Assessing Jerome Powell’s eight years as Fed chair

The Hutchins Center on Fiscal and Monetary Policy at Brookings convened a retrospective on Jerome Powell’s eight years as Federal Reserve chair (2018-2026) on June 2, 2026. Following opening remarks from Glenn Hutchins, co-chair of the Brookings Board of Trustees, the conference featured a paper with lessons learned from the Powell years by Christina and David Romer, professors of economics emeritus at the University of California, Berkeley. Their presentation was followed by two panels of experts. One focused on monetary policy, with former Fed Chair Ben Bernanke of Brookings, Dan Ivascyn of PIMCO, Kristin Forbes of MIT, and former Fed Vice Chair Alan Blinder of Princeton. The other focused on financial stability, with former Fed Governor Dan Tarullo of Harvard Law School, former Fed Vice Chair for Supervision Randal Quarles, and Andrew Metrick of Yale. Former Treasury Secretary and former Fed Chair Janet Yellen made closing remarks. (A video and transcript of the event are available here.)

Here are some highlights from the conversation.

No Fed chair’s tenure is uneventful, but Powell’s was unusually challenging

The Romers divide Powell’s tenure into six episodes: the 2018-19 normalization of interest rates (raising rates) and the balance sheet; the 2019 policy reversal (cutting rates); the emergency response to COVID, which brought rates down to zero; the 2021 inflation forbearance; the rapid tightening of 2022 and 2023; and the period of rate cuts beginning in 2024, alongside severe threats to Fed independence.

The Fed moved from trade war uncertainty to pandemic collapse, from supply chain breakdown to an inflation surge, from regional bank stress to direct political pressure on the institution itself.

Kristin Forbes put the point sharply: Powell faced an inflation shock of a kind not seen in about 40 years, pressure on Fed independence not seen since the Nixon-Burns era of the 1970s, tariffs not seen since the 1930s, and a pandemic the “likes of which we hadn’t seen in about a hundred years.” If those events were independent, she estimated the odds of all of them occurring in one eight-year term at “roughly one in 5,500.”

Randal Quarles translated Forbes’s calculation into rodeo terms. Powell had drawn “the money bull … You can’t get a great score in bull riding unless you are randomly assigned a truly life-threatening animal to ride. Jay certainly did that and rode it in a way that will put him down in the history books.”

The Fed was late to move against inflation in 2021….

The Fed cut rates to zero at the onset of the pandemic in March 2020 to keep a health crisis from becoming a financial collapse. Despite a surge in inflation, it did not begin raising rates until March 2022.  The Romers say this is the one episode in the Powell years about which they have the most qualms. It is not just that the Fed failed to forecast the full inflation surge, they say. Almost all forecasts did. Rather, there was a discrepancy between the traditional monetary policy rule book and the Fed’s action; even using Fed officials’ own forecasts, policy stayed too easy for too long, with unemployment expected to run below its longer-run level, while the federal funds rate remained far below neutral.

Simply put, the economy moved out of the pandemic emergency faster than policy did. As Alan Blinder put it, “The big mistake of the Powell era, as the Romers said and as everybody has said, and, by the way, as Jay Powell has said, was waiting too long to raise interest rates.”

…But how much difference did that delay make?

Blinder called Powell Fed’s delayed response a “forgivable error.” The event did not produce a simple conclusion that earlier hikes would have prevented the inflation surge.

Dan Ivascyn of PIMCO pointed out that COVID had not disappeared in 2021. New variants, market sell-offs, and the risk of another growth shock were still live concerns. Earlier tightening might have reduced some later financial excesses, he suggested, but its effect on inflation was “not obvious.”

And Bernanke asked whether tightening “three months earlier, four months earlier” would have made much difference. His answer was cautious. “I don’t think it’s obvious.” Other countries moved earlier without obviously better inflation outcomes, and much of the inflation surge came from supply constraints that rates could not quickly address.

