On December 1, Fed Chairman Jerome Powell deliberately avoided discussing the current economic situation or monetary policy during a speech at the Hoover Institution at Stanford University. He reiterated the Central Bank's responsibility to maintain price stability and emphasized the importance of trust and economic humility. Powell's term is set to expire in May 2026, and the market is following the possibility that Trump may announce a new Fed chair nominee this month.
The timing of the speech is noteworthy: with only 9 days left until the next Federal Open Market Committee (FOMC) meeting, the market had hoped to gain signals regarding policy direction from the speech. However, Powell emphasized that he would not discuss the current economy or monetary policy, but instead, he would pay tribute to the contributions of the late former Secretary of State George Shultz.
Despite the avoidance of policy, Powell's historic comments on inflation are still worth following. In reviewing the wage and price controls during the Nixon era, he pointed out that economic perceptions evolve over time, and today's criticisms may be reinterpreted in the future. This statement reflects both humility and hints at a response to the current policy controversies.
Powell specifically reiterated the Fed's responsibility for price stability, stating that “the Central Bank has a responsibility to maintain price stability, and this issue has been resolved.” He emphasized that even under political pressure, the Fed remains committed to independence and data-driven decision-making.
In his speech, Powell also praised Schultz's approach of combining steadfast principles with pragmatic abilities, emphasizing his belief in market wisdom. The event was hosted by the Hoover Institution, with Peter Robinson as the moderator, and attended by Condoleezza Rice and Michael Boskin, aiming to recognize Schultz's contributions to economic policy over the past fifty years.
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