Latest / The Paul Barron Crypto Show / Jerome Powell Rate Cut Decision vs Crypto Market🚨

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Jerome Powell Rate Cut Decision vs Crypto Market🚨 · The Paul Barron Crypto Show

• 0:07
  Speaker 1: Well, it's time to cover the FED FOMC meeting again
• 0:10
  Speaker 1: and a part of this is going to be looking
• 0:11
  Speaker 1: down at breatcut potentials in the future. We'll give it
• 0:14
  Speaker 1: all to you today. My name is Paul Vera. Welcome
• 0:16
  Speaker 1: back in a tech path. Thanks for joining us live.
• 0:18
  Speaker 1: I do want to think our sponsor and that is Coinbase,
• 0:20
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• 0:22
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• 0:25
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• 0:28
  Speaker 1: stable coin things are happening, markets are moving in that space. Well,
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• 0:41
  Speaker 1: in crypto to get rolling. Let's get into the big
• 0:43
  Speaker 1: tweet right there, and that is that the Federal Reserve
• 0:46
  Speaker 1: leaves interest rates unchanged, which has pretty much been the
• 0:49
  Speaker 1: point that we've been talking about at the four and
• 0:52
  Speaker 1: a quarter to four and a half. And the point
• 0:55
  Speaker 1: look at is where chair Chair Powells position is and
• 1:00
  Speaker 1: why because this is a question mark that everybody is
• 1:03
  Speaker 1: asking on why isn't he changing rates whether it's up
• 1:07
  Speaker 1: or down? And there's two sides to this token. We
• 1:11
  Speaker 1: like to call it that, and I'll break down a
• 1:13
  Speaker 1: few of those for you. President Trump says the Federal
• 1:16
  Speaker 1: Reserve probably won't cut today, and of course, you know
• 1:19
  Speaker 1: he's already calling Pal not a smart guy. And this
• 1:24
  Speaker 1: is the one that's crazy. Trump says, I'm allowed to
• 1:26
  Speaker 1: appoint myself as the head of the Fed. Do you
• 1:29
  Speaker 1: guys think that that Trump should be, you know, involved
• 1:33
  Speaker 1: in this at all or let me know in the
• 1:35
  Speaker 1: comments down below. And of course we're gonna have a
• 1:38
  Speaker 1: poll for you guys today. I want to get your
• 1:39
  Speaker 1: input on that. And of course the polymarket cut was
• 1:43
  Speaker 1: accurate again and that was that there was no change.
• 1:46
  Speaker 1: Pollymuket is getting pretty accurate on all of this and
• 1:50
  Speaker 1: seems to be more effective as we start to move
• 1:53
  Speaker 1: into some of these markets as they get a little
• 1:54
  Speaker 1: bit more volatile. What's he going to talk about today.
• 1:58
  Speaker 1: Everybody's kind of pointing in a few things, inflation as
• 2:00
  Speaker 1: being one of them. You know, more data, obviously, the
• 2:04
  Speaker 1: situation of what's happening in the Middle East that could
• 2:06
  Speaker 1: also come up with instability, jobless claims the potential of
• 2:11
  Speaker 1: where inflation is going. I want to go over to
• 2:14
  Speaker 1: a clip because this is getting into the framework of
• 2:17
  Speaker 1: should we actually raise rates? When I say we the Fed,
• 2:20
  Speaker 1: should we actually raise rates? There is an argument around this.
• 2:24
  Speaker 1: Take a look.
• 2:25
  Speaker 2: Most of the world is waiting to see when the
• 2:28
  Speaker 2: Fed will cut rates. Do you think they need to
• 2:30
  Speaker 2: be raising rates?
• 2:30
  Speaker 3: Why is that?
• 2:32
  Speaker 4: I've been saying that for a while, And if you
• 2:33
  Speaker 4: look at what is happening today, you have the higher
• 2:36
  Speaker 4: oil prices pushing up inflation. I think the tariffs are
• 2:41
  Speaker 4: going to have that impact on inflation during the second
• 2:43
  Speaker 4: half of this year and the first half of twenty
• 2:46
  Speaker 4: twenty six, and it would be irresponsible to cut interest
• 2:50
  Speaker 4: rates now when you don't know what the impact is
• 2:52
  Speaker 4: going to be. Somehow, the Fed has been saying, based
• 2:57
  Speaker 4: upon all the public speeches they make, that uncertainty means
• 3:02
  Speaker 4: stay put. Why doesn't uncertainty also involve being more cautious,
• 3:08
  Speaker 4: increasing the interest rate and preparing for a higher inflation.
• 3:12
  Speaker 2: Well, to this point, nothing has shown up. Anyone who's
• 3:14
  Speaker 2: been waiting for those numbers in inflation has been surprised
• 3:18
  Speaker 2: to not see anything.
• 3:19
  Speaker 4: To this point, I have been writing and saying that
• 3:22
  Speaker 4: there will not be any show in inflation in the
• 3:24
  Speaker 4: short term. The reason being wholesalers retailers are taking their
• 3:29
  Speaker 4: cut themselves, reduce their profit margin, and they are postponing
• 3:34
  Speaker 4: the date in which they need to pass on the
• 3:36
  Speaker 4: cost increases, hoping that tariffs would get canceled. We've all
• 3:41
  Speaker 4: seen tariffs being imposed then they are pulled back. So
• 3:44
  Speaker 4: the hope is many of the tariffs will not happen.
• 3:47
  Speaker 4: So why would I raise my prices on the customers today?
• 3:50
  Speaker 4: But if the tariffs are going to stay, and at
• 3:53
  Speaker 4: least some of them are going to stay in place
• 3:56
  Speaker 4: by the time July, August, September come, you will have
• 4:00
  Speaker 4: to react to it. And that's when you think, I
• 4:02
  Speaker 4: think inflation would show up.
• 4:04
  Speaker 1: All right. So if you believe that and you look
• 4:07
  Speaker 1: at inflation is still kind of a looming in the
• 4:09
  Speaker 1: back door, and a lot of retailers are in a
• 4:11
  Speaker 1: position right now where they're kind of fading the heat
• 4:13
  Speaker 1: on a lot of these costs. This is only going
• 4:16
  Speaker 1: to last so long. I mean, at some point they
• 4:18
  Speaker 1: are going to have to take price. What I mean
• 4:20
  Speaker 1: by that raise prices. And you look at a couple
• 4:23
  Speaker 1: of the strategies that have been done by the FED
• 4:25
  Speaker 1: here recently. Here's Timorros coming in from his point, and
• 4:30
  Speaker 1: I think this is an interesting one right now around
• 4:32
  Speaker 1: the dot plots, and this gets into remember twenty twenty
• 4:35
  Speaker 1: four meeting the medium project move from around three twenty
• 4:38
  Speaker 1: five basis point cuts to one. Okay, everybody was cool
• 4:41
  Speaker 1: with that. Then they delivered four cuts worth of easing
• 4:44
  Speaker 1: beginning in September. That was the concept. Yet here we
• 4:46
  Speaker 1: are now a year later almost and we're not anywhere
• 4:51
  Speaker 1: near that. So that I think is the question mark
• 4:53
  Speaker 1: is what has materially changed within the markets other than
• 4:58
  Speaker 1: maybe some little bit of instability globally, I would say,
• 5:02
  Speaker 1: you know when you look at that, but the markets
• 5:04
  Speaker 1: have not necessarily positioned one way or the other. They
• 5:08
  Speaker 1: are looking at maybe a better answer of how the
• 5:11
  Speaker 1: FED should analyze data. And this is where it gets interesting.
• 5:15
  Speaker 1: The same analyst talked about using AI and a lot
• 5:19
  Speaker 1: more speed to market, which is what I always say
• 5:22
  Speaker 1: is the faster you can get to data that's real,
• 5:25
  Speaker 1: the better it is. Take a look at this clip.
• 5:31
  Speaker 2: It's supposed to be data dependent, because we don't. As
• 5:34
  Speaker 2: you point out, the Fed's often wrong do you want
• 5:36
  Speaker 2: them making predictions on things that they think are going
• 5:39
  Speaker 2: to happen, on the data that might show up.
• 5:42
  Speaker 4: Good point, Becky, I agree with you, But data dependent
• 5:46
  Speaker 4: doesn't mean the late you take the latest number and extrapolated,
• 5:50
  Speaker 4: assuming everything else is perfect. Data dependent today would mean
• 5:55
  Speaker 4: nothing will happen in the oil market, there will not
• 5:58
  Speaker 4: be any war, Uran industry will not go to war,
• 6:02
  Speaker 4: and everything will be very calm.
• 6:04
  Speaker 5: Do you wait for two back to back quarters of
• 6:06
  Speaker 5: negative growth before you acknowledge that you know?
• 6:09
  Speaker 2: But then you have people who are telling you, well,
• 6:11
  Speaker 2: you should wait for the data because you get you're
• 6:12
  Speaker 2: always wrong on.
• 6:13
  Speaker 5: Everybody, and there's there's there's definitely a risk, but there's
• 6:17
  Speaker 5: a risk either way. There was there was a risk
• 6:19
  Speaker 5: in not acting pan That's why that's why they're still
• 6:22
  Speaker 5: trying to You know, they hate what happened when inflation
• 6:25
  Speaker 5: got out of it. It's a forty year high in inflation
• 6:27
  Speaker 5: and everyone thinks it's their fault.
• 6:29
  Speaker 4: But then what I would do if I were the
• 6:31
  Speaker 4: person doing it is to have an able algorithm, a computer,
• 6:35
  Speaker 4: a formula.
• 6:36
  Speaker 5: Well, now we can do that with AI.
• 6:38
  Speaker 4: No, you can probably do that, but they won't let
• 6:41
  Speaker 4: it come by because they all need to keep their
• 6:43
  Speaker 4: jobs and to make speeches in public. And that is
• 6:46
  Speaker 4: where I think the problem comes from.
• 6:48
  Speaker 1: All right, So that's that's that hand. I think AI
• 6:51
  Speaker 1: could solve this. But if you look at data that
• 6:53
  Speaker 1: is being analyzed much quicker a place like trueflation. There's
• 6:57
  Speaker 1: something we show on the channel all the time, and
• 6:59
  Speaker 1: you kind of look at the hovering percent and this
• 7:02
  Speaker 1: is the over the last year. Remember the peak right
• 7:03
  Speaker 1: there around three percent, And Powell's position has always been
• 7:07
  Speaker 1: trying to get down to the two we are holding
• 7:10
  Speaker 1: currently as of today, right at two one two. I mean,
• 7:13
  Speaker 1: essentially inflation has been curbed in the United States. Let's
• 7:17
  Speaker 1: go back here to the five year look at the
• 7:19
  Speaker 1: difference here. Well, I can't get access to that one.
