[LIVE] FOMC PRESS CONFERENCE

[LIVE] FOMC PRESS CONFERENCE

welcome back to another live fomc press
conference I am George we’re all George
so in minutes we will see Fed share pal
come on and address the nation and
really address the world what the us is
going to do about its rates and
about inflation that’s the key right
inflation what is he going to do with
inflation well I mean right now he did
release like a statement basically as
expected there will be no Ray cut right
now but he didn’t say
anything about not cutting this year he
didn’t say that oh we’re going to change
it from three cuts to two
no um the only thing he really said was
the ‘s balance sheet they’ve been buying
a whole lot of bonds for the last four
years okay basically propping up the bad
companies that should have fallen right
and he’s been letting a lot of them
mature so they haven’t been buying it
back but dur in the statement he said
well they’re going slow that down
meaning they’re going to Reby back a lot
of the bonds that are maturing basically
hoping that a lot of these companies do
do not go under right because right now
the GDP also shows that consumers are
spending less which means there’s going
to be a lot more pressure on these
companies and if they still can’t borrow
money because interest rates are high a
lot of them will face downturn and may
even go bankrupt right but if the FED is
going to support them by continuing to
buy their junk bonds for example well
then it keeps them afloat right so that
is basically what the statement
just said it was just released not too
long ago saying that you know what he’s
not going to cut rates yet but doesn’t
mean that he’s not going to and he’s
going to
help give more lifelines I guess to some
of these companies that they hold bonds
of okay um that is pretty much it now of
course we got two minutes left this uh
big meeting is about to start I mean I
think the the the
I haven’t done one of these for a while
right but we always have good time
watching Gina and others as intelligent
and sometimes not so intelligent
questions but right now uh Bitcoin is re
reacting a little bit we’re almost back
up to 58 that’s pretty
good uh we will see because if these
reporters ask some tough questions and
P’s not able to answer or answers very
negatively okay more importantly
negatively uh then the market could come
crash down but if he’s like no you know
what one bad inflation reading doesn’t
mean a whole lot okay we will keep our
eyes open and our plan is to still cut
three times this year well then the
Market’s going to Rally hard today okay
so uh that is the story we are about to
begin I better get my audio ready in
about one minute this is going to
start Let me refresh make sure oh there
we go let’s get the audio going
uh uh oh this is not working right
now or there’s no sound well it’s
because there’s no sound I guess there
there’s nothing being said right
now I hope this
works I haven’t done one of these in a
long time I hope this is still
working okay there’s a big daddy P right
there
uh there we
go good
afternoon my colleagues and I remain
squarely focused on our dual mandate to
Pro promote maximum employment and
stable prices for the American
people the economy has made considerable
progress toward our dual mandate
objectives inflation has eased
substantially over the past year while
the labor market has remains strong and
that’s very good news but inflation is
still too high further progress in
bringing it down is not assured and the
path forward is
uncertain we are fully committed to
returning inflation to our 2% goal
restoring price stability is essential
to achieve a sustainably strong labor
market that benefits
all today the fomc decided to leave our
policy interest rate unchanged and to
continue to reduce our Securities
Holdings though at a slower
Pace a restrictive stance of monetary
policy has been putting downward
pressure on economic activity and
inflation and the risks to achieving our
employment and inflation goals have
moved toward better balance over the
past
year however in recent months inflation
has shown a lack of further progress
toward our 2% objective and we remain
highly attentive to inflation
risks I’ll have more to say about
monetary policy after briefly reviewing
economic
developments recent indicators suggest
that economic activity has continued to
expand at a solid Pace although GDP
growth moderated from 3.4% in the fourth
quarter of last year to 1.6% in the
first quarter private domestic final
purchases which excludes inventory
investment government spending and net
exports and usually sends a clearer
signal on underlying demand was 3.1% in
the first quarter as strong as the the
second half of
2023 consumer spending has been robust
over the past several quarters even as
high interest rates have weighed on
housing and Equipment
investment improving Supply conditions
have supported resilient demand and the
strong performance of the U Eon US
economy over the past
year the labor market remains relatively
tight but supply and demand conditions
have come into better
balance payroll job gains at averaged
276,000 jobs per month in the first
quarter while the unemployment rate
remains low at
3.8% strong job creation over the past
year has been accompanied by an increase
in the supply of workers reflecting
increases in participation among
individuals aged 25 to 54 years and a
continued strong pace of
immigration nominal wage growth has
eased over the past year and the jobs to
workers Gap has narrowed but but labor
demand still exceeds the supply of
available
workers inflation has eased notably over
the past year but remains above our
longer run goal of
2% total pce Prices rose 2.7% over the
12 months ending in March excluding the
volatile food and energy categories core
pce prices Rose
2.8% the inflation data received so far
this year have been higher than expected
although some measures of short-term
inflation expect ations have increased
in recent months longer term inflation
expectations appear to remain well
anchored as reflected in a broad range
of surveys of households businesses and
forecasters as well as measures from
financial
markets the fed’s monetary policy
actions are Guided by our mandate to
promote maximum employment and stable
prices for the American people my
colleagues and I are acutely aware that
high inflation imposes significant
hardship as it erodes purchasing power
especially for those least able to meet
the higher costs of Essentials like food
housing and
transportation we are strongly committed
