Federal Reserve Chair Jerome Powell, in a wide-ranging talk at Harvard University, said Monday that he sees inflation expectations as grounded despite rising energy prices so the central bank doesn’t need to respond with higher interest rates.

As his term leading the central bank nears an end, Powell avoided questions about the longer-term direction of interest rates or inclinations his designated successor has espoused.

In the near term, he said the proper move is to look beyond the short-term gyrations of the energy market and focus on the Fed’s goals of stable prices and low unemployment.

“Inflation expectations do appear to be well anchored beyond the short term, but nonetheless, it’s something we will eventually maybe face the question of what to do here,” he said during a question-and-answer question with a moderator and students. “We’re not really facing it yet, because we don’t know what the economic effects will be, but we’ll certainly be mindful of that broader context when we make that decision.”

As he has in the past, Powell said he believes the current rate target, in a range between 3.5%-3.75%, is “a good place” for the Fed to sit as it observes events currently playing out, including the Iran war and the impact tariffs are having on prices.

The comments appeared to register in financial markets, with traders no longer pricing in a significant chance of a rate hike this year. As recently as Friday morning, markets were looking at a better than 50% probability of a quarter percentage point increase amid expectations the Fed would react to the surge in energy costs. However, odds of a hike by December fell to 2.2% after Powell’s appearance.

Powell said raising rates now could have negative effects on the economy later. He noted that Fed rate moves have a lagged impact on the economy, so tightening here wouldn’t help the inflationary impact of the Iran war.

“By the time the effects of a tightening in monetary policy take effect, the oil price shock is probably long gone, and you’re weighing on the economy at a time when it’s not appropriate. So the tendency is to look through any kind of a supply shock,” he added.

Market-based measures such as breakeven rates in Treasury yields indicate few fears of an inflation spike. Breakevens measure the difference between Treasurys inflation-indexed securities. The five-year breakeven rate most recently was around 2.56% and trending lower over the past 10 days.

Powell’s term ends in mid-May, and President Donald Trump has nominated former Governor Kevin Warsh as the next chair. However, Warsh’s nomination is being held up in the Senate Banking Committee as U.S. Attorney Jeanine Pirro continues her investigation into renovations at Fed headquarters.

Though a judge threw out a subpoena Pirro’s office issued to Powell, she has appealed the decision. While the case is being adjudicated, Sen. Thom Tillis, R-N.C., has vowed to prevent the nomination from going through.

For his part, Warsh has stated a preference for lower interest rates than the current level. Asked to comment on his successor’s plans, Powell said, “I’m not going to swing at that pitch.”

Regarding private credit, Powell noted rising defaults, investor withdrawals and concerns about wider issues in the $3 trillion sector.

“I’m reluctant to say anything that suggests that we’re dismissive of the risk, but we’re looking for connections to the banking system and things that might result in contagion. We don’t see those right now,” he said. “What we see is a correction going on, and certainly there’ll be people losing money and things like that. But it doesn’t seem to have the makings of a broader systemic event.”

Federal Reserve Governor Stephen Miran on Monday continued his campaign for lower interest rates, telling CNBC that policymakers should disregard the current energy price spike unless there are signs it will have longer-lasting impacts.

“If I saw a wage-price spiral, or I saw evidence that inflation expectations are starting to pick up, then I would get worried about it,” he said during a “Squawk on the Street” interview. “There’s no evidence of it thus far, and you can move the monetary policy rate all you want — today tomorrow — but it’s not going to affect inflation the next couple of months.”

Citing market-based indicators, Miran said inflation expectations remain well anchored, despite the jump in oil to more than $100 a barrel and a price shock at the pump that has pushed gasoline higher by more than $1 a gallon.

Monetary policy works with a lag and isn’t geared toward short-term market gyrations, he added.

Miran has dissented at each of the meetings he has attended since September 2025. He told CNBC that he continues to think “we could be about a point easier, gradually done over the course of a year.”

The fed funds rate is currently targeted in a range between 3.5%-3.75%. Market pricing is implying no moves in either direction before the end of the year.

Miran’s term has expired, but he continues to serve as the nomination of former Federal Reserve Governor Kevin Warsh is held up in the Senate Banking Committee. If confirmed, Warsh will take over as chair for Jerome Powell when the latter’s term expires in May.

Sen. Tim Scott on Wednesday said he hopes the federal investigation into Federal Reserve Chair Jerome Powell “goes away” so the Senate can take up the nomination of Kevin Warsh, President Donald Trump’s pick to replace the head of the U.S. central bank.

“That proceeding going away allows for us to get the Fed fully functioning, back on target,” Scott, who chairs the Senate Banking, Housing and Urban Affairs Committee, said during an appearance on CNBC’s “Squawk Box.”

Sen. Thom Tillis, R-N.C., has vowed to hold up any Fed nominees until a federal criminal investigation into Powell is resolved. Trump floated the idea of firing Powell last year and lashed out at the Fed chair for refusing to cut interest rates to the extent he desired. Powell has denied any wrongdoing and has said he is being targeted for refusing to accede to Trump’s demands.

Powell was expected to testify before Congress on Feb. 11, but missed that date because of the federal probe, Scott said.

“I had a conversation with Jay about his testimony,” Scott said. “I recommended that he come before the committee.”

“At this point he is more concerned about the criminal proceeding ,” he said. “And I get that.”

The Fed did not immediately respond to a request for comment.

Tillis is otherwise supportive of Warsh, who Trump nominated for the role in January, but doubled down on his blockade after meeting with the Fed nominee on Tuesday.