• 7:21
  Speaker 1: Maybe I'll get the three now. But the point being
• 7:23
  Speaker 1: is that when you go to the longer term chart,
• 7:25
  Speaker 1: it is actually down. And that is the point that
• 7:28
  Speaker 1: I think when you compare this to why other countries
• 7:32
  Speaker 1: are actually cutting rates, other central banks are actually cutting rates,
• 7:37
  Speaker 1: it's just confusing a little bit as to why the
• 7:39
  Speaker 1: United States is not ready to move in this direction.
• 7:41
  Speaker 1: If you look at this data right here, this is
• 7:43
  Speaker 1: kind of interesting right here. Trueflation looks at this amount
• 7:46
  Speaker 1: of data points around eighteen to thirty million plus versus
• 7:50
  Speaker 1: eighty thousand under standard CPI and the BLS, the FED,
• 7:54
  Speaker 1: and they're looking at it on a daily and real
• 7:57
  Speaker 1: time basis versus the monthly data that Powell talks about often.
• 8:01
  Speaker 1: So maybe it's just a time to change the way
• 8:04
  Speaker 1: in which you analyze the data of what's coming in
• 8:07
  Speaker 1: because there's enough of it out there that could really
• 8:10
  Speaker 1: help stimulate a lot of this market. Now, chimaf Polyopatia,
• 8:14
  Speaker 1: he comes in from all En Podcast. You guys know him.
• 8:16
  Speaker 1: He's been in the tech industry for quite some time,
• 8:18
  Speaker 1: former Google guy, and he goes after this with a
• 8:21
  Speaker 1: different kind of argument, the flip side of what that
• 8:24
  Speaker 1: analyst was saying.
• 8:24
  Speaker 3: Take a look, we are run rating three hundred to
• 8:30
  Speaker 3: four hundred billion dollars above forecast in terms of our receipts,
• 8:36
  Speaker 3: meaning the revenues that we will take in, and you
• 8:39
  Speaker 3: get to that number by looking at the last three
• 8:42
  Speaker 3: months of tariffs and forecasting forward assuming a reasonable balance here,
• 8:47
  Speaker 3: So why is that important that then sets up this
• 8:49
  Speaker 3: next cataclysmic thing that we're going to see over the
• 8:52
  Speaker 3: next sixty days. If your own Powell looks at the
• 8:56
  Speaker 3: conditions on the ground, especially when you start to see
• 9:00
  Speaker 3: inflation stay in the low twos and approach two point zero,
• 9:05
  Speaker 3: the real thing that he's going to be under tremendous
• 9:07
  Speaker 3: pressure to justify is why are you not cutting? And
• 9:12
  Speaker 3: just to give you a sense of how important that is,
• 9:14
  Speaker 3: if we cut by one hundred basis points, that's another
• 9:17
  Speaker 3: three hundred billion dollars. Now, in that case, that's not
• 9:20
  Speaker 3: money that we get in, but it's money we don't
• 9:23
  Speaker 3: have to spend. So if you add these two things together,
• 9:27
  Speaker 3: we are in the next sixty days going to have
• 9:30
  Speaker 3: to refecast the American balance sheet where this is, or
• 9:36
  Speaker 3: we're actually going to be able to positively forecast an
• 9:39
  Speaker 3: extra six hundred billion, three hundred billion of incremental revenue
• 9:42
  Speaker 3: and a three hundred billion of savings. Jason, if that happens,
• 9:47
  Speaker 3: watch out, what does that mean? Watch out? It means
• 9:49
  Speaker 3: that every single risk dollar is going to run to America.
• 9:55
  Speaker 3: Forget Japan, forget Europe. There is no place to put
• 9:59
  Speaker 3: your money accept the United States. So I think that
• 10:03
  Speaker 3: we have to figure out how to get jero own
• 10:06
  Speaker 3: Powell on the side of America versus on the side
• 10:09
  Speaker 3: of what could happen politically, because I think that there's
• 10:13
  Speaker 3: probably a version in his head that says, my gosh,
• 10:16
  Speaker 3: if I do this, it helps Trump, and if I
• 10:19
  Speaker 3: don't do it, it hurts Trump. Practically that is true,
• 10:23
  Speaker 3: but the reality is the conditions on the ground justify cutting, all.
• 10:27
  Speaker 1: Right, conditions on the ground justify cutting. If you look
• 10:30
  Speaker 1: at would the FED have cut raids this year if
• 10:33
  Speaker 1: it was just using trueflation. This was perplexity on this,
• 10:36
  Speaker 1: and it says if they were using trueflation, primary measure
• 10:38
  Speaker 1: of inflation, more data, really the BLS, the Bureau of
• 10:42
  Speaker 1: Labor Statistics, consumer Price Index, likely would have had a
• 10:46
  Speaker 1: stronger case for cutting earlier and more aggressive in twenty
• 10:50
  Speaker 1: twenty five. So remember that we still have not seen
• 10:54
  Speaker 1: the final job numbers. That's still an issue. If we
• 10:56
  Speaker 1: continue to see slowing in job loss. I mean, we're
• 10:59
  Speaker 1: still gaining jobs and we're not seeing jobs going away,
• 11:03
  Speaker 1: and you're seeing in controlled measurements here at least on
• 11:05
  Speaker 1: the inflation side of things that have never really materialized.
• 11:08
  Speaker 1: According to Scott Vessine, then it Chimath is right, is that
• 11:12
  Speaker 1: this is a condition in which you would see a
• 11:16
  Speaker 1: potential opportunity going forward. And if you look at the
• 11:18
  Speaker 1: US collecting the amount of annualized revenue, this is more
• 11:22
  Speaker 1: cash into the US, which is going to benefit most
• 11:26
  Speaker 1: likely taxpayers in some sort of way. We hope the
• 11:30
  Speaker 1: idea is that this is good for the American economy
• 11:33
  Speaker 1: and GDP in general. And I think that's the point
• 11:36
  Speaker 1: that people are getting to. Like I said, don't forget
• 11:38
  Speaker 1: to hit the poll today, I want to get on that. Okay,
• 11:42
  Speaker 1: here we go, right here, all right, twenty four hour
• 11:44
  Speaker 1: hours after the FED meeting, crypto markets will have crash, pumped,
• 11:48
  Speaker 1: remain the same. So everybody's pretty much split on this.
• 11:51
  Speaker 1: Looks like thirty seven percent on remain the same. That's
• 11:55
  Speaker 1: not a major landslide. But hey, I think most people
• 11:59
  Speaker 1: are probably right. And I think a lot of this
• 12:01
  Speaker 1: is bill still built around what's going on right now
• 12:04
  Speaker 1: in the Middle East. People are very cautious whether or
• 12:07
  Speaker 1: not they should deploy. I look at it this way.
• 12:09
  Speaker 1: I think this is when you look at digital assets, idiots,
• 12:12
  Speaker 1: the alternative asset to be in and if you look
• 12:14
  Speaker 1: at things that have been happening yesterday, the genius AAC
• 12:17
  Speaker 1: went right through the Senate and not only went through
• 12:20
  Speaker 1: this but actually landslided in the Senate vote. And of
• 12:23
  Speaker 1: course this means that we are one step away from
• 12:26
  Speaker 1: the House just saying yep, this is done. Everybody's going forward.
• 12:29
  Speaker 1: But pretty much this is a slam dunk. I believe
• 12:31
  Speaker 1: from here, and I think all the companies that are
• 12:34
  Speaker 1: built around this, we're already starting to see this in
• 12:36
  Speaker 1: the charts. I'll show you guys some stuff here in
• 12:38
  Speaker 1: a second of some of the companies out there just
• 12:41
  Speaker 1: in the trading side on Wall Street that have benefited
• 12:44
  Speaker 1: from the stable coin bill getting through the Senate. Bessett
• 12:49
  Speaker 1: comes in and says right now that recent reporting projects
• 12:53
  Speaker 1: now stable coins could grow to three point seven remember
• 12:55
  Speaker 1: when this was two trillion. I'm sure you guys remember
• 12:58
  Speaker 1: this two trillion. I think that three point seven is low.
• 13:01
  Speaker 1: And here's the reason why is we see material, material
• 13:06
  Speaker 1: uptake and adoption. The key will be retail. If we
• 13:10
  Speaker 1: do see retail integration and Amazon Walmart those guys have
• 13:13
  Speaker 1: already talked about, Shopify is already in. We'll probably see
• 13:16
  Speaker 1: a lot more integration coming in from the trading zones.
• 13:18
  Speaker 1: And when we get into Wall Street, all of that
• 13:22
  Speaker 1: leans into the use case when you get that much
• 13:26
  Speaker 1: movement and you get new capital coming into the United States,
• 13:30
  Speaker 1: just like what Jamath was saying is the amount of
• 13:32
  Speaker 1: new investment into the US, Well, guests, we're going to
• 13:35
  Speaker 1: have US treasuries and stable coins that are basically buying
• 13:38
  Speaker 1: those US treasuries. Feel very, very positive and very bullish
• 13:43
  Speaker 1: for the market in general. Now, yes, there is a
• 13:46
  Speaker 1: potential where things could get dicey in the Middle East,
• 13:50
  Speaker 1: even more so than now. They could cause a little
• 13:53
  Speaker 1: bit of a problem. Unless the US gets involved in
• 13:56
  Speaker 1: a much bigger way, then maybe it's a bigger problem.
• 13:59
  Speaker 1: The point being is that when you look at the
• 14:01
  Speaker 1: market in general, I think we are in for a
• 14:04
  Speaker 1: very interesting time coming ahead. JP Morgan now partnering with
• 14:07
  Speaker 1: E twos or Ethereum's L two base now launching JPMD.
• 14:13
  Speaker 1: This is a US deposit token. We showed this earlier
• 14:15
  Speaker 1: on a video just cut here in the studio, and
• 14:19
  Speaker 1: when you hear that, you think, yeah, this is the
• 14:21
  Speaker 1: way to go. But in reality, the yield proposition that
• 14:24
  Speaker 1: that may represent may not be that great. And you
• 14:27
  Speaker 1: guys should watch that video it's coming out today, because
• 14:29
  Speaker 1: it really breaks down what's going on in the stable
• 14:31
  Speaker 1: coin arena, and really what's going to be happening in
• 14:35
  Speaker 1: terms of yields that are going to be coming to
• 14:37
  Speaker 1: average Americans for the first time, and they're going to
• 14:40
  Speaker 1: get exposure to the first phase of earning yield in
• 14:44
  Speaker 1: stable coins. And guess what's after that, Well, the next
• 14:47
  Speaker 1: thing is going to be the DeFi zone. And as
• 14:49
  Speaker 1: we see DeFi start to pay more and get more competitive,
• 14:53
  Speaker 1: watch out, guys, We're going to see a lot of movement.
• 14:55
  Speaker 6: Now.
• 14:55
  Speaker 1: We're going to get to Cherpal here in a second.
• 14:57
  Speaker 1: He usually comes on right around two thirty, so hopefully
• 15:00
  Speaker 1: will be coming on. We'll get to some of that.
• 15:02
  Speaker 1: Also drop some questions in over there. Looks like you
• 15:04
  Speaker 1: step into a podium right now, so let's listen.