to returning inflation to our 2%
objective the committee decided at
today’s meeting to maintain the target
range for the federal funds rate at 5
and a qu to 5 a half% and to continue
the process of significantly reducing
our Securities Holdings though at a
slower
Pace over the past year as labor market
tightness has eased and inflation has
declined the risks to achieving our
employment and inflation goals have
moved toward better
balance the economic Outlook is
uncertain however and we remain highly
attentive to inflation
risks we’ve stated that we do not expect
that it will be appropriate to reduce
the target range for the federal funds
rate until we have gained greater
confidence that inflation is moving
sustainably toward
2% so far this year the data have not
given us that greater confidence in
particular and as I noted earlier
readings on inflation have come in above
expectations it is likely that gaining
such greater confidence will take longer
than previously
expected we are prepared to maintain the
current target range for the federal
funds rate for as long as
appropriate we’re also prepared to
respond to an unexpected weakening in
the labor
market we know that reducing policy
restraint too soon or too much could
result in a reversal of the progress we
seen on
inflation at the same time reducing
policy restraint too late or too little
could unduly weaken economic activity
and
employment in considering any
adjustments to the target range for the
federal funds rate the committee will
carefully assess incoming data the
evolving Outlook and the balance of
risks policy is well positioned to deal
with the risks and uncertainties that we
face in pursuing both sides of our dual
mandate we will continue to make
decisions meet meeting by
meeting turning to our balance sheet the
committee decided at today’s meeting to
slow the pace of decline in our
Securities Holdings consistent with the
plans we released
previously specifically the cap on
Treasury redemptions will be lowered
from the current 60 billion per month to
25 billion per month as of June
1 consistent with the committee’s
intention to hold primarily treasury
Securities in the longer run we’re
leaving the cap on agency Securities
unchanged per month and we will re
reinvest any proceeds in excess of this
cap in treasury
Securities with principal payments on
agency Securities currently running at
about $5 billion per month total
portfolio runoff will amount to roughly
$40 billion per
month the decision to slow the pace of
runoff does not mean that our balance
sheet will ultimately shrink by less
than it would otherwise but rather
allows us to approach its ultimate level
more
gradually in particular slowing the pace
of runoff will help Ensure a smooth
transition reducing the possibility that
money markets experience stress and
thereby facilitating the ongoing decline
in our Securities Holdings consist that
are consistent with reaching the
appropriate level of ample
reserves we remain committed to Bringing
inflation back down to our 2% goal and
to keeping longer term inflation
expectations well anchored restoring
price stability is essential to set the
stage for achieving maximum employment
and stable prices over the longer run
to conclude we understand that our
actions affect communities families and
businesses across the
country everything we do is in service
to our public Mission we at the FED will
do everything we can to achieve our
maximum employment and price stability
goals thank you I look forward to your
questions that sounded pretty doish to
me thank you Howard schneid with Reuters
um a question to follow if I could uh do
you consider the current policy rate
still uh you confident that it’s
sufficiently restrictive to get
inflation back to 2% so I do I do think
the evidence shows you know pretty
clearly that policy is restrictive and
is Weighing on demand and um there are a
few places I would point to for that you
can start with the labor market um so
demand is still strong the demand side
of the labor market in particular but
it’s cooled from its extremely high
level of a couple years ago and you see
that in in job openings you saw it more
evidence of that today in the report as
you’ll know uh it’s still higher than
pre pandemic but it has been coming down
both in the indeed report and in the
jolts report that’s that’s demand
cooling uh the same is true of quits and
hiring rates which have essentially
normalized um I also look at the we look
at surveys of workers and pardon me
surveys of workers and businesses and
ask workers are jobs plentiful and ask
businesses are workers plentiful is it
easy to find workers and you’ve seen
that the answers to those have come back
down down to pre pre-pandemic levels you
also see in in intensitive spending like
housing and investment you also see that
higher interest rates are weighing on
those activities so I do think it’s
clear that um that policy is restrictive
sufficiently restrictive I guess is so I
I would say a whole lot of nothing that
we we believe it is restrictive and we
believe over time it will be
sufficiently restrictive that will be a
question that that the data will have to
answer follow infation continues running
roughly sideways as it has been uh the
job market stays reasonably strong
unemployment low and expectations are
anchored and maintained would you
disrupt that for expectations are not
anchored are anchored anchored stable
roughly would you disrupt that for the
last half point on pce you know I don’t
want to get into complicated
hypotheticals but I would say that you
know we’re committed to retain retaining
our current uh restrictive stance of
policy for as long is appropriate and
we’ll do
that PA just shut him
down Jenna is Raising her
hand G thanks for taking our questions
chair pal um I wonder you know obviously
Michelle Bowman has been saying that
there is a risk that rates may need to
increase further although it’s not her
Baseline Outlook I wonder if you see
that as a risk as well and if so what
change in conditions would Merit
considering raising rates at this point
so I think it’s unlikely uh that the
next policy rate move will be a hike I’d
say it’s unlikely um he should just say
our policy focus is really what I just
mentioned which is which is how long to
keep policy restrictive you asked what
would it take you know I think we’d need
to see persuasive evidence that our
policy stance is not sufficiently
restrictive to bring inflation
sustainably down to 2% over time that’s
not that’s not what we think we’re
