Worrying, energy supply shocks: Fed

Cambridge. Federal Reserve Chairman Jerome Powell said it is important to closely monitor inflation amid a spike in energy prices due to the war in Iran.

Powell, speaking to nearly 400 students at Harvard University as gasoline prices neared an average of $4 a gallon in the United States, said there was little Fed policymakers could do since energy shocks “tend to come and go pretty quickly” and monetary maneuvers take effect over the longer term. However, a series of energy shocks could be cause for concern.

“You have to watch inflation expectations carefully because there could be a series of large supply shocks and that can lead the general public, businesses, price setters, households… to start expecting higher inflation over time. Why wouldn’t they?” he declared.

Difficult job market

Powell acknowledged that young graduates are entering a difficult job market. He noted that although employment is at historically low levels, there is very little job creation.

The United States labor market has declined over the past year: with fewer than 10,000 jobs a month in 2025, it was the weakest hiring outside of a recession since 2002. This year started strongly, with 126,000 new jobs in January, but the United States took a sharp turn and recorded 92,000 losses in February.