• 15:06
  Speaker 7: In good afternoon, my colleagues and I remain squarely focused
• 15:14
  Speaker 7: on achieving our dual mandate goals of maximum employment and
• 15:18
  Speaker 7: stable prices for the benefit of the American people. Despite
• 15:22
  Speaker 7: elevated uncertainty, the economy is in a solid position. The
• 15:26
  Speaker 7: unemployment rate remains low, and the labor market is at
• 15:29
  Speaker 7: or near maximum employment. Inflation has come down a great
• 15:34
  Speaker 7: deal but has been running somewhat above our two percent
• 15:37
  Speaker 7: longer run objective. In support of our goals, today the
• 15:41
  Speaker 7: Federal Open Market Committee decided to leave our policy interest
• 15:45
  Speaker 7: rate unchanged. We believe that the current stance of monetary
• 15:49
  Speaker 7: policy leaves us well positioned to respond in a timely
• 15:52
  Speaker 7: way to potential economic developments. I'll have more to say
• 15:56
  Speaker 7: about monetary policy after briefly reviewing economic deday developments. Following
• 16:03
  Speaker 7: growth of two point five percent last year, GDP was
• 16:06
  Speaker 7: reported to have edged down in the first quarter, reflecting
• 16:09
  Speaker 7: swings in net exports that were driven by businesses bringing
• 16:13
  Speaker 7: in imports ahead of potential tariffs. This unusual swing has
• 16:18
  Speaker 7: complicated GDP measurement. Private domestic final purchases or PDFP as
• 16:24
  Speaker 7: we call them, which excludes net exports, Inventory, investment, and
• 16:28
  Speaker 7: government spending grew at a solid two point five percent rate.
• 16:33
  Speaker 7: Within PDFP, growth of consumer spending moderated, while investment in
• 16:38
  Speaker 7: equipment and in tangibles rebounded from weakness in the fourth quarter.
• 16:43
  Speaker 7: Surveys of households and businesses, however, report a decline in
• 16:46
  Speaker 7: sentiment over recent months and elevated uncertainty about the economic outlook,
• 16:51
  Speaker 7: largely reflecting trade policy concerns. It remains to be seen
• 16:56
  Speaker 7: how these developments might affect future spending and investment. In
• 17:01
  Speaker 7: our summary of economic projections, the median participant projects GDP
• 17:06
  Speaker 7: to rise one point four percent this year and one
• 17:08
  Speaker 7: point six percent next year, somewhat slower than projected in March.
• 17:14
  Speaker 7: In the labor market, conditions have remained solid. Payroll job
• 17:18
  Speaker 7: gains averaged one hundred and thirty five thousand per month
• 17:21
  Speaker 7: over the past three months. The unemployment rate, at four
• 17:25
  Speaker 7: point two percent, remains low and has stayed in a
• 17:28
  Speaker 7: narrow range for the past year. Wage growth has continued
• 17:32
  Speaker 7: to moderate, while still outpacing inflation. Overall, a wide set
• 17:37
  Speaker 7: of indicators suggests that conditions in the labor market are
• 17:40
  Speaker 7: broadly in balance and consistent with maximum employment. The labor
• 17:45
  Speaker 7: market is not a source of significant inflationary pressures. The
• 17:52
  Speaker 7: median projection for the unemployment rate in the SEP is
• 17:55
  Speaker 7: four point five percent at the end of this year
• 17:57
  Speaker 7: and next, a bit higher than projected in March. Inflation
• 18:02
  Speaker 7: has eased significantly from its highs in mid twenty twenty two,
• 18:06
  Speaker 7: but remains somewhat elevated relative to our two percent longer
• 18:09
  Speaker 7: run goal estimates based on the consumer Price Index and
• 18:13
  Speaker 7: other data indicate that total PCE prices rose two point
• 18:16
  Speaker 7: three percent over the twelve months ending in May, and
• 18:20
  Speaker 7: that excluding the volatile food and energy categories, core PCE
• 18:24
  Speaker 7: prices rose two point six percent. Near term measures of
• 18:29
  Speaker 7: inflation expectations have moved up over recent months, as reflected
• 18:33
  Speaker 7: in both market and survey based measures. Respondents to surveys
• 18:38
  Speaker 7: of consumers, businesses, and professional forecasters point to tariffs as
• 18:42
  Speaker 7: the driving factor beyond the next year or so. However,
• 18:46
  Speaker 7: most measures of longer term expectations remain consistent with our
• 18:49
  Speaker 7: two percent inflation goal. The median projection in the SEP
• 18:54
  Speaker 7: for total PCEE inflation this year is three percent, somewhat
• 18:58
  Speaker 7: higher than projected in US. The median inflation projection falls
• 19:03
  Speaker 7: to two point four percent in twenty twenty six and
• 19:06
  Speaker 7: two point one percent in twenty twenty seven. Our monetary
• 19:12
  Speaker 7: policy actions are guided by our dual mandate to promote
• 19:15
  Speaker 7: maximum employment and stable prices for the American people. At
• 19:19
  Speaker 7: today's meeting, the Committee decided to maintain the target range
• 19:22
  Speaker 7: for the federal funds rate at four and a quarter
• 19:24
  Speaker 7: to four and a half percent, and to continue reducing
• 19:27
  Speaker 7: the size of our balance sheet. We will continue to
• 19:30
  Speaker 7: determine the appropriate stance of monetary policy based on the
• 19:33
  Speaker 7: incoming data, the evolving outlook, and the balance of risks.
• 19:38
  Speaker 7: Changes to trade, immigration, fiscal and regulatory policies continue to evolve,
• 19:43
  Speaker 7: and their effects on the economy remain uncertain. The effects
• 19:47
  Speaker 7: of tariffs will depend, among other things, on their ultimate level.
• 19:51
  Speaker 7: Expectations of that level and thus of the related economic
• 19:54
  Speaker 7: effects reached to peak in April and have since declined.
• 19:58
  Speaker 7: Even so, increases in tariffs this year are likely to
• 20:02
  Speaker 7: push up prices and weigh on economic activity. The effects
• 20:07
  Speaker 7: on inflation could be short lived, reflecting a one time
• 20:10
  Speaker 7: shift in the price level. It's also possible that the
• 20:13
  Speaker 7: inflationary effects could instead be more persistent. Avoiding that outcome
• 20:17
  Speaker 7: will depend on the size of the tariff effects, on
• 20:20
  Speaker 7: how long it takes for them to pass through fully
• 20:22
  Speaker 7: into prices, and ultimately on keeping longer term inflation expectations
• 20:26
  Speaker 7: well anchored.
• 20:28
  Speaker 8: Our obligation is.
• 20:29
  Speaker 7: To keep longer term inflation expectations well anchored and to
• 20:32
  Speaker 7: prevent a one time increase in the price level from
• 20:35
  Speaker 7: becoming an ongoing inflation problem. As we act to meet
• 20:39
  Speaker 7: that obligation, we will balance our maximum employment and price
• 20:42
  Speaker 7: stability mandates, keeping in mind that without price stability, we
• 20:46
  Speaker 7: cannot achieve the long periods of strong labor market conditions
• 20:50
  Speaker 7: that benefit all Americans. We may find ourselves in the
• 20:55
  Speaker 7: challenging scenario in which our dual mandate goals are intention
• 20:58
  Speaker 7: If that were to occur, we would consider how far
• 21:01
  Speaker 7: the economy is from each goal and the potentially different
• 21:05
  Speaker 7: time horizons over which those respective gaps would be anticipated
• 21:08
  Speaker 7: to close. For the time being, we are well positioned
• 21:12
  Speaker 7: to wait to learn more about the likely course of
• 21:15
  Speaker 7: the economy before considering any adjustments to our policy stance.
• 21:21
  Speaker 7: In our sep FMC, participants wrote down their individual assessments
• 21:25
  Speaker 7: of an appropriate path for the federal funds rate based
• 21:28
  Speaker 7: on what each participant judges to be the most likely.
• 21:31
  Speaker 8: Scenario going forward.
• 21:34
  Speaker 7: The median projection projects participant medium participant projects that the
• 21:38
  Speaker 7: appropriate level of the federal funds rate will be three
• 21:40
  Speaker 7: point nine percent at the end of this year, the
• 21:42
  Speaker 7: same as projected in March. The median projection declines to
• 21:47
  Speaker 7: three point six percent at the end of next year
• 21:49
  Speaker 7: and to three point four percent at the end of
• 21:51
  Speaker 7: twenty twenty seven. A little higher than the March projection.
• 21:56
  Speaker 7: These individual forecasts are always subject to uncertainty, and as
• 22:00
  Speaker 7: I have noted, uncertainty is unusually elevated, and of course
• 22:04
  Speaker 7: these projections are not a Committee plan or decision. At
• 22:09
  Speaker 7: this meeting, the Committee continued its discussions as part of
• 22:12
  Speaker 7: our five year review of our monetary policy framework. We
• 22:16
  Speaker 7: focused on issues related to assessing the risks and uncertainties
• 22:19
  Speaker 7: that are relevant for monetary policy and the potential implications
• 22:22
  Speaker 7: for pology, strategy and communications. Our review includes outreach on
• 22:28
  Speaker 7: public events involving a wide range of parties, including FED
• 22:31
  Speaker 7: listens events around the country, and a research conference that
• 22:34
  Speaker 7: we held last month. We are open to new ideas
• 22:38
  Speaker 7: and critical feedback, and we will take on board lessons
• 22:41
  Speaker 7: of the last five years in determining our findings. We
• 22:45
  Speaker 7: intend to wrap up any modifications to our statement on
• 22:47
  Speaker 7: longer run goals and monetary policy strategy.
• 22:50
  Speaker 8: By late summer.
• 22:52
  Speaker 7: After that we will consider enhancements to our suite of
• 22:54
  Speaker 7: communications tools, including the SEP the FED has been assigned
• 23:00
  Speaker 7: and two goals for monetary policy, maximum employment and stable prices.
• 23:05
  Speaker 7: We remain committed to supporting maximum employment, bringing inflation sustainably
• 23:09
  Speaker 7: to our two percent goal and keeping longer term inflation
• 23:13
  Speaker 7: expectations well anchored. Our success in delivering on these goals
• 23:17
  Speaker 7: matters to all Americans. We understand that our actions affect communities, families,
• 23:22
  Speaker 7: and businesses across the country. Everything we do is in
• 23:25
  Speaker 7: service to our public mission, and we at the FED
• 23:28
  Speaker 7: we'll do everything we can to achieve our maximum employment
• 23:32
  Speaker 7: and price stability goals.
• 23:34
  Speaker 8: Thank you. I look forward to your questions.
• 23:39
  Speaker 9: Thank you, Colby Smith of the New York Times to
• 23:42
  Speaker 9: what extent has the more limited impact from tariffs at
• 23:44
  Speaker 9: this stage on inflation changed your view on what the
• 23:48
  Speaker 9: ultimate economic fallout will be from these policies and the
• 23:51
  Speaker 9: timing of when they will materialize in the data.