seeing as I as I mentioned but that
that’s something like that is what it
would take we look at the totality of
the data answer that question that would
include inflation inflation expectations
and all the other data
too that she’s not
done well I think again the the test
what I’m saying is if we were to come to
that conclusion that policy weren’t
tight enough to achieve that so it would
be the totality of of all the things we’
be looking at it it could be
expectations it could be a combination
of things but if we if we reach that
conclusion and we we don’t see evidence
supporting that conclusion that’s what
it would take I think for us to take
that step
Chris uh thank you Chris rugaber at
Associated Press uh you didn’t mention
the idea that rates are at a peak uh for
the cycle and didn’t mention the idea
that it might be appropriate to cut
rates later this year uh as you have at
previous press conferences so has the
FED sort of dropped its easing bias
where are you standing on that so on
um uh let let me address uh Cuts so
obviously our decisions that we make on
our policy rate are going to depend on
the incoming data how the Outlook is
evolving and the balance of risks as
always and we’ll look at the totality of
the data so I think and we think that
policy is well positioned to add address
different paths that the economy might
take um and we’ve said that we don’t
think it would be appropriate to dial
back our restrictive policy stance until
we’ve gained greater confidence that
inflation is moving down sustainably
toward 2% so for example let me take a
path uh if we did have a path where
inflation proves more persistent than
expected and where the labor market
remains strong strong but inflation is
moving sideways and we’re not gaining
greater confidence well that would be a
case in which it could be appropriate to
hold off on rate Cuts I think there’s
also other paths that the economy could
take which which would cause us to want
to consider right cuts and those would
be two two of those paths would be that
we do gain greater confidence as we’ve
said
if that inflation is moving sustainably
down to 2% and and another path could be
you know an unexpected weakening in the
labor market for example so those are
paths in which in which you could see us
uh uh cutting race so I think there it
really will depend on the data in terms
of in terms of peak rate you know I I
think um really it’s the same question I
I uh I I think the data will will have
to answer that question for us well and
could you just follow uh on the path
where you you might not cut is that you
mentioned that would be inflation
persistent uh I mean is inflation would
that be the key data in making that
decision or could you expand a bit more
on that thank you again it’s it’s um
we’ve set ourselves a test that we for
us to begin to reduce policy restriction
we’d want to be confident that inflation
is moving you know moving sustainably
down to 2% and for sure one of the
things we’d be looking at is the
performance of inflation we’d also be
looking at infl expectations be looking
at the whole story but clearly incoming
uh incoming inflation data would be at
the very heart of that of that
decision Nick timrose of the Wall Street
Journal uh chair Powell to what extent
has the easing in financial conditions
since November contributed to the re
acceleration in growth and do you now
expect a period of sustained tighter fin
icial conditions will be needed to
resume the sort of disinflation the
economy saw last year so I I think it’s
hard to know that I think we’ll we’ll be
able to look back you know from down the
road and look back and and understand it
better you know if you if you look at um
let’s look at growth really uh what
we’ve seen so far this year in the first
quarter is growth coming in about
consistent with where it was last year I
know GDP came in lower but you don’t see
an acceleration growth I mean the
thought would be that Financial
conditions loosened in in in December
and that caused an uptick in activity
and that caused inflation presumably
that’s what or tightening in the labor
market you don’t really see that
happening what you see is economic
activity at a level that’s roughly the
same as as last year so you know what
what’s causing this inflation you know
we’ll we’ll have a better sense of that
over time I don’t know that there’s an
obvious connection there though with the
easing of financial conditions in terms
of tightening you’re you’re right I mean
R are certainly higher now and have been
for some time than they were before the
December meeting and and uh they’re
higher and that’s tighter Financial
conditions and you know that’s
appropriate given uh given what
inflation has done in the first quarter
you you’ve said in the past that
stronger growth wouldn’t necessarily
preclude rate Cuts I wonder would
continued strength in the labor market
change your view about the appropriate
stance of policy if it was accompanied
by signs that wage growth was
reaccelerating so I just want to be
careful that we don’t Target wage growth
or the labor market and remember what we
saw last year very strong growth a
really tight labor market and a
historically fast decline in inflation
so we and that’s because we know there
are there are two forces at work here
there’s the unwinding of the pandemic
related supply side distortions and and
and demand side distortions and there’s
also monetary policy you know uh
restrictive monetary policy so I I
wouldn’t rule out that something like
that can can’t continue you know
wouldn’t give up at this point on
further things happening on the supply
side either because you know we do see
that uh that companies still report that
that that there are supply side issues
that they’re facing and also even when
the supply side is issues are solved it
should take some time for that to affect
economic activity and ultimately
inflation so there are still those
things so I I don’t like to say that
either strong uh gr either growth or or
a strong labor market in and of itself
would automatically uh create problems
on inflation because of course it didn’t
do that last year you ask about wages we
we we we also don’t we don’t Target
wages we we Char Target price inflation
it is one of the inputs the point with
wages is of course we we like everyone
else like to see high wages but we we
also want to see them not eaten up by uh
by high inflation and that’s really what
we’re what we’re trying to do is to is
to cool the economy and and work with
what’s happening on the supply side to
