"Federal Reserve's Mouthpiece": Powell Defends the Federal Reserve's Policies

Nick Timiraos, the "voice of the Federal Reserve," stated that Federal Reserve Chairman Jerome Powell's remarks on the balance sheet did a few things:

1. In light of recent signs of strengthening overnight borrowing rates, the remarks provided a market-based assessment of the current quantitative tightening outlook;

2. It rebutted recent criticisms that the support measures during the pandemic—implemented with broad support in Congress and the early Trump administration—were absurd policy interventions. Powell acknowledged that stopping quantitative easing more quickly would have seemed wiser, but given the Fed's rapid and abrupt change in course in 2022, this move had no substantial impact on the macroeconomy.

3. It also defended efforts by bipartisan populist senators to strip the Fed of its ability to pay interest on excess reserves, warning that revoking this policy tool could cause greater disruption to the markets