Editor's Note: At 2:30 p.m. Eastern Time on April 29 (early morning on April 30 Beijing Time), the Federal Reserve, in Powell's final FOMC meeting, maintained the interest rate and kept the federal funds rate target range at 3.50% to 3.75%. However, the focus of this press conference was not only on the interest rate itself: on one hand, the Middle East conflict raised energy prices, inflation resurfaced, and there was a clear internal division within the committee on whether to continue the "dovish stance," making this meeting the most divided FOMC vote since 1992; on the other hand, Powell confirmed that he would continue to serve as a Fed governor after the end of his chairmanship, attributing the decision to a series of legal and political pressures from the Trump administration on the Fed.

Therefore, this "final press conference" felt more like an institutional statement before the handover. Powell reiterated multiple times that he would not become a "shadow chair" to the new chair, but he also would not leave easily when the Fed's independence was still under pressure. The core message he tried to deliver was: monetary policy can have disagreements, the rate path can be debated, but the Fed cannot be dragged into the political cycle.

Below is the original text (slightly reorganized for readability):

1. Opening Statement

Good afternoon. My colleagues and I remain steadfastly focused on achieving our dual-mandate goals: for the benefit of the American people, to achieve maximum employment and price stability. The U.S. economy has been expanding at a moderate pace. While job gains have been solid, the unemployment rate has changed little in recent months. Inflation has moved up and is running above 2%, largely reflecting the impact of the recent increase in global energy prices.

Today, the FOMC decided to maintain the target range for the federal funds rate. We believe that the current stance of monetary policy is appropriate to support further progress toward our objectives of maximum employment and inflation at 2%. Developments in the Middle East have increased uncertainty about the economic outlook, and we will continue to monitor the risks to our dual mandate. I will speak more about monetary policy shortly, but first, let me briefly review the economic situation.

Recent indicators suggest that economic activity has been expanding at a solid pace. Household spending has been resilient, and business fixed investment has continued to expand at a rapid pace. In contrast, activity in the housing sector remains soft. On the labor market front, the unemployment rate in March was 4.3%, and job gains have been modest in recent months. Over the past year, job growth has slowed notably, reflecting, in part, a decline in labor force growth, which is related to reduced immigration and lower labor force participation. However, labor demand has also weakened noticeably. Nonetheless, other indicators, such as job openings, layoffs, hires, and nominal wage growth, have been little changed overall in recent months.

Inflation has recently seen an increase, remaining elevated relative to our 2% longer-run goal. Based on the Consumer Price Index and other data, total PCE prices rose by 3.5% over the 12 months ending in March. This was mainly driven by the significant global oil price increase due to the Middle East conflict. Excluding the more volatile food and energy categories, core PCE prices rose by 3.2% over the 12 months ending in March. This relatively higher level mainly reflects the impact of tariffs on prices in the goods sector. Short-term inflation expectations indicators have risen this year, possibly due to the sharp rise in oil prices. Most long-term inflation expectations indicators remain consistent with our 2% inflation goal.

Our monetary policy actions are guided by a dual mandate to promote maximum employment and price stability for the American people. At today's meeting, the Committee decided to maintain the federal funds rate target range at 3.5% to 3.75%. The economic outlook remains highly uncertain, with the Middle East conflict further increasing this uncertainty. In the near term, higher energy prices will push up overall inflation. In addition, it is unclear the extent and duration of the impact of these factors on the economy, and the future evolution of the conflict is also uncertain.

We will continue to monitor risks to both aspects of the dual mandate. We are currently in a favorable position to decide whether and when to further adjust policy rates based on incoming data, evolving outlook, and risk balance. Monetary policy does not follow a preset path, and we will make decisions at each meeting.

This is my final press conference as Chair, and I'd like to conclude with a few thoughts. First, I want to congratulate Kevin Warsh on his approval by the Senate Banking Committee this morning. This is an important step forward, and I wish him all the best in the subsequent proceedings.

The fundamental purpose of the Federal Reserve is singular: to create an economic environment in which American households and businesses can thrive, including stable prices, a strong job market, and a reliable financial system. Every decision we make, whether on rates, regulation and supervision, or other matters, is in service of this goal.

Our decisions reflect the collective judgment of the Board and my FOMC colleagues. They have shown disciplined analysis, principled judgment, and a sincere commitment to the public interest. Our long-standing process of collaboration and deliberation also reflects a common commitment to seeking consensus to fulfill our mission.

This institution is resilient, capable, and staffed by a group of highly talented and dedicated professionals. It has been my privilege to work with such outstanding public servants on the Board and throughout the Federal Reserve System. The effectiveness of the Federal Reserve's work depends on public understanding, and the media's role in helping to inform the public about what we do and why is indispensable. The people we serve also benefit from your careful reporting.

