This morning, Powell took to the podium in the Eccles Building press conference room for the last time. As he had done at every FOMC press conference in the past eight years, he went up, adjusted his microphone, and began his remarks.
This was Powell's last public address as Federal Reserve Chairman. The agenda was the usual review of the FOMC's interest rate decision and answering questions from reporters. With only two weeks left before his official departure, everyone knew this would be a different press conference than usual, but Powell still prepared some unexpected surprises.
The decision to keep interest rates unchanged at 3.5%-3.75% was unsurprising, but the committee experienced four dissenting voices, making it the most divided policy meeting since 1992. At the same time, he formally responded to previous market speculation, stating that he will remain with the Federal Reserve.
The last person to choose to remain on the board after stepping down as chairman was Marina Eccles in 1948, after whom the Federal Reserve Building is named. 78 years passed between him and Powell.
Why did Powell choose to stay? The story of these past eight years has always begun with "Good afternoon." This is the opening line he's repeated countless times on the press conference stage, and it has become the most widespread and familiar memory of him on social media. But to understand the weight of his decision today, we need to turn back the clock eight years.
An "unqualified" chairman
"I will do everything in my power to fulfill the two mandates Congress has given us: price stability and maximum employment." — Jerome Powell, November 2, 2017, at the White House Rose Garden Federal Reserve Chair nomination ceremony.
On the morning of February 5, 2018, Jerome Powell raised his right hand to take the oath of office in a conference room on the second floor of the Eccles Building. The ceremony was brief, lasting less than three minutes, and no president was present. The oath was presided over by Federal Reserve Governor Randall, a colleague with even less seniority. Two reporters took photos of the scene: dark blue suits, steady gazes, and no one speaking.
That day, he was 65 years old and officially succeeded as the 16th Chairman of the Federal Reserve, with an annual salary of just over $200,000. If judged by the standards of the four successors who had taken the position before him, he would not seem qualified.
Alan Greenspan earned his PhD in economics from New York University and had already spent thirty years in the private economic consulting industry before his appointment. Before Reagan entered the White House, he was widely recognized in both Washington and New York as a "market translator." Ben Bernanke was the former chair of the economics department at Princeton University; his 1980s paper on the Great Depression was later considered the theoretical foundation for central bank policy in the early 21st century. Janet Yellen earned her PhD from Yale and spent most of her life as an academic in the economics department at Berkeley; she was the first woman to serve as chair of the department.
Powell has no background in economics; he studied political science at Princeton University for his undergraduate degree and then went on to earn his Juris Doctor degree at Georgetown. Strictly speaking, he is a lawyer. Powell served in the Treasury Department under President George H.W. Bush, rising to the position of Deputy Secretary, before becoming a partner at the Carlyle Group for nearly ten years. In 2012, Obama nominated him and a Democratic economist to the Federal Reserve Board as a political balancing act. He served on the board for five years without much fanfare.
If we go back further and find a case of a "non-economist" like him sitting in the chairman's chair, we have to go back to 1978.
In March 1978, U.S. President Jimmy Carter sent a man named G. William Miller to Eccles Building. Miller was previously the CEO of Textron, a defense contractor. The Carter administration selected him, in part, because of his good relations with the labor community, believing that he could "control inflation without being too harsh."
But Miller sat in that chair for 17 months, during which time the CPI rose from 6% to 12%, and the dollar experienced its worst crisis in the foreign exchange market since World War II. In August 1979, Carter ousted him to become Treasury Secretary, and Paul Volcker took over the Federal Reserve. What followed is written into all central bank textbooks: Volcker pushed interest rates to 20%, a Double Botto recession ensued, inflation collapsed, and the US economy entered the 1980s.
For nearly forty years after Miller, no non-economist sat in that chair. Until Powell.
During his five years as a board member, Powell was virtually transparent. From his inauguration in May 2012 to his assumption of the chairmanship in February 2018, he voted for the majority every time he cast a vote on the FOMC, never opposing it. His daily work involved technical issues such as financial regulation and payment systems, far removed from the limelight. Colleagues later recalled that what was most unique about him during this period wasn't his papers or speeches, but his phone calls. He wanted to bypass academic papers and official data, to hear what people on the front lines of the market had to say, calling bankers, bond traders, and corporate CFOs. A board member making dozens of such calls at his own expense every week was something his academic colleagues wouldn't do.