• 23:55
  Speaker 7: So we've had three months of of favorable inflation reading
• 24:01
  Speaker 7: since the high readings of January and February, and that's
• 24:03
  Speaker 7: of course highly welcome news.
• 24:06
  Speaker 8: Part of that just is that.
• 24:07
  Speaker 7: Services, course services, both housing services and not housing services
• 24:12
  Speaker 7: have really been grinding down toward levels that are consistent
• 24:15
  Speaker 7: with two percent inflation.
• 24:16
  Speaker 8: So that's the good news.
• 24:17
  Speaker 7: We've had goods inflation just moving up a bit, and
• 24:22
  Speaker 7: of course we expect, as you point out, we do
• 24:25
  Speaker 7: expect to see more of that over the course of
• 24:27
  Speaker 7: the summer. It takes some time for tariffs to work
• 24:31
  Speaker 7: their way through the chain of distribution to the end consumer.
• 24:34
  Speaker 7: A good example of that would be goods being sold
• 24:36
  Speaker 7: at retailers today may have been imported several months ago
• 24:40
  Speaker 7: before tariffs were imposed. So we're beginning to see some effects,
• 24:43
  Speaker 7: and we do expect to see more of them overcoming months.
• 24:46
  Speaker 7: We do also see price increases in some of the
• 24:50
  Speaker 7: relevant categories, like personal computers and audio visual equipment and
• 24:53
  Speaker 7: things like that that are attributable to tariff increases. In addition,
• 24:57
  Speaker 7: we look at surveys of businesses and and there are
• 25:00
  Speaker 7: many of those, and you do see a range of things,
• 25:04
  Speaker 7: but many, many companies do expect to put all or
• 25:10
  Speaker 7: some or all of the effect of tariffs through to
• 25:12
  Speaker 7: the next next person in the in the chain and
• 25:15
  Speaker 7: ultimately to the consumer.
• 25:17
  Speaker 8: Today. You know, the amount of these the amount of.
• 25:20
  Speaker 7: The tariff effects, the size of the tariff effects, their
• 25:23
  Speaker 7: duration and the time it will take are all highly uncertain.
• 25:26
  Speaker 7: So that that is why we think the appropriate thing
• 25:29
  Speaker 7: to do is to hold where we are as we
• 25:32
  Speaker 7: learn more, and we think our policy stances is in
• 25:34
  Speaker 7: a good place where we're well positioned to react to
• 25:37
  Speaker 7: incoming developments.
• 25:38
  Speaker 9: So in terms of how we should interpret the rate
• 25:40
  Speaker 9: cuts penciled into the SEP, is this reflecting that there's
• 25:45
  Speaker 9: this expectation that underlying inflation will just stay well enough
• 25:48
  Speaker 9: contained that allows the Committee to eventually move ahead with
• 25:51
  Speaker 9: those cuts, or is it about, you know, responding to
• 25:54
  Speaker 9: a deterioration in economic activity? Let's say, I mean, how
• 25:57
  Speaker 9: should we make sense of the forecast?
• 25:59
  Speaker 7: So if you look at the forecast, you will see
• 26:01
  Speaker 7: that people do generally expect inflation to move up and
• 26:04
  Speaker 7: then to come back down. But we can't just assume that.
• 26:07
  Speaker 7: Of course, we don't know that, and you know, our
• 26:10
  Speaker 7: job is to make sure. One of our job is
• 26:12
  Speaker 7: to make sure that a one time increase in inflation
• 26:15
  Speaker 7: doesn't turn into an inflation problem, and that again, that
• 26:19
  Speaker 7: will depend on the size of the effects, how long
• 26:21
  Speaker 7: it takes for them to come in, and ultimately on
• 26:24
  Speaker 7: keeping inflation expectations anchored.
• 26:31
  Speaker 10: Hi, and thanks chairper Howard Sneier with ruyters, if you
• 26:34
  Speaker 10: look at the rate path starting in December to today
• 26:38
  Speaker 10: and adjust it over the full time horizon you've got there,
• 26:43
  Speaker 10: You've taken about a quarter point per year out of
• 26:46
  Speaker 10: your projected path, and you ended a higher rate in
• 26:49
  Speaker 10: twenty seven than you would have in the prior FORCAS.
• 26:52
  Speaker 10: Is that a result of a sense that terifs will
• 26:56
  Speaker 10: lead to more persistent inflation? Is it a result of
• 26:59
  Speaker 10: reassessments rare your short term neutral rate?
• 27:01
  Speaker 8: Is it? Why are you on a slower path now?
• 27:04
  Speaker 7: So I would focus most on the nearer term as
• 27:07
  Speaker 7: you think as you get out to the later years,
• 27:12
  Speaker 7: it's hard. It's hard for anybody to know where the
• 27:14
  Speaker 7: economy has been going. You didn't see people moving their
• 27:16
  Speaker 7: longer term estimate of the neutral rate, for example, at
• 27:20
  Speaker 7: this meeting, so and those things are.
• 27:22
  Speaker 8: Probably slow moving.
• 27:23
  Speaker 7: So I think, I think if you look at what's
• 27:25
  Speaker 7: happening here since March, this is since March, right, you
• 27:28
  Speaker 7: see a little slower growth, just of tiny tick up
• 27:31
  Speaker 7: a one tenth tick up in unemployment, and you see
• 27:35
  Speaker 7: inflation moving up three tenths And by the way it was,
• 27:37
  Speaker 7: it was a similar move from the December sep to
• 27:41
  Speaker 7: the March. So that's what you see. You see the
• 27:44
  Speaker 7: effects of tariffs. I think we learned in April after
• 27:48
  Speaker 7: the March meeting that substantially higher tariffs were likely. And
• 27:53
  Speaker 7: then since then the estimates of where the tariffs will
• 27:55
  Speaker 7: we have actually moved back down, although still at an
• 27:57
  Speaker 7: elevated level.
• 27:58
  Speaker 8: So we're adapting in real time.
• 28:00
  Speaker 7: And what you see is, you know, an accumulation of
• 28:03
  Speaker 7: individual assessments.
• 28:06
  Speaker 10: You say in the statement that risks have diminished on
• 28:08
  Speaker 10: that front, but the July ninth, you know, drop dead
• 28:12
  Speaker 10: day for all the Liberation Day tariffs is still out
• 28:15
  Speaker 10: there and unresolved.
• 28:17
  Speaker 8: You've got now an.
• 28:18
  Speaker 10: Exchange of missiles between two Middle ees. How can you
• 28:23
  Speaker 10: justify saying that risks have diminished.
• 28:26
  Speaker 7: So what we said was that uncertainty has has Uncertainty
• 28:30
  Speaker 7: about the economic outlook has diminishment, reins elevated.
• 28:33
  Speaker 8: Many many surveys say that they do so.
• 28:35
  Speaker 7: And that's that's actually a line from the Teal book,
• 28:38
  Speaker 7: which you can see in five years.
• 28:40
  Speaker 8: I remember to check that.
• 28:44
  Speaker 7: No, but if you think about it, terrafun teriff uncertainty,
• 28:48
  Speaker 7: uncertainty really peaked in April and since then has come down.
• 28:51
  Speaker 7: And that's that's really what that's just acknowledging it's diminished
• 28:54
  Speaker 7: but still elevated, that it's uncertainty.
• 28:57
  Speaker 8: So I think that's an accurate statement.
• 29:01
  Speaker 11: And Gabor, thank you, Chris Rygabert, Associated Press. There is
• 29:06
  Speaker 11: an argument out there in favor of cutting rates more immediately.
• 29:12
  Speaker 11: Inflation has continued to cool in its back to roughly
• 29:15
  Speaker 11: two percent despite the terrace, and I guess I also
• 29:17
  Speaker 11: wanted to ask about, you know, cracks in the job market,
• 29:20
  Speaker 11: with gross hiring slowing, concentrated in just a few industries.
• 29:24
  Speaker 11: We see even some housing data, including this morning, that
• 29:28
  Speaker 11: have been pretty weak. Do you see any concerns that
• 29:33
  Speaker 11: you know, the economy is weakening and that is a
• 29:35
  Speaker 11: reason to cut rates going forward, So.
• 29:39
  Speaker 7: We do, we do, of course, monitor all those things.
• 29:42
  Speaker 7: I think if you look at the overall picture, you know,
• 29:45
  Speaker 7: what you're seeing is four point two percent unemployment and
• 29:47
  Speaker 7: an economy that's growing at a rate hard to know
• 29:51
  Speaker 7: given the unusual flows in the first quarter, but it
• 29:55
  Speaker 7: appears to be one and a half two percent, maybe
• 29:57
  Speaker 7: a little better than that. Sentiment has them up off
• 30:01
  Speaker 7: of its very low levels. It's still it's still depressed,
• 30:04
  Speaker 7: so you know, you can you can point to things.
• 30:07
  Speaker 7: The housing market is.
• 30:08
  Speaker 8: A longer run problem and also a short run problem.
• 30:11
  Speaker 7: I don't think it's indicative of you know, Basically, the
• 30:15
  Speaker 7: situation is we have a longer run shortage of housing
• 30:18
  Speaker 7: and we also have high rates right now.
• 30:20
  Speaker 8: I think the best thing we can do for the
• 30:22
  Speaker 8: housing market.
• 30:23
  Speaker 7: Is to restore price stability in a sustainable way and
• 30:27
  Speaker 7: and create a strong labor market. And that's the best
• 30:29
  Speaker 7: thing we can do for the housing market.
• 30:32
  Speaker 8: You asked about.
• 30:35
  Speaker 7: The job market again, look a look at labor force participation,
• 30:38
  Speaker 7: look at wages, look at job creation. They're all at
• 30:41
  Speaker 7: healthy levels.
• 30:42
  Speaker 8: Now.
• 30:43
  Speaker 7: I would say you can see perhaps a very very slow,
• 30:47
  Speaker 7: continued cooling, but nothing that's troubling at this time. But
• 30:51
  Speaker 7: you know, we watch it, we watch it very very carefully.
• 30:53
  Speaker 7: So overall, again, the current stance of monetary policy leaves
• 30:57
  Speaker 7: us well positioned to respond in a timely way to
• 30:59
  Speaker 7: economic developments for now, and we'll be watching the data carefully.
• 31:05
  Speaker 11: Well, just quickly on given that you know there are
• 31:09
  Speaker 11: concerns inflation will rise, But there is the alternate scenario
• 31:12
  Speaker 11: that tariffs would create demand destruction and slow growth sufficiently,
• 31:17
  Speaker 11: and that would perhaps keep a bit of a lid
• 31:19
  Speaker 11: on inflation. Do you see odds of that scenario? What
• 31:22
  Speaker 11: kind of odds do you see of that scenario coming true,
• 31:25
  Speaker 11: and how many months of cool inflation? What do you
• 31:27
  Speaker 11: need to see before concluding that maybe that lower inflation
• 31:30
  Speaker 11: scenario is taking place.