Last Friday, the District of Columbia's federal prosecutor announced the closure of a criminal investigation, which I welcome. However, she also noted that if necessary, she would not hesitate to reopen the investigation. Over the weekend, the Department of Justice provided assurance that unless the Federal Reserve Inspector General makes a criminal referral, they will not restart the investigation. In the absence of such a referral, even if they appeal a recent court ruling, they will not seek to reopen the investigation or issue new subpoenas during the appeal.

I have previously stated that I will not leave the Board until this investigation is genuinely, thoroughly, transparently, and definitively concluded. I stand by that. Recent developments have encouraged me, and I am closely watching the remaining steps of this process. My decisions on these matters will continue to be guided solely by what I believe is in the best interest of this institution and the people we serve. My term as Chair ends on May 15, and I will continue to serve as a Governor for some time after that, the specific duration of which is still to be determined. I plan to maintain a low profile as a Governor.

The Federal Reserve Board always has only one Chair. When Kevin Warsh is confirmed and sworn in, he will become that Chair. Upon his swearing-in as Chair of the Board, his new colleagues will elect him as FOMC Chair. As I often emphasize from this podium, achieving our goals is crucial for all Americans. I believe the Fed will continue its work with an unwavering commitment to objectivity, integrity, and serving the American people.

Thank you, and I look forward to taking your questions.

Part II: Q&A

Why Stay on the Federal Reserve Board

Question: Could you discuss why you have decided to remain on the Board? What criteria are you weighing? How long might you stay?

Powell: Certainly. My primary concern is that the Fed is facing a series of legal challenges that threaten our ability to conduct monetary policy without regard to political considerations.

Let me be clear that this is not about verbal criticism from elected officials. I have never said that such verbal criticism is a problem, nor has anyone else here. But the legal actions taken by this administration represent an unprecedented threat to the Fed in its 113-year history, with the ongoing risk of further similar actions.

My worry is that these challenges are undermining this institution and jeopardizing something truly vital to the public: whether the Fed can conduct monetary policy without regard to political considerations.

For our economy and the people we serve, they must be able to rely on an apolitical central bank for the long term. This is one of the cornerstones of the American economic system and a key reason why the U.S. economy is admired globally.

This institutional arrangement is a key difference between successful and unsuccessful countries. It is extremely important. What is important is not the individuals who have worked at the Fed at any given time, but the public we serve. The Fed must be able to make monetary policy without being pulled into politics, without helping or hurting any particular politician or party. This is essential to the public.

As for when I will leave, I will leave when I think it is appropriate.

Question: Some have criticized that by staying on the Board, you are engaging in a political act yourself because it could prevent the President from having a majority on the Fed Board. How do you see this?

Powell: I completely disagree. The reason I stayed was precisely because of what has happened over the past few months. I had planned to retire much earlier. But the events of the past three months or so have led me to believe that I need to stay at least until these issues are clearly resolved.

I also do not think this will interfere with the new Chair. The tradition at the Fed is for Board members to work with the Chair. As an outgoing Chair, I am well aware of how difficult it is to build consensus among 19 independent-minded people.

My approach will be clear: work to have my views heard but also work with the Chair; support the Chair when I can and engage constructively when I cannot.

Inflation Outlook, Tariff Pass-Through, and Energy Shock

Question: In March, you mentioned that the usual practice is to ignore energy shocks, but that's conditioned on inflation expectations remaining anchored. Since that meeting, there has been almost no progress towards reopening key energy trade channels. Could you help us understand how the inflation outlook has changed during this period? Firstly, whether the tariff pass-through to prices will recede as you outlined in March, and then discussing the additional layer of the energy shock on top of that now.

Powell: For a long time, we have been working on the basis of this assumption: tariffs would lead to a one-time increase in prices, which would then fade over time. In other words, after the price level rises, it will not continue to rise in a cycle; measured inflation will not continue to rise just because the price level has risen.

Now is the time when this should happen. We do expect to see this play out over the next two quarters. So, we will be watching very closely to see if what we have long expected to happen actually occurs. This is a critical part of the forecast.

As for energy, it's really hard to say. In a textbook treatment, you typically look through an oil price shock because such shocks are often short-lived, usually coming down, and monetary policy acts with long and uncertain lags. So, you may not necessarily react right away.

I believe that considering we have been above the 2% inflation target for several consecutive years and have been trying to assess the tariff impacts, this point is even more valid. So, we will proceed with great caution.

