Money isn't just paper. It’s a feeling of security or a sudden wave of panic when the eggs cost three dollars more than they did last Tuesday. At the center of that chaos sits one person. You’ve seen him on the news, probably wearing a suit that looks exactly like every other suit in Washington, D.C. Jerome Powell currently holds the title, but the role of Chair of the Federal Reserve Board is much bigger than any one individual. It is, quite literally, the steering wheel of the global economy. If they turn it too hard to the left, we hit a recession. If they don’t turn it enough, inflation eats your savings alive.
It’s a weird job. Honestly, it’s a bit of a tightrope walk over a pit of fire.
Most people think the President of the United States runs the economy. They don't. The President can suggest taxes or spend money on bridges, but the person who decides how much it costs for you to borrow money for a Honda Civic is the Chair. They head the "Fed," which is basically the central bank of the U.S. Their power comes from a tiny, seemingly boring number: the federal funds rate.
What the Chair of the Federal Reserve Board actually does all day
You might imagine a shadowy room with golden levers. It’s actually more like a lot of very long, very dry meetings with people who have PhDs in econometrics. The Chair leads the Board of Governors and, more importantly, the Federal Open Market Committee (FOMC).
They have a "dual mandate." This is a fancy way of saying they have two jobs that often hate each other. First, they have to keep prices stable (keep inflation around 2%). Second, they have to make sure as many people have jobs as possible.
👉 See also: Sands Casino Long Island: What Actually Happens Next at the Old Coliseum Site
Here is the catch. Usually, when you try to fix one, you break the other.
If the Chair sees that prices are skyrocketing—think 2021 and 2022—they have to raise interest rates. This makes it expensive for businesses to expand. It makes your credit card debt more painful. Ideally, it slows down spending and brings prices back to earth. But if they go too far? People get fired. Companies go bust. This is why everyone hangs on every single word the Chair of the Federal Reserve Board says during those televised press conferences. One wrong syllable about "transitory" inflation or "soft landings" can send the Dow Jones into a 500-point tailspin in minutes.
The ghost of Paul Volcker and the 2% target
Why do they care so much about 2%? It feels arbitrary. It kind of is. But in the world of central banking, expectations are everything. If people expect prices to go up 10%, they demand 10% raises, and then businesses raise prices 10% to pay for those raises. It's a spiral.
Paul Volcker, who was Chair in the late 70s and early 80s, is the legend in this space. He had to be the "bad guy." Inflation was out of control, so he hiked interest rates to nearly 20%. Imagine a mortgage today with a 20% interest rate. It would be a disaster. People sent him keys to their houses because they couldn't afford them anymore. Construction workers mailed him two-by-fours. But he broke the back of inflation. Every Chair since has lived in his shadow, trying to be tough enough to be respected but gentle enough not to cause a total collapse.
✨ Don't miss: Is The Housing Market About To Crash? What Most People Get Wrong
The politics of being "Independent"
Technically, the Chair of the Federal Reserve Board doesn't report to the President. This is intentional. If politicians ran the money supply, they’d probably just keep interest rates at zero forever to keep voters happy, which would eventually turn the U.S. dollar into monopoly money.
The Chair is appointed by the President and confirmed by the Senate for a four-year term. But once they are in, they are supposed to be an island.
Does it actually work that way? Mostly. But the pressure is insane. We saw this with Donald Trump publicly attacking Jerome Powell on Twitter (now X), calling the Fed "boneheads" for not lowering rates. Powell just kept his head down. Before him, Janet Yellen—who is now Treasury Secretary—had to navigate the slow crawl out of the Great Recession. Each Chair brings a different "vibe." Ben Bernanke was the scholar of the Great Depression who decided to "drop money from helicopters" (metaphorically) via quantitative easing to save the banks in 2008.
It is not just about the US
When the Fed Chair speaks, the world listens. Not because they’re particularly charismatic, but because the U.S. Dollar is the world’s reserve currency. If the Fed raises rates, money flows out of emerging markets and back into the U.S. This can cause currency crises in places like Turkey or Argentina.
🔗 Read more: Neiman Marcus in Manhattan New York: What Really Happened to the Hudson Yards Giant
The Chair is basically the world's central banker. It’s a massive responsibility for someone who is technically just a government employee with a very nice office in the Eccles Building.
How to actually use this information
Watching the Fed isn't just for day traders with six monitors. It affects your real life. When the Chair of the Federal Reserve Board starts sounding "hawkish"—meaning they want to raise rates—that is your signal that the era of cheap money is ending.
- Check your debt structure. If the Chair is talking about "persistent inflationary pressures," stop using your variable-rate credit cards. Lock in a fixed rate on your mortgage if you haven't. Those "small" quarter-point hikes add up to hundreds of dollars a month in interest payments very quickly.
- Watch the labor market, not just the headlines. The Fed looks at "JOLTS" reports (job openings) and the unemployment rate. If the job market is "too hot," the Chair will almost certainly keep rates high. If you're thinking of switching jobs, do it while the market is hot, because the Fed's literal goal is often to "cool" that market down.
- Don't fight the Fed. This is an old market saying for a reason. If the Chair says they are going to keep rates high until "the job is done," believe them. Don't bet your retirement savings on a pivot that hasn't been announced yet.
- Listen for the "Dot Plot." Every few months, the Fed releases a chart showing where each member thinks rates will be in the future. It looks like a scatter plot from a middle school math class. It’s the closest thing we have to a crystal ball for the economy.
The Chair isn't a wizard. They’re a person looking at lagging data, trying to make decisions about the future using a rearview mirror. They make mistakes. They stayed "easy" for too long in 2021, and we all paid for it at the grocery store. But understanding their logic—the brutal math of the dual mandate—is the only way to make sense of why your bank account feels the way it does.
Keep an eye on the next FOMC meeting. Don't look at the dry statement; look at the Chair's tone during the Q&A. If they seem nervous, you should probably be cautious. If they seem confident, maybe that "soft landing" is actually happening. Either way, their word is law in the land of the dollar.
Practical Next Steps for Following the Fed:
- Bookmark the FOMC Calendar: The Federal Reserve Board publishes the dates of their eight annual meetings. These are the days the "big decisions" happen.
- Follow the "Beige Book": Released eight times a year, this is a plain-English report on how the economy is doing in different parts of the country. It’s much easier to read than a formal policy paper.
- Monitor the 10-Year Treasury Yield: This often moves based on what people think the Chair will do next. It’s the ultimate "BS detector" for the economy.