Powell’s curtain call: An era of plain-spoken Fed communication comes to an end

This was Powell’s final public address as Chair of the Federal Reserve. The agenda was routine: reviewing the FOMC’s rate decision and answering questions from reporters. With only two weeks left until his official departure, everyone knew this press conference would be different from the usual ones. However, Powell still had some surprises prepared that exceeded expectations.

The interest rate decision to hold steady in the 3.5%-3.75% range was not surprising, but the committee saw four dissenting votes, making it the most divided FOMC meeting since 1992. At the same time, he formally responded to market speculation, confirming he would remain at the Fed.

The last person to choose to stay on as a Governor after stepping down as Chair was Marriner Eccles in 1948, after whom the Fed building is named. That was 78 years before Powell.

Why did Powell choose to stay? The story of these eight years always began with “Good afternoon.” That opening line, which he uttered countless times from the podium in the press room, also became his most widely recognized memory on social media. But to fully understand the weight of his decision today, we need to turn back the clock eight years.

The “Unqualified” Chair

“I will do everything I can to achieve the two mandates Congress has given us: price stability and maximum employment.” — Jerome Powell, November 2, 2017 · White House Rose Garden, Nomination Ceremony for Fed Chair

On the morning of February 5, 2018, Jerome Powell raised his right hand and took the oath in a conference room on the second floor of the Eccles Building. The ceremony was brief, lasting less than three minutes, with no President in attendance. The oath was administered by Fed Governor Randal Quarles, a less senior colleague. Two reporters captured the scene: a dark blue suit, a steady gaze, silence.

At 65 years old, he officially became the 16th Chair of the Federal Reserve, with an annual salary just over $200,000. Measured by the standards of his four immediate predecessors, he seemed ill-suited for the role.

Alan Greenspan held a PhD in economics from NYU and had spent three decades in private economic consulting before his appointment. He was recognized as a “translator of markets” by both Washington and New York even before Reagan entered the White House. Ben Bernanke was the former chair of the Economics Department at Princeton University. His 1980s papers on the Great Depression were later considered the theoretical foundation for central banking policy in the early 21st century. Janet Yellen earned her PhD from Yale and spent most of her career as an academic in UC Berkeley’s Economics Department, becoming the first woman to hold the position.

Powell had no background in economics. He studied Political Science at Princeton for his undergraduate degree and then earned a JD from Georgetown Law. Strictly speaking, he is a lawyer. Powell entered the Treasury Department under George H.W. Bush, rising to Deputy Secretary, before spending nearly a decade as a partner at the Carlyle Group. In 2012, President Obama nominated him along with a Democratic economist to join the Fed Board of Governors as a political balance. He served as a Governor for five years without attracting particular attention.

To find a precedent for a “non-economist” occupying the Chair’s seat like him, one had to go back to 1978.

In March 1978, U.S. President Jimmy Carter appointed a man named G. William Miller to the Eccles Building. Miller was previously the CEO of Textron, a defense contractor. The Carter administration chose him partly because of his good relations with labor, believing he could “control inflation without being too harsh.”

But Miller lasted only 17 months in the role. During his tenure, CPI rose from 6% to 12%, and the dollar experienced its worst crisis in the foreign exchange markets since World War II. In August 1979, Carter moved him to become Treasury Secretary, bringing in Paul Volcker to take over the Fed. What followed is now in every central banking textbook: Volcker raised rates to 20%, caused a double-dip recession, crushed inflation, and ushered the U.S. economy into the 1980s.

For nearly forty years after Miller, no non-economist sat in that chair. Until Powell.

During his five years as a Governor, Powell was nearly invisible. From his swearing-in in May 2012 to becoming Chair in February 2018, all his FOMC votes sided with the majority; he never cast a dissenting vote. His daily work revolved around technical issues like financial regulation and payment systems, far from the spotlight. Colleagues later recalled that what distinguished him most during this period wasn’t papers or speeches, but his phone calls. He sought to bypass academic papers and official data, wanting to hear directly from people on the ground—calling bankers, bond traders, and corporate CFOs. A Governor making dozens of such calls weekly at his own expense was something his more academically-minded colleagues wouldn’t do.

On the afternoon of November 2, 2017, President Donald Trump announced Powell’s nomination to succeed Yellen as Fed Chair from the White House Rose Garden. Trump gave a forceful speech, while Powell delivered a restrained one, focusing on being “committed to fulfilling the dual mandate of maximum employment and price stability.”