However, when it comes to the question of whether to assess the energy impact, it is not yet a real issue before us. It has not even peaked yet. I think that before we consider a rate cut, we would like to see the energy impact start to recede and progress made on tariffs.

Question: Today's statement retained a certain wording. This wording had acquired a particular meaning when the Committee was actively cutting rates. Considering that the current inflation outlook is very different from a couple of meetings ago, why is this dovish bias still appropriate? What needs to happen to remove this bias from the statement?

Powell: You will recall that we discussed this issue at the last meeting and also talked about it in the press conference after the March meeting. It's the same today. We had a very full discussion on this issue today: whether this guidance is still appropriate, whether it should be adjusted, and so on.

I would say that during this time, the number of Committee members able to support changing the wording to a more neutral stance has increased. That is, making rate hikes and rate cuts seem equally likely. The reasons are also easy to understand.

It's a good question. You will see that during this time, inflation has moved up, with core inflation now at 3.2%, although not by much, but the direction is unfavorable. We also know that overall inflation pressures from the Gulf region will still emerge, and we do not know to what extent, so we need to watch that.

Therefore, it is entirely reasonable to have a full discussion in light of these developments. You also see that three members dissented on the wording. I think those people all agree with the rate decision itself.

But the majority of the Committee members do not want to change the wording now, and I myself do not think it is necessary at this meeting. The question really is: Why must it be done now? We have a lot more to learn, and there is considerable uncertainty about the path ahead. There is no need to rush to make this decision now because things could change significantly in the next 30 days, 60 days, or even before the next meeting, affecting the judgment of that wording.

So, this issue is much closer within the Committee than it was in March. I think this makes complete sense.

Oil Prices, Dovish Bias, and Communication Tools

Question: Still on the dovish bias issue. Now, benchmark oil prices such as Brent crude are close to $120 per barrel. If six weeks from now, oil prices remain at this level, in your best judgment, would the dovish bias still be retained in the statement?

Powell: I don't want to speculate on that. First of all, by then we will likely have a new leadership team, and the new leadership team will play a very important role on this issue. So, at that time, I will not stand on this podium to answer your question.

I don't know. All I can say is that today we did have a very good discussion on this. This issue has become more worthy of discussion compared to before. We had the discussion, and most members still believe there is no need to pivot to that extent now. I also take that stance.

But I understand the issue. At some point, you may indeed adjust, and theoretically, the earliest that could happen is at the next meeting.

Question: The incoming leadership does not seem particularly enthusiastic about press conferences and dot plots. What advice would you give to them?

Powell: I will not be giving advice to them through you today. But I think communication is very important overall. Every incoming Chair will look at the way they communicate, which is a very healthy thing. Communication is very complex, and there are always new ways to explore. If that were to happen, I think that would be entirely appropriate.

Transitioning to the Chair-elect

Question: Have you had any contact with the Chair-elect? To what extent will this be a normal transition process? With many unusual things happening externally, what will be special about this process? What can we expect a few weeks later when he stands on this podium?

Powell: I have not seen him since I met him at a dinner in January. I congratulated him at that time and had a very pleasant conversation with him. I have not seen him since then.

I don't know what would be considered a normal process. The last transition was with Janet Yellen, and she and I worked together for six years, sharing the same hallway, so that was a completely different situation.

I think this will be a very normal, standard transition process. I expect it to be so, and I have every reason to believe it will be.

Question: Will the Supreme Court ruling on a certain director affect when you leave the Board?

Powell: I have not factored that in. No, actually I have not. I am more focused on the things mentioned earlier.

During Tenure, Low Unemployment, Employment Mandate, and Post-Pandemic Inflation

Question: I want to ask a question about your tenure. During your chairmanship, you often talked about how disadvantaged Americans benefited from long periods of low unemployment. The Fed's 2020 adoption of a new framework, which some economists argue has increased the weight on the employment mandate. Are you concerned that the subsequent surge in post-pandemic inflation may make future Fed Chairs less inclined to pursue a "hotter" job market? Should they have this concern?

Powell: I don't know the answer. What we were going through at the time was, in the mid-2010s, a very long period of a low unemployment rate, but inflation didn't respond. We were all very focused on that. We also saw the largest wage increases going to the bottom end of the income distribution.

We received many reports indicating that it seemed to be a relatively stable equilibrium, with many benefits flowing to lower-income groups. For example, some companies would start training people while they were still constrained, and then hire them when they came out. It was a very healthy social dynamic.

So, of course, anyone would want to return to that kind of state.