bring uh to bring the economy back to 2%
inflation and part of that will probably
be uh having wage increases move down
incrementally toward levels that are
more
sustainable see that’s you just said a
whole lot of nothing basic
wages from The Washington Post thanks
for taking our questions you talked
about needing time to gain more
confidence that inflation is sustainably
moving back down to 2% it’s may now time
this year to cut three times just
centralized but I definitely want to
make it that way um you
know we said is that we we need to be
more confident and we’ve said my
colleagues and I today said that uh U we
didn’t see progress in the first uh uh
in the first quarter and I’ve said that
it it it appears then that uh it’s going
to take longer for us to to reach that
point of conference so I don’t know how
long it’ll take I I you know I can just
say uh that when we get that conf then
then rate Cuts will be will be in scope
and I don’t know exactly when that will
be and with hindsight are there any
signs that you can look back on now
looking at the reports from January or
February or March that suggested
something more worrying than just
expected
bumpiness I you know not really you know
what what um so I I thought it was
appropriate to reserve judgment until
until we had the full quarters data
until we saw the March data and so take
a step back what do we now see in the
first quarter we see strong uh economic
activity we see a strong labor market
and we see inflation we see three
inflation
readings and and you so I think you’re
at a point there where you where you
should take some signal I I we don’t
like to react to one or two months data
but this is a full quarter and I think
it’s appropriate to take signal now and
we are taking signal and the signal that
we’re taking is that it’s likely to take
longer for us to gain confidence that we
are on a sustain able path down a 2%
inflation that’s the signal that we’re
taking you know that’s good are acting
well Mr CH if I could Steve lean CNBC if
I could follow up on that um what
particular areas were sort of temporary
or blips in the inflation date in the
first quarter what’s the dynamic to
work to centralized but I definitely
want to meet CHR LaRon you know we will
put the thing we I don’t know why every
time I type
nothing is going to come out of that
that’s going to change the view I think
that in fact uh we didn’t gain
confidence and that it’s going to take
longer to get that confidence but I
don’t know why confidence I I just think
you I mean you know the story what what
um what’s happened since December is
you’ve seen uh higher Goods inflation
than expected and you’ve seen higher uh
non-housing Services inflation than
expected and those two are working
together to to sort of be higher than
than we had thought and there are
stories behind how that happened uh and
you know we I think I think my
expectation is that we will over the
course of this year see inflation move
back down that that’s my my forecast I I
think my confidence in that is lower
than it was uh because of the data that
we’ve seen so you know we’re looking at
those things we also continue to expect
and I continue to expect that Housing
Services inflation given where Market
rents are those will show up in in uh in
measured housing Serv Services inflation
over time uh we believe that it will it
just it looks like the LA that there are
substantial lags between when uh you
know lower Market rates turned up and
and for new tenants and and when it
shows up for existing tenants or or for
in Housing Services so if I could just
follow up is there a bit of a
contradiction in the idea that you are
reducing quantitative tightening which
is sort of an easing while you’re
holding rates steady at a restrictive
rate to try to slow cool the economy on
inflation thank you I I wouldn’t say
that no I mean the active tool of
monetary policy is of course interest
rates and uh this is this is a a long a
plan we’ve long had in place to to slow
really not not in order to um uh you
know
to provide accommodation to the economy
but to man I hope you guys threw your
longs to be less restrictive to the
economy really is to ensure that the
process of shrinking the balance sheet
down to where we want to get it is a
smooth one it doesn’t wind up uh in um
with with financial Market turmoil the
way it did the last the last time we did
this and the only other time we’ve ever
done
this
Craig craus from
Bloomberg uh two questions first simple
one um given the Run of data since
March has the probability in your mind
of no Cuts this year increased or stayed
the same that’s first question
second question chair pal you joined the
board in 2012 and I’m sure you remember
as I do what the jbless recovery was
like um lawyers accountants all kinds of
Highly qualified people who couldn’t get
jobs and given your history there I
wonder if there’s an argument for being
more patient with inflation here um we
have strong productivity growth that’s
helping wages grow up go up we have good
employment and so it seems to me there’s
a lot of Hysteria about inflation I I
agree it’s you know nobody likes it but
but is there an argument for being
patient and working with the economic
cycle to get it down over time thank you
so on your first question I don’t have a
probability estimate for you but all I
can say is that uh you know we’ve said
we that we didn’t think it’d be
appropriate to cut until we were more
confident uh that inflation was moving
sustainably at at 2% we didn’t get our
confidence in that didn’t increase in
the first quarter and in fact what
really happened was uh uh we came to the
view that it will take longer to get
that confidence and I think there are it
you know I think it’s U the economy has
been very hard for forecasters broadly
to predict to predict its path but there
are paths to to not cutting and they
past to cutting it’s really going to
depend on the data in terms of the the
um employment mandate to your point um
if you go back a couple of years U our
our our sort of framework document says
that when uh you look at the two mandate
goals and if one of them is further away
from from goal than the other then you
focus on that one it actually it’s it’s
the time to get back there times the uh
you know times how far it is from the
goal and that was clearly inflation so
our Focus was very much on inflation as
as and this is what we referred to in
the in the statement as um we as
inflation has come down now to below 3%
on a on a on a 12-month basis um it’s
