Powell says Fed ‘will be patient’ with monetary policy as it watches how economy performs

Powell said the Fed has a history of adjusting its actions according to conditions. The Fed is “always prepared to shift the stance of policy and to shift it significantly” in order to achieve its dual mandate of full employment and stable prices.

He cited 2016 as a recent example. In that year, the FOMC had indicated four rate hikes were likely but ended up only approving one as financial conditions tightened particularly amid geopolitical concerns.

“No one knows whether this year will be like 2016,” he said. “But what I do know is that we will be prepared to adjust policy quickly and flexibly and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labor market strong and to keep inflation near 2 percent.”

Economic signals as of late have been mixed.

Less than two hours before the Fed panel began, the Labor Department reported that nonfarm payrolls grew by 312,000 in December, the best gain since February and well above Wall Street expectations. However, a key manufacturing report Thursday showed signs of a slowdown, and housing data has been disappointing as well.

Though Powell said the economy still looks strong, he noted that markets are pricing in “downside risks,” particularly in the slowdown from China. He said the market is “obviously well ahead of the data” but pledged that ‘we’re listening very carefully” to the signals it is sending.

The market briefly touched an intraday bear market, or 20 percent decline from its most recent high, in December and has been subject to volatile swings. Stocks gained sharply Friday following the jobs report and added to those gains as Powell spoke.