“Inflation expectations do appear to be well anchored beyond the short term, but nonetheless, it’s something we will eventually maybe face the question of what to do here,” Powell said during a question‑and‑answer session with a moderator and students.
“We’re not really facing it yet, because we don’t know what the economic effects will be, but we’ll certainly be mindful of that broader context when we make that decision.”
“The tendency is to look through any kind of a supply shock,” Powell said.
“Monetary policy works with long and variable lags, famously, and so, by the time the effects of a tightening in monetary policy take effect, the oil price shock is probably long gone, and you’re weighing on the economy at a time when it’s not appropriate.”
Rising oil prices and the Iran conflict push OECD US inflation forecasts to 4.2% in 2026. Fed policy uncertainty could keep long-term rates high, affecting mortgage demand even as buyers regain leverage in housing.https://t.co/sOFVXPoZXc
— Mortgage Professional America Magazine (@MPAMagazineUS) March 26, 2026
He added that the current federal funds rate target, in a range between 3.5%–3.75%, was “a good place” for the Fed to sit as it watches how the Iran war, higher energy prices and tariffs filtered into the broader economy, rather than reacting pre‑emptively with another hike.