That evening, the main takeaway in memos from major Wall Street traders to clients was the same: a continuation of the dovish stance, no need for market anxiety. Different voices emerged from academia. Several economists interviewed by *The New York Times* that day worried whether a lawyer could lead the FOMC at a critical moment. But these concerns were quickly drowned out by congratulatory financial news.

Less than a year into his term, Powell made a structural change. He converted the post-FOMC press conference from a quarterly event to one held after every meeting and adopted the most everyday language possible, almost entirely avoiding academic jargon. “Constructive ambiguity,” once Greenspan’s hallmark, ceased to be the Fed’s communication style from that year onward. But this new style hadn’t yet become a habit when March 2020 arrived.

Every Choice, Unprecedented

“We will keep at it until the job is done.” — Jerome Powell, August 26, 2022 · Jackson Hole Economic Symposium, Wyoming

Sunday, March 15, 2020. Late in the afternoon, Powell convened an emergency FOMC meeting in the Eccles Building, moving it up by three days from its original schedule. The announcement following the meeting was unprecedented in Fed history: a 100 basis point cut in the federal funds rate to 0-0.25%, the launch of $700 billion in asset purchases, and the opening of dollar swap lines with five major central banks. It was the single most aggressive action ever taken by the Fed.

At that moment, COVID-19 was sweeping across the U.S., ICU beds were soon to run out, U.S. stocks had triggered circuit breakers twice the previous week, and the Treasury market experienced a liquidity drought that sent chills down every trader’s spine. The world’s deepest market saw days where no one wanted to quote U.S. Treasuries.

Over the next three weeks, Powell introduced a new facility almost every few days. March 17: Commercial Paper Funding Facility. March 19: Money Market Mutual Fund Liquidity Facility. March 23: Unlimited QE, relaunch of TALF, and the formation of the Main Street Lending Program. April 9: Expansion of the corporate bond purchase program to $2.3 trillion. These facilities pushed beyond the Fed’s long-standing boundaries.

Buying corporate bonds was something Bernanke had explicitly declined to do in 2008. Lending directly to small and medium-sized enterprises, bypassing banks, was not even attempted during the 2008 financial crisis. In the fall of 2008, after Lehman Brothers collapsed, it took Bernanke nearly three months to initiate QE1. Powell, however, moved from the emergency rate cut on March 3 to unlimited QE in just 20 days.

On May 17, Powell sat down for an interview on CBS’s *60 Minutes* and uttered a line that would be repeatedly quoted: “We’re not going to run out of ammunition.” It wasn’t a slogan; it was a promise to the market about a concrete action. In the following months, the voices that had claimed he “didn’t act like a Fed Chair” fell silent for the first time.

But his biggest mistake began precisely from this silence.

In the spring of 2021, year-over-year CPI readings started to jump. April: 4.2%. May: 5.0%. June: 5.4%. Powell and his team of economists diagnosed this as “transitory.” They believed it was a disruption caused by pandemic-related supply chain issues that would resolve itself within a few quarters. This wasn’t indifference; it was a genuine belief. Powell repeatedly stated in internal meetings that he didn’t want to crush a recovering labor market over a cyclical disturbance. Millions of people who lost their jobs during the pandemic, many of them low-income, were just being rehired.

So throughout 2021, the Fed maintained zero interest rates and continued buying $120 billion in assets monthly. At every press conference, Powell explained in plain language why rate hikes should wait.

Inflation didn’t wait. September: 5.4%. October: 6.2%. November: 6.8%. From academia, Wall Street, and Republican Senate seats, criticism returned in a new form: a lawyer couldn’t understand what economists were saying, and he had steered the U.S. into an inflation crisis. Former Treasury Secretary Larry Summers wrote in his *Washington Post* column that he had never seen fiscal and monetary policy so disconnected from reality.

On the morning of November 30, Powell testified before the Senate Banking Committee. Asked about the inflation outlook, he said: “I think it’s probably a good time to retire that word [‘transitory’] and try to explain more clearly what we mean.”

This was not a forced admission of error. No journalist had pressed him; no senator had demanded he abandon “transitory.” It was his own choice to say it.

After admitting the mistake, Powell acted swiftly.

March 2022: 25 basis point hike. May: 50 basis points. June: 75 basis points. This was the largest single rate increase since the Greenspan tightening cycle in 1994. July: another 75 basis points. The market initially interpreted this pace as “catching up,” assuming the Fed would soon return to a moderate path. On August 26, the closed-door gathering of global central bank governors began as scheduled in Jackson Hole. The market expected Powell to soothe sentiment there, leaving some room for the possibility of a “policy pivot.”

