Fed Chair Powell

What Powell Said And Why It Matters

by

WHAT POWELL SAID

“a marked slowing in both the supply of and demand for workers…suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.” and “…the shifting balance of risks may warrant adjusting our policy stance,” Jerome Powell – Jackson Hole, WY 8/22/25

An AI summary of Powell’s remarks sans the emotion and frothiness of investors and others said that “Powell’s Jackson Hole remarks were carefully calibrated—not a firm commitment to cutting rates, but a clear signal of readiness to pivot if economic conditions warrant it. He recognized rising risks in the labor market and suggested that, given such risks and the Fed’s already restrictive stance, a policy adjustment might be justified. However, any change would be data-driven and cautious.”

WHY IT MATTERS 

Investors and the media interpreted those remarks as the signal that “the race is on”. Someone said that Powell’s remarks “opened the door to a possible interest rate cut”. 

Investors rushed through the door with complete abandon and drove stock prices up to new highs, seemingly oblivious to Powell’s expressed statements  that conditions “may warrant adjusting our policy stance” and “any change would be data-driven and conscious.”

The door was kicked open almost one year ago when the Federal Reserve announced its intention to lower the Fed funds target rate in September 2024. After two successive cuts, the target rate has remained unchanged.

Jerome Powell acknowledges the growing risks in the labor market and the presumed risk of higher inflation from tariffs. The labor market threat is real and appears to be significant. Hence, Powell’s comments that labor market risks can accelerate “quickly in the form of sharply higher layoffs and rising unemployment” are noteworthy.

Tariffs are not inflationary.

“Tariffs are taxes imposed by a government on imported goods. Tariffs are assessed at the port of entry and must be paid before the goods can be unloaded. Whoever (businesses, consumers, etc.) imports the goods pays the tariff(s) to U.S. Customs and Border Protection, a government agency. Subsequently, remittance is made to the U.S. Treasury. (see Tariffs Are NOT Inflationary)

The effects of tariffs compound the risks associated with the labor market. Any acceleration in layoffs and unemployment will be exacerbated by the effects of tariffs. The results could lead directly to deflation and economic depression.

CONCLUSION

The Fed dilemma pertaining to interest rate policy remains the same. Lower interest rates and aggressive monetary growth will slam the dollar. Higher rates and restrictive monetary policy will depress economic activity.

Holding rates stable seems the more prudent choice. If nothing else, a disastrous day of reckoning might be postponed.

Far from being a boon to growth (domestic or otherwise), the effects of tariffs will magnify and accelerate problems in the labor market and the economy. Those effects can overwhelm Fed efforts to stave off financial and economic collapse.

The worst that could happen is likely to come quickly. (also see Complete Financial Collapse Is Unavoidable)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

Trump vs. Powell vs. Yellen – Same Game

by
Generated image

We have been here before. President Trump’s latest bashing of Fed Chair Powell isn’t without precedent. Chair Powell was the object of President Trump’s scorn during his first term, too.

It doesn’t stop there, though. Trump vs. Powell was preceded by Trump vs. Yellen.

During the 2016 campaign, Trump accused Yellen of keeping interest rates artificially low to benefit the Obama administration and predicted a market collapse once she raised rates. He claimed she was “keeping them artificially low to get Obama retired” and “she should be ashamed of herself.” (NBC News Nov 2016) 

One year later, towards the end of his first year in office, President Trump nominated Jerome Powell as the new Fed Chairman. Here is what I said then…

“President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change. And Janet Yellen’s announcement that she will resign from the board upon Mr. Powell’s induction as board chair is pretty much a non-event.” (New Fed Chairman, Same Old Story Nov 2017)

That was almost eight years ago. Has anything changed? Ironically, in 2016, Trump was displeased with Fed Chair Yellen for “keeping rates artificially low”. Now, he is attacking Fed Chair Powell for not lowering rates more aggressively.

THEN AND NOW

Both Ms. Yellen and Chair Powell face(d) similar situations. Their terms as Fed Chair expire(d) before their terms as board members conclude. That would mean sticking around for a couple of years as a board member after their term as board Chair ends.

I believe Ms. Yellen, as Fed Chair, was very concerned about the prospect of presiding over a financial crisis that would tarnish her reputation as Fed Chair. Here is what I said seven months prior to Jerome Powell’s assumption as Fed Chair…

“…if Ms. Yellen makes it through the current year unscathed, she won’t be hanging around afterwards. She won’t want to extend her risk of being at the helm when the ship sinks.

And don’t trouble yourself worrying about who the next Fed chief will be.  It doesn’t matter. It is too late in the game for a quarterback change to have any meaningful impact.” (The Fed’s Dilemma July 2017)

CONCLUSION 

The situation today isn’t much different from eight years ago. Jerome Powell’s term as Federal Reserve Board Chair ends May 2026. I expect him to finish his term (ends May 2026) as Chairman and voluntarily resign from the board at that time without serving the remainder of his term (ends January 31, 2028) as a member of the board, just as Chair Yellen did, for similar reasons.

Can you imagine either Janet Yellen or Jerome Powell serving as a member of the board after their term as Fed Chair ended? (also see Cruisin’ Wtih The Fed and Federal Reserve –  Conspiracy Or Not?)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

Powell And Yellen – Team Fed

by

POWELL AND YELLEN…

Flashback 11/21/2017:

“President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change. And Janet Yellen’s announcement that she will resign from the board upon Mr. Powell’s induction as board chair is pretty much a non-event.” (see New Fed Chairman, Same Old Story)

Currently, comments by Jerome Powell last week regarding inflation and its effects spooked some investors and analysts.  Investors in leveraged Treasuries were dealt a severe blow when yields spiked and bond prices fell. Others have claimed that the sky is falling and that inflation is all around us.

Read more