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Fed chair Jerome Powell testifies at a hearing last year. Photo: Graeme Jennings-Pool/Getty Images

Most of the questions Federal Reserve chair Jerome Powell fielded at Wednesday's press conference related to the coming taper. A runner-up: the trading controversy that’s put a spotlight on some Fed officials, including Powell himself.

Catch up quick: Recent financial disclosures showed two regional Fed officials owned — and in one case, actively traded — assets sensitive to the drastically expanded monetary policy they helped shape.

Driving the news: In response to a question, Powell said it’s a “reasonable thing” that officials should not be able to individually own securities that the central bank is buying.

  • Powell told reporters current rules around Fed officials’ financial holdings aren’t up to snuff — and changes are coming, though he did not offer any details.
  • The current rules “served us well, but it is now clearly seen as not adequate to the task of really sustaining the public’s trust in us,” he said. (As it stands, Fed officials are barred from trading around policy meetings. They also can't own bank stocks.)

CNBC reported late last week that Powell owned more than $1 million worth of municipal bonds for years — including when the pandemic hit and the Fed started buying those assets to shore up that market.

  • “We .. checked with the Office of Government Ethics, who looked carefully at it and said I did not have a conflict,” Powell said, noting his account had been set up to hold those securities through maturity.

Between the lines: None of the Fed officials' holdings explicitly violate current rules. But a conduct guide already cautioned against “any dealings … that might convey even an appearance of conflict between their personal interests, the interests of the [Fed], and the public interest.”

As for the main event, the Fed signaled it will start to taper its massive bond-buying program as soon as November, with the process wrapping up by the middle of next year.

  • The Federal Open Market Committee is officially evenly split on whether the first interest rate hike comes by the end of 2022.
  • The market responded with stocks holding onto their gains and short-term Treasury yields inching higher.

Go deeper

Changing the inflation conversation

Illustration: Annelise Capossela/Axios

Inflation looks like it’ll run hot for longer than plenty of smart people thought it would. The conversation over just how much more Americans will have to pay for their stuff has taken on a new intensity, as supply problems show few signs of fading.

Why it matters: The rate of price growth has remained consistently strong in recent months — a time that some thought would bring cooling prices after an initial reopening spike. What goes on with prices will influence the decisions made by Congress, the Biden Administration, and the Federal Reserve.

2 hours ago - Sports

Unvaccinated athletes face 21-day quarantine at Beijing Olympics

Logos for the 2022 Winter Olympics at Yanqing Ice Festival in February 2021 in Beijing. Photo: Lintao Zhang/Getty Images)

Athletes, staff members and journalists at the 2022 Beijing Olympic and Paralympic Winter Games who have not been vaccinated against the coronavirus will be required to quarantine for three weeks, the International Olympic Committee (IOC) outlined in its newly-published "playbooks."

Why it matters: The quarantine period is longer than the Games themselves, meaning vaccinations or an earlier arrival date will be required to participate in or cover the Games.

Dan Primack, author of Pro Rata
5 hours ago - Economy & Business

FTX CEO predicts more U.S. crypto flight

Photo: "Axios on HBO"

FTX doesn't look much like a company valued at $25 billion. Its new headquarters, located in a sleepy part of The Bahamas, is so nondescript as to not even have a sign. But it does expect to soon have neighbors.

Driving the news: Founder and CEO Sam Bankman-Fried tells "Axios on HBO" to expect "more and more crypto flight from the states" if the U.S. doesn't soon create a regulatory regime for cryptocurrencies.

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