I don't think any factor that led to global pandemic inflation was related to an overemphasis on the labor market. It was a global shock that occurred in a very similar way around the world, related to factors such as lockdowns, reopening, stimulus policies, etc. You could put charts of the top ten major economies on the same page and almost not tell which one is the U.S., which one is Germany, or France.

So, I don't think that judgment in any way led to the high inflation we later experienced.

Of course, it's always a balance. We must steadfastly pursue our dual mandate. For example, right now, we don't see the labor market as a source of inflation, so we don't need to worry about that. In fact, we haven't needed to worry about it for a long time. During the pandemic recovery, the labor market did indeed become extremely overheated and very tight at one point, and we had to pay attention to it then, but not now.

Question: Do you still need more assurances from the Justice Department before stepping down? Is this what you're waiting for?

Powell: I am waiting for the investigation to truly conclude in a final, transparent way. I am waiting for that. I will step down when I think it's appropriate.

Possibility of Rate Hikes and Fed Credibility

Question: Can you further explain or describe the Committee's discussion on the two-way risk of interest rates? Because some Federal Open Market Committee members have suggested that even without a war, there may be a need for rate hikes because inflation is not falling rapidly enough. Does the Committee believe that rates may need to be raised? Or is this just to alert the market that you're concerned about the impact of a war?

Powell: The three dissenters, as well as others who might support a wording adjustment, some with voting rights or without but inclined towards such an adjustment, all support the rate decision itself.

So, people are not saying we need to hike rates now. The question is more about whether we should move to a neutral characterization. What is the market doing? Some think this is consistent with how the market is currently priced. That's a very reasonable question.

However, this adjustment in language is a forward-looking statement. You want to make sure that once it is made, it can be sustained and continue to make sense, rather than quickly having to retract it.

So, some of us, myself included, feel that there is no rush to do this. The market does not misunderstand our reaction function. We do not have a communication issue that needs to be resolved immediately. Of course, the opposite argument is also valid. As I said, it is a topic well worth discussing. The end result is what we have now.

Question: Currently, there are three members who dissent, supporting the issuance of a two-way risk warning; you are also staying on the board; there is criticism from elected officials; there is also a lot of criticism that the Fed has been too slow to address inflation in 2021. Are you concerned that the Fed's credibility may be affected by these factors? Is this also one of the reasons you want to stay?

Powell: That is not a motivating factor for me now.

Monetary policy will be determined by 19 people together, which provides a significant level of stability. Every new Fed chair will face the same situation: there are 18 colleagues on the FOMC, with 11 of them having voting rights each year. The chair's job is to build consensus, to communicate with them, understand their thinking, get into their mindset, aggregate them into a consensus, and then act.

Every Fed chair must do this. I believe the new chair has the capability and skill to do this well. So I'm not too worried about this process. I think it will work out.

How to Maintain a Low Profile After Stepping Down, and the Transmission of Oil Prices to Core Inflation

Question: You mentioned that you would maintain a low profile after continuing as a board member. Could you elaborate more specifically on what that would look like? Especially in policy discussions, how would you express your views without becoming a "shadow chair," without exerting too much influence on the process?

Powell: That is something I would never do, that is, being a "shadow chair."

I do not know what the specific form would be, but I will return to a board role. I respect the position of the chair. I have served as chair before, and I have also been a board member for six years, so I know what that looks like. I have had a particularly close look at Chair Yellen; I have a very close relationship with her. I also worked with Chair Bernanke for two years, but that was when I had just joined.

So I am very clear about what this position is and I understand how difficult it is to get this team to reach a consensus. I have always felt that unnecessary difficulties should not be added to the chair. That means, when you can support the direction in which the chair wants to go, you should support it as much as possible; if you cannot support it, then you should not force it.

I have always felt that this is how the Fed operates. The Chair has only one vote, and beyond that, the ability to build consensus. If people are not willing to be flexible at all, how can you possibly hope to reach consensus? The true authority of the Chair is in building relationships with people, working with them, and then coming up with solutions that can create consensus.

I intend to be a constructive participant in this process, and this is also out of respect for the position of Chair.

Question: As someone about to be reappointed as a Board member, how do you view the risk of oil prices transmitting to core inflation in the coming weeks? Some regional bank presidents seem particularly concerned about this, that is, the concern about oil prices transmitting to core inflation. Now we have three dissenters. How do you see the outlook for core inflation?

Powell: This risk is real. They do exist, and the reality is that we have to wait and see.

The good news is that we believe the current policy stance is in a very good place to wait and see. We are roughly at the high end of the neutral range, or slightly restrictive. The labor market is showing more and more signs of stability, while inflation is not behaving very obediently. So, slightly restrictive, or at the high end of neutral, may be just the right place.

