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Federal Reserve Chairman Jerome Powell looks skyward as he tours mHUB during a visit to Chicago Friday, April 6, 2018.Charles Rex Arbogast/The Associated Press

Federal Reserve Chairman Jerome Powell on Friday painted a mostly sunny view of the U.S. economy and said the Fed remains committed to raising its key interest rate gradually unless events change. He said it was too soon to determine how a trade fight with China could affect the U.S. economy.

In his first speech as Fed leader, Powell noted that the central bank raised its key rate by a quarter-point at its March meeting, just the sixth increase since late 2015. He depicted that rate hike as “another step in the ongoing process of gradually scaling back” the ultra-low rates it employed to lift the economy out of the Great Recession.

This “patient approach has paid dividends and contributed to the strong economy we have today,” Powell said in remarks to the Economic Club of Chicago.

He said the Fed will continue to balance the risks of moving too slowly in raising rates and running the risk that inflation gets out of control and moving too quickly, which could hurt growth.

Asked during a question and answer session about the economic impact of higher trade tariffs, Powell said the issue was discussed at the Fed’s meeting last month. Fed officials noted that business executives around the country were expressing concerns.

“People really don’t see yet any implications in the near term for the outlook because we don’t know the extent to which the tariffs will actually go into effect,” Powell said. “Tariffs can push up on prices, but again, it is too early, I think, to really say whether that is going to be something that happens or not.”

Powell spoke on a day when stock prices were tumbling because of new worries about a trade war with China after the Trump administration announced late Thursday that it was considering imposing tariffs on an additional $100 billion worth of Chinese goods. The Chinese government pledged it would “counteract with great strength” should broader tariffs be imposed.

In a separate appearance in California, John Williams, who has been tapped to take over as president of the Fed’s New York regional bank, said that the “right direction for monetary policy” includes “three to four rate increases this year and further gradual rate increases over the next two years.”

Williams, currently the president of the Fed’s San Francisco regional bank, will take over as head of the New York bank in June.

Powell, who was tapped by President Donald Trump to succeed Janet Yellen as Fed leader, took over on Feb. 5. He presided over his first Fed meeting last month when the central bank boosted its key rate to a still-low level of 1.5 per cent to 1.75 per cent.

At the meeting, the Fed signalled that it expected to raise rates a total of three times this year, matching the number of rate hikes it approved in 2017.

Many private economists believe that the economic stimulus stemming from $1.5 trillion in tax cuts and increased government spending will ultimately prompt the Fed to raise rates at a slightly faster pace.

But Powell did not give any indication Friday that the central bank felt a need to accelerate its pace. He stressed that if economic conditions changed, the Fed would be ready to respond to those changes.

“As long as the economy continues broadly on its current path, further gradual increases in the federal funds rate will best promote these goals,” Powell said, noting that the central bank seeks to pursue policies to achieve maximum employment and stable prices, which it defines as inflation rising at 2 per cent annually.

After his speech, Powell toured mHub, a facility that seeks to boost manufacturing in the Chicago area by giving start-up companies access to equipment. He was asked by a reporter if he would elaborate on the tariff battle with China. He declined to answer.

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