The economy remains on solid footing as it has for several quarters. Inflation remains around 3%, the unemployment rate hovers around 4%, and generally the fears of a recession have not come to pass . Yet there is one change rippling through the American consumer: Will the stability continue?

“Recent surveys of households and businesses point to heightened uncertainty about the economic outlook,” said Federal Reserve chair Jerome Powell at the University of Chicago’s Monetary Policy Forum on Friday. “It remains to be seen how these developments might affect future spending and investment.”

In his prepared remarks, Powell stressed the economy is steady at the moment. But the throughline of his remarks was that a heightened sense of unpredictability had permeated the economy in recent weeks. In fact, the first words of Powell’s speech were “despite elevated levels of uncertainty,” but he also sought to reassure the audience the U.S. economy was in a “good place.”

The latest jobs report showed the U.S. added 151,000 jobs in February. That was less than economists had predicted, though. The labor market remains good with an unemployment rate of 4.1%, although it was a jump from the month prior. Inflation, on the other hand, is sitting at 3%—still above the Fed’s 2% target—but drastically lower than its peak of 9% in summer 2022.

Much of the uncertainty stemmed from an unclear picture about what trade policies the U.S. might enact moving forward, Powell said. The newly inaugurated Trump administration has pledged a series of sweeping changes to everything from energy policy to immigration to tariffs, all of which could have significant impacts for the U.S. economy given the scale of the changes contemplated by the White House.

“Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,” Powell said during his speech.

During the short time in office, the Trump administration has so far made the most headway on implementing tariffs, a key pillar of its trade policy. On several occasions since entering office in January, President Donald Trump has implemented—albeit briefly—a series of tariff policies that risk upending the U.S.’s current trade regimes.

Earlier this week, Trump implemented a series of tariffs on Mexico and Canada, among the U.S.’s most important trading partners. He suspended those tariffs a day later. Trump also placed 20% tariffs on Chinese goods. Doing so appears to set the world’s largest and second-largest economies on a collision course for a trade war . In a recent statement, the Chinese embassy in the U.S. said it was ready for a trade war with the U.S.

Powell cautioned the audience the Fed needed to consider the effect the totality of administration’s policies would have on the economy.

“It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy,” Powell said. “While there have been recent developments in some of these areas—especially trade policy—uncertainty around the changes and their likely effects remains high as we parse the incoming information. We are focused on separating the signal from the noise.”

Until the outlook of those policies became clear, the Fed would sit tight before cutting or raising interest rates, according to Powell. Earlier this year, the Fed paused its rate-cutting cycle, citing a solid economy that did not necessitate intervention . That decision had greatly angered Trump, who regularly advocates for low interest rates regardless of other factors in the economy.

On Friday, Powell said the Fed could afford patience at the moment.

“The costs of being cautious are very, very low,” he said.. “The economy's fine. It doesn't need us to do anything, really. And so we can wait, and we should wait.”