On the afternoon of November 2, 2017, US President Trump announced in the White House Rose Garden his nomination of Jerome Powell to succeed him as Chairman of the Federal Reserve. Trump delivered a strong speech, while Powell gave a more restrained one, focusing on the phrase "committed to achieving the dual mandate of employment and price stability."
That evening, major Wall Street traders' memos to their clients largely echoed the same assessment: a continuation of the moderate stance, and no need for market panic. There were some dissenting voices within academia; several economists interviewed by the New York Times that day expressed concern about whether a lawyer could lead the FOMC at a crucial moment, but these concerns were quickly drowned out by the generally positive financial news.
Less than a year into his term, Powell made a structural change. He changed the post-meeting press conferences at Federal Reserve policy meetings from four times a year to every single meeting, and adopted everyday language, almost entirely avoiding academic jargon. The "constructive ambiguity" that Greenspan had once lauded ceased to be the Fed's communication style from that year onward. However, this new style didn't even have time to become a habit before March 2020 arrived.
Every choice was unprecedented.
"We will persevere until the work is done." — Jerome Powell, August 26, 2022, Jackson Hole Global Central Bank Symposium, Wyoming
March 15, 2020, was a Sunday. Later that afternoon, Powell convened an emergency FOMC meeting at Eccles Building, brought forward from its original schedule of three days later. The announcements included: a 100-basis-point cut in the federal funds rate to 0-0.25%, the launch of a $700 billion asset purchase program, and the opening of dollar swap lines with the five major central banks. This was the most aggressive single move in the history of the Federal Reserve.
At that moment, the coronavirus swept across the United States, ICU beds were running out, the US stock market triggered circuit breakers twice in the past week, and the Treasury market experienced a liquidity crunch that sent chills down the spines of all traders. What should have been the world's deepest market saw several trading days with no one willing to accept offers for US Treasury bonds.
Over the next three weeks, Powell introduced a new tool almost every few days. On March 17th, the Commercial Paper Funding Facility; on March 19th, the Money Market Mutual Lending Facility; on March 23rd, the announcement of unlimited QE, the restart of TALF, and the formation of the Main Street Lending Program; and on April 9th, the expansion of the corporate bond purchase program to $2.3 trillion. These tools pushed the boundaries of the Federal Reserve's practices for many years.
Buying corporate bonds was something Bernanke explicitly refused to do in 2008, bypassing banks to lend directly to small and medium-sized enterprises—something he didn't even dare to do during the 2008 financial crisis. In the autumn of 2008, when Lehman Brothers collapsed, it took Bernanke nearly three months to launch the first round of QE, while Powell went from an emergency rate cut on March 3 to unlimited QE in just 20 days.
On May 17, Powell sat in front of the cameras on CBS's "60 Minutes" and said the quote that has been repeatedly cited since: "We will not run out of ammunition." He wasn't just making empty promises; he was making a concrete commitment to the market. In the months that followed, for the first time, the voices criticizing him for "not acting like a Federal Reserve chairman" collectively fell silent.
But his biggest mistake began with this silence.
In the spring of 2021, the year-on-year CPI reading began to jump: 4.2% in April, 5.0% in May, and 5.4% in June. Powell and his team of economists judged it to be "temporary." They believed it was a disruption caused by the pandemic disrupting supply chains and would subside on its own within a few quarters. This assessment wasn't indifference; it was genuine belief. Powell repeatedly stated in internal meetings that he didn't want to crush a recovering labor market with a single cyclical disruption. A significant portion of the millions who lost their jobs during the pandemic were low-income earners, and they are currently being re-employed.
Therefore, throughout 2021, the Federal Reserve maintained zero interest rates and continued to purchase $120 billion in assets each month. At every press conference, Powell used everyday language to explain why interest rate hikes should be postponed.
Inflation didn't wait. 5.4% in September, 6.2% in October, and 6.8% in November. In academia, on Wall Street, and in Republican senators, skepticism returned in a new form: a lawyer who couldn't understand what economists were saying had led the U.S. into an inflation crisis. Former Treasury Secretary Larry Summers wrote in his Washington Post column that he had never seen fiscal and monetary policy so out of touch with reality.
On the morning of November 30, Powell testified before the Senate Banking Committee. When asked about the inflation situation, he said, "I think now might be a good time to let that term (temporary inflation) 'retire' and let us try to explain ourselves more clearly."