become we be we’re now focusing the the
other goal that the employment goal now
comes back in for to focus and so we are
focusing on it um and and that’s that’s
how we think about
that
Claire CLA Jones Financial stimes thanks
a lot for the opportunity to ask the
questions just to go back to the answer
before um the previous one um it seemed
to suggest that you think the likeliest
path of inflation is one that’s going to
allow you to have a situation where
rates are lower at the end of the year
than they are right now it’ be good if
you could just confirm whether or not
that’s a correct reading um and the q1
GDP R prins um led to some some to start
mentioning the term stagflation with
with respect to the US economy do you or
anyone else on the fomc think this is
now a risk thank you yeah I I’m I’m not
um dealing really in likelihoods I think
there are there are paths that the
economy can take that would that would
involve cuts and their paths that
wouldn’t and I I don’t have great
confidence in which of those paths I
think my I would say my personal
forecast is that we will begin to see
further progress on inflation this year
I don’t know that it will be enough
sufficient I don’t know that it won’t I
think we’re we’re going to have to let
the data uh lead us on that in terms of
your question your second question was
stagflation I um I guess I would say I I
was around for stagflation and it was um
you know 10% uh 10% unemployment it was
high single digits inflation right now
we have and and and and uh very slow
growth so um right now we have 3% growth
which is you know
pretty solid growth I would say by any
measure and we have inflation running
under 3% so uh I don’t I don’t really
understand where that’s coming from and
and uh uh in addition I would say you
know most forecasters including our our
forecasting was that uh that last year’s
level of growth was very high 3.4% in I
guess the fourth quarter you know and
probably not going to be sustained and
would come down but that would be that
would be our forecast that wouldn’t be
stagflation that would still be to a
very healthy level of growth and of
course with inflation you know our we
will return inflation to
2% and that won’t be so I don’t see the
Stag or deflation
actually I have no idea what he just
said there zero idea Michael mcke from
Bloomberg radio and television the vice
chair of the fomc said recently that
he’s willing to consider the idea that
potential growth has moved up and of
course he’s Mr potential growth our star
do you share that view and would that
imply that maybe policy isn’t tight
enough i s so I think I would take that
question this way um we saw a year of
very high productivity growth in
2023 and we saw a year of I think
negative productivity growth in
2022 so I think it’s hard to draw from
the data uh I mean the question is is
Will productivity run there are two
questions one is Will productivity run
you know persistently above its longer
run Trend I don’t think we know that in
terms of potential output though if
that’s a separate question we we’ve had
a what amounts to a uh uh a significant
increase in the potential output of the
economy that’s not about productivity it
was about having more labor frankly both
through in in 2020 through both through
participation Al also through
immigration so we’re very much like
other forecasters and economists getting
our arms around what that means for
potential output this year and next year
and and last year for that matter too so
I think in that case I think you really
do have a significant increase in
potential output but you’ve also got you
so you got more Supply but those people
also come in they they are they work
they have jobs they spend so you’ve also
got demand so it it may there may be it
may be that you get more Supply than you
get demand at the beginning but
ultimately should be neither
inflationary nor disinflationary over
over a longer
period said earlier that um what does
that mean you’re not really considering
rate increases if uh growth is higher
but you’re not considering rate
increases does that imply that you’re
more worried about causing the economy
to slow too much than you are about
inflation taking off again no I I think
we we we believe our our policy stance
is in a good place and and is
appropriate to the current situation U
we believe it’s restrictive and you know
we our evidence for that I went over
earlier you see it in the labor market
you see an inflation sensitive spending
where demand has clearly come down a lot
over the past few years and that’s
that’s more from monetary policy whereas
the supply side things that are
happening are more on the supply side so
um that that’s how I would think about
it
Edward thank you Mr chairman Edward
Lawrence uh from Fox Business so GDP
growth is about 2% inflation employment
is about 4% it feels a lot like a steady
state and we have 3% inflation so if the
data Remains the Same that you’re seeing
um and I know you said you don’t see a
rate hike but it stands to reason that
you would need a rate hike to get from
three to 2% inflation so was there any
discussion about a raid hike in today’s
meeting uh and stop talking about raid
hike are you satisfied 3% inflation for
the rest of the
year Well I of course we’re not SA with
3% inflation um 3% can’t be in a
sentence with
satisfied um so why not we will return
inflation to
2% over time and we think our policy
stance is is appropriate to do that so
if we were to conclude that policy is
not sufficiently restrictive to bring uh
inflation sustainably down 2% then
that’s that would be what it would take
for us to want to increase rates we
don’t see that we don’t see evidence for
that uh so that’s where we are with the
discussion was there a discussion about
a rate hike at all no so the the policy
Focus has been on has really been on
what to do about why is everyone asking
about raid hike uh holding the current
uh the current level of restriction that
that’s really that’s part of the policy
that’s where the policy discussion was
in the meeting I wanted to follow on the
3% is there a time frame of persistent
inflation that would trigger a rate hike
there there isn’t any rule you can’t
look to a rule you know these are these
are going to be Jud judgement calls uh I
you know clearly restrictive monetary
policy needs more time to do its job
that that that is pretty clear based on
trying to make say yes consider patient
we should be it’s going to depend on the
totality of the data how the Outlook
evolves Victoria he should not be
