“We may be entering a period where supply shocks are more frequent and potentially more persistent,” Powell said in the keynote address at the inaugural Thomas Laubach Research Conference. “That presents a tough challenge - not only for the economy, but for central banks as well.”

The two-day conference marks a moment of reflection for the Fed, which in 2020 adopted a new policy framework shaped by the pandemic and a long era of low inflation. That framework, Powell acknowledged, may now be due for a rethink.

“The economic environment has changed significantly since 2020,” he said. “Our review will reflect our assessment of those changes.”

Powell avoided commenting on the Fed’s current policy stance or near-term outlook. Still, he noted that April’s personal consumption expenditures inflation is expected to come in at 2.2% - a subdued figure that may not fully capture inflationary pressures linked to new tariffs. Even so, Powell described the Fed’s recent progress as a “historically unusual outcome” - a rare instance of disinflation achieved without major economic pain, or what some have dubbed a “soft landing.”

Five years ago, the Fed embraced a strategy designed to allow more room for labor market gains and to make up for extended periods of low inflation - such as the post-financial-crisis decade of 2010 to 2019. But surging inflation and a more fragile global economy have thrown that strategy into question.

“In the discussions we've had so far,” Powell said, “participants have indicated that it may be appropriate to reconsider the conduct of monetary policy.”

That reconsideration includes how the Fed talks about labor market "shortfalls" - a term introduced in 2020 to avoid equating low unemployment with inflation risk. According to Powell, that language, too, may be on the chopping block.

“At our meeting last week, there was a similar consensus around revisiting average inflation targeting,” he added. “We’ll make sure that our new consensus statement can withstand a wide range of economic environments and developments.”

Powell’s remarks suggest deep revisions may be coming to a policy shift that, at its inception, was seen as a bold embrace of a more inclusive labor market and a willingness to tolerate higher inflation after years of price stagnation.

But that vision - of a deliberate and modest inflation overshoot - has lost credibility, Powell admitted, in the wake of post-pandemic price surges that pushed inflation close to double digits.

“That idea,” he said, “has simply not been part of our policy discussions - and still isn’t.”