Janet Yellen last month. But he said the Fed's regional bank presidents around the country have heard concerns from businesses about the consequences of the tariffs.
"A number of participants in [the] FOMC did bring up the issue of trade", Powell said on Wednesday, adding that participants have been approached by members of the business community who have expressed fears of more widespread retaliation. Fed representatives now utter an upsurge from their former prediction done prior to the Republican tax cuts was concluded.
In the forecasts, US central bankers projected a median federal funds rate of 2.9% by the end of 2019, implying three rate increases next year, compared with two 2019 moves seen in the last round of forecasts in December.
Inflation "is expected to move up in coming months and stabilise" around the Fed's target, it said.
That would represent a three-year overshoot of the Fed's 4.5-percent estimate for the unemployment rate that keeps labor supply and demand in balance.
The Federal Reserve's policymaking committee signaled no rush to step up its gradual pace of interest-rate increases.
According to officials at the Fed, "The economic outlook as strengthened in recent months".
But there was a hawkish tone in some of the Fed's observations, and Powell for the first time said the Fed expects above-target core inflation of 2.1%. The Fed also significantly boosted its forecast for US growth this year and next. An index tracking the dollar's value against trading partners earlier dropped the most in two weeks, with Canada's dollar and Mexico's peso surging after some concessions in trade talks.
Normally, a hike in interest rate in the United States does not augur well for the emerging markets and commodities. In theory, he said, lower corporate tax rates and the expensing provisions should encourage more investment in the USA, which would lead to a corresponding rise in productivity.
Higher interest rates aren't always a bad thing, however: They can also lead to increased rates for bank savings accounts, for example. However, it marginally downgraded its assessment of the rise in economic activity to "moderate rate" from "solid" in January.
"On the one hand, the risk would be that we wait too long and then we have to raise rates quickly".