allowed to ask any more questions ever
again hi Victoria Guido with Politico um
you’ve talked about your commitment to
being a political and nonpartisan and I
was just wondering given that it’s an
election year is the bar for rate
changes higher uh close to an election
yes and uh similarly is there a
significant economic difference between
you know starting to cut in SE say
September versus
December so we’re we’re always going to
do what we think the right thing for the
economy is when we come to that
consensus view that it’s the right thing
to do for the economy that’s our record
that’s what we do we’re not looking at
anything else you know it’s it’s hard
enough to get the economics right here
these are difficult
things and if we’re if if we were to
take on a whole another set of factors
and and use that as a new filter it
would reduce the likelihood we’d
actually get the economics right so
that’s how we think about it around here
and you know we’re at peace over it we
we know that we’ll do what we think is
the right thing when we think it’s the
right thing and we’ll all do that and
that that’s that’s how everybody around
here thinks so I I I can’t say it enough
that we just don’t we just don’t go down
that road if you go down that road where
do you stop and and we’re so we’re not
on that road we’re on the road where
we’re serving all the American people
and making our decisions based on the
data and how those data affect the
Outlook and the balance of risks you’re
on the road and then is there a
significant difference between uh you
know whether you start in say September
versus
December there there’s a significant
difference between an institution that
takes into account all sorts of
political events and one that doesn’t
that’s where the significant difference
is and and you know we’re we just don’t
do that I mean you can you can go back I
can read the transcripts for every this
is my 14 16 fourth election fourth
presidential election here read all the
transcripts and see if anybody mentions
in any way the the pending election it
just isn’t part of our thinking it’s not
what we’re hired to do if we start down
that road I I don’t I don’t know how you
stop this a
lot very defensive about
it uh thank you chair Powell question
about the labor market you’ve mentioned
a few times that the labor market is
normalizing certainly today’s jols data
suggested that things are kind of
getting back to pre-pandemic levels one
thing that hasn’t normalized is wage
growth which is still quite a bit
stronger than before the pandemic I
wonder if you can share your analysis of
of why that’s happening is it a lagging
indicator or something else going on so
I think if you if you go back to where
wage is peaked wage increas is peaked a
couple three years ago essentially all
wage measures have come down
substantially to that but they are not
not down to where they were before the
pandemic they’re still roughly a
percentage Point higher and we’ve seen
pretty consistent progress but not
uniformly and you’ll note the the ECI
reading from Tuesday was it was expected
to be to have come down and essentially
it was flat year-over-year uh you know I
think roughly so yeah I mean it’s that
part of it is Bumpy and uh again we
don’t Target wage increases but but it
you know in in the longer run if you
have if you have um wage increases
running higher than productivity would
warrant and uh then you know there it
there will be inflationary pressures uh
employers will raise prices over time if
that’s the case so we’ve seen progress
it has been in you know inconsistent but
we have seen a substantial decline
overall but we have ways to go on
that Scott
Nancy Nancy
sorry hey
cherer from Marketplace um he mentioned
uh consumers and consumers are feeling
the weight of interest rates right now
mortgage rates are up as our rates for
car loans credit cards people looking to
borrow are very discouraged that’s
reflected in their views on the economy
what would you say to them well um the
thing that hurts everybody and
particularly um people in the lower
income brackets is inflation if you’re a
person who’s living paycheck to paycheck
and suddenly all the things you buy the
the fundamentals of Life go up in price
you you are in trouble right away and so
with those people in mind in particular
what we’re doing is we’re using our
tools to bring down inflation it will
take some time but we will succeed and
we will bring inflation back down to 2%
and then people won’t have to worry
about it again now what we’re doing and
we know that it’s painful and
inconvenient but the dividends will be
paid in the in the will be very large
and and everyone will share in those
dividends and we’ve made quite a lot of
progress if you if you can think about
it uh I think core I think uh headline
core pce peaked
at at 5.8 now it’s at anyway headline
peaked at 7.1 now it’s at 2.7 don’t want
to get that wrong no you don’t uh quick
followup are current interest rates
really doing that much though to fight
inflation right now for those
consumers yes I mean I I think I think
that restrictive monetary policy is
doing what it’s supposed to do and it’s
but it’s also in this case unusually
working alongside and with the healing
of the supply side this this that was
different this time was that a big part
of the of the source of the inflation
and the reason why we’re having this
conversation is that we had this supply
side kind of collapse with with
shortages and and bottlenecks and all
that kind of thing and and so and this
was to do with the shutting down and
reopening of the economy and other
things that that um that really raised
demand So Many Factors did that so I
think now you see those two things
working together the the reversal of
those supply and demand distortions from
from the pandemic and the response to it
along with with uh restrictive monetary
policy those two things are working to
bring down inflation and we’ve made a
lot of progress let’s remember how far
we’ve come we we have a ways to go we’ve
got work left to do but we’re not
looking at the very high inflation rates
that we were seeing two years
ago I don’t know Coury things still seem
pretty expensive uh Courtney Brown from
maxios uh thanks for taking our
questions chair Powell um I wanted to
follow up on something you mentioned
earlier on um housing inflation there’s
kind of been this long awaited
disinflation and shelter that still
hasn’t arrived so I guess two questions
how do you explain the substantial lags
between some of the private sector data