• 31:32
  Speaker 7: So this is very much the conversation we had today
• 31:35
  Speaker 7: and yesterday. There are many many different scenarios, many combinations
• 31:39
  Speaker 7: of scenarios where where inflation does or doesn't prove out
• 31:43
  Speaker 7: to be at the levels we think, and where the
• 31:44
  Speaker 7: labor market does or doesn't soften. And I think what
• 31:48
  Speaker 7: you see people doing is looking ahead at a time,
• 31:52
  Speaker 7: very high on certainty, and writing down what they think
• 31:55
  Speaker 7: the most likely case is. No one holds these rate
• 31:58
  Speaker 7: paths with a great deal of conviction, and everyone would
• 32:01
  Speaker 7: agree that they're all going to be data dependent and
• 32:04
  Speaker 7: that you can make a case for any of the
• 32:08
  Speaker 7: rate paths I think that you see in the SEP
• 32:11
  Speaker 7: and you know we do this once a quarters. It's
• 32:13
  Speaker 7: a hard thing to do at this particularly at this time,
• 32:16
  Speaker 7: but it does reflect. You know, if you see somebody
• 32:18
  Speaker 7: writing down, you know a rate path that involves cuts,
• 32:22
  Speaker 7: that's them saying yes, I think we will get to
• 32:24
  Speaker 7: a place more likely than not where cuts will be appropriate.
• 32:27
  Speaker 7: And it could be it could be a joint probability
• 32:30
  Speaker 7: of a number of possible outcomes. Again, remember how much
• 32:33
  Speaker 7: uncertainty we face though.
• 32:37
  Speaker 12: Thank you, mister chair. I wonder if you could describe
• 32:40
  Speaker 12: for us some of those scenarios. How do you get
• 32:42
  Speaker 12: to a place I'm noticing that the uncertainty levels in
• 32:45
  Speaker 12: your forecast are very high. How do you get to
• 32:48
  Speaker 12: a place where you have the confidence in the outlook
• 32:50
  Speaker 12: for say inflation and or growth or the unplanted rate.
• 32:54
  Speaker 12: How many months does it take and what do you
• 32:56
  Speaker 12: want to see in the data to get to that
• 32:58
  Speaker 12: level of confidence.
• 32:58
  Speaker 8: Actually reduced rates off the restrictive.
• 33:01
  Speaker 7: Level, So it's a it's very very hard to say
• 33:03
  Speaker 7: when that will happen. We know that the time will come.
• 33:06
  Speaker 7: It could come quickly, it could not come quickly. As
• 33:10
  Speaker 7: long as the economy is solid, though, as long as
• 33:12
  Speaker 7: we're seeing the kind of labor market that we have
• 33:15
  Speaker 7: and reasonably decent growth and inflation moving down, we feel
• 33:19
  Speaker 7: like the right thing to do is to be where
• 33:22
  Speaker 7: we are, where our policy stance is, and just learn more.
• 33:25
  Speaker 7: In particular, we feel like we're going to learn a
• 33:27
  Speaker 7: great deal more over the summer on tariffs. We hadn't
• 33:31
  Speaker 7: expected them to show up much by now, and they haven't,
• 33:34
  Speaker 7: and we will see whether the extent to which they
• 33:37
  Speaker 7: do overcoming months, and I think that's going to inform
• 33:40
  Speaker 7: our thinking for one thing. In addition, we'll see how
• 33:42
  Speaker 7: the labor market progresses, so at some point it will
• 33:45
  Speaker 7: become clear. I can't tell you exactly when that will be.
• 33:48
  Speaker 7: And meanwhile, we'll be watching watching the labor market very
• 33:51
  Speaker 7: carefully for signs of weakness and strength, and tariffs for
• 33:55
  Speaker 7: signs of what's going to happen there. And of course
• 33:57
  Speaker 7: there are many developments ahead. Even in the near term,
• 34:00
  Speaker 7: developments are expected on tariff so I think we don't
• 34:04
  Speaker 7: yet know with any confidence where they will settle out.
• 34:06
  Speaker 7: We have an estimate, and it's a pretty I think
• 34:08
  Speaker 7: all estimates are now pretty close together.
• 34:11
  Speaker 8: But it's highly uncertain.
• 34:13
  Speaker 12: When you say estimate estimate of the impact of tariffs
• 34:16
  Speaker 12: on the core PCE, is that what it is?
• 34:19
  Speaker 9: In?
• 34:20
  Speaker 7: Yeah, what you start with is what's the effective tariff
• 34:22
  Speaker 7: rate overall, and people are managing to that.
• 34:26
  Speaker 8: But you know, the.
• 34:27
  Speaker 7: Pass through of tariffs to consumer price inflation is a
• 34:32
  Speaker 7: whole process that's very uncertain. You know, As you know,
• 34:34
  Speaker 7: there are many parties in that chain. There's the manufacturer,
• 34:37
  Speaker 7: the exporter, the importer or the retailer and the consumer,
• 34:41
  Speaker 7: and each one of those is going to be trying
• 34:43
  Speaker 7: not to be the one to pay for the tariff,
• 34:45
  Speaker 7: but together they will all pay for together, or maybe
• 34:48
  Speaker 7: one party will pay it all. But that process is
• 34:51
  Speaker 7: very hard to predict, and we haven't been through a
• 34:54
  Speaker 7: situation like this, and I think we have to be
• 34:57
  Speaker 7: humble about our ability to forecast it. So that's why
• 35:00
  Speaker 7: we need to see some actual data to make better decisions.
• 35:03
  Speaker 8: We'd like to.
• 35:04
  Speaker 7: Get some more data, and again, in the meantime, we
• 35:06
  Speaker 7: can do that because the economy remains in solid condition.
• 35:11
  Speaker 13: Nick Nick Tamrose of The Wall Street Journal chirpell I
• 35:19
  Speaker 13: guess I'm wondering if you could explain a little bit
• 35:21
  Speaker 13: more the divergence we see in the dot plot, particularly
• 35:25
  Speaker 13: around the twenty twenty five right projections. I realized this is,
• 35:29
  Speaker 13: you know, you have one group of officials that are
• 35:31
  Speaker 13: putting down no cuts, another that are putting down more
• 35:34
  Speaker 13: than one. And again recognizing that could be difficult to summarize,
• 35:39
  Speaker 13: but is it a matter of people having a different
• 35:42
  Speaker 13: outlook or a different reaction function, a different commitment to
• 35:46
  Speaker 13: defending against another inflation mistake? How did that.
• 35:52
  Speaker 8: Play out over the last two days.
• 35:55
  Speaker 7: So you're right, and this is often the case, we
• 35:57
  Speaker 7: have a pretty healthy diversity of views on the Committe.
• 36:00
  Speaker 7: We did have strong support for today's decision and broad
• 36:03
  Speaker 7: agreement that our policy stance does leave us in a
• 36:05
  Speaker 7: good place. But I would point to two factors and
• 36:08
  Speaker 7: you mentioned them.
• 36:09
  Speaker 8: The first is just.
• 36:10
  Speaker 7: That parties have a diversity of forecasts and they do
• 36:14
  Speaker 7: align with with where with where their dots are. So
• 36:16
  Speaker 7: if you have a higher inflation forecast, you're going to
• 36:19
  Speaker 7: be less likely to be writing down you know.
• 36:21
  Speaker 8: More more cuts.
• 36:24
  Speaker 7: But as remember, as we see more data, we're going
• 36:26
  Speaker 7: to learn more about where inflation is headed. And that
• 36:28
  Speaker 7: means when it is time to look at normal at
• 36:32
  Speaker 7: at you know, resuming our normalization process, the differences you
• 36:36
  Speaker 7: may you see should be smaller because we'll have seen
• 36:39
  Speaker 7: actual data. Right now, it's just a forecast in a
• 36:41
  Speaker 7: very foggy time. So that's the first part is forecast. Secondly,
• 36:45
  Speaker 7: people can look at the same data and they can
• 36:47
  Speaker 7: evaluate the risks differently, as you know, and that includes
• 36:50
  Speaker 7: you know, the risk of higher inflation, the risk that
• 36:52
  Speaker 7: will be more persistent, the risk of the labor marketable week,
• 36:55
  Speaker 7: and people are going to have different assessments of that risk,
• 36:58
  Speaker 7: so that you put that in there too. So those
• 37:02
  Speaker 7: are the two ways that the two things I think
• 37:05
  Speaker 7: that drive these things. Remember, though, as I mentioned earlier,
• 37:09
  Speaker 7: with uncertainty as elevated it as it is, no one
• 37:12
  Speaker 7: holds these rate paths with a lot of conviction.
• 37:16
  Speaker 8: So that's really where it is.
• 37:19
  Speaker 7: It's a function of those things, and I think as
• 37:21
  Speaker 7: the data come in you should see those differences diminish.
• 37:25
  Speaker 13: If I could follow, You've said the policy isn't a
• 37:27
  Speaker 13: good place and that it's modestly restrictive given all the uncertainty.
• 37:31
  Speaker 8: You just talked about tariff levels.
• 37:32
  Speaker 13: I'm certainly around the pass through is that price increases
• 37:34
  Speaker 13: versus margin compression, some of the softness that Chris talked
• 37:38
  Speaker 13: about and labor in housing. Why wouldn't it be better
• 37:41
  Speaker 13: to have rates at a more neutral setting as the
• 37:43
  Speaker 13: economy heads into this period of very high uncertainty.
• 37:47
  Speaker 7: So if you just look backward at the data, that's
• 37:51
  Speaker 7: what you would say, but that's not We have to
• 37:53
  Speaker 7: be forward looking. And the thing that every forecaster, every
• 37:57
  Speaker 7: outside forecaster, and the FED is saying that we expect
• 38:00
  Speaker 7: a meaningful amount of inflation to arrive in coming months,
• 38:04
  Speaker 7: and we have to take that into account. So I
• 38:06
  Speaker 7: think a backward looking look would would lead you to
• 38:08
  Speaker 7: a neutral stance, but we can't. We have to we
• 38:11
  Speaker 7: have to look at that, and because the economy is
• 38:14
  Speaker 7: still solid, we can take the time to actually see
• 38:17
  Speaker 7: what's going to happen.
• 38:18
  Speaker 8: It's you know, there's.
• 38:20
  Speaker 7: A range of possibilities on how how large the inflation
• 38:23
  Speaker 7: effects and the other effects are going to be. So
• 38:26
  Speaker 7: we'll make smarter and better decisions if we just wait
• 38:29
  Speaker 7: a couple of months or however long it takes to
• 38:31
  Speaker 7: get a sense of really what is going to be
• 38:34
  Speaker 7: the pass through of inflation, and what are what's going
• 38:36
  Speaker 7: to be the effects on spending and on hiring and
• 38:38
  Speaker 7: all those things.
• 38:41
  Speaker 14: It's the key, Michael mc key from Bloomberg Radio and Television.
