Washington — Federal Reserve Chair Jerome Powell defended the central bank’s response to the COVID-19 pandemic Sunday in a Princeton University speech in which he also praised government employees and U.S. universities, both of which have been targeted by the Trump administration.
Powell and the central bank have been subject to extensive criticism in recent weeks by President Donald Trump and a potential successor, former Fed governor Kevin Warsh.
Speaking at a baccalaureate service ahead of Tuesday’s commencement, Powell, who noted he graduated from Princeton 50 years ago, specifically defended the central bank’s decision to cut its key interest rate to nearly zero in response to the pandemic. It also launched an asset-purchase program that involved buying trillions of dollars of Treasury bonds and mortgage-backed securities, intended to keep longer-term interest rates low.
“With little warning, economies around the world came to a hard stop,” Powell said, referring to the pandemic. “The possibility of a long, severe, global depression was staring us in the face. Everyone turned to the government, and to the Federal Reserve in particular as a key first responder.”
Powell also singled out longtime government employees for praise: “Career civil servants at the Fed who are veterans of previous crises stepped forward and said, ‘We got this,’” he said.
Trump has subjected Powell to a stream of attacks for several months because the Fed has kept its key rate unchanged this year, after cutting it three times at the end of 2024. Trump has said there is “no inflation” so the Fed should reduce borrowing costs.
Earlier this month, Trump called Powell a “fool” for not cutting rates and last week called the Fed chair “Too Late Powell.”
Powell has not responded to Trump’s attacks, which has previously won him support among Republicans on Capitol Hill.
In his Sunday speech, he defended American universities, which have come under sharp attacks from the Trump administration as research grants and other funding have been cut for several Ivy League universities, including Princeton.
“Our great universities are the envy of the world and a crucial national asset,” Powell said. “Look around you. I urge you to take none of this for granted.”
Late last month, Warsh, who served as one of the Fed’s governors from 2006 to 2011, slammed the central bank for letting inflation spike to its highest level in four decades in 2022. Warsh is considered a leading candidate to become the next Fed chair when Powell’s term ends in May 2026.
“Each time the Fed jumps into action, the more it expands its size and scope,” Warsh said in a speech on the sidelines of the International Monetary Fund’s spring meetings. “More debt is accumulated … more institutional lines are crossed and the Fed is compelled to act even more aggressively the next time.”
The Fed does not issue debt, but Warsh and other Fed critics argue that its purchase of Treasury bonds enabled to federal government to borrow and spend more.
Powell has acknowledged that the Fed could have moved quicker to raise interest rates once inflation began to rise in 2021. Still, on Sunday, he defended the Fed’s pandemic record.
“Through the joint efforts of many, we avoided the worst outcomes,” Powell said. “It is hard to imagine the pressure people face at a time like that. Their collective efforts saved our economy, and the career civil servants involved deserve our respect and gratitude; it is my great honor to serve alongside them.”
