- [Narrator] When FedChair Jerome Powell speaks.- Today, the FOMC raisedits policy interest rateby a quarter percentage point.- [Narrator] The markets move.That's because the headof the US Federal Reserveis the most powerfuleconomic voice in the nation,and Fed chairs can generallybe put into two categories.- Hawks are more worriedabout controlling inflationand doves tend to be more worriedabout making sure theemployment market's strong.- [Narrator] But Powellisn't one or the other.Here's how Powell'smindset helped him riseto the top and keep the Fed united.The US Federal Reservefunctions as a bank for banks.- We look after the overall stabilityof the financial system andwe have tools to do that.- Recently most Fed chairs havebeen academics or economistsso he's a little bit differentfrom the Fed chairs that we'vehad in the past few decades.- He was never trained informal economic modelingbut he's smart and he's got agreat staff and he catches on.- [Narrator] After a careerin investment bankingand law in New York,Powell left to become anundersecretary at the Treasury.- Speaking for myself, thataccounted in large measurefor my own conduct at the meeting,which was to be fairly passive.- [Narrator] In 2012, hejoined the Fed's Boardof Governors to helpguide the organization.- He has a fine reputation.He should be a fine member.- [Narrator] But his practical experiencein finance gave him a different skillset.- Powell hasn't beenpreparing his whole lifeto be Fed chair.He hasn't been partof this priesthood ofmonetary policy theoristsand so that's brought different strengthsand weaknesses for him in the job.- He watches the data.He listens to whateconomists and modelers sayand what financialmarket people are sayingbut not what politicians are saying.- [Narrator] His prioritization of data,not economic models has meantthat he's not always a hawk,economic shorthand for thosewho prioritize fighting inflation,and he's not always a dove,taking action to boost employment.- He's a pragmatist. He's a realist.He's not an ideologue, and sohe's going to change his mindwhen he sees the factson the ground changing.- [Narrator] And thingscertainly changed in March 2020.- [Reporter 1] The tollis growing by the hour.- [Reporter 2] Majorretailers are also going dark.- It doesn't seem fairthat people should loseeverything they have,including their homes over this.- [Narrator] Powell'sdata-driven mentalitywas guiding the largesteconomic stimulus planever undertaken in the US.- At that point, the wholeFederal Reserve board,certainly including Jay Powellare leaning very stronglyin the dovish direction.- The Fed can alsocontribute in important waysby providing a measureof relief and stabilityduring this period ofconstrained economic activityand by using our tools to ensurethat the eventual recoveryis as vigorous as possible.- [Narrator] In hisresponse to the emergency,Powell stretched his power fartherthan Fed chairs had done before.- He got after his staff, he said,"We're falling behind this thing."He said, "It feels like we'reswimming after a speedboat."He encouraged them toreally get on top of thisand they just announced a bunch of stuffthis one weekend of March 2020.- [Narrator] He instructedthe Fed to begin a torrentof bond-buying programsto stabilize marketsand slash interest rates.That month, it bought Treasuryand mortgage securitiesat a pace of nearly $75 billion a day.- The criticism on Powell has beenthat maybe he overreacts tothe problem at the moment,so you kept interest rates too lowwhen maybe you shouldhave been more concernedabout the risk of an inflation shock.- [Narrator] That risk became a reality.Fed holdings had reached $9 trillionand inflation had hit a 40-year high.- As Americans well knowit remains painfully high.- [Narrator] Powell had to pivot againand tried to keep the Fed'srate-setting committeeor FOMC voting togetherto get policy passed.He began acting as a hawkto bring down inflation.- But everything thateconomists thought they knewabout inflation in 2021turned out to be pretty wrong.- It's not going to be,we don't think smooth.It's probably gonna be bumpy.- I think at a time like this,we're very fortunate to have somebodywith the temperament of JayPowell, who listens to people,understands different points of view,distills the different piecesof information that come into the Fed and makes consideredjudgements about what to doand then goes and persuadespeople that maybe on one extremeor the other extreme to comeinto the center and goalong with the consensus.- [Narrator] Powell keptthe hawks and doves unitedwith only one dissenting voteagainst rate raises since the end of 2021.- A lot of the people I talkedto say that he's very goodat taking people's concerns seriously,making them feel likethey're being listened to,figuring out what a reasonablecompromise position might beand that I think explainswhy he's been ableto keep the committee so unitedduring this pretty difficult stretch.- Everything we do is inservice to our public mission.We at the Fed will do everything we canto achieve our maximum employmentand price stability goals.- [Narrator] As he confrontsan uncertain economic landscape,his empirical mindset willcontinue to be tested.- How we look back on Powell's tenureas chair really depends on what happenswith inflation and the economyover the next two years.- How well did he handlethis uncertain period?What did the economy looklike in 2024 and 2025?That history is yet to be writtenand I think future historiansof the Fed will judge himstrongly on how that looks.(pensive music)
