Jerome Powell lets loose: ‘it’s very hard to build great democratic institutions and much easier to bring them down’

Federal Reserve Chair Jerome Powell said Monday that it is important to closely monitor inflation amid a spike in energy prices from the Iran war.

Powell, who spoke before nearly 400 students at Harvard University as gas prices inched toward an average of $4 per gallon in the U.S., said there wasn’t a lot Fed policymakers could do since energy shocks “tend to come and go pretty quickly” and monetary maneuvers work over the longer-term. But a series of energy shocks, nevertheless, could be concerning.

“You have to carefully monitor inflation expectations because you could have a series of big supply shocks and that can lead, you know, the public generally, businesses, price setters, households … to start expecting higher inflation over time. Why wouldn’t it?” Powell said.

In wide-ranging remarks, Powell acknowledged young graduates were entering a challenging job market. He noted the role of artificial intelligence and that while employment is historically low, there is very little job creation right now.

The U.S. job market has been lackluster for the past year. Employers added fewer than 10,000 jobs a month in 2025 – the weakest hiring outside a recession since 2002. This year began with a strong 126,000 new jobs in January, but the United States whipsawed to 92,000 job losses the following month.

Economists refer to a low-hire, low-fire job market in which companies are hesitant to add staff but don’t want to let go of the workers that they have. That’s made it especially hard for young people to find employment. There’s some concern that artificial intelligence is taking over entry-level work that previously would have gone to young jobseekers, or that companies are reluctant to make hiring decisions until they better understand how they are going to use AI.

Powell said he was optimistic over the medium- to long-term, noting that history has shown that technological innovations have repeatedly raised living standards and increased production. Large-language models, he said, make people, including himself, more productive.

“You’re in a situation where you need to really invest the time to master the use of these new technologies,” Powell said. “There’s no denying it’s a challenging time to enter the labor market, It may take some patience and all that, but in the longer term, this economy is going to give you great opportunities. Just be a little optimistic.”

In a question-and-answer session, neither Powell nor the students mentioned President Donald Trump, who has repeatedly criticized the Fed chair. But Powell did stress the importance of the Fed’s independence.

“It’s very hard to build great democratic institutions and much easier to bring them down,” Powell said.

President Donald Trump has repeatedly urged Powell and the Fed to cut interest rates, which would lower the costs to borrow for households, businesses and the U.S. government. Powell’s caution has infuriated Trump.

Some of the economic policies under the Trump administration, however, have complicated the dual mandate of the Federal Reserve, which is to keep prices stable and seek maximum employment.

The U.S. has hit all of its trading partners with new tariffs which can boost retail prices, and the war in Iran has sent energy prices soaring.

The average gallon of gas in the U.S. rose to $3.99 overnight, according to motor club AAA.

Trump escalated his attacks on the Fed in January, when the Department of Justice served the central bank with subpoenas and threatened it with a criminal indictment over his testimony last summer about the Fed’s building renovations.

Trump has nominated former Fed official Kevin Warsh to succeed Powell. But Warsh’s confirmation has been delayed by a Justice Department investigation. Sen. Thom Tillis, a North Carolina Republican, has said he won’t vote to confirm any Fed nominees until the investigation is dropped.

Still, Powell took a moment to offer some advice to his would-be successor without naming him, saying it was “very important to stick to your knitting and to stick to the things that were actually assigned.”

“We have very powerful tools. They’re supposed to be for maximum employment and price stability and financial stability,” he continued. “There’s always a time when an administration looks and say it would be good to use that tool for something else … We just have to be in a situation where we’re not trying to work against any politician or any administration, but we have to be careful to stick to what we’re doing.”

This story was originally featured on Fortune.com