• 38:47
  Speaker 14: Your friend down at sixteen hundred Pennsylvania Avenue continues to
• 38:50
  Speaker 14: love insults in your direction. And I'm wondering, given now
• 38:54
  Speaker 14: that the Supreme Court has maybe carved out the fed
• 38:57
  Speaker 14: from some of the legal implications, that whether this is
• 39:01
  Speaker 14: just noise that the markets that everybody should ignore until
• 39:06
  Speaker 14: your term is up, or whether you worry that it
• 39:10
  Speaker 14: could lead to more pressure on confidence on Wall Street,
• 39:14
  Speaker 14: on consumers about the outlook for the economy.
• 39:19
  Speaker 7: Okay, from my standpoint, it's not complicated. What everyone on
• 39:24
  Speaker 7: the FOMC wants. It's a good, solid American economy with
• 39:28
  Speaker 7: strong labor market and price stability.
• 39:30
  Speaker 8: That's what we want.
• 39:31
  Speaker 7: We think our policies well positioned to right now to
• 39:34
  Speaker 7: deliver that and to be able.
• 39:36
  Speaker 8: To respond in time and way as the data lead
• 39:38
  Speaker 8: us around.
• 39:39
  Speaker 7: The economy has been resilient, and part of that is
• 39:41
  Speaker 7: our stance, and again we think we're in a good
• 39:45
  Speaker 7: place on that to respond to significant economic developments. That's
• 39:49
  Speaker 7: what matters. That is what matters to us pretty much,
• 39:52
  Speaker 7: that's all that matters to us.
• 39:55
  Speaker 14: I need to ask, assuming you are not reappointed, would
• 39:58
  Speaker 14: you stay on as governor when your term as chair?
• 40:00
  Speaker 8: And I'm not thinking about that. I'm thinking about this, Andrew, Thanks,
• 40:09
  Speaker 8: mister chairman.
• 40:11
  Speaker 15: I guess, with workplace raids increasing picking up significantly, what
• 40:15
  Speaker 15: kind of effect would that have on the labor marketing
• 40:18
  Speaker 15: workplace raids?
• 40:21
  Speaker 8: Immigrant?
• 40:22
  Speaker 7: So you're asking immigration, Yeah, you know, I wouldn't want
• 40:26
  Speaker 7: to speculate. One way to get at that from an
• 40:29
  Speaker 7: economic standpoint. We of course don't comment on immigration policy.
• 40:33
  Speaker 7: It's not ours to make or comment on. But what
• 40:35
  Speaker 7: you see is an unemployment rate that has been really
• 40:38
  Speaker 7: solid and at a low, low level, not really increasing.
• 40:42
  Speaker 7: It's been in a good range and well within the
• 40:45
  Speaker 7: range of mainstream estimates of maximum employment. And that means
• 40:48
  Speaker 7: part of that is that labor demand and labor supply
• 40:51
  Speaker 7: are kind of moving down at the same rate. Labor
• 40:54
  Speaker 7: demand is softening, you see that in job creation, but
• 40:57
  Speaker 7: it's still kind of at a healthy level, and labor
• 41:00
  Speaker 7: apply is diminishing because the the immigration numbers that we
• 41:04
  Speaker 7: see are are much lower than they were. So those
• 41:08
  Speaker 7: two factors, supply and demand, that's what has kept the
• 41:11
  Speaker 7: unemployment rate in a reasonably you stable place.
• 41:15
  Speaker 8: Okay, thanks.
• 41:16
  Speaker 15: The other thing I wanted to follow up on is
• 41:18
  Speaker 15: if you could you could elaborate on the potential changes
• 41:20
  Speaker 15: to the SEP that you suggested. We're part of the
• 41:22
  Speaker 15: framework review, I think.
• 41:25
  Speaker 7: So the framework review really has two tracks, right. The
• 41:29
  Speaker 7: first track is our is our policy framework that is
• 41:32
  Speaker 7: reflected in the consensus statement, and we've said that we
• 41:36
  Speaker 7: would finish that and announce it by the end.
• 41:38
  Speaker 8: Of the summer. So we're well along in that process.
• 41:41
  Speaker 7: We've had the meetings that we need to have, and
• 41:44
  Speaker 7: we're now going to be going into pardon me, into
• 41:48
  Speaker 7: discussions about you know, specific changes to language. So that's
• 41:52
  Speaker 7: that's the framework part of it. The second part of
• 41:55
  Speaker 7: it is our communications tools and practices, pardon me, and
• 42:00
  Speaker 7: that part comes next. Okay, that's what we're going to
• 42:03
  Speaker 7: do in the meetings this fall. Actually what we did
• 42:06
  Speaker 7: at this meeting though, is we sort of prepared the
• 42:09
  Speaker 7: ground for that. We had a meeting where we talked
• 42:11
  Speaker 7: at a high level about a number of ideas. The
• 42:14
  Speaker 7: SEP is part of it, you know, other many many
• 42:18
  Speaker 7: other ideas. It's it's sort of how do we think
• 42:20
  Speaker 7: our communications can be improved? There are number of ideas
• 42:23
  Speaker 7: people offered a really it was a great conversation, number
• 42:27
  Speaker 7: of ideas. But we're going to look at those with
• 42:29
  Speaker 7: staff briefing and a lot of thought in the fall.
• 42:32
  Speaker 7: And I would say when it comes to changing communications,
• 42:35
  Speaker 7: you know, I would only do that, I would only
• 42:37
  Speaker 7: support things really that, I only implement things that have
• 42:40
  Speaker 7: very broad support. And also you want to be really
• 42:43
  Speaker 7: careful because I think our communications are pretty well received,
• 42:46
  Speaker 7: they're not broken so more is not necessarily better, but
• 42:50
  Speaker 7: better is better. So we're going to be looking at
• 42:52
  Speaker 7: ways to do to do things that will improve the
• 42:55
  Speaker 7: clarity of what we do for the benefit of the public.
• 43:02
  Speaker 16: Thanks Chair Powell. Kelly O Grady, CBS News. You're famously
• 43:06
  Speaker 16: known as the guy that makes decision based on data
• 43:09
  Speaker 16: instead of speculation. You've said today, and the inflation data
• 43:13
  Speaker 16: is in a good place. We don't know how tariffs
• 43:15
  Speaker 16: are going to impact prices going forward, that's uncertain. But
• 43:18
  Speaker 16: I've got to go back to the last time that
• 43:20
  Speaker 16: you cut rates in December, and there was still the
• 43:23
  Speaker 16: what if of tariffs? So what made you feel comfortable
• 43:27
  Speaker 16: cutting then when inflation was higher than where it is
• 43:31
  Speaker 16: today and you didn't cut today.
• 43:34
  Speaker 7: Well, the forecast for inflation in December was two and
• 43:40
  Speaker 7: a half core PCE. For twenty twenty five, the forecast
• 43:43
  Speaker 7: was two and a half percent, which is a good
• 43:45
  Speaker 7: inflation forecast. I think what we've learned is that, and
• 43:50
  Speaker 7: this was long before we had any idea of what
• 43:52
  Speaker 7: the actual policies would be, we've learned that the tariffs
• 43:55
  Speaker 7: are going to be substantially larger than forecasters generally thought.
• 43:59
  Speaker 7: And you know, we know, our forecasts are generally not
• 44:03
  Speaker 7: particularly different from those of other you know, well resourced
• 44:07
  Speaker 7: forecasting operations. So what we learned, and particularly in April,
• 44:11
  Speaker 7: was that very substantially larger tariffs were coming and that
• 44:14
  Speaker 7: that would mean higher inflation.
• 44:16
  Speaker 8: That's what happened.
• 44:17
  Speaker 7: And so now you see you saw two and a
• 44:19
  Speaker 7: half percent forecast in December, you saw two point eight
• 44:22
  Speaker 7: percent in March, and you see three point one percent now.
• 44:25
  Speaker 7: So it's six tenths higher inflation for two thousand and
• 44:28
  Speaker 7: twenty five. And that's that's a big part of the change,
• 44:31
  Speaker 7: and that's that's due to the effects of the tariffs
• 44:35
  Speaker 7: that are you know, we don't know where they're going
• 44:37
  Speaker 7: to land, but it's pretty apparent they're going to land
• 44:39
  Speaker 7: higher than outside forecasters were really guessing at the end
• 44:44
  Speaker 7: of last year.
• 44:45
  Speaker 16: My fault to that in consumers, right, we're looking for
• 44:48
  Speaker 16: relief on rates when it comes to mortgages, car loans,
• 44:51
  Speaker 16: small businesses want to take out more manageable loans. When
• 44:55
  Speaker 16: you look at the cumutive inflation over the past five years,
• 44:57
  Speaker 16: prices have risen over twenty percent. It's been a rough road.
• 45:01
  Speaker 16: So what is the tipping point then for the weight
• 45:04
  Speaker 16: and see approach in terms of how much it's going
• 45:07
  Speaker 16: to help versus when it hurts the American consumer.
• 45:11
  Speaker 7: Well, I mean, we're trying to restore price. The best
• 45:13
  Speaker 7: thing we can do for the public that we serve
• 45:15
  Speaker 7: is restore price stability if we can, and we will
• 45:18
  Speaker 7: restore price stability, meaning two percent inflation on a durable,
• 45:22
  Speaker 7: sustainable basis.
• 45:24
  Speaker 8: That and also maximum employment. If we re.
• 45:26
  Speaker 7: Restore those things, that's the best thing, and that is
• 45:29
  Speaker 7: our goal, the best thing we can do for the
• 45:30
  Speaker 7: American people, for households and businesses, that is the ultimate
• 45:35
  Speaker 7: thing that we can deliver and they can make their
• 45:37
  Speaker 7: decisions without having to think about inflation all the time.
• 45:40
  Speaker 7: So in the meantime, we have to keep rates high
• 45:43
  Speaker 7: to keep to get inflation all the way down. They're
• 45:46
  Speaker 7: not very high, let's be honest. I would say policy
• 45:49
  Speaker 7: is modestly or moderately, probably modestly now restrictive. If you
• 45:53
  Speaker 7: look at the economy, it's not performing as though it
• 45:56
  Speaker 7: were performing under very strict monetary policy, very restrictive monetary policy.
• 46:00
  Speaker 8: So I would say probably modestly restricted.
• 46:03
  Speaker 7: And so what it will take is confidence that inflation
• 46:06
  Speaker 7: is coming down. Now I would say, without tariffs, that
• 46:09
  Speaker 7: confidence would be building, because if you see what's happening
• 46:13
  Speaker 7: with non housing services and housing services, which are the
• 46:16
  Speaker 7: other two big pieces other than goods, those are coming
• 46:19
  Speaker 7: down really nicely now. So I think we have to
• 46:22
  Speaker 7: learn a little more about about tariffs. I don't know
• 46:24
  Speaker 7: what the right way for us to react will be.
• 46:26
  Speaker 7: I think it's hard to know with any confidence how
• 46:28
  Speaker 7: we should react until we see really the size of
• 46:31
  Speaker 7: the effects.
