Fed Chair Jerome H. Powell professed confidence that the economy remained “healthy” and “solid” and said he did not see any reason to sharply change the Fed’s path of gradually pulling back support for it. But he acknowledged the economy is showing signs of “softening” and there is a “fairly high degree of uncertainty” about what the Fed will do.

President Trump, who appointed Powell to the top job at the Fed a year ago, had urged the central bank to stop raising interest rates. Trump has called the Fed “foolish” and “crazy” for hiking rates when there is little sign of inflation, and he has blamed Powell for the stock market slump in recent months. U.S. stocks are on track to have their worst year in a decade.

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Investors hit the sell button shortly after the Fed’s announcement Wednesday, giving up what had been modest gains after several days of brutal selling. The Dow Jones industrial average closed down more than 350 points, about 1.5 percent, to its lowest level of 2018.

The sharp sell-off shows the difficult challenge Powell faces in his young tenure as Fed chair. He is trying to reassure the nation that the central bank has a firm grip on the state of the economy and will not do anything to make things worse.

Stocks have dropped after every Fed decision since Powell took over the top leadership role at the central bank in February, with his words and actions failing to calm markets.

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Powell, like most of his predecessors, says his main focus is economic fundamentals, not short-term market whiplash.

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Economists disagree on whether recent developments — including the stock market sell-off and Trump’s trade war — will have a dramatic impact on hiring and spending or whether they will just be small blips.

“A little bit of volatility … doesn’t probably leave a mark on the economy,” Powell said.

Still, the Fed noted that head winds are rising, lowered its 2019 growth forecast from 2.5 percent to 2.3 percent and indicated it is likely to do only two interest-rate hikes in 2019, down from its earlier forecasts of three increases.

Through its benchmark interest rate, the Fed can influence what Americans pay to borrow for homes and cars, as well as what companies pay to borrow to invest and spend. That in turn shapes the whole economy.

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Until recently, the Fed had been mostly concerned that the economy could overheat, unleashing a wave of inflation that would lead to a recession. Powell has been trying to engineer a “Goldilocks” economy — plentiful jobs, low inflation and solid growth without overheating. It’s a rare scenario that has not happened since the 1990s.

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But a growing number of business leaders and economic forecasters believe that a recession is coming in 2020 and that the Fed is still operating as if there are few problems ahead.

In addition to Trump, several prominent Wall Street investors have criticized Powell, saying the Fed has raised interest rates too much this year and should hit the pause button. The central bank has done four rate hikes this year, the most since 2006.

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The latest move by the Fed brings interest rates up a quarter-point to a range of 2.25 to 2.5 percent, the highest rate in more than a decade.

“The Fed is now acknowledging some of the early signs of weakness in the economy,” said Lindsey Piegza, chief economist for Stifel Fixed Income. “But even if the Fed reduces the number of hikes next year to one, it may be one too many.”

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Powell tried to signal to the world Wednesday that there is no “preset course” for what the Fed will do and that he and his team are prepared to raise interest rates if the economy grows faster than expected and lower them if the economy grows slower than expected.

Investors anticipated that Powell would stress that he wants to be flexible, but they were spooked when he said he did not think the Fed would make any changes to its plans to continue shedding some of the bonds it bought during the height of the financial crisis. That is another form of tightening, and the Fed does not appear to want to scale it back.

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Foreign economies are clearly slowing, stock and bond markets are jittery, Trump’s trade war is starting to hurt and the boost from Trump’s tax cuts is widely expected to diminish.

“Over the past few months it’s become clear that the Fed’s communication strategy has failed pretty badly,” said Ed Al-Hussainy, a senior interest-rate and currency analyst at Columbia Threadneedle Investments. “The Fed miscommunicated their confidence in the strength of the economy.”

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The Fed appears caught between pessimistic markets and a White House that predicts growth will continue at 3 percent for years to come.

A few hours before the Fed announcement, the White House’s top economist said he saw no signs that the economy would slow next year, setting up yet another potential disagreement with the Fed.

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“Mostly, jobs reports have been super solid,” said Kevin Hassett, chairman of the White House Council of Economic Advisers. “There’s nothing in our data other than the financial market jitteriness that suggests the fundamentals are changing.”

The Fed expects unemployment to fall to 3.5 percent next year, even lower than this year, and inflation to remain at a modest 1.9 percent. The Fed typically hikes interest rates to keep inflation in check, but the central bank slightly lowered its inflation forecast for next year, a sign Fed leaders are not expecting a major surprise.

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“Wages have moved up for workers across a wide range of occupations, a welcome development,” Powell said during his news conference Wednesday. “Wage increases do not need to be inflationary.”

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Many parts of the economy continue to show strength. Unemployment remains at nearly a 50-year low, and growth is hovering around 3 percent this year, which would be the fastest annual pace of growth since 2005, but it is not expected to last.

The Dow and the Standard & Poor’s 500-stock index are on pace for their worst quarter since 2011 and worst year since 2008. The Dow has fallen 10 percent from its September peak, wiping out all gains for the year. Other markets, especially high-yield debt, are also showing signs of stress and making it more difficult for companies to borrow money.

“If Fed officials overreact to the market moves, which are only taking us back to where the market was about a year ago and still leave us with one of the strongest bull markets in history, they would severely depreciate their credibility,” said Tendayi Kapfidze, chief economist at LendingTree.

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The decision Wednesday to boost rates was unanimous, with all 10 Fed leaders voting in favor of the increase, although Fed officials are split on how many rate hikes are likely in 2019 and 2020.

The Fed’s next meeting takes place Jan. 29 and 30, and the Fed will hold a news conference after every decision next year, which has never happened before and should give Powell more flexibility to adjust policy.

“We will adjust monetary policy as best we can to keep the expansion on track, the labor market strong and inflation near 2 percent,” Powell said.

Thomas Heath contributed to this report.