The Romers regard anchored inflation expectations as an insufficient reason to wait because “inflation’s harmful even if inflation expectations don’t become unanchored.” Inflation, they argued, stresses households, makes people miserable about the economy, and weakens trust in institutions and elected leaders. From a policy-rule perspective, the point is not that the Fed should react to every short-lived price shock, but that a persistent inflation shock may require action even if expectations still look stable.

Yellen disagreed. She acknowledged that the Fed was late to raise rates, but cited research attributing the 2021 inflation to supply shocks, not the strong demand and rising wages that are the usual triggers for rate increases. “Monetary policy cannot tame supply-driven inflation without exacting unacceptable unemployment costs. Looking through supply shocks should remain the default strategy unless inflation expectations are at genuine risk of becoming unanchored,” she said.

Some of Powell’s biggest successes were the dogs that didn’t bark

Metrick argued that a full account of the Powell years must take account of what didn’t happen—the dogs that didn’t bark. COVID, for instance, had all the makings of a financial crisis, but, in part because the Fed was so aggressive, a crisis was averted.

Silicon Valley Bank’s March 2023 collapse exposed large uninsured deposits, rapid bank runs, and broader vulnerabilities across the banking system. But the panic did not become a systemwide crisis. Yellen credited the Fed, FDIC, and Treasury with moving quickly to contain it, pointing to the Bank Term Funding Program as an “ingenious mechanism” that helped stop the contagion from spreading

Yellen pointed out that a chronically overheated labor market could have generated a wage-price spiral and unanchored inflation expectations. But when the Fed finally responded, it did so “aggressively and skillfully”: labor-market pressures eased, “no recession ensued,” unemployment remained low, inflation expectations stayed anchored, and inflation eventually fell sharply as supply shocks faded.

As Glenn Hutchins said in his opening comments:

“In 2021, Jay was navigating a genuinely unprecedented situation—a supply-side shock layered on top of massive fiscal stimulus, snarled global supply chains, and labor market conditions not seen before. The economics profession and the markets largely shared his read that raising rates early carried its own grave risk—choking off a recovery that had not yet reached millions of Americans still out of work. But when the evidence turned, he did not stubbornly defend his prior view. He pivoted and executed the most aggressive tightening campaign in, I believe, forty years—adroitly bringing inflation down without the deep recession many predicted. Confounding the consensus of the professors and pundits, the Powell Fed engineered a soft landing.”

Communication is a useful tool, but can become a constraint

Monetary policy influences the economy through expectations, markets, credit conditions, and the public’s understanding of what the Fed is likely to do next—all of which are influenced by Fed communications.

Bernanke credited Powell with making the Fed more accessible, taking press conferences from four a year to eight, and making them “less wonky and more democratic.” That mattered at moments of crisis. When the Fed moved forcefully in 2020, and again when it pivoted against inflation, communication helped markets understand the direction of policy and gave the Fed’s actions more impact.

Trouble came when communication left too little room to move. The word “transitory” is the primary example. Blinder said Team Transitory (economists and policymakers who expected pandemic-era inflation to be temporary and to fade as supply constraints eased) “basically got it right, except for the word transitory.” Supply constraints did fade, but too slowly for the word to hold up. Bernanke was blunter: “Transitory was a mistake.” The word “transitory”conveyed more certainty than the circumstances warranted.

Some panelists argued that the root of the problem was the language of the revisions to the Fed’s monetary policy framework unveiled in August 2020. The 2020 revisions put more weight on maximum employment, average inflation, and the risk of returning to too-low inflation. Those concerns made sense after years of weak inflation and slow labor market healing. But in 2021, they made it harder for the Fed to pivot when inflation risk changed.

Forward guidance (when the Fed tells markets and the public what it plans to do with rates in the future) proved a significant constraint. Christina Romer said one reason the Fed stayed with aggressive expansion for so long was that it had issued “extremely aggressive forward guidance.” David Romer drew the lesson directly: Guidance should be “carefully crafted, and the bar for using it should be high.”