• 46:33
  Speaker 8: Then we can start to make a better judgment.
• 46:35
  Speaker 7: So that's what we're doing, and I think we can
• 46:37
  Speaker 7: take the time to do that because unemployment is four
• 46:40
  Speaker 7: point two percent, wages are moving up, real wages are
• 46:43
  Speaker 7: moving up at a healthy clip now, and inflation is
• 46:47
  Speaker 7: two point three percent headline inflation over a twelve month basis.
• 46:50
  Speaker 7: So it's a good economy and a solid economy with decent.
• 46:54
  Speaker 8: Growth, Thank you, Chebelle.
• 47:00
  Speaker 17: So you're saying that uncertainty has come down, the economy
• 47:03
  Speaker 17: is moving at a solid pace, inflation has come down
• 47:05
  Speaker 17: over the past three months, and this is all moving
• 47:08
  Speaker 17: in the right direction. So are you indicating here that
• 47:11
  Speaker 17: Americans should expect some sort of economic pain in the
• 47:14
  Speaker 17: second half of the year.
• 47:16
  Speaker 8: I'm not saying that at all.
• 47:18
  Speaker 7: You know, from our standpoint, what I can say is
• 47:21
  Speaker 7: that the US economy is in solid shape. Inflation has
• 47:24
  Speaker 7: come down, the n employment rate remains at four point
• 47:26
  Speaker 7: two percent. As I mentioned, real wages are moving up.
• 47:29
  Speaker 7: It's a good job creation is at a healthy level.
• 47:32
  Speaker 7: Unemployment again, as I said, low labor force participation in
• 47:35
  Speaker 7: a good place. So and what we're waiting for to
• 47:38
  Speaker 7: reduce rates is to understand what will happen with really
• 47:42
  Speaker 7: the tariff inflation. And there's a lot of uncertainty about that.
• 47:48
  Speaker 7: Every forecaster you can name, who you know who is
• 47:50
  Speaker 7: a professional, you know, forecaster with adequate resources and forecasts
• 47:55
  Speaker 7: for a living, is forecasting a you know, pretty signific
• 47:58
  Speaker 7: Everyone that I know is for casting a meaningful increase
• 48:01
  Speaker 7: in inflation in coming months from tariffs, because someone has
• 48:06
  Speaker 7: to pay for the tariffs, and it will be someone
• 48:08
  Speaker 7: in that chain that I mentioned between the manufacturer, the exporter,
• 48:12
  Speaker 7: the importer, the retailer, ultimately somebody putting it into a
• 48:16
  Speaker 7: good of some kind or just the consumer buying it,
• 48:19
  Speaker 7: you know, and all through that's that chain, people will
• 48:22
  Speaker 7: be trying not to be the ones who pick up
• 48:24
  Speaker 7: the cost, but ultimately the cost of the tariff has
• 48:27
  Speaker 7: to be paid, and some of it will follow on
• 48:29
  Speaker 7: the end consumer.
• 48:30
  Speaker 8: We know that because.
• 48:31
  Speaker 7: That's what businesses say, that's what the data say from
• 48:34
  Speaker 7: past that net. So we know that's coming and we
• 48:38
  Speaker 7: just want to see a little bit of that before
• 48:40
  Speaker 7: we make judgments prematurely.
• 48:42
  Speaker 17: And followed on that. So you spent years though talking
• 48:44
  Speaker 17: about how you're data dependent and be a little more
• 48:47
  Speaker 17: direct on this. You know, now you're making decisions looking forward.
• 48:50
  Speaker 17: Doesn't the data you're seeing today indicate there should be
• 48:54
  Speaker 17: a rate cut?
• 48:55
  Speaker 8: No, I mean you're monetary policy has to be forward looking.
• 49:00
  Speaker 8: That is elementary.
• 49:01
  Speaker 7: You've got to be looking at I always talk about
• 49:03
  Speaker 7: the incoming data, the evolving outlook, and the balance of risks.
• 49:07
  Speaker 7: That we say that over and over and over again, right,
• 49:10
  Speaker 7: So it's always forward looking.
• 49:12
  Speaker 18: You know.
• 49:12
  Speaker 7: If you know at the very beginning of the pandemic,
• 49:15
  Speaker 7: you know, we cut rates to zero immediately, nothing had happened.
• 49:19
  Speaker 7: We just knew that it was going to be really bad, right,
• 49:21
  Speaker 7: so we took very aggressive forward looking because we knew
• 49:25
  Speaker 7: things were going to be unusually difficult. So of course
• 49:30
  Speaker 7: this is something we sort of know is coming. We
• 49:33
  Speaker 7: just don't know the size of it. And again, the
• 49:35
  Speaker 7: economy seems to be in solid shape, so the labor
• 49:38
  Speaker 7: market's not crying out for a rate.
• 49:40
  Speaker 1: Hopefully we're going to get a little bit of impact too.
• 49:43
  Speaker 1: Here from him mentioning stable coins, I mean the Genius
• 49:46
  Speaker 1: Act came through. I'm surprised we haven't seen a reporter
• 49:49
  Speaker 1: ask about that to stimulate the use of the US dollar.
• 49:53
  Speaker 1: Let's see if they say something.
• 49:55
  Speaker 7: Constructive then it did three months ago. Let's say so again,
• 50:00
  Speaker 7: we think that our current stance of monetary policy is
• 50:02
  Speaker 7: in a good place, Amra.
• 50:08
  Speaker 19: Thank you. Amram Oquay with Bloomberg Chapell. In February, you
• 50:11
  Speaker 19: told Congress that the FED is quote overworked, maybe not overstaffed.
• 50:15
  Speaker 19: Then a memo to staff in May announcing a deferred
• 50:18
  Speaker 19: resignation program at the FED, you said you wanted to ensure.
• 50:21
  Speaker 8: That the FED was quote right sized.
• 50:23
  Speaker 19: Those two statements appear to be at odds with one another.
• 50:26
  Speaker 19: Could you explain what changed in the roughly three months
• 50:28
  Speaker 19: between those statements that made you decide that fat staff
• 50:31
  Speaker 19: levels at the FED should decline.
• 50:33
  Speaker 7: I don't see them at all as intention you know, so,
• 50:36
  Speaker 7: I was asked, is the FED overstaffed, and I said, no,
• 50:40
  Speaker 7: you know, and I sort of said as a pun overworked,
• 50:42
  Speaker 7: but not overstaffed. People do work extremely hard at the FED,
• 50:45
  Speaker 7: and I know they work hard at.
• 50:47
  Speaker 8: Bloomberg too, so but we do we work hard.
• 50:51
  Speaker 7: But I would say this, so we are careful stewards
• 50:55
  Speaker 7: of public resources, and sometimes you need to show that.
• 50:58
  Speaker 7: So there have been several times in our history, modern
• 51:00
  Speaker 7: history where the FED has said, you know what, we're
• 51:02
  Speaker 7: going to do a buyout. We're going to we're going
• 51:04
  Speaker 7: to show the public. We're going to demonstrate that we
• 51:06
  Speaker 7: are good stewards of public resources. So we thought, and
• 51:10
  Speaker 7: I thought that this is a time when we can
• 51:13
  Speaker 7: you know, we've we grow it about our headcount has
• 51:15
  Speaker 7: grown at about one percent a year. So over the
• 51:18
  Speaker 7: course of a couple of years, we're going to we're
• 51:21
  Speaker 7: doing a careful scrub of the board and all the
• 51:23
  Speaker 7: reserve bank who can do something else where we can
• 51:30
  Speaker 7: we can streamline our operations, and we think we can
• 51:34
  Speaker 7: get there in a year, in a couple of years.
• 51:36
  Speaker 7: We think we can do that, and we think the
• 51:38
  Speaker 7: oper we think the the you know this is this
• 51:41
  Speaker 7: is without taking risk to carrying out our critical missions.
• 51:45
  Speaker 7: So this is something you do very carefully, thoughtfully, and
• 51:49
  Speaker 7: you do it again respecting that we have critical missions
• 51:52
  Speaker 7: to carry out.
• 51:53
  Speaker 8: I've had experience a lot of.
• 51:54
  Speaker 7: Experience in my prior careers, uh, you know, with headcount
• 51:59
  Speaker 7: real and things like that, and this is how you
• 52:01
  Speaker 7: do it professionally. You do it carefully, thoughtfully, with a
• 52:04
  Speaker 7: lot of planning, and you do it over a period
• 52:07
  Speaker 7: of time. And I think it's I think the FED
• 52:09
  Speaker 7: will be fine. I think no one will notice any
• 52:11
  Speaker 7: decline in our ability to carry out our missions. And
• 52:14
  Speaker 7: I think it's just us wanting to demonstrate to the
• 52:16
  Speaker 7: public that we are actually good stewards of their of
• 52:20
  Speaker 7: their resources. Well, we're effectively wiping out ten years of
• 52:24
  Speaker 7: headcount growth with this, so I mean, we just we
• 52:27
  Speaker 7: wanted to show that you know that we're good stewards.
• 52:31
  Speaker 19: How is progress on reducing TOW going so far?
• 52:34
  Speaker 8: Are you on track to meet the goal? We're just
• 52:35
  Speaker 8: at the very beginning. As you know, we're doing a
• 52:37
  Speaker 8: buyout program.
• 52:38
  Speaker 7: We're we're going to we're going to hit that goal.
• 52:40
  Speaker 7: I think many organizations find that they can that they
• 52:43
  Speaker 7: can do this. You don't want to do it every
• 52:45
  Speaker 7: year or anything, but you can do it at intervals
• 52:48
  Speaker 7: and you wind up not you know, not interfering with
• 52:52
  Speaker 7: your ability to perform your jobs.
• 53:00
  Speaker 20: I'm Chapow Claire Jones from the Financial Times, as you're
• 53:04
  Speaker 20: no doubt where the Center of Finance Committee has tabled
• 53:07
  Speaker 20: its version of the Reconciliation Bill this week, and I
• 53:10
  Speaker 20: was wondering if you could tell me a little bit
• 53:13
  Speaker 20: about the tenor of the debate at the f MC
• 53:16
  Speaker 20: over the past few days on fiscal policy and the
• 53:20
  Speaker 20: degree to which that influenced people's projections for twenty twenty
• 53:24
  Speaker 20: six and beyond.
• 53:25
  Speaker 21: Thank you.
• 53:26
  Speaker 1: Yeah, So.
• 53:28
  Speaker 7: You know, we don't we don't sit around in debate
• 53:31
  Speaker 7: or really discuss We take fiscal policy as fully exogynous
• 53:36
  Speaker 7: and so people we actually you know, really didn't talk
• 53:40
  Speaker 7: about about the bill or the contents of it. It's
• 53:44
  Speaker 7: still evolving, you know, when when it gets close closer,
• 53:47
  Speaker 7: it's remember also, we have a very very large economy,
• 53:52
  Speaker 7: and the effects will be at the margin, and you know,
• 53:56
  Speaker 7: I expect that they may already be in, but they
• 53:59
  Speaker 7: will be in by the next meeting. Will make an estimate,
• 54:02
  Speaker 7: but it's not a major thing. It's nothing that we discuss.
