For the Federal Reserve, which is currently at the center of attention, this exchange occurs at an extremely sensitive moment. Although Powell may deliberately avoid certain topics tonight, Trump is unlikely to let him off easily…
This week, the US market will witness some fairly intriguing events. As the transition from March to April occurs, labor market data will return to the spotlight this week. However, first, Federal Reserve Chair Powell will make an appearance later today (Beijing time 22:30) at a moderated discussion session for Harvard University’s Principles of Economics course. Beyond closely watching US-Iran headline risks, this will be the most notable item on the agenda.
For the Federal Reserve, which is currently under intense scrutiny, this academic exchange takes place at an extremely sensitive moment. Powell will answer questions live from the moderator as well as students in the audience. Since no prepared remarks are scheduled, this will be one of his rare off-script public appearances in recent times. Although there is no specific theme, Powell is expected to cover a broad range of topics, spanning from the economy to inflation and monetary policy.
Analysts predict that he will avoid addressing any issues related to the politicization of the Federal Reserve. Nevertheless, it is reasonable to expect that Trump will once again lash out at Powell following this event, especially if Powell suggests that the Fed wishes to pause rate adjustments amid the Middle Eastern situation to maintain flexibility. Ironically, the circumstances leading to this scenario stem directly from Trump's own actions. Still, it can be assured that Trump will continue to blame Powell for not cutting rates.
Prior to this visit to Harvard, Powell and the Federal Reserve had just endured a turbulent period. In January this year, the Department of Justice launched a criminal investigation into him, focusing on his testimony last June before the Senate Banking Committee regarding cost overruns in the renovation project of the Federal Reserve headquarters. Powell countered by stating that the investigation was unrelated to construction costs but rather stemmed from pressure exerted by the Trump administration to force the Federal Reserve to cut interest rates.
Earlier this month, a federal judge dismissed the subpoena after a prosecutor admitted in court that no evidence of wrongdoing had been found. However, US Attorney Jenny Piro responded at a subsequent press conference, strongly criticizing the ruling as “divorced from the law,” and stated that the DOJ would appeal to ensure the investigation continued.
On the monetary policy front, the Federal Reserve maintained interest rates unchanged for a second consecutive meeting in March. However, officials are facing a dilemma: inflation remains above the Fed’s 2% target, currently hovering around 3%, with tariffs being a significant contributing factor; meanwhile, tensions with Iran have added uncertainty to the economic growth outlook. Moreover, this year’s labor market has been relatively stagnant, with dismal unemployment figures in February showing a loss of over 90,000 jobs.
Powell's term as chair of the Federal Reserve will officially conclude on May 15. During the press conference following the March policy meeting, he indicated that if his nominated successor, Kevin Warsh, has not received Senate approval by then, he will serve as acting chair. He also emphasized that he will not resign from his position as a Federal Reserve governor—whose term extends until January 2028—until the DOJ investigation is fully resolved.
Senator Thom Tillis, a Republican member of the Senate Banking Committee, has explicitly stated that he will block Warsh’s confirmation until this legal controversy subsides. This has made the likelihood of a smooth transition for the Federal Reserve before May increasingly slim.
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