we’re seeing and um the government data
and how confident are you that rents
will be helpful on the inflation front
in the coming
months so essentially the there are
there are a number of places in the
economy where there’s a where there just
lag structures built into the inflation
process and housing is one of them so
when you have um when you when when
someone um goes to a new person goes to
rent an apartment that that’s called
Market rent and you can see Market rents
are barely going up at all they the
inflation in those has been very low um
but it takes before that they were
incredibly high they sort of led the the
the high part so what happens is the
those Market rents Take Years actually
to get all the way
into um rents for uh C tenants who are
rolling over their leases landlords
don’t tend to charge as much of an
increase to a rollover tenant for
whatever reason and what that does is it
builds up a sort of an unrealized
portion of increases when there have
been big increases and what happens is
you know it’s it’s complicated but the
story is it just takes some time for
that to get in now I’m I am confident
that as long as Market rents remain low
this is going to show up in measured
inflation assuming that that market
rents do remain low how what will be the
exact timing of it I think it I think
we’ve learned that the lags are longer
we now I think significantly longer than
we thought at the beginning um and so
confident that it will come but not so
confident in the timing of it but yes I
expected that that this will happen I
bet PA has renter homes he’s renting out
a lot of homes that’s how he knows thank
you pal for taking the questions this is
Nicholas jinsky from Baron’s magazine um
it seems that over the past three or
four years economies and central banks
in developed markets at least have been
on more or less the same trajectory
easing during the pandemic fighting
inflation with restrictive policy on the
way out um feels like that may be ending
in 2024 based on some of the economic
data from Europe and the US and Japan
and statements from those central banks
as well so my question is what what
considerations or risks does a period of
more Divergent global economic
trajectories and Central Bank policies
present for the
fomc so um that you’re right I think
that that may happen and I you know you
know that we all serve domestic mandates
right so I think the difference between
the United States and and other
countries that are now considering uh
rate Cuts is that they’re just not
having the kind of growth we’re having
uh they they have their inflation is
performing about like ours or maybe a
little better but they’re not
experiencing the kind of growth we’re
experiencing so we actually have the
luxury of having strong growth and a
strong labor market very low
unemployment High job creation and all
of that and we can be patient and we and
we will will be careful and cautious as
we approach the decision to cut rates
whereas I think other jurisdictions may
go before that in terms of the
implications I you know I think
um the obviously markets see it coming
it’s priced in now and so I I think the
econom markets and economies can adapt
to it uh and I think you know we haven’t
seen in addition for the emerging market
economies we haven’t seen the kind of
turmoil that was more frequent 20 years
ago 30 years ago and that’s I think
partly because Emerging Market countries
many of them have much better monetary
policy for Frameworks much more
credibility on inflation and so they’re
navigating this pretty well this
time
Jennifer thank you chair pal Jennifer
sha bger with Yahoo finance you sort of
backed away from the notion that the
economy would need to encounter pain for
inflation to come back down but given
sticky inflation data in the first
quarter can disinflation still happen
along relatively painless path for the
economy or is some softening in the
labor market and the economy likely
needed to bring inflation back down so
you’re right we I think we thought and
and U most people thought there would
have to be uh probably a significant um
dislocations somewhere in the economy
perhaps the labor market to get
inflation all the way down from the very
high levels it was at at the beginning
of this episode that didn’t happen
that’s a tremendous result we’re very of
course gratified and pleased that hasn’t
happened
and if you look at the Dynamics that
enabled that it really was this the that
that so much of the gain was from the
unwinding of of things that weren’t to
do with monetary policy but the
unwinding of the distortions to the
economy you know Supply problems supply
side problems and also some some demand
issues as well the unwinding of those
really helped inflation come down now as
I’ve said I I’m not giving up on that so
I think I think it is possible that that
that those forces will still work to
help us bring inflation down we can’t we
can’t be guaranteed that that’s true
though and so you know we’re we’re we’re
trying to use our Tools in a way that
keeps the the labor market strong and
and the economy strong but also helps
bring inflation back down to 2%
sustainably we will bring inflation down
to 2% sustainably we hope we can do it
without um you know without U uh
significant dislocations in the labor
market or elsewhere and speaking of
dislocations in the labor market um in
terms of cutting you said if there were
weakness in the job market that could be
a reason to cut rates so if the
unemployment rate were to tick above 4%
but inflation not backed down to your 2%
Target how would you look at that would
the unemployment rate popping back above
4% catch your attention you know I I
said an unexpected weakening is what I
what the way I characterize it so you
know and I’m not going to try to Define
exactly what I mean by that but you know
it would be it had to be meaningful and
and get our attention and lead us to
think that the labor market was really
significantly weakening for us to want
to react to it you know a couple of
tents in the unemployment rate would be
would would probably not do that but a
broader would be a broader thing that
would that would suggest that uh that it
would be appropriate to consider uh
cutting and I I think whether you decide
to cut will depend on all the facts and
circumstances not just that
one
[Music]
KY chair Paul thanks for taking the
question Kyle Campbell with American
Banker uh you’ve said that Broad and
material changes are needed for the
bosel 3 endgame proposal and you’ve
mentioned that a repr proposal is