This was not a forced admission of guilt. No reporters pressed him for answers, and no lawmakers demanded that he relinquish the "temporary" status. He chose to say it himself.
After admitting his mistake, Powell acted just as quickly.
In March 2022, interest rates were raised by 25 basis points, followed by 50 basis points in May and 75 basis points in June. This was the largest single rate hike since Greenspan's tightening cycle in 1994. A further 75 basis points were raised in July. The market initially interpreted this pace as a "catch-up," believing the Fed would soon return to a more dovish path. On August 26, the global central bank governors' closed-door meeting opened as scheduled at Jackson Hole, with the market expecting Powell to reassure the public and leave room for a possible "policy shift."
At 10 a.m., Powell stepped onto the podium to begin his speech. Typically, a chairman's speech on such occasions lasts half an hour. But that morning, Powell didn't look at the teleprompter in the audience, and his speech lasted only eight minutes. He didn't discuss academic frameworks, complex transmission mechanisms, or offer any dovish hints; he simply conveyed three key points: price stability is the Fed's responsibility, interest rate hikes will be painful, and we will see it through to the end.
The last sentence of the speech was, "We will persevere until the work is done." Those who understood immediately recognized this as a reference to the words of a former chairman. "Keeping at it" is the title of Paul Volcker's 2018 memoir. Volcker's anti-inflation campaign in 1979, which pushed interest rates to 20% and plunged the economy into a Double Botto recession, was a phrase he later used to summarize that period. Powell mentioned Volcker three times in his eight-minute speech; he didn't compare himself to Volcker, but he chose to conclude with Volcker's words.
On the day the speech concluded, the S&P 500 fell 3.4% and the Nasdaq fell 3.9%. This was the market's final disappointment with a promise of "continuation of the dovish stance."
He knew that these words would cause a stir, but he said them anyway. This was the first time in four years since he sat in the Federal Reserve Chairman's office that he made it clear to everyone that he did not intend to be defined by his past.
Following Jackson Hole, Powell's pace of interest rate hikes continued. 75 basis points in September, 75 basis points in November, and 50 basis points in December. In March 2023, Silicon Valley Bank (SVB) collapsed within 48 hours, becoming the second-largest bank failure in U.S. history. Powell did something again that exceeded market expectations: while creating the Term Funding Program for Banks (BTFP) to rescue banks, he continued to raise interest rates by 25 basis points.
This "two-pronged approach" is not easily understood within the traditional central bank framework, because rescuing liquidity and tightening policies should point in opposite directions. But Powell is not one to follow textbooks. He views "system stability" and "inflation target" as two separate issues: using one set of tools to rescue banks and another set to suppress inflation. This is a lawyer-like instrumentalist mindset: using which tool to solve which problem, without allowing the logic of one thing to override the logic of the other.
By the time of the final rate hike in July 2023, the federal funds rate had reached a range of 5.25% to 5.50%, the highest level in 22 years. The total rate hike over the entire cycle amounted to 525 basis points.
Inflation has finally begun to decline. The CPI returned to 3.0% year-on-year in June 2024 and to 2.9% by the end of the year. The unemployment rate remained near historically low levels throughout the interest rate hike cycle, without the sharp rise typical of recessions. This is the first time since the 1980s that the Federal Reserve has managed to suppress high inflation without plunging the economy into a widespread recession.
Economists have since debated whether he was "lucky," arguing that the unique circumstances of the pandemic made his tools more effective than theoretically possible, and that the decline in energy prices also helped. This debate will continue.
In his final press conference, Powell summarized the past eight years as follows: "We have actually experienced four supply shocks: the pandemic, the Russia-Ukraine conflict, tariffs, and now Iran and soaring oil prices. Each supply shock has the potential to push up inflation and unemployment, and central banks have a hard time knowing what to do." It is this unprecedented macroeconomic environment, coupled with the unprecedented actions the Federal Reserve has been forced to take, that has made this morning's committee the most divided since 1992.
But in those eight minutes on the morning of August 26, 2022, the judgment he made was a genuine judgment, the risk he took was a genuine risk, and his choice not to be defined by his own mistakes in 2021 was a genuine choice.