In September 2020, the Fed said it would keep rates low “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.” Bernanke described this use of the word “and” as the “Boolean logic of forward guidance.” Under this logic, even a sharp rise in inflation did not, by itself, clearly release the Fed from its commitment. If the employment conditions had not yet been met, the guidance still seemed to point toward keeping rates low. Bernanke pushed the logic to its extremes. Even if inflation rose to 20%, the Fed would still appear unable to raise rates unless the employment test was satisfied. “Of course, that doesn’t make sense,” he said.

Does the Fed’s structure for supervising banks work in a more partisan era?

Don Kohn observed:

“It appears that the swings in the regulatory pendulum from one administration to the next have gotten more extreme since the Global Financial Crisis. I think that’s partly the reaction to the crisis, the polarized nature of our politics… [The Fed] acted as a kind of a moderating influence on the pendulum swing. I think we’re not doing that anymore, partly because of the way the vice chair for supervision has evolved.”

Dan Tarullo recalled earlier periods when major bank legislation, including the response to the S&L crisis and Gramm-Leach-Bliley in 1999, passed with “overwhelmingly bipartisan” support. This changed after the Dodd-Frank Act enacted in 2010:  Tarullo said the earlier bipartisan consensus on banking regulation “doesn’t seem as though it’s going back.”

The creation, by Dodd-Frank, of the post of Fed vice chair for supervision was “well-intentioned and well-motivated,” because it was not clear before the financial crisis that anyone at the Fed was paying enough attention to supervision, Tarullo said. But he argued that it has contributed to “whipsawing” in regulatory policy, as each administration pushes supervision in a different direction and turns it into another source of political pressure on the Fed.

The Powell Fed, in Tarullo’s view, addressed that pressure pragmatically. Powell generally accepted that an administration’s broad regulatory direction would shape the Fed’s approach, while refusing to go along uncritically with everything. To Tarullo, that was “the best one could do under the circumstances” and “an admirable trait” on Powell’s part.

But if politics around regulation keep building, Tarullo said, it may be necessary to ask whether the Fed Board of Governors should continue to have a direct regulatory role, even though separating that role would bring “significant losses” in the quality of regulation and supervision.

Powell made some mistakes, but panelists called him a hero

At this event, criticism of the Powell Fed—particularly for being slow to raise interest rates as inflation surged in 2021—was offset by unanimous praise for Powell’s response to demands from President Trump that the Fed cut interest rates and his threats to the political independence of the central bank. Indeed, the word “hero” or “heroic” was used several times to describe Powell.

As his immediate predecessor, Janet Yellen, put it:

“Jay Powell is a person of exceptional integrity and competence. He has served the American people with distinction under circumstances none of us fully anticipated. The continuing soundness of our financial system and the resilience of our economy owe no small debt to his leadership. His defense of Federal Reserve independence, as [the Romers] said, has been heroic … Powell has left the Fed sound. He has left it still independent. He has left the economy, despite everything, in better condition than the challenges he inherited might have led us to fear.”

All participants agreed that the Fed needs enough insulation from political pressure to make difficult decisions when the more politically palatable choice may be the wrong one. The Romers called Fed independence “vital but tenuous.” Recent attacks on the Fed by President Trump were not only about small disagreements over the path of rates. They included calls for deep cuts in interest rates and demands that the Fed should cut rates to make Treasury borrowing cheaper. The panelists said this is the kind of pressure Fed independence is meant to resist. As Yellen put it, Fed policy should be made “on economic grounds,” not to “reflect the preferences of the sitting administration.”

Panelists agreed that protecting the Fed’s independence, rather than his monetary policy successes and missteps, will be Powell’s lasting legacy. “My guess is that 50 years from now,” Blinder said, “what he will be known for mainly … will be the way he stood up to the president of the United States who was attacking the Federal Reserve in ways that no president had before.”