Jerome Powell does not do unsolicited advice. He said so himself. But speaking publicly in what amounts to one of his final major appearances before Kevin Warsh takes the chair, Powell offered something close to a farewell address to the institution he has led through a pandemic, an inflation crisis and now a period of deepening geopolitical and economic uncertainty.Advertisement

“Stick to your knitting,” Powell said. “There is always a temptation to want to move into other areas. We have very powerful tools. They are supposed to be for maximum employment, price stability and financial stability. There is always a time when an administration looks and says it would be good to use that tool for something else.”

He did not name names. He did not need to.

The Timing Could Not Be More Loaded

The Senate Banking Committee is preparing to hold a confirmation hearing for Warsh in the week of April 13, a timeline that places his nomination squarely inside one of the most turbulent macroeconomic moments in recent memory.

Inflation is rising again. US-Iran tensions are escalating and clouding the rate cut outlook that markets had been quietly counting on. The FOMC meets April 28 to 29, and whoever sits in the chair by then, or is confirmed to sit there soon after, will inherit a set of decisions with no clean answers.

Powell acknowledged the weight of the role without flinching. “What we do is very challenging and highly uncertain. The Fed is not a perfect institution. Don’t look for perfection.”

What he did ask for was something simpler and more fragile: independence.

“We are not trying to work against any politician or any administration. But we have to be careful to stick to what we are doing.”

What Warsh Walks Into

Warsh, a former Fed governor known for his market-focused instincts and more hawkish leanings, enters a confirmation process shaped by competing pressures. The White House has made no secret of its preference for lower rates. Markets want clarity. And Powell, in his own careful way, just reminded everyone why the person holding that chair cannot simply deliver what any one side wants.

Meanwhile, the CLARITY Act, which would formally define crypto assets under US law, is advancing toward a markup in April with growing bipartisan support, adding another dimension to the regulatory environment Warsh will need to navigate.

To the Next Generation, With Caveats

Powell also spoke directly to students navigating a labour market reshaped by AI and immigration policy shifts, offering a perspective that was optimistic in the long run and honest about the near term.

“It is a challenging time to enter the labour market,” he said plainly. “But this economy is going to give you great opportunities. Master these new technologies. That should stand you in good stead.”

On whether AI ultimately complements or replaces human workers over a 40-year horizon, Powell, for once, did not pretend to have the answer.

“It is so hard to say.”