Tariff Tremors In Markets: Powell Says Wall Street Doing What It Is Supposed To

In this high-stakes exchange with Raghuram Rajan at the Economic Club of Chicago, Federal Reserve Chairman Jerome Powell addresses growing market anxieties head-on—from spiking volatility in stocks and bonds to questions about central bank liquidity support. Powell pushed back against the idea of a "Fed put," making it clear that the Fed doesn’t intervene just to stabilize equity markets. He attributed current volatility to uncertainty around economic policies—especially trade—and emphasized that markets remain orderly despite heightened stress. On the bond front, Rajan questioned why U.S. Treasury yields were rising while other safe-haven yields fell, and Powell acknowledged the complexity of interpreting real-time moves, pointing to deleveraging and global uncertainty as possible factors. Crucially, Powell explained why the Fed recently slowed the pace of balance sheet reduction (quantitative tightening)—to ensure it doesn't misjudge reserve needs during a period of erratic Treasury flows. He also reaffirmed that the Fed stands ready to supply dollar liquidity to global central banks, calling it a vital part of maintaining dollar funding stability.