Fed Chair Powell: Long-Term Inflation Expectations Remain Stable

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Federal Reserve Chair Jerome Powell stated that longer-term inflation expectations in the US appear to be well-anchored, but the central bank is closely monitoring the potential economic effects from the ongoing conflict between the US, Israel, and Iran. Powell noted that the Fed may need to adjust policy in response to the fallout from the conflict, though the full impact is still unknown.

Why it matters

Inflation expectations are a key indicator the Fed watches closely, as they can influence actual inflation and the central bank's policy decisions. Powell's comments suggest the Fed believes it has maintained credibility in keeping long-term inflation expectations stable, despite recent price pressures, but the geopolitical tensions add a new variable that policymakers must carefully assess.

The details

During an event at Harvard University, Powell said that while short-term inflation expectations have risen, the Fed's measures of longer-term expectations remain 'well anchored.' However, he acknowledged that the central bank is closely monitoring the potential economic ramifications from the military conflict between the US, Israel, and Iran, and may need to adjust monetary policy in response, though the full impact is still unknown.

• Powell made these remarks on March 30, 2026.

What they’re saying

What’s next

The Federal Reserve will continue to closely monitor inflation expectations and the economic impact of the US-Israel conflict with Iran as it assesses the appropriate course of monetary policy.