Semiannual Monetary Policy Hearing. Gabriel Philipp, Connor Stout, Dylan Unruh, and Rohan Sivakumar

Chairman Powell, center. Connor Stout, right, front row in white shirt.

Federal Reserve Board Chairman Powell’s opening remarks addressed the state of the economy, which he said was “solid”.  He reiterated the Federal Reserve’s dual mandate to ensure price stability (inflation control) and maintain near-full employment. To this end, Mr. Powell said that, currently, inflation remains a non-issue, and the labor market is near maximum employment. Furthermore, the Chair attributed strong Q1 figures to ‘front-loading’ – increases in imports and consumption in preparation for potential price shocks due to tariffs. Mr. Powell stood by the Fed’s decision to hold rates steady earlier this month and noted that the Federal Reserve will act largely based on the impacts of tariffs, noting the lag between the instatement of a tariff and when its effects become observable (as early as Q3). 

For the moment, the economy is in a good place, and the risk of recession is perhaps overstated. However, tariff uncertainty prevents a clear path for any potential rate changes in the immediate future.

Partisan Agendas: 

Both parties appeared to have distinct agendas while questioning Chair Powell. Republican representatives focused on his handling of Trump’s tariff policy versus the Biden administration’s Inflation Recovery Act spending. They pressed him to comment on recent decisions and statements - particularly Trump’s criticism of Powell - and potential interest rate cuts. Their opening remarks also echoed broader Republican views on the economy. Democrats, meanwhile, questioned Powell on current fiscal policies and economic issues directly affecting their districts, with housing being a major concern for both sides. While there was political posturing, many representatives raised thoughtful questions on topics like cybersecurity, tariffs, and the future of the U.S. economy.

Housing Concerns: 

Multiple representatives, notably Rep. Rashida Tlaib (D-MI) and Rep. Nikema Williams (D-GA) inquired about the effects of higher interest rates on the housing market and the current supply crisis. Rep. Tlaib cited a study published in the Journal of Urban Health stating that more Black women have experienced an eviction. Ms. Tlaib begin her argument that the housing crisis, though “some might say it’s a policy choice,” is largely a result of the Fed’s monetary policy and elevated interest rates. 

Fed Chair Powell countered that Fed policy does not affect housing supply and argued the most the Fed can do to ease the negative effects of rising housing prices is focus on creating stable prices in the macro economy. Rep. Williams took a different route, beginning her questioning with a statement that the current administration is exacerbating the housing crisis by gutting the Department of Housing and Urban Development (HUD) and by releasing a budget that doesn’t grow the supply of affordable housing. Rep. Williams’ clear disdain influenced her question about housing. The Representative gave a nod to Trump’s attempt to control the Fed. She asked about the effect President Trump's proposed  lowering interest rates without “addressing the housing crisis” would have on the housing market. Fed Chair Powell unequivocally responded that the Federal Reserve does not speculate on the actions of the president. 

Chair Powell repeatedly attempted to explain that monetary policy can only impact housing demand, which he believes is not the cause of the housing crisis. A housing supply gap is. Interestingly, this was addressed by both Rep. Tlaib, arguing that monetary policy is a drag on housing supply, and Rep. Williams, contending that housing supply and the housing market are two separate entities and issues. Both arguments were countered by Chair Powell who continued to emphasize that the Fed can only focus on price stability to help the housing market. 

Takeaways: 

Walking away, the committee hearing was both frustrating and disappointing. Mr. Powell spent much of the session in silence as representatives used their time to promote political agendas or question him on matters outside his purview; they seemingly forgot that, as Chair of the Federal Reserve, his role is intentionally separated from partisan debate. Mr. Powell conducted himself well, calmly reiterating his responsibilities and responding thoughtfully to the substantive questions asked. 

Overall, it felt that much of the room lost sight of the hearing’s purpose: to assess monetary policy and the state of the economy. Instead, many used the hearing to score political points or confront Powell with questions he is neither mandated nor able to answer. It was disheartening to see elected officials prioritize political theater over constructive oversight, especially with several tangible threats looming on the horizon.