The Night Watchman in the Gate
"I will not resign." — Jerome Powell, November 7, 2024, FOMC press conference, responding to the question of "Can the president fire the Federal Reserve Chairman?"
On the afternoon of January 11, 2026, Powell recorded a video in a conference room in Eccles Building. The Federal Reserve emblem was in the background. He said to the camera, "This criminal charge threatens the Federal Reserve's right to set interest rates based on the best judgment of the public, not on the president's preferences."
The video was released by the Federal Reserve's official account that evening. Global financial media outlets almost simultaneously broke the news. This marked the first time in the Fed's 113-year history that it had directly and publicly confronted the U.S. administration in this manner.
The trigger for this incident came a few days ago. The U.S. Department of Justice issued a grand jury subpoena to Powell, initiating a criminal investigation into him over the renovation project at the Federal Reserve headquarters. The Department of Justice cited budget overruns and irregularities in the procurement process as the reasons.
But everyone knows what really happened. For the past twelve months, President Trump has repeatedly asked Powell to cut interest rates to align with his tariff policies. Powell maintained his own pace, citing "we don't have that kind of political consideration." This criminal investigation is a form of retaliation chosen by the president after he felt he had exhausted conventional means. Powell didn't use the word "retaliation" in the video. But he used plain language that almost everyone could understand.
To understand why this moment happened, we must go back eight years and start from Powell's first conflict.
In December 2018, Powell's Federal Reserve raised interest rates for the fourth time that year, pushing the federal funds rate to a range of 2.25%-2.50%. The market was already tired of the continued tightening, and the S&P 500 entered a bear market the week before Christmas. Trump broke with decades of tradition for US presidents not to publicly criticize the Fed chairman, and began a series of humiliations against Powell on Twitter. The words he used were ones that no previous White House occupant would have used.
In the following year, the Federal Reserve implemented three "precautionary rate cuts," each by 25 basis points, totaling 75 basis points. Was this a capitulation? That remains inconclusive. Powell's team explained it at the time by citing the global economic slowdown and weakening manufacturing PMI caused by the US-China trade friction. However, the opposition insists that these three rate cuts would not have occurred without pressure from Trump.
Trump's second term begins in January 2025. This time, his pressure on Powell isn't through Twitter, but through the tools of an entire executive machine.
In April 2025, Trump introduced a new round of tariffs. The market widely expects this to push up inflation and suppress employment, trapping the Federal Reserve in a stagflation dilemma where "raising interest rates hurts employment, while lowering rates increases inflation." Trump repeatedly urged Powell to cut interest rates, hoping that loose monetary policy would offset the negative effects of tariffs.
Powell responded in his speech at the Economic Club of Chicago on April 16. He didn't directly reject interest rate cuts, but used typical Powell-style colloquial language: "We are currently in a favorable position to wait for the situation to become clearer before considering any adjustments to our policy stance." Midway through his speech, he used a line from a well-known Chicagoan movie to ease the tension: "As the great Chicagoan Ferris Beeler (the protagonist of the film *Ferris Bueller*) once said, 'Life moves fast.'" The audience laughed, but the financial markets didn't. Powell's meaning was clear: the Federal Reserve wouldn't panic and cut interest rates because of tariffs.
In the months that followed, Trump repeatedly threatened to fire Powell. This had actually been addressed as early as the FOMC press conference on November 7, 2024. That day, a reporter asked Powell, "If the president asked you to resign, would you resign?" He replied, "No." Another reporter followed up, "Does the president have the right to fire you?" He answered, "The law doesn't allow it." Both answers were brief and showed no hesitation.
The last time a Federal Reserve chairman faced such intense political pressure in the past was in the 1970s. The chairman then was Arthur Burns, a Columbia University PhD in economics and a senior figure in the central bank economics school. This would normally be the standard resume for a Fed chairman, but during his tenure, he was pressured by President Nixon through private phone calls, memos, and senior White House staff to ease monetary policy in the lead-up to the 1971-1972 presidential election. Later released Nixon tapes show the president bluntly telling Burns that he needed the economy to "overheat" a bit in an election year. Burns did not refuse. The result was a decade of stagflation in the 1970s in the United States, which lasted until Volcker took over in 1979.
Burns has a PhD in economics, while Powell is a lawyer. But faced with pressure from the president, Powell did what Burns didn't.
