Federal Reserve

Powell says Trump's trade policy has become a growing concern among Federal Reserve members

Key Points
  • "A number of participants in the [Federal Open Market Committee] did bring up the issue of tariffs," Federal Reserve Chairman Jerome Powell said at a news conference.
  • The March FOMC meeting is Powell's first as chair.
Powell: Changes in trade policy shouldn't effect current outlook
VIDEO1:5001:50
Powell: Changes in trade policy shouldn't effect current outlook

The threat of a global trade war, which has caught the attention of investors in a big way, is also a concern for the Federal Reserve.

In his first news conference as central bank chairman, Jerome Powell said the battle over tariffs has not caused Fed officials to change their economic outlook yet, but future expectations will depend on how the situation unfolds.

"A number of participants in the [Federal Open Market Committee] did bring up the issue of tariffs," Powell said. "If I could summarize what came out of it was, first, there's no thought that changes in trade policy should have any effect on the current outlook."

However, "a number of participants reported that about their conversations with business leaders around the country and reported that trade policy has come a concern going forward for that growth."

Those concerns come as President Donald Trump has slapped a 25 percent tariff on imported steel and 10 percent on aluminum.

A number of recent investor surveys, including one from CNBC, indicate that an acceleration in trade tensions presents the biggest threat to future growth.

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., on Wednesday, March 21, 2018.
Andrew Harrer | Bloomberg | Getty Images

At this week's FOMC meeting, members marked up their expectations for GDP growth, moving 2018 up to a 2.7 percent forecast from a 2.5 percent outlook in December, with 2019 rising from 2.1 percent to 2.4 percent.

That could change should other countries retaliate against the U.S. levies.

"Our FOMC participants reported that they heard concerns, which were relatively new, about future trade actions," Powell said. "They're seeing it as a risk to the outlook. The kind of things people are talking about are more widespread retaliations, more widespread action back and forth."

The committee approved a quarter-point hike at the meeting, putting the benchmark funds rate at a range of 1.5 percent to 1.75 percent. In approving the increase, members noted that the economic outlook has "strengthened" recently.