31/03/2026
On Monday local time, Federal Reserve Chairman Jerome Powell delivered a public speech at an event held at Harvard University in Cambridge, Massachusetts, releasing key signals on core issues including inflation expectations, the impact of geopolitical conflicts, the direction of Federal Reserve policy, and the recent turmoil in the private credit market. Powell clearly stated that current long-term U.S. inflation expectations remain within a controllable range, and short-term inflation expectations have also stabilized. The Federal Reserve will maintain a policy of wait-and-see, while closely tracking external risks and market trends, and there is no immediate need to adjust monetary policy.
Regarding the inflation issue that has attracted widespread market attention, Powell gave a clear judgment: long-term U.S. inflation expectations are still in a controllable state, and short-term inflation expectations have also stabilized, which is the core tone of the current inflation situation. He also emphasized that although inflation expectations are stable, the Federal Reserve will still maintain a high level of close tracking and monitoring, and will not relax its vigilance.
When talking about the relevant conflicts between the United States and Israel against Iran, Powell admitted that it is currently impossible to accurately assess the specific impact of this conflict on the U.S. economy. The Federal Reserve will continue to evaluate the possible chain reactions of the conflict in the future, but at this stage, there have been no substantial changes in the economic level that require the Federal Reserve to take action. He stated that maintaining the current monetary policy and adopting a wait-and-see attitude is a more prudent policy choice.
It is worth noting that since the outbreak of the conflict a month ago, international oil prices have experienced a sharp upward trend. On the one hand, the rise in oil prices may further exacerbate domestic U.S. inflationary pressures; on the other hand, it will also suppress residents’ consumption demand and drag down overall economic growth, which undoubtedly poses a dual challenge to the Federal Reserve’s policy formulation. The Federal Reserve’s core policy goals are to achieve full employment and price stability, and supply-side shocks such as oil prices have precisely broken the balance between economic growth and inflation, increasing the difficulty of policy regulation.
Powell specifically emphasized that the market often tends to ignore various supply-side shocks, but for monetary policy formulation, continuously keeping an eye on inflation expectations is a crucial core link, which is also the key starting point for the Federal Reserve to respond to potential inflation rebound risks.
Earlier this month, Federal Reserve policymakers announced that they would keep interest rates unchanged for the second consecutive meeting, and the meeting statement clearly mentioned that the uncertainty facing the current economy has increased significantly. In this speech, Powell reaffirmed this position, clearly releasing a dovish wait-and-see signal: before considering launching a new round of interest rate cuts, the Federal Reserve must see more concrete and sufficient evidence that U.S. inflation is continuing to steadily move towards the 2% policy target, and will not adjust interest rate policy rashly.
After Powell’s speech, market sentiment turned optimistic, U.S. Treasury bond prices rose immediately, and the stock market also ushered in an upward trend, reflecting that market expectations for the Federal Reserve to suspend policy tightening and maintain an accommodative environment have been strengthened.
In recent times, the U.S. private credit market has experienced successive turmoil, triggering the spread of panic among global investors. Some investors have successively submitted early redemption applications, and many private credit funds have even taken measures to restrict investors from withdrawing funds, putting the market’s liquidity and stability to the test.
When asked about this market risk, Powell responded that the Federal Reserve is maintaining highly close monitoring of the private credit sector, which is currently in a period of internal adjustment. He also stated that he will never downplay the potential risks in this field, and is focusing on investigating risk clues related to the banking system and transmission factors that may trigger cross-market risk spillover. So far, the Federal Reserve has not detected such risk clues and transmission signs, and the turmoil in the private credit market has not yet spilled over to the core financial system.
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