something that’s on the table as you’ve
had more time to sort of sit with the
public commentary process that and
understand the options available to you
if you have a better sense of whether a
repr proposal will be necessary um and
do you have a timeline in mind for when
um you know some sort of movement will
be made on that front either a repr
proposal or a move to
finalize so let me let me start by
saying that the FED is committed to you
know completing this process and and
carrying out bosel 3 endgame in a way
that’s faithful to Basel and also
comparable to what the other other large
comparable jurisdictions are doing um we
haven’t made any decisions on on policy
or on on process at all nothing nothing
no decisions have been made I’ll say
again though if we conclude that that
repr proposal is appropriate we won’t
hesitate to insist on that and then do
you need to resolve issues with the
capital proposal in order to advance
other parts of the regulatory agenda or
do you expect to continue to make
progress on those other uh agenda items
you know there’s no mechanical rule in
place there but I would say that the you
know the Basel 3 it uh process is by far
the most important thing and really is I
think occupying us at this at this time
in terms of what’s what’s what we’re
moving ahead
with let go to mark for the last
question last question thank you Mark
Hamrick with bank rate uh Mr chairman uh
what can you tell us about your the
approach that you take uh with your role
in the sense of trying to achieve
consensus which you recently identified
as a priority uh while allowing for a
range of views or even dissent uh we
don’t see many descending votes in the
official statements even when more
spirited discussions are noted in the
minutes after the fact how do you avoid
group think uh and avoid a higher risk
of a policy mistake thank you so I I
think if you listen to and you all do
listen to my uh my 18 colleagues on the
on the fomc you’ll see that we do not
lack for a diversity of voices and
perspectives we really don’t and it’s
one of the great aspects of the Federal
Reserve System we have 12 reserve banks
around the country where they have their
own economic staff not the people who
work here at the board they’re different
people and you know and and so each each
Reserve Bank has its own culture around
monetary policy and its own approach and
that kind of thing it guarantees you a
diversity of perspectives so I I think
that the perspectives are very diverse
but uh and in terms of in terms of
descents you know I I we have
descents and and you know a thoughtful
descent uh is is a good thing you know
if someone really makes you think that
kind of thing but um all I can say from
my standpoint is is I try I listen
carefully to people I try to incorporate
their thinking or do everything I can to
incorporate their thinking into what
we’re doing and I think many people if
they they feel that’s happening you know
that for most people most of the time
that’ll be enough and but I’m I’m not um
I mean it’s it’s not you know frowned
upon or illegal or against the rules or
anything like that it just is the way
things come out and uh I mean I think we
have a very diverse group of brand of
people frankly more diverse than it used
to be in many dimensions more diverse
but from the obvious you know gender and
demographic ways but also we have we
have um more people who are not PhD
economists so we have people from
business and and law and academ and
things like that so I think you actually
do have quite a quite a good diverse
perspective the I think all of us read
these stories about a lack of diversity
and we look around the room and say I
don’t I really don’t understand what
they’re talking about so why is that
even considered very much whether you
have a PhD or not PhD as a board
Governor like why is that even part of
the diversity conversation I don’t even
get
that oh my god um all right uh with all
that said uh Bitcoin um did go up as
high as
594 now it’s at
582 I don’t know if this is going to
hold but uh from my
understanding I would say that
was pretty
good as far as as far as a statement I
guess
um man he he he talks so much in circles
you know if you need someone to talk in
circles without saying anything PA is a
master at it as he would say he’s a PhD
at that because on one hand he talks
about about you know we love High wages
but we hate High inflation so what we
need is Wages to go down and for
inflation to go down like then then just
say that you didn’t need to say like oh
we love High wages right but then what
he’s really saying is like no we don’t
like high wages because High wages leads
to high inflation you know it’s like you
just talk in circles non-stop circles
and circles and more circles um out of
all that basically what I what I’ve
learned is the boorder of Governors is
more diverse now than ever because now
you have non-phd people within the
group um and then also what I learned is
uh he’s still looking to cut he’s still
looking to cut rates okay I hated that
one guy that kept saying kept pressing
him have you thought about raising rates
are you going to raise rates you know
like what conditions will you consider
rate hikes like he kept pressing him
that’s not in Pal’s mind okay or any of
those government Minds because it is a
presidential election year he’s supposed
to make the economy look good even
though he was very defensive when he
asked about that
um you know overall uh it is it is what
it is he does want to cut just don’t
know when it wasn’t today is it going to
be next month possibly it just really
depends on the economic data and he
thinks inflation is still okay hasn’t
really gone up that much and he thinks
the other measurements of the economy is
still are still great not just GDP so
basically in Paul’s mind things are
still smooth smooth going and rate cuts
are still in play just don’t know
when that’s it
that’s all I have to say uh enjoy
Bitcoin um just FYI I I closed almost
all my Longs just now uh that was a
pretty good run but I don’t know where
this is going to go we still have 30
minutes 40 minutes until end of the day
I don’t know if grayscale is still
selling um I think we got some pretty
good news so we’ll
see by tonight when I stream 8:30 a.m.
8:30 p.m. Central Standard Time where
Bitcoin will be okay smash it a like
subscribe to the channel and I’ll see
you guys later take care bye

How will Bitcoin behave after Fed Chair Powell addresses the media?

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