We can wait here, see how things evolve, and then act. We will watch how much pressure there is to transmit to core inflation. You have seen this effect in ticket prices, and you may see it in many other places. But we don't know yet. It's very difficult to judge because how long will the strait be closed? You can construct any number of scenarios, but we won't know until we actually see it.

Fortunately, we are in a good position right now to wait and see the situation develop.

Press Conference Held After Each Meeting and Dot Plot Reform

Question: You have started holding a press conference after every rate-setting meeting, not just after those with a Summary of Economic Projections. Could you talk about why you think this is a net positive change?

Powell: In the past, when we held quarterly press conferences, we always said we could act at any meeting. But in practice, we would only act at those quarterly meetings that had the Summary of Economic Projections and a press conference.

During the pandemic, we were doing a tremendous amount of operations at every meeting, and sometimes between meetings. It would have been very challenging without a press conference, I think. This has now become an industry norm and a standard.

As to whether it has to be this way all the time, I don't know. People have gotten used to this arrangement. I do think it's very helpful because I'm trying to convey a message on behalf of the Committee rather than having 18 other people go out and speak to their points. Because we really do have a very diverse set of views, and without a unified explanation, the information could be very divergent.

Question: Regarding last year's communication review, could you describe the debate at the time? What changes were considered? What did you hope to accomplish? And what prevented the relevant changes?

Powell: I won't get into very detailed specifics. But we quickly found that making significant changes to the dot plot or the economic projections summary was difficult to achieve broad support for within the Committee. So we didn't push forward too much.

I have never been the biggest fan of the dot plot. But without an alternative, you can't just abolish it. We looked at a lot of things.

I think each new Chair will look at our whole set of communication tools and think about whether adjustments should be made. We're the only major central bank that doesn't publish formal forecasts, because we have a 19-person Committee. Trying to do that at the Board level is hard; at the Committee level, it's also hard; if it's done by staff, there are issues too. So it's always been difficult.

The current way of communicating is operational. I think our communication overall is good. But it's only natural to consider whether things could be done in a different, better way.

Is the 'Hawkish Outcome' Just an Extension of the Pause in Rate Cuts?

Question: Moving on to the question about rate hikes. Can we understand that the Fed's most hawkish outcome is still just an extension of the pause in rate cuts? Is the Committee increasingly of the view that current monetary policy is not actually restrictive? The economy is still performing relatively well under significant energy shocks, unemployment has ticked down slightly, inflation was sideways before the war and is now moving up. How does the Committee view this debate?

Powell: Our current view is that the policy rate is in an appropriate place. If we need to raise rates, we will signal that, and we will do so. If we need to cut rates, if that's appropriate, we will signal the opposite.

I think we feel that we are in a place where we can move in either direction. There's no one calling for an immediate rate increase now. So it really depends on how things evolve.

As I said, this round of deliberations about adjusting guidance was closer than before, but ultimately we didn't make the adjustment.

Question: Regarding the war, when do you think the growth risks could outweigh the inflation risks? Where is the tipping point if the conflict continues to drag on?

Powell: You can only judge by actual data.

Given that we are a large energy-exporting country and our economy is far less dependent on energy, particularly oil, than it was in the 1970s, the impact on the U.S. would be significantly smaller than on Western Europe or Asian economies. They would be much more severely impacted.

Currently, the impact we are feeling, as well as what is reflected in market pricing, is a situation of relatively quick resolution. If the conflict persists longer and prices rise further, we will feel the impact more acutely.

Of course, what I am referring to is headline inflation. We are very aware that people across the country are already facing higher gasoline prices, which is truly painful and these increases may continue. Other aspects will also start to show, such as the airline ticket prices I mentioned, as well as other products and services that depend on oil and its derivatives, which people will begin to feel.

Neutral Rate and a Potentially Split Fed

Question: The market is now not expecting any rate cuts this year. Do you think we are already at the neutral rate level? Why?

Powell: The neutral rate is something we really cannot know. I think we are very close to the neutral rate. My judgment has always been that the neutral rate is between 3% and 4%. We are now slightly above 3.5%, so we are in what I consider the reasonable range for the neutral rate, just closer to the high end.

The labor market may still be cooling slightly. I don't think there is a strong case to be made for policy being clearly restrictive. Perhaps slightly restrictive, or neutral, I would say.

Question: Following up on your future. We are now seeing the first four dissents since October 1992. Are you presiding over a split Fed?

Powell: What is important to remember is that we have always had very robust debates, and those debates are very healthy. We are in an exceptionally difficult environment right now.

