Jerome Powell, chairman of U.S. Federal Reserve (Fed), said on Friday that the Fed "will be patient" while it weighs future interest rate hikes.
Citing tight job market and low inflation in the United States, Powell first described 2018 as a good year for the U.S. economy during a discussion at the American Economic Association in Atlanta, moderated by New York Times reporter Neil Irwin.
Meanwhile, Powell said the Fed noticed the concerns about downside risks, which include slowing global growth, ongoing trade negotiations, and general policy uncertainty coming out of Washington.
Heading into 2019 with these conflicting signals, Powell stressed that the Fed was "going to be taking that downside risk into account."
"There is no preset path for policy," he said, "and particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves."
In the meantime, Powell said that the Fed would be prepared to adjust their normalization plans, after a three-year long campaign to shrink the portfolio that the Fed purchased after the Great Recession took place.
"If we ever came to the conclusion that any aspect of our normalization plans was somehow interfering with our achievement of our statutory goals, we wouldn't hesitate to change it, and that would include the balance sheet, certainly," Powell said.
All those dovish remarks eased the market's fears on further rate hikes effectively, while the Dow soared 747 points, or 3.3 percent on Friday after previous day's rout.
Last month, Fed policymakers already lowered the forecast of the rate hikes in 2019 to two times, while their previous estimate was three. However, Powell voiced more flexibility in the future path of Fed's monetary policy.
Powell said the Fed "will be prepared to adjust policy quickly and flexibly" in order to maintain the expansion, support the labor market and keep inflation near 2 percent.
"We're always prepared to shift the stance of policy and to shift it significantly, if necessary," Powell added.
During the discussion, Powell also stressed that he would hold his ground even if President Donald Trump asked him to resign, since the Fed embraced "a very strong culture around nonpolitical activity."
Former Fed chairs Janet Yellen and Ben Bernanke, who also attended the discussion, both voiced the importance to preserve the independence of Fed. Enditem