Federal Reserve Chairman Powell Rules Out Market Intervention Amid Volatility

Federal Reserve Chairman Jerome Powell addressed the market's expectations for intervention in market volatility during a conference in Chicago on April 17th. Powell explicitly dismissed the notion that the Federal Reserve would step in to stabilize market fluctuations, stating, "My answer is no, but I will provide an explanation." He attributed the current economic uncertainty to shifts in U.S. trade policy, particularly the tariffs implemented under Trump, which have contributed to ongoing market volatility.

Powell highlighted the challenges in interpreting the causes of market turmoil, noting that market participants often reassess their views weeks later. He cited past experiences with significant bond market shifts, emphasizing that initial interpretations can be misleading. Powell also pointed out that the current volatility is partly due to hedge funds reducing their leverage, suggesting that market turbulence may persist in the short term.

Powell's remarks underscore the Federal Reserve's stance on market intervention, emphasizing that the central bank will not act to stabilize market volatility. This position is consistent with the Fed's approach to maintaining market stability through monetary policy rather than direct intervention. Powell's explanation provides clarity on the Fed's role in managing economic uncertainty and market fluctuations, reinforcing the importance of understanding the underlying causes of market turmoil.