The DOJ investigation ultimately failed. In March 2026, a federal judge dismissed the subpoena, citing that "the sole purpose of the investigation was harassment and pressure," and the Justice Department subsequently quietly abandoned the investigation. That same month, Powell was awarded the Paul Volcker Public Integrity Award in a small auditorium in Washington. The ceremony was quiet and brief, without flashing lights; the auditorium was filled with Volcker's family, several former Federal Reserve governors, and economists. This award is given to those who "uphold public integrity under immense political pressure," and the final sentence of the acceptance speech was, "Independence and integrity are inseparable."
The award Powell received is named after Volcker. During his tenure, Volcker, despite pressure from both the Carter and Reagan administrations, never faced confrontations of the magnitude seen in public humiliation, threats of dismissal, or criminal investigations by the president. However, Volcker only faced policy disagreements; Powell also faced attacks on his identity from the highest political authority in the United States.
After Volcker in 1979, the Federal Reserve established a boundary independent of the White House, a boundary that was not breached during Powell's eight-year term.
At this morning's press conference, Powell formally answered a question that the market had been speculating about for the past few weeks. He will not actually leave the Federal Reserve on May 15. He will step down as chairman but remain as a governor for an undetermined period. His reason was straightforward: "What has happened over the past three months has left me with no choice but to stay until I see these things over." That was three months after the Justice Department subpoena was served.
He used his final chairmanship to do one thing: prevent his departure from creating a vacancy for the administration. He declared he would not be a "shadow chairman." He didn't want influence over monetary policy; he wanted to ensure the position of night watchman wasn't vacant.
He will still move out of the chairman's office on May 15, leaving it for Kevin Walsh. But Powell's desk will not be moved from the Eccles Building; it will simply be moved to a different floor and a different room.
"Good Afternoon"
At this morning's press conference, someone directly asked Powell how history would judge his eight-year term as chairman and his legacy. He simply replied, "Let others decide."
Eight years ago, when Powell first sat in this office, no one thought he would get to where he is today. In those eight years, he weathered a pandemic no one anticipated, inflation initially thought to be temporary, and political pressure that nearly eroded the Fed's independence. But May 15th wasn't the end; it was more like a halftime break. After Powell stepped down, all the forces that had pushed him to the brink remained, leaving the market with three questions.
The first question is, how long can the monetary policy framework he left behind be effective? In August 2020, Powell announced at Jackson Hole that the Federal Reserve would adopt a "flexible average inflation targeting" framework, allowing inflation to moderately exceed 2% for a period of time. This framework was reasonable in an era of low inflation, but the high inflation of 2021 made it seem sluggish. The FOMC has begun an internal review. The next chairman will have to decide whether to modify, retain, or abandon it.
The second issue is central bank independence. For the past eight years, Powell withstood almost every form of pressure from the White House. He defended the central bank's independence from the White House with three short phrases: "No," "It's not allowed by law," and "This isn't our job." But that boundary is now at a new level. It hasn't been breached, nor is it a tacitly accepted fact. When the next chairman walks into the office, no one will assume the White House won't intervene.
The third question is the most difficult to answer. What kind of political climate will the next chairman face? Trump's second term still has two years left. Whoever the next chairman is, it won't be like Powell's relatively calm start. The moment he sits in his office, what awaits him outside will no longer be mild policy debates, but rather the various probing tactics that have been condensed over the eight years from 2018 to 2026. These tactics will return in the future.
During Powell's eight years in office, a GIF frequently circulated on social media, resurfacing after each interest rate meeting. The GIF's background was the Eccles Building press conference room, where Powell walked to the podium, adjusted the microphone, and uttered two words: "Good afternoon." Immediately afterward, various asset markets plummeted.
This meme first appeared in December 2018, when netizens used it to mock Powell for causing the stock market to drop every time he spoke, calling this phenomenon the "Powell crash".
But over the past eight years, the interpretation of this meme has changed.
That lawyer, deemed "unqualified," weathered the market crash during the pandemic, admitted his mistakes and swiftly corrected them amidst inflation, and held his ground against all pressure from the White House. Every time he stepped onto the podium and uttered those two words, he knew the market would crash, and he knew the president would criticize him on Twitter. But he stood up every single time.
That opening remark, initially taken as a joke, ultimately became the simplest yet most powerful promise of an era. He never learned how to minimize market declines, but he always made sure to step out on time.
