the data, particularly if you look at this morning's labor market data," Powell added.
The Fed chairman added: "I'll just say that we are listening carefully to that ... listening sensitively to the message that markets are sending and we are going to be taking those downside risks into account as we make policy going forward."
Earlier on Friday, the Labor Department reported that nonfarm payrolls jumped by 312,000 jobs, well above market expectations, while wages and labor force participation rose, all signals of sustained economic strength.
Powell called the December jobs report "very strong" and said U.S. data seems "to be on track to sustain good momentum into the new year."
The U.S. central bank hiked interest rates four times last year, including in December when policymakers' forecasts pointed to two more rises this year. Markets, however, have mostly tumbled since October on fears of a global economic slowdown and the ongoing U.S.-China trade war.
Futures traders on Friday were pricing in a small chance of a rate hike this year, versus no chance seen before Powell began speaking.
U.S. President Donald Trump has called the Fed's rate hikes a mistake and said he was not happy with Powell. Asked on Friday whether he would resign if Trump requested it, Powell said: "No," adding there were no meetings scheduled between the two men.