Fed's Secret COVID Tapes Reveal Internal Divide

Liam Peterson

Bond

Political

Remarks of Officials

Economic

Central Bank

Summary:

Newly revealed Fed transcripts expose deep internal divisions over 2020 crisis moves and the fierce debate to protect central bank independence.

In the chaotic spring of 2020, as the COVID-19 pandemic brought the global economy to a standstill, the U.S. Federal Reserve projected an image of unified, overwhelming force. It slashed interest rates and unleashed a firehose of liquidity through massive bond purchases.

But newly released transcripts from the Fed's closed-door meetings paint a more complex picture. They reveal that behind Chair Jerome Powell's decisive public stance, there was significant internal division over just how far and how fast the central bank should go. The documents show a tense debate shaped by a deep-seated concern: protecting the Fed's political independence at a moment of unprecedented crisis.

The Contentious 100-Point Rate Cut

As financial markets began to spiral in early March 2020, Fed policymakers met twice to orchestrate their response. The first move on March 3, a 50-basis-point rate cut, was unanimous. Less than two weeks later, however, the consensus fractured.

At its March 15 meeting, the Fed pushed through a full 100-basis-point cut. While Cleveland Fed President Loretta Mester was the only official dissenter, the transcripts show she was not alone in her reservations. Three other influential members were not immediately convinced:

• Randal Quarles, then Fed Vice Chair for Supervision, worried the move would signal panic. "Lowering the interest rate will not open schools, and it won't finish the NBA season," he quipped.

• Raphael Bostic, President of the Atlanta Fed, argued that with a large fiscal stimulus package expected from Congress, the "urgency of our moving to a dramatically more accommodative stance" was reduced.

• Robert Kaplan, then Dallas Fed President, expressed sympathy for these arguments, though both he and Quarles ultimately voted for the cut.

The core concern was that such a drastic move could backfire, telegraphing alarm and worsening the very instability the Fed was trying to contain.

Powell's Push for 'All-In' Action

Despite the hesitancy, Powell forcefully argued for decisive action. "I feel that there is no useful purpose to be served in holding back today," he told his colleagues, successfully swaying the committee.

The group ultimately went even further than originally planned. Minneapolis Fed President Neel Kashkari suggested making the central bank's bond-buying program open-ended rather than capping it at a specific dollar amount.

"We should be erring on the side of doing too much," Kashkari urged, a sentiment that would become a public mantra for the Fed in the months that followed.

Guarding Independence Amid Political Pressure

Even as they embraced aggressive measures, policymakers were acutely aware of the risks to the central bank's independence. With an array of new programs, including direct purchases of corporate credit, the Fed was entering uncharted territory.

Kashkari himself warned that the Fed needed to design these programs "in a way that can support the economy, without having us step out of our lane."

Philadelphia Fed President Patrick Harker was even more direct. "Given the declaration of a national emergency, our actions might also be viewed as bowing to political pressures," he stated, referring to the pressure being exerted by the Trump administration at the time. The key, he argued, was to communicate that the Fed's goal was providing relief, not economic stimulus.

One idea from Boston Fed President Eric Rosengren highlighted how far some were willing to think outside the box. He suggested encouraging the Treasury to issue more bills to keep short-term rates from falling below zero, though the idea did not gain traction.

Why the Fed Drew the Line at Yield Curve Control

By the summer of 2020, concerns over independence had become a central theme in Fed discussions. This was the primary reason policymakers ultimately rejected a proposal to implement yield curve control (YCC), a policy that would involve capping long-term interest rates.

While Vice Chair Lael Brainard had presented YCC as a potential next step, others saw it as a bridge too far. St. Louis Fed President James Bullard voiced a common view at the June meeting, arguing that YCC "may prove to be incompatible with central bank independence."

After extensive debate, the committee decided against the policy. The 2020 transcripts reveal a central bank that, while willing to act with unprecedented force in a crisis, was also intensely focused on drawing clear lines to protect its long-term institutional integrity.

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Catherine Richards

Political

Commodity

Remarks of Officials

Economic

Energy

Daily News

The U.S. Department of Energy has officially rejected claims that it is considering a plan to use Venezuelan crude oil to replenish the nation’s Strategic Petroleum Reserve (SPR). The denial follows a report, citing two sources, that the Trump administration was exploring an oil swap with U.S. companies to bolster the emergency stockpile.

"This is false," a spokesperson for the Energy Department stated on Friday. "We are not currently considering using Venezuelan oil to refill the SPR." The spokesperson also confirmed that no such exchange is currently planned.

An aerial view shows the Bryan Mound Strategic Petroleum Reserve in Freeport, Texas, a key facility for the U.S. emergency oil stockpile.