We have actually had four supply shocks. You could also say more than four, but at least including the pandemic, the Russia-Ukraine war, tariffs, and now the Iran situation and the surge in oil prices. Every supply shock has the potential to push up both inflation and unemployment. So what is a central bank to do? It's very hard for the central bank to know.

The right thing is to strive for a balance between the achievement of the dual mandate, which is what our framework requires of us. But these judgments are very difficult. You have to forecast where each variable is going, you have to think about how long it will take to get back to the target, you have to judge how restrictive policy is. Therefore, naturally there will be differences of view within the committee. People will see things differently, people will have different risk tolerances. If everyone agreed, that would be surprising.

I think this is partly because we have been dealing with a set of very challenging supply shocks for the past five or six years.

Will the Incoming Chair Resist Political Pressure and Gasoline Prices

Question: Do you believe the new chairman will withstand political pressure from the president?

Powell: He was very clear about this during the hearing, and I will take him at his word.

Question: Now that gasoline prices have exceeded $4 per gallon, inflation has just hit a two-year high. Should Americans expect to pay higher gasoline prices for the rest of the year? Does this mean that a rate cut is now off the table in your view? Also, as you continue to serve as a Fed governor, what signal do you think this sends to the president?

Powell: I don't know how gasoline prices will evolve for the rest of the year. It depends on how long the strait remains closed, how quickly it reopens, and so forth.

But remember, when gasoline prices rise, it takes some money out of people's disposable income, so they will cut back on spending in other areas. This will impact GDP. So, the question is whether the spending reduction will offset the inflation impact. The answer is not obvious beforehand. We have to see how it evolves.

Question: So, what signal do you think you staying on sends to the president?

Powell: I stand by what I've said before.

Where Federal Reserve Independence Comes From

Question: During your tenure, the Fed's independence has faced many different forms of pressure. In practice, where do you believe the Fed's independence comes from? Is it from the law? From political support in Congress? Or from the Fed's own actions? What maintains the Fed's independence?

Powell: To a large extent, it comes from the law. We have had to resort to the courts, and so far have been successful in defending this.

The law has indeed created an environment that enables the Fed to and requires it to formulate monetary policy without considering political factors. So, part of it comes from the law.

But it is not just the law. There is also a whole set of conventions. There are boundaries between the Fed and the executive branch, between the Fed and the Treasury, that we must respect and continue to respect, clarifying what the Fed is responsible for, what the Treasury is responsible for, and what other executive agencies are responsible for.

So, some of it is a legal issue. Ultimately, all of this has a legal basis. But it is not just monetary policy. We do not want to use our tools to achieve goals that are clearly beyond our mandate. Every administration looks at our tools and thinks they can be repurposed for other goals. But that would drag us into politics and fiscal policy. So we have been resisting that.

Question: In a different form, do you believe the Federal Reserve's independence is as strong today as when you first became Chair? If so, why?

Powell: I think it is facing risks. As I mentioned earlier, these legal challenges are undermining this institution. We have had to resort to the courts to defend our legal standing. What is at issue here is not just the word "independence," but whether we can set monetary policy without regard to political considerations.

So far, we have been successful in court. But things are not over; nothing is ever completely settled. This is very important. It is not about the people working at the Fed or the institution itself; it's about whether a central bank can make decisions based on analysis and our best assessment, rather than trying to help or hurt politicians.

There is a clear line as to whether a central bank does that. Almost without exception, successful developed economies have built in strong protections for their central banks for this reason.

That is the heart of the matter. I am confident, as I said in my remarks, that the Fed will continue to make decisions based on objective, rigorous analysis, not based on political considerations. But we do have to fight for that.

I hope that we can get through this period and get back to a place of respecting the law and tradition, which is to let the Fed do its job. We are not perfect. The Fed is an institution made up of people who work very hard to do the right thing for the public. Don't expect perfection, but expect us to make decisions based on the best analysis we can muster without regard to political considerations.

How Colleagues View his Stay and Reserve Bank Function Centralization

Question: How would you describe your colleagues' views on your decision to stay? Have you received their support? Additionally, have you heard concerns from colleagues about the continued legal challenges from the executive branch? Is this an issue that others are discussing with you?

Powell: I don't want to speak for my colleagues; they can speak for themselves. But indeed, people are generally concerned that these types of things may continue to happen. That's all I'll say. And if they do continue to happen, that would be a problem.

Question: I also wanted to ask about a speech by a Board member regarding the reserve banks. What are your thoughts on some of the ideas he put forth for functional centralization? Are you concerned that this could be a slippery slope leading to further centralization of reserve bank functions, to the point where the central bank loses some very important regional information?

