LIVE: Fed Chair Jerome Powell delivers remarks at Harvard University

Dissent strengthens monetary policy decisions

Powell welcomes disagreement among the 12 voting FOMC members as a tool to stress-test ideas, arguing that expecting unanimity during periods with conflicting risks to labor markets and inflation would be misleading.

Bipartisan stewardship as chair

Following a tradition of predecessors like Paul Volcker and Ben Bernanke, Powell emphasizes that the Fed Chair advances national interests over personal political considerations, evidenced by his nominations from both President Trump and President Biden.

QE necessary when rates hit zero

Powell defends the Fed's $6 trillion-plus balance sheet expansion during the 2008 and 2020 crises as essential for restoring market function when interest rates reached the zero lower bound, despite critics arguing the Fed became too dominant in bond markets.

Macroeconomic effects hard to quantify

While an 'oceanic quantity' of research suggests quantitative easing lowers long-term rates and supports economic activity, Powell acknowledges there is no accepted answer on the exact magnitude of these macroeconomic effects.

Soft landing achieved in 2024

Despite 100% of economists forecasting recession when the Fed rapidly raised rates in 2022, Powell notes the economy achieved a soft landing by end of 2024 with 2.5% growth, full employment, and inflation near the 2% target.

Tariffs adding 0.5-1 percentage point to inflation

Powell identifies current tariff impacts as a smaller, one-time source of inflation adding between half and a full percentage point, distinct from the larger pandemic-era price pressures.

Looking through energy supply shocks carefully

While the Fed typically looks through temporary supply shocks like Middle East energy price spikes because monetary policy works with long lags, Powell stresses the need to monitor inflation expectations vigilantly to prevent them from becoming unanchored.

Separation of monetary and regulatory roles

Powell distinguishes between politically independent monetary policy and collaborative financial regulation, explaining that the Vice Chair for Supervision has statutory authority to set the regulatory agenda while the Chair remains a neutral voter.

Post-2008 reforms face new threats

While post-crisis reforms created a dedicated Division of Financial Stability, Powell identifies ongoing risks from commercial real estate declines, the booming private credit market, and AI-driven cybersecurity threats in both banking and non-bank sectors.