Details of the Alleged Oil Swap Proposal

According to the two sources, the proposed plan involved a complex exchange designed to move Venezuelan oil into the U.S. market while simultaneously adding to the SPR. Under the arrangement, Venezuelan crude would be delivered to U.S. refineries. In return, participating companies would supply U.S.-produced medium sour crude directly into SPR storage facilities.

The sources indicated the administration was looking to transfer the Venezuelan crude to storage tanks at the Louisiana Offshore Oil Port for subsequent shipment to refineries. The United States has asserted it would control Venezuela's oil sales and revenue indefinitely following the capture of President Nicolas Maduro earlier this month.

The Push to Refill America's Oil Reserve

The Strategic Petroleum Reserve, the world's largest emergency oil stockpile, is stored in a series of underground salt caverns along the Texas and Louisiana coasts. Replenishing it has been a stated policy goal for the Trump administration, which pledged on the first day of its second term to fill the emergency reserve as part of a broader energy support strategy.

Currently, the SPR holds approximately 414 million barrels, which is about 60% of its total capacity. However, efforts to refill the reserve have been hampered by a lack of funding and ongoing maintenance requirements.

Funding Challenges and Alternative Strategies

The administration has been seeking creative ways to add crude to the SPR without direct government spending. U.S. Energy Secretary Chris Wright has previously stated that the administration was exploring alternative approaches, including potential deals with private companies to supply oil.

This search for alternatives comes as direct funding has been reduced. A major tax and spending bill last year allocated only about $171 million for SPR oil purchases and maintenance, a significant decrease from the $1.3 billion originally included in the legislation.

From a technical standpoint, Venezuelan crude is generally denser and has a higher sulfur content than the U.S.-produced crude that has traditionally filled the SPR.

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James Riley

Political

Remarks of Officials

Economic

Middle East Situation

Daily News

Russian President Vladimir Putin is actively mediating the situation in Iran, aiming for a rapid de-escalation of tensions, the Kremlin confirmed Friday. The move follows direct phone calls between the Russian leader, Israeli Prime Minister Benjamin Netanyahu, and Iranian President Masoud Pezeshkian.

Moscow has also condemned threats of new military action from the United States, which came after protests broke out in Iran late last month.

Russia Proposes Dialogue with Israel and Iran

During his call with Prime Minister Netanyahu, President Putin affirmed Russia's readiness to "continue its mediation efforts and to promote constructive dialogue," according to a Kremlin statement. Putin outlined his vision for enhancing stability across the Middle East, though further details of his mediation proposal were not disclosed.

In a separate conversation, Iranian President Pezeshkian briefed Putin on what the Kremlin described as Tehran's "sustained efforts" to normalize the internal situation.

The Kremlin reported that both Russia and Iran are aligned in their support for de-escalating tensions as quickly as possible. The two nations agree that any emerging issues, both concerning Iran and the wider region, must be resolved "through exclusively political and diplomatic means." Putin and Pezeshkian also reaffirmed their commitment to the strategic partnership between their countries and to ongoing joint economic projects.

SCO Blames Western Sanctions for Unrest

The Shanghai Cooperation Organization (SCO)—a bloc that includes Russia, China, India, and Iran—publicly opposed any external interference in Iran’s affairs. The organization pointed to Western sanctions as a key factor creating the conditions for the recent unrest.

"Unilateral sanctions have had a significant negative impact on the economic stability of the state, led to a deterioration in people's living conditions, and objectively limited the ability of the Government of the Islamic Republic of Iran to implement measures to ensure the country's socio-economic development," the SCO declared in a statement.

The protests, which began on December 28, were triggered by soaring inflation in an economy heavily impacted by international sanctions.

US Tightens Sanctions as Moscow Pushes Stability

In contrast to Russia's diplomatic approach, the U.S. Treasury announced fresh sanctions on Thursday. The new measures target Iranian officials, including Ali Larijani, the secretary of Iran's Supreme Council for National Security.

When asked what specific support Russia might offer Iran, Kremlin spokesman Dmitry Peskov emphasized Moscow's broader role. "Russia is already providing assistance not only to Iran but also to the entire region, and to the cause of regional stability and peace," Peskov stated. "This is partly thanks to the president's efforts to help de-escalate tensions."

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Manuel

Political

The Trump administration has paused its efforts to seize student debt from borrowers’ paychecks, the Education Department said Friday, as the White House makes a concerted push around an affordability agenda ahead of this year’s midterm elections.

The department said the “temporary delay” would persist until the department implements new student debt repayment and rehabilitation options outlined in recent legislation. Under Secretary of Education Nicholas Kent said in a press release that department officials determined garnishment “will function more efficiently and fairly” after those are in effect.

Speaking to reporters in Rhode Island on Monday, Education Secretary Linda McMahon said the government had paused the program “for a bit” in response to a question about Americans facing worsening financial struggles.