At 10 a.m., Powell took the stage to deliver his speech. Typically, a Chair’s speech at such events lasts half an hour. But that morning, Powell didn’t look at the TelePrompTer from the audience. His speech lasted only 8 minutes. He didn’t discuss academic frameworks, complex transmission mechanisms, or offer any dovish hints. He conveyed just three points: price stability is the Fed’s responsibility, rate hikes will bring pain, and we will see it through.

The final sentence of the speech was: “We will keep at it until the job is done.” Those in the know immediately recognized the borrowing of a former Chair’s language. “Keeping at it” is the title of Paul Volcker’s 2018 memoir. Volcker, whose 1979 inflation-fighting campaign drove rates to 20% and the economy into a double-dip recession, used those three words to summarize that period. Powell mentioned Volcker three times in his 8-minute speech. He wasn’t comparing himself to Volcker, but he chose to end with Volcker’s words.

By the end of the day the speech was given, the S&P 500 had fallen 3.4%, and the Nasdaq dropped 3.9%. It was the market’s final disappointment in the promise of a “continuation of the dovish stance.”

He knew the market would drop after he said those words. He said them anyway. This was the moment, four years into his tenure as Fed Chair, when he let everyone see that he had no intention of being defined by his past.

After Jackson Hole, Powell didn’t stop hiking. September: 75 basis points. November: 75 basis points. December: 50 basis points. In March 2023, Silicon Valley Bank (SVB) collapsed in 48 hours, becoming the second-largest bank failure in U.S. history. Powell did something else that exceeded market expectations: he created the Bank Term Funding Program (BTFP) to rescue banks while simultaneously raising rates by 25 basis points.

This “dual operation” is difficult to understand within the traditional central banking framework, as liquidity rescue and tightening policy usually point in opposite directions. But Powell is not one to follow the textbook. He treats “system stability” and “inflation targeting” as separate issues: using one set of tools to rescue banks and another to suppress inflation. It’s a lawyerly, instrumentalist approach: using the right tool for the right problem, without letting the logic of one squeeze out the other.

By the time of the final rate hike in July 2023, the federal funds rate reached 5.25%-5.50%, the highest level in 22 years. The total tightening cycle amounted to 525 basis points.

Inflation finally began to recede. By June 2024, year-over-year CPI returned to 3.0%, and by the end of the year, it was down to 2.9%. The unemployment rate stayed near historic lows throughout the entire tightening cycle, without the sharp rise typical of a recession. This marked the first time since the 1980s that the Fed had successfully brought down high inflation without plunging the economy into a broad recession.

Economists will continue to debate whether he was “lucky”—the unique nature of the pandemic shock making his tools more effective than theory suggests, and falling energy prices also helping. This debate will continue.

In his final press conference, Powell summed up the eight years this way: “We actually experienced four supply shocks: the pandemic, the Russia-Ukraine conflict, tariffs, and now Iran and the surge in oil prices. Each supply shock has the power to push up inflation and unemployment, making it very difficult for a central bank to know what to do.” It is precisely this macro environment, unseen for decades, combined with the unprecedented actions the Fed was forced to take, that made the committee this morning the most divided since 1992.

But in those 8 minutes on the morning of August 26, 2022, his judgment was a real judgment, the risk he took was a real risk, and his choice not to be defined by his 2021 mistake was a real choice.

The Watchman Inside the Door

“I will not resign.” — Jerome Powell, November 7, 2024 · FOMC Press Conference, responding to “Can the President fire the Fed Chair?”

On the afternoon of January 11, 2026, Powell recorded a video in a conference room in the Eccles Building. The backdrop was the Fed’s seal. Looking into the camera, he said: “What this criminal investigation threatens is the Fed’s right to set interest rates based on its best judgment for the public, not according to the President’s preferences.”

The video was released by the Fed’s official account later that evening. Global financial media refreshed their headlines almost simultaneously. It was the first time in the Fed’s 113-year history that it had engaged in such direct public confrontation with the executive branch of the U.S. government.

The trigger event occurred a few days prior. The U.S. Department of Justice, citing the renovation project at the Fed’s headquarters, issued a grand jury subpoena to Powell, initiating a criminal investigation into him. The DOJ’s stated reasons were budget overruns and irregularities in the procurement process for the renovation.

But everyone knew what this was really about. Over the past twelve months, President Trump had repeatedly demanded that Powell cut rates to align with

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