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US Federal Reserve Chairman Jerome Powell delivered remarks at the George P. Shultz Memorial at the Hoover Institution at Stanford University on December 1.
He carefully avoided discussing current economic conditions or monetary policy, although his historical observations had implicit relevance to current debates.
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It raises questions about timing
The timing of Powell’s appearance generated significant interest among market watchers. With the next Federal Open Market Committee meeting just nine days away and counting Market expectations of an interest rate cutHopes were pinned on signals about the direction of Fed policy.
In addition, speculation has increased that President-elect Trump may announce his choice to chair the Federal Reserve this month, and potential candidates include Kevin Hassett. Powell’s term ends in May 2026.
However, Powell initially stated, “I will not discuss current economic conditions or monetary policy,” and instead focused on celebrating the legacy of the late George Shultz.
Powell avoided discussing current policy, but his historic comments on inflation have an implicit meaning. Reflecting on the wage and price controls of the Nixon era, Powell noted the evolution of economic intelligence:
“Our understanding of economics is constantly evolving,” he said. “Some things that are sometimes accepted as conventional wisdom, people will look back in 50 years and wonder, what were they thinking?”
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Powell’s statements had two meanings. There was humility in this – even a Fed can be wrong – and defense: actual criticisms may be different over time.
Many analysts have noted the links between their historical observations and current monetary conditions. When the Fed ends the quantitative tightening period, the Fed weakens its liquidity reduction, which could stabilize conditions for banks, investment funds and entities exposed to risky assets.
Price stability “decided”
In particular, Powell reiterated the Fed’s mandate on price stability. “We understand that the central bank is responsible for price stability,” he said. He added: “This case is solved. This does not mean that it is easy to do this, but the case is solved.”
These assertions of the Fed’s mandate come at a particularly fraught time. The Trump administration has signaled its interest in changing the leadership of the Fed, National Economic Council Director Kevin Hassett said. what you do“Monetary policy has become very complex… I think we should simplify things.”
Powell emphasized the responsibility of the central bank, which may carry a hidden message. The independence of the Federal Reserve remains a sensitive issue in Washington. Powell reinforced the Fed’s longstanding commitment to independence and data-driven decisions. These points indicate a desire for continuity, even in the midst of political pressure.
Powell praised Shultz’s approach to policy-making, combining “strong principles and unwavering integrity with practical problem-solving.” Powell also highlighted Schultz’s belief in the wisdom of the markets, noting that he “believed very much in the wisdom of the markets.” Observers suggested this could reflect Powell’s professional values ​​as he navigates his final months as Fed chairman.
During the event, hosted by the Hoover Institution at Stanford University and moderated by Peter Robinson and with former Secretary of State Condoleezza Rice and economist Michael Boskin, Shultz’s contributions to economic policy over five decades were honored.