Powell: We are striving to be good stewards of the public's funds and to increase efficiency. The particular Board member is particularly passionate about this. Of course, so are the Reserve Bank presidents. The question is how to achieve this.

Of course, we would like to have 12 strong, independent reserve banks, each with its own staff, its own monetary policy views, and so on. He also mentioned this in his speech.

However, there are indeed some things that are currently being done separately by the 12 banks, which could possibly be done more efficiently in one place, saving costs. So there is a back-and-forth discussion on this, but everyone is in agreement on the overall direction.

He also mentioned another idea, which is the removal of a reserve bank president due to differing monetary policy views. I strongly agree with him on this: if that were to happen, it would mark the beginning of the end of the Fed's independence in setting monetary policy. If every administration could do this, then the Fed would just be another cabinet agency. I would not support such a move. He also said the same.

Historical Legacy, Inflation, and Economic Resilience

Question: I wanted to ask about your historical legacy. When history writes about these eight years, how do you think people will remember your leadership at the Fed?

Powell: I'll leave that question for someone else to answer. I'll give you a chance to rephrase.

Question: Then I'll ask a question about "unruly inflation." You have mentioned that over the past five years, there have been four significant supply shocks, yet inflation has still been "unruly." What do you say to those American families who feel that since the economic restart post-COVID, inflation has never really been brought under control?

Powell: We have committed to bringing inflation back to 2% in a sustainable way. That is our goal, and we will stick to it until we achieve it.

These events keep happening, continually pushing up costs. The best thing we can do is to use our tools to guide inflation back to 2%. I think that if we were to try to quickly achieve this goal, it could come at a high cost in terms of job losses, among other things. Therefore, we are striving to gradually achieve the goal while minimizing damage as much as possible. Our commitment to this is ongoing and unwavering.

Question: Besides "unruly inflation," how would you describe the U.S. economy? It seems to have remained quite resilient despite facing so many shocks.

Powell: I would say that it has indeed remained quite resilient.

Overall, U.S. economic growth is very robust. Part of the reason is that consumer spending is still holding up well, and the latest data are also good. Another reason is that there seems to be almost insatiable demand across the U.S. for data centers, with a significant amount of business investment flowing into data center construction, and there are good reasons to believe this situation will continue.

So what you're seeing is an economy that's growing at a 2% or higher rate. Private Domestic Final Purchases, or PDFFP, is actually a better gauge of economic momentum, and it's even above that level. That's a positive.

Then look at the unemployment rate, which is at 4.3%. That's a low level, close to mainstream estimates of the natural rate of unemployment, and we've been around this level for a long time.

However, for some who are out of work, it may not necessarily feel like a strong labor market. With a low quit rate, low hiring, and virtually no net job creation, the labor market is in a kind of equilibrium, but it's an unusual and uncomfortable one. Those without jobs find it hard to enter the market if no one is quitting.

So overall, things are not bad. What we need to deal with is inflation. Part of the inflation comes from tariffs, and we expect this portion of inflation to fade away within the year as it's a one-time increase that shouldn't repeat and should start to show up quickly. Energy inflation should also pass through relatively quickly. We'll have to see how that develops.

Meanwhile, we believe the current policy stance is appropriate to hold steady and wait for developments.

Has the Dovish Bias Shifted to Neutral, and Is Inaction the Balancing Act?

Question: It might be a bit repetitive, but I'll ask anyway. Clearly, three members dissented against retaining the dovish bias in the statement. You mentioned that the majority still believes there's no need to change the wording at the moment. So, are the majority of the committee still inclined to cut rates now? Or has the committee's bias shifted from cutting rates to holding, or even raising if necessary?

Powell: I think the center of the committee is moving towards a more neutral position, as is roughly being reflected in the markets.

It's just that when you change that guidance, it sends a lot of signals. So most think we don't need to send that signal now. Maybe we'll get there. The reason is we're waiting to see how events in the Middle East unfold and what they mean for the U.S. economy.

So there's a group of people who think we don't need to act quickly. We get that. Of course, if we were looking to raise rates, we would shift to a bias to raise, and before that, to a neutral bias. The disagreement is on whether we should do that at this meeting. And at this meeting, all but one agreed that the rate decision was appropriate, meaning no action.

Question: You just mentioned that you think the Fed's independence is at risk. Can it be said that you wish to continue as chair to provide a check on this issue?

Powell: I will stay on until I think it's appropriate to leave. Yes, that has certainly been a consideration driving my decision. But I'm not looking to be a high-profile dissenter or that kind of figure. I'm more focused on other aspects, hoping to see things calm down, get back to a more traditional mode: working with existing members, bringing them to consensus, and respecting that consensus. That's what I'd like to see.