The Education Department had announced last month that it would resume wage garnishment for student loan borrowers after a more than five-year hiatus, with an initial batch of 1,000 affected borrowers due to be notified last week. The administration originally planned to send larger batches of notifications to borrowers each month through the year, Bloomberg previously reported.

Political Messaging

The about-face comes as President Donald Trump is rolling out a raft of policy proposals and actions aimed at easing Americans’ financial hardship and centering affordability in Republicans’ political messaging ahead of consequential midterm elections in November. So far in 2026, Trump has called for a 10% interest rate cap on credit card debt; a ban on corporate investors buying up homes; and a bid to make tech companies pay for surging electrical costs caused by proliferating data centers.

Only borrowers in default, meaning those who have not made a payment on their student loans in over a year, are subject to wage garnishment.

There are currently 5 million borrowers in default, according to government data. But that number could balloon this year: An additional 6 million borrowers are in delinquency, according to an analysis from the American Enterprise Institute. And legislative changes to student debt relief, such as the elimination of some income-based repayment programs for new borrowers, could exacerbate the default rate.

Source: Bloomberg

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Manuel

Stocks

Political

Policymakers say they are still talking, but the past week ended with a trio of signals that efforts to renew now-expired enhanced Obamacare subsidies face longer odds than ever.

The political salience of the issue is self-evident — Affordable Care Act subsidies led to a government shutdown last fall, and the expiration has caused double-digit rate increases — but Washington disagreements appear to be winning over action.

Bipartisan negotiations on Capitol Hill have been ongoing for weeks, but lawmakers left Washington on Thursday for a weeklong recess sounding notably downbeat that any breakthrough is forthcoming.

The White House released its healthcare framework focused on prescription drug prices and health savings accounts. It was notably silent on the issue of renewing these enhanced subsidies.

Meanwhile, on a third front — perhaps the area most front of mind for millions of Americans — the open enrollment period ended for most Obamacare exchange plans.

These plans are offered at the state level, and while some extensions may be offered, the passing of this deadline means higher rates for many are now formally in place.

The effects of these hikes have already been felt. New government data on exchange enrollment released this week showed that sign-ups on the government's Healthcare.gov marketplace are down more than 800,000 from levels seen last year.

About 22 million Americans received these subsidies in 2025, and an analysis from health policy research organization KFF found that subsidies saved enrollees an average of $705 annually in 2024.

A focus in Washington on healthcare, but not on subsidies

As the White House unveiled its healthcare framework, an official downplayed the notion to reporters that the omission of subsidies was a signal that the administration is not interested in the issue. But President Trump held a healthcare event Friday where he again slammed former President Barack Obama's signature law.

Trump said his framework, which is short on details and could face an uphill path to enactment on its own, was released in part because Obamacare "was designed to make insurance companies rich."

The White House official added to reporters that Trump prefers a different approach and called the focus on Obamacare subsidies "too narrow a view on what is ailing our healthcare system."

Congressional negotiations, meanwhile, are on ice for at least a week. Lawmakers are now home for the Martin Luther King Jr. holiday recess. Moderates are trying to stay optimistic after weeks of pushing for a compromise.

Senate Minority Leader Chuck Schumer met with President Trump this week and, according to Schumer's office, pressured the president to "push Senate Republicans."

Sen. Lisa Murkowski, an Alaska Republican, has been central to the talks and told reporters Thursday, "I'm not giving up, because I think what we have to do is respond to the immediacy of the situation that we have now."

But she acknowledged that talks for the moment are "paused."

Discussions could restart at the end of the month when lawmakers return on Jan. 26 — especially as another government shutdown deadline looms on Jan. 30. Democratic leaders have signaled an interest in keeping the healthcare and shutdown debates separate, suggesting they are unlikely to push for shutting down the government a second time over the issue.

As Schumer put it recently, "[W]e'd like to get an appropriations bill done" and continue to negotiate healthcare separately.

For now, much of the focus is on Obamacare premiums as more likely to become a 2026 campaign trail issue rather than one that is likely to be addressed anytime soon.

Oregon Sen. Ron Wyden even offered a spin this week on a famous question first asked in 1980 by Ronald Reagan during the presidential campaign, which could be repeated a lot by Democrats between now and November.

Wyden wrote, "Every American should be asking themselves a simple question: Are you paying more for your healthcare than you were a year ago?"

Source: Yahoo Finance

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Alexander

Remarks of Officials

Economic

Central Bank

Federal Reserve Vice Chair Philip Jefferson indicated he supports holding interest rates steady at the central bank's upcoming January meeting, citing a "cautiously optimistic" outlook for the U.S. economy.

Speaking in Boca Raton, Florida, on Friday, Jefferson suggested that previous rate cuts have positioned monetary policy in a neutral range, allowing the Fed to adopt a more patient stance.

