WASHINGTON (AP) – Fed Chairman Jerome Powell defended the central bank’s response to the 19th pandemic at a opening ceremony at Princeton University, and praised administration employees and U.S. universities, both of which are the goals of the Trump administration.
Powell and the central bank have been widely criticized in recent weeks by President Donald Trump and potential successor Kevin Warsh.
In his speech, Powell noted that he graduated from Princeton 50 years ago, in particular defending the central bank's decision to lower its critical interest rate to nearly zero in response to the pandemic. It also launched an asset purchase program that involves the purchase of trillions of dollars of Treasury bills and mortgage-backed securities designed to keep long-term interest rates low.
“Economics around the world have been hard to stop without warning,” Powell said. “The possibility of a long-term, severe, global depression is staring at us. Everyone is turning to government, especially as key first responders.”
Powell also picked up compliments from long-time government employees: “The Fed’s professional civil servants were veterans of previous crises and said: “We get it,” he said.
After Trump cuts three times at the end of 2024, the Fed kept its key rate unchanged this year. Trump said there is no “inflation” and therefore the Fed should reduce borrowing costs.
Earlier this month, Trump called Powell a “fool” not lowering the rate, calling the Fed chairman “too late Powell” last week.
Powell has not responded to Trump's attacks, who had previously gained support among Republicans on Capitol Hill.
In his speech Sunday, he defended American universities that were hit hard by the Trump administration as research grants and other funds have been cut by several Ivy League universities, including Princeton.
“Our great university is the world's jealousy and an important national asset,” Powell said. “Look around. I urge you to take it all for granted.”
Warsh, who served as one of the Federal Reserve governors from 2006 to 2011 in late last month, slammed the central bank for raising inflation to its highest level in four decades in 2022. When Powell ended in May 2026, Warsh was considered the leading candidate to become the next Fed chairman.
“Every time the Fed takes action, it expands its size and scope,” Warsh said of the side note of the International Monetary Fund's spring meeting. “More debt accumulates… more institutional boundaries are being crossed, and the Fed takes action next time.”
Instead of issuing debt, the Fed argues that its purchase of Treasury bills allows the federal government to borrow and spend more.
Powell acknowledged that the Fed could raise interest rates faster once inflation starts to rise in 2021. Still, on Sunday, he defended the Federal Reserve's pandemic record.
“Through the joint efforts of many people, we avoid the worst,” Powell said. “It’s hard to imagine the pressure people face at a time like this. Their collective efforts have saved our economy and the professional civil servants involved should be respected and appreciated by us; it’s my honor to serve with them.”