Most Proud and Regretful Decisions During Tenure, and Why Central Bank Independence Matters

Question: You have made many difficult decisions during your time at the Fed. As your term as chair nears its end, when you look back on your tenure and a possible historical evaluation, are there any decisions that make you particularly proud? And are there any decisions that, in hindsight, you would wish to do over?

Powell: I don't want to single out one thing at this moment. I can only say that all of us have been working hard to do what we believe is in the best interest of the American people, based on the tools and objectives Congress has given us. It's been very challenging because we have been in a supply shock environment. The past six years can be described as a series of supply shocks.

This is very different from what the Fed and other central banks have been doing for a long time, which is demand management. There was certainly an inflation mandate back then, but low inflation persisted for 25 years. Now it's a very different and more challenging world, where you have to balance between two objectives.

By the way, even central banks that only have an inflation goal have to do the same thing because they are also balancing economic activity. So it has always been challenging. We have done our best in these difficult times. I am very proud of the work that I and my colleagues have done in these years.

Question: On the Federal Reserve's independence, could you explain to the public why this somewhat technical-sounding concept is so important? What would be the consequences if the Supreme Court made a ruling in a case against a director that was unfavorable to the Fed, or if the Fed were to make decisions more around the political agenda than economic data in the future?

Powell: Every major advanced economy in the world has made the same choice as the United States: to take monetary policy, which is setting rates to support the economy, achieve maximum employment, and price stability, out of the direct control of elected politicians.

The reason is that elected politicians are always campaigning, they always want lower rates, and that ultimately leads to inflation. After centuries of experience, the world turned to a different model, and it has worked well. In that period, inflation was controlled for 40 years.

Then we had a global pandemic inflation. Later, inflation almost returned to the target, and now it's being affected by energy shocks, while the U.S. is also affected by tariff shocks.

What I want to convey to the general public is: Do not perceive it as an institution's independence. You can think of it this way: You want someone to formulate monetary policy, set interest rates, to serve the public interest, strive to achieve the dual mandate of maximum employment and price stability, and only focus on these objectives, completely disregarding political considerations.

This is not a partisan issue but a nonpartisan issue. We work directly for the American people. We do not say, because the President thinks this is good, or because the elections are approaching, I will speed up or slow down the economy. Just think, if we actually did that, we would have no credibility. The market would lose trust in us and would not believe we have the ability to control inflation.

What I want to say is that, regardless of what people say, the market believes we will achieve 2% inflation. If you look at long-term inflation expectations, the market does believe that. There is no situation where the market thinks the Fed's credibility has diminished. That's not the fact. People understand that this is our commitment, and we will achieve it, and this is already reflected in market pricing. If someone disagrees, they can go bet against the market. But what is priced in now is the Fed's credibility.

Energy Prices Impact on Consumption and Transmission of Overseas Manufacturing Costs

Question: Today, we have discussed a lot about gasoline prices and also about airfare prices, both of which have surged due to the Iran conflict. Have you seen this drag on consumer spending in other areas of the economy? If so, how concerned are you about it dragging down growth?

Powell: We have not seen that in spending yet, we truly haven't. As one of your colleagues mentioned, the economy has a lot of momentum. Not just this time, but over the past several years, it has had a lot of momentum. The U.S. economy has repeatedly withstood shocks and continued to move forward.

Consumers are still spending. Banks will tell you that, credit card companies will tell you that, and the latest retail sales data show that as well. People are still spending.

Of course, if gasoline prices continue to surge, that is money that would have been spent on other things that people are taking out of their pockets, how long can that go on? Logically, you would think it would eventually begin to have an effect on spending. Because people's disposable incomes are limited, if they are spending 25% more on gasoline or some similar proportion, that money has to come from other spending.

But we have not yet seen a pronounced slowdown, at least we have not seen a slowdown due to this shock.

Question: You mentioned that some Asian economies are particularly reliant on oil and they produce many goods that American consumers buy. Has there been any discussion today about whether this cost transmission to consumers is a real concern? Could this potentially drive up inflation?

Powell: These factors are all in our inflation model. You can ask any similar question, and they will have a place in the staff analysis. They will assess how price increases will pass through.

Currently, these effects are not significant. We are a large economy, with the import sector accounting for only 10% of the economy. We are not like some European countries where the external sector is 50% of GDP. Furthermore, as I mentioned, we are also an oil-exporting country. Therefore, we will not face the same pressure as the Western European economy, especially the Asian economy, and are unlikely to suffer to the same extent.

Thank you very much, anyway. I won't see you next time (laughs).

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