Thirty years of "radicalism" may come to an end, and the Federal Reserve may usher in a new era.

Last week, the Hoover Institution at Stanford University held a monetary policy conference with the theme "Finishing the Job." On the surface, the focus was on how the Federal Reserve could gradually lower interest rates while pushing inflation back to the 2% target. However, the signals sent during the conference were thought-provoking, suggesting that this "task" may never truly be completed, and the role of the Federal Reserve as the executor is facing redefinition. For the past 30 years from Greenspan to Powell, the Federal Reserve has played the role of the market's "active intervenor." From interest rate controls in the 1990s to the quantitative easing era that began after the 2008 financial crisis, to unprecedented asset purchases during the COVID-19 pandemic, the Federal Reserve has evolved from a mere monetary policy maker to a "super central bank" for crisis management. However, at this conference, a consensus quietly emerged that this era is coming to a close. The future Federal Reserve may be more restrained, limited, and even experience a fundamental shift in its core functions. The current policy tools and theoretical framework of the Federal Reserve are facing increasing scrutiny. Brad, the Dean of the Purdue University Krannert School of Management and former President of the St. Louis Fed, pointed out that the traditional "price stickiness" model is no longer applicable. He believes that prices adjust rapidly nowadays, while contracts are more rigid, so the role of the Federal Reserve should not only be controlling inflation, but also ensuring the predictability of money to support the contractual system in the economy. Jason Furman, a Harvard University professor and former Chief Economic Advisor to the White House, criticized the Federal Reserve for its "confused framework," relying on data indicators that frequently change, leaving the market and the public at a loss. He called for the Federal Reserve to adopt clearer, more predictable rule-based policies, rather than reacting to every situation on the spot. Lael Brainard, the new President of the Cleveland Fed, recommended a reevaluation of the role of the Federal Reserve's balance sheet, especially the long-term effects of quantitative easing and tightening policies. Her predecessor, now a professor at the Wharton School, believes that the current policy memoranda are too simplistic, leading to market speculation about Chairman Powell's words and impacting market stability. Powell, who took office as a pragmatic moderate but became a "firefighter" due to the COVID-19 pandemic, was able to stabilize the market by cutting rates to zero and initiating massive asset purchases. Faced with high inflation later on, Powell quickly shifted gears and started the fastest rate hike cycle in decades. Currently, the Federal Reserve has achieved some initial success, with inflation easing. However, with Trump reentering the policy stage, his tariff measures and other policies may once again disrupt the price system. Stephen Brown of Capital Economics predicts that the US core CPI could rise to 3.5% by the end of the year. Apollo's Chief Economist, Torsten Slok, warns that the US may face a situation of "stagflation," with high prices and low growth, and the Fed may be powerless to address it. Powell is still working on a "soft landing," but his term will expire in May next year, and the market widely expects Trump to nominate a successor as early as this autumn. At that time, this action may be taken over by another person, the outcome is unpredictable. It is widely predicted that Powell's successor will be Kevin Warsh, a former Fed governor who has long been critical of the Fed's crisis intervention model. Warsh advocates for the central bank to "take a back seat," reduce its balance sheet, reduce its responsibilities, and stop intervening in the market excessively. He has publicly stated that "generalized goals" such as climate change, wealth disparity, and financial stability should be removed from the Fed's task list, with the sole goal being to control inflation. Another key figure is Michelle Bowman, the current Fed governor and Trump's nominee for Vice Chair of Supervision, who also leans towards loose regulation. The attendance of these two individuals at the conference already suggests a shift within the Federal Reserve. The Federal Reserve is expected to announce the results of a new round of policy framework reviews this summer, but many insiders are skeptical, believing that the new framework is likely to be transitional before the leadership changes. Brainard expects the changes to be relatively moderate, potentially including a more symmetrical inflation target setting and clearer forecasting methods; while former Fed economist Andrew Levin warns that the Fed's internal checks and transparency are weakening, and reform must be based on a clearer governance structure. Under Warsh and his philosophy, the Federal Reserve will be more restrained and focused, but may also appear "underpowered" in the next financial crisis. Furman summed up, "We are in a completely new economic phase." Even without a new round of Trump's tariffs, he doubts whether inflation can truly decrease further.