A 'Wait-and-See' Stance on Policy

In his first public comments on monetary policy since November, Jefferson argued that the current policy is appropriate for evaluating future economic data.

"The current policy stance leaves us well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks," he stated.

This language closely mirrors the Fed's December post-meeting statement, which was widely interpreted as a signal that the central bank would pause its rate adjustments. The Fed's policy rate currently sits in a range of 3.50% to 3.75% following three consecutive quarter-point cuts. Jefferson was part of the 9-3 majority that voted for the last reduction in December.

He described last year's rate cuts as "the right step" to balance the risks of persistent inflation against the potential for a weakening labor market, adding, "This policy stance puts the economy in a good position moving forward."

Economic Outlook: Steady Growth and Cooling Inflation

Looking ahead, Jefferson laid out a stable forecast for the economy. He expects near-term growth to be around 2% and the unemployment rate to hold steady near its December level of 4.4%.

While acknowledging upside risks to inflation, he projected that it would return to a sustainable path toward the Fed's 2% target. He addressed the rise in core goods prices last year, attributing much of it to tariffs.

"It is a reasonable base case that the effects of tariffs on inflation will not be long-lasting—effectively, a one-time shift in the price level," Jefferson explained, noting that inflation expectations remain anchored.

Reflecting this sentiment, financial markets are currently pricing in only a 5% probability of another rate cut at the Fed's meeting on January 27-28.

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Ukadike Micheal

Political

Remarks of Officials

Economic

Russia-Ukraine Conflict

Daily News

Ukraine is dispatching a delegation to the United States to finalize crucial talks on security guarantees and a massive post-war recovery package, President Volodymyr Zelenskiy announced Friday. The Ukrainian leader expressed hope that the agreements could be formally signed at the World Economic Forum in Davos next week.

Speaking at a press conference in Kyiv alongside Czech President Petr Pavel, Zelenskiy highlighted that the discussions are also aimed at gaining clarity on Washington's perspective regarding Russia's stance on U.S.-backed peace initiatives to end the nearly four-year conflict.

"I think we have worked well with the American side, we are just not on the same side on some issues," Zelenskiy noted, alluding to the ongoing negotiations with Washington.

Ukrainian President Volodymyr Zelenskiy outlined the goals for upcoming talks with the U.S. during a press conference in Kyiv.

High-Stakes Diplomacy Expected at Davos

The potential signing at Davos sets the stage for a high-profile diplomatic event. U.S. President Donald Trump told Reuters earlier this week that he might meet with Zelenskiy at the forum, a meeting the Ukrainian president has actively sought.

Ukrainian officials have stated the country needs an estimated $800 billion for its post-war reconstruction. Zelenskiy confirmed that Ukraine has completed its work on the documents for this "prosperity package" and the U.S. security guarantees, which are designed to deter future Russian aggression.

According to Ukraine's ambassador to the U.S., Olha Stefanishyna, senior Ukrainian officials were set to participate in bilateral talks in Miami on Friday to refine the two agreements. "The purpose of the visit is to refine these agreements with American partners," she wrote on Facebook, adding they "may be signed ... in Davos."

The delegation includes several key figures:

• Kyrylo Budanov, head of Zelenskiy's office

• Rustem Umerov, secretary of Ukraine's national security and defence council

• Davyd Arakhamia, head of Zelenskiy's parliamentary faction

Clashing Views on the Path to Peace

A key point of friction revolves around the framework for ending the war. Washington has encouraged Ukraine to agree to a peace framework to present to Moscow. Meanwhile, Kyiv and its European allies are focused on ensuring that any deal includes robust guarantees against future attacks from Russia.

"Ultimatums are not, in my view, a workable model for democratic relations between countries," Zelenskiy stated, without elaborating on the specific context of his comment.

The diplomatic landscape is further complicated by recent remarks from President Trump, who on Wednesday claimed that Russia was ready for a peace deal and positioned the Ukrainian leader as the primary obstacle. This assessment sharply contrasts with the views held by European leaders.

Russia's Actions Undermine Peace Talks, Zelenskiy Says

Zelenskiy firmly rejected the notion that he is stalling peace efforts. Instead, he pointed to Moscow's recent strikes on Ukraine's energy infrastructure as clear evidence of Russia's true intentions.

"Each of these strikes against our energy sector and our cities quite clearly shows Russia's real interests and intentions: they are not interested in agreements, but in the further destruction of Ukraine," he posted on social media following the press conference.

During the conference, Zelenskiy also made an urgent plea for more air defence ammunition to protect the country's power grid. He revealed that until a new aid package arrived on Friday morning, several of Ukraine's air defence systems had been left without missiles.

"We need to fight for these (aid) packages with blood, with people's lives," he told reporters.

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