WASHINGTON — Federal Reserve Chair Jerome Powell stated on March 30 that longer-term inflation expectations remain “well anchored,” but the central bank is vigilantly tracking impacts from the U.S.-Israel war against Iran.
Speaking at Harvard University, Powell noted officials may respond if needed, but current policy allows waiting. “We don’t know what the economic effects will be… Our policy is in a good place to wait and see,” he said.
Oil prices have surged since the conflict erupted a month ago, risking higher inflation while curbing growth and demand, a dilemma for the Fed’s dual mandate of maximum employment and 2% inflation. Powell stressed monitoring supply shocks closely: “The tendency is to look through any kind of a supply shock but… you have to carefully monitor inflation expectations.”
Treasuries rallied and stocks rose post-remarks. The Fed held rates steady in March for the second time, citing uncertainty; Powell wants more progress toward 2% inflation before cuts.
On private credit jitters, where investors demand withdrawals and some funds block them, Powell said, “We’re watching it super carefully.” He sees a sector correction but no banking contagion yet: “We don’t see those right now.”