“This is not about people, it’s about process,” Tillis said. “I think this is a foul.”

“This is about this is bedrock principle of Fed independence,” Tillis told reporters Tuesday. “I have no earthly idea what the market reaction would have been if suddenly the perception is that the Fed chair serves at the pleasure of the president.”

Sen. Kevin Cramer, R-N.D., another Banking committee member, told CNBC earlier Wednesday he sees no reason why some Democrats won’t support Warsh’s nomination.

“There’s really no reason by anything from he’s ever said or that he’s done that, that Democrats shouldn’t support his nomination,” Cramer, who was scheduled to meet with Warsh on Wednesday, said. “They’re going to be rigorous, of course, in their interviewing of him and and the cross examination … when his hearing takes place. But I think we should be on track to get him across the finish line so that there’s no gap between … the end of Jay Powell’s term and the beginning of the new term.”

The investigation into Powell is in part based on testimony Powell gave to the Senate Banking committee last year. Scott has said in the past that he did not believe Powell committed a crime in his testimony, sentiment he repeated Wednesday. He said the Senate would begin confirmation hearings for Warsh “as soon as possible.”

“At the end of the day … when he was before the committee he definitely was unprepared,” Scott said of Powell. “I think he was woefully unprepared. But he did not commit a criminal act when he was before the committee.”

President Donald Trump on Wednesday officially nominated Kevin Warsh to be the next chairman of the Federal Reserve.

Warsh, if confirmed by the Senate, would replace Fed Chairman Jerome Powell, for a four-year term.

Trump’s nomination was transmitted to the Senate, the White House said in a statement posted online on Wednesday.

That transmittal came more than a month after Trump first publicly announced he wanted Warsh as the Fed chairman.

Sen. Thom Tillis, a North Carolina Republican, has said he would block Warsh’s nomination from proceeding in the Senate until a federal criminal investigation of Powell by the U.S. Attorney’s Office in Washington, D.C., is dropped.

Tillis’ stance could prevent the nomination from being considered by the full Senate.

Powell said in mid-January that he was under investigation in connection with the $2.5 billion renovation of the Federal Reserve’s headquarters in Washington, and his testimony about that project to the Senate.

The chair also said that “the threat of criminal charges” against him is directly due to him and other Fed governors refusing to bow to Trump and his demands that they cut interest rates more quickly than the president has demanded.

Last summer, Trump tried to fire Fed Governor Lisa Cook, who sided with Powell on interest rate decisions. Trump, at the time, cited an allegation by a housing official he had picked that Cook had committed mortgage fraud, but his move to terminate her was seen as motivated by his ire over her stance on interest rates.

Cook, who has denied any wrongdoing, has remained on the Fed pending the outcome of a lawsuit against Trump challenging her removal.

The Supreme Court in January heard oral arguments in that case. The court has yet to issue a ruling on whether Trump can fire Cook.

Treasury Secretary Scott Bessent on Thursday refused to rule out the possibility of a criminal investigation of Kevin Warsh, President Donald Trump’s nominee for Federal Reserve chair, if Warsh ends up refusing to cut interest rates.

Sen. Elizabeth Warren of Massachusetts, the top Democrat on the Senate Banking, Housing and Urban Affairs Committee, questioned Bessent about a joke Trump made over the weekend about suing Warsh if he does not reduce rates to the president’s liking, according to The Wall Street Journal.

“I think it was a joke, but just in case, this should be an easy one, Mr. Secretary: can you commit right here and now that Trump’s Fed nominee Kevin Warsh will not be sued, will not be investigated by the Department of Justice if he doesn’t cut interest rates exactly the way that Donald Trump wants?” Warren asked. 

“That is up to the president,” Bessent said, as the questioning devolved into cross talk.

U.S. presidents typically leave interest rate decisions up to the Fed, with a metaphorical firewall between the independent board and the White House.

Bessent’s testimony before the Senate committee was his second appearance on Capitol Hill in as many days. On Wednesday, he was grilled by Democrats during a contentious hearing of the House Financial Services Committee. Democrats there pressed Bessent on tariffs and inflation, regulation of cryptocurrencies, and the independence of the Federal Reserve, a hot-button issue.

Trump in recent months has targeted Federal Reserve Chair Jerome Powell over his refusal to lower interest rates to the president’s liking. Powell on Jan. 11 revealed he was the subject of an unprecedented investigation by the Department of Justice relating to cost overruns on the renovation of the Federal Reserve headquarters.

Trump critics have characterized the investigation, which is based in part on testimony Powell gave to the Senate banking committee last year, as a thinly veiled attempt to strong arm the independent central bank.

Committee Chair Tim Scott, R-S.C., said this week he does not believe Powell committed a crime in his testimony. And Sen. Thom Tillis, R-N.C., a member of the committee, has vowed to block the nomination of Warsh, unless the probe into Powell is dropped. Powell’s term as chairman ends in May. Trump, meanwhile, doubled down on the investigation earlier this week.

Warren and her Democratic colleagues on the committee have also called on Scott to hold up Warsh’s nomination until the probes into Powell and Federal Reserve Board Governor Lisa Cook — who is being investigated for alleged mortgage fraud — are ended.

“Donald Trump has been trying to take over the Fed for months and months now,” Warren said before Thursday’s hearing. “He’s threatened to fire Jerome Powell. He started a bogus criminal investigation against him. He started a bogus investigation trying to fire Lisa Cook, and now he wants to appoint his man who’s going to do exactly what he says at the Fed.”

“That’s a takeover,” Warren continued.