The Fed has two main objectives: maintain maximum employment and contain inflation. Although one single data point is never decisive, when inflation is high, the Fed generally raises interest rates to slow demand. When the unemployment rate is high, the Fed often lowers interest rates to stimulate consumer activity.

A strong economy is giving Federal Reserve officials room to move “carefully” as they lower interest rates, the central bank chair said.

Federal Reserve Chair Jerome Powell said on Thursday the U.S. central bank has time before it needs to adapt its policymaking thinking due to the return of President-elect Donald Trump to the White House.

The U.S. economy is in strong shape, Federal Reserve chair Jerome Powell said Thursday, which means the central bank can move carefully as it cuts interest rates. Why it matters: The direction of Fed policy is clear — the central bank is likely to cut interest rates further — but Powell's remarks indicate that it is uncertain how fast and how far those rate reductions will be.

Stay informed on the latest insights from Federal Reserve Chair Jerome Powell and their impact on the financial markets.