• 54:05
  Speaker 7: It it may have been mentioned a couple of times, but
• 54:07
  Speaker 7: as something that's coming in. But I think the outcome is,
• 54:11
  Speaker 7: you know, we don't know the outcome yet. They're so
• 54:13
  Speaker 7: hard to be real specific.
• 54:18
  Speaker 8: Neil, Thanks Chapelle.
• 54:21
  Speaker 22: Neil Rwin with Axios. There have been some cutbacks in
• 54:24
  Speaker 22: economic statistics collection in the last few weeks, worries that
• 54:27
  Speaker 22: long running problems around funding and response rates maybe getting worse.
• 54:31
  Speaker 8: How much is this concern on your radar?
• 54:33
  Speaker 22: How much confidence do you have that the gauges you're
• 54:35
  Speaker 22: watching to assess the economy are reliable right now?
• 54:38
  Speaker 7: You know two things. One, the data we get right now,
• 54:42
  Speaker 7: we can do our jobs. I'm not concerned that we
• 54:44
  Speaker 7: can't do our jobs. That's not the that's not the point.
• 54:49
  Speaker 7: The point really is that we are starting to see,
• 54:53
  Speaker 7: you know, layoffs, and important gatherers of data are saying
• 54:58
  Speaker 7: that they're having to cut back on the size of
• 55:00
  Speaker 7: their surveys. That's going to lead to more volatility in
• 55:02
  Speaker 7: the surveys. I think we should take a step back
• 55:05
  Speaker 7: and from our standpoint, and I think the standpoint of
• 55:08
  Speaker 7: businesses and governments and everyone having really good data on
• 55:12
  Speaker 7: the state of the economy at any given time is
• 55:14
  Speaker 7: a huge public good. It just doesn't help the FED.
• 55:18
  Speaker 7: It helps the government, It helps Congress, it helps the
• 55:20
  Speaker 7: executive branch. More importantly, really it helps businesses. They need
• 55:23
  Speaker 7: to know what's going on in the economy. The United
• 55:25
  Speaker 7: States has been a leader for many, many years in
• 55:29
  Speaker 7: this whole project of measuring and understanding what's happening in
• 55:33
  Speaker 7: our very large and dynamic economy, and I hate to
• 55:36
  Speaker 7: see I hate to see US cutting back on that
• 55:39
  Speaker 7: because it is a real benefit to the general public
• 55:43
  Speaker 7: that people in all kinds of jobs have the best
• 55:47
  Speaker 7: possible understanding of what's happening in the economy and hence
• 55:50
  Speaker 7: what's likely to happen. It's very hard to measure what's
• 55:53
  Speaker 7: going on in the US economy. If you read, there's
• 55:56
  Speaker 7: a book called Well, it's really remarkable how many things
• 56:00
  Speaker 7: you need to understand to estimate US GDP. Very very difficult,
• 56:04
  Speaker 7: and it's so important that we get it right. I
• 56:07
  Speaker 7: would I just would say it's not a place to
• 56:11
  Speaker 7: I would want to keep investing in that, you know,
• 56:13
  Speaker 7: for the good of the general public.
• 56:18
  Speaker 21: Victoria come Hi, Victoria Guida with Politico. So you're conducting
• 56:27
  Speaker 21: this monetary policy strategy Framework Review. But next year we're
• 56:32
  Speaker 21: supposed to have a new FED chair and I'm wondering
• 56:35
  Speaker 21: if that affects at all the way that you're approaching this.
• 56:38
  Speaker 21: How do you ensure that this framework will actually be durable?
• 56:42
  Speaker 7: You know, the framework goes back to the framework document
• 56:46
  Speaker 7: goes back to twenty twelve, and it's the committee's document.
• 56:52
  Speaker 7: It's not like we're going to invent a brand new
• 56:54
  Speaker 7: way to do things. It's been an evolving document. So
• 56:57
  Speaker 7: it shouldn't depend on who the chair is at all.
• 57:00
  Speaker 7: It should depend on what's happening in the economy and
• 57:02
  Speaker 7: what the committee wants to do. So, yeah, it isn't
• 57:05
  Speaker 7: really tied to any particular chair. And you know, we
• 57:09
  Speaker 7: used to renew it every year. Now we do it
• 57:11
  Speaker 7: every five years. So but I don't think anybody, I've
• 57:14
  Speaker 7: never heard anyone raise this issue that you know, a
• 57:18
  Speaker 7: new chair might want to come in and go in
• 57:19
  Speaker 7: a completely different Really, I really don't think that's right.
• 57:22
  Speaker 7: But you know that's not going to be up to
• 57:24
  Speaker 7: me to decide.
• 57:26
  Speaker 21: Is that affecting at all?
• 57:28
  Speaker 8: Your consulting went not at all, not in any way.
• 57:33
  Speaker 6: Yeah, thank you, chairpell Matt Egan from CNN relatively low
• 57:42
  Speaker 6: gas prices this year have helped drive down inflation in
• 57:47
  Speaker 6: recent reports, but that trend is starting to reverse given
• 57:50
  Speaker 6: the crisis in the Middle East.
• 57:52
  Speaker 8: How are you thinking about how.
• 57:53
  Speaker 6: The Israeli wrong conflict will impact the economy, especially inflation,
• 57:58
  Speaker 6: and what lessons were learned during the twenty twenty two
• 58:02
  Speaker 6: period when another conflict, the Russia Ukraine War, sent oil
• 58:06
  Speaker 6: and gas prices skyrocking.
• 58:08
  Speaker 7: So of course we're watching like everybody else's what's going on.
• 58:12
  Speaker 7: I really don't have any comment on that. You know,
• 58:14
  Speaker 7: possible that we'll see higher energy prices. What's tended to
• 58:19
  Speaker 7: happen is when there's tmoil in the Middle East, you
• 58:22
  Speaker 7: may see a spike in energy prices, but tends to
• 58:24
  Speaker 7: come down. Those things don't generally tend to have lasting
• 58:30
  Speaker 7: effects on inflation, although of course in the nineteen seventies
• 58:33
  Speaker 7: they famously did because you had a series of very,
• 58:35
  Speaker 7: very large shocks.
• 58:37
  Speaker 8: But we haven't seen anything like that like that.
• 58:40
  Speaker 7: Now the US economy is far less dependent on foreign
• 58:43
  Speaker 7: oil than it was back in the nineteen seventies.
• 58:47
  Speaker 8: So but there a quick follow up.
• 58:50
  Speaker 6: I've just got to ask you about artificial intelligence, some
• 58:53
  Speaker 6: technology executives have recently been warning.
• 58:56
  Speaker 8: That AI could wipe out a large.
• 58:58
  Speaker 6: Chunk of entry level jobs and significantly increase the unemployment rate.
• 59:03
  Speaker 8: I'm wondering how concerned you are.
• 59:05
  Speaker 6: If at all, about the threat that AI poses to employment.
• 59:11
  Speaker 7: So this is the question question really is will AI
• 59:15
  Speaker 7: be more augmenting labor or replacing labor? And I wouldn't
• 59:19
  Speaker 7: we all see those announcements, including one today, I wouldn't
• 59:23
  Speaker 7: you know, overread a couple a couple of data points,
• 59:28
  Speaker 7: because you know, AI should be creating jobs at the
• 59:30
  Speaker 7: same time it may be replacing maybe doing both. Anyone
• 59:35
  Speaker 7: who's done any work with it with AI will will
• 59:40
  Speaker 7: have been a little bit stunned and how capable it is,
• 59:43
  Speaker 7: and it's just a different thing. So I think this
• 59:46
  Speaker 7: is something that certainly has transformational potential, and probably.
• 59:50
  Speaker 8: We're in the very early stages of it.
• 59:52
  Speaker 7: You know, they say what you're seeing now compared to
• 59:54
  Speaker 7: what you'll see in two years is going to be
• 59:57
  Speaker 7: very different and even more effective.
• 59:58
  Speaker 8: So I think it's really hard to know that.
• 1:00:01
  Speaker 7: You know, of course, there are optimists who feel like
• 1:00:03
  Speaker 7: it's going to make everybody much more, you know, much
• 1:00:06
  Speaker 7: more productive, and they're those who think it's going to
• 1:00:09
  Speaker 7: replace an awful lot of jobs right across the income spectrum,
• 1:00:12
  Speaker 7: you know, white collar, blue collar and everything. So I
• 1:00:15
  Speaker 7: just don't know, we don't we don't have a house
• 1:00:18
  Speaker 7: few on that. But this is this is going to
• 1:00:20
  Speaker 7: be a very important question for some time.
• 1:00:25
  Speaker 23: Great thank you, Greg Wrap from Marko Watch. I was
• 1:00:34
  Speaker 23: wondering if you could step back a little bit, chair pow.
• 1:00:37
  Speaker 23: You know, there's a spate of articles and a lot
• 1:00:40
  Speaker 23: of op eds now in the newspapers saying that the
• 1:00:43
  Speaker 23: US economy and the global economy is going through this
• 1:00:46
  Speaker 23: profound change, you know, under akin to the end of
• 1:00:49
  Speaker 23: the Breton Woods era in the nineteen seventies. And don't
• 1:00:53
  Speaker 23: you owe the American people like some sort of like
• 1:00:57
  Speaker 23: explanation for what we're going through. I mean, I noticed
• 1:01:00
  Speaker 23: earlier this month when you talked about Britain Woods a
• 1:01:03
  Speaker 23: little bit and you said that Bretton Wood's the Fed
• 1:01:06
  Speaker 23: staff had to like change how they've the dollar movements
• 1:01:09
  Speaker 23: of the dollar wasn't impacting the economy. Are we going
• 1:01:12
  Speaker 23: through something like that now that you know? Are you
• 1:01:15
  Speaker 23: having to change how you do monetary policy? Is it
• 1:01:18
  Speaker 23: that fundamental a change underway.
• 1:01:20
  Speaker 7: Thanks, It's it's certainly a time of real change, you know,
• 1:01:25
  Speaker 7: from a geopolitical standpoint, from a trade standpoint, from an
• 1:01:30
  Speaker 7: immigration standpoint. You see this not just here but everywhere.
• 1:01:33
  Speaker 7: So there's quite a lot going on. It doesn't change
• 1:01:37
  Speaker 7: the way we do monetary policy in the near term,
• 1:01:39
  Speaker 7: I mean, but it doesn't change our objectives or what
• 1:01:42
  Speaker 7: we need to do. And you know, these these things
• 1:01:44
  Speaker 7: are not really our issues. They're really issues for elected governments.
• 1:01:47
  Speaker 7: All of those issues are really for elected governments. But
• 1:01:50
  Speaker 7: there's no question it's a time of real change.
• 1:01:54
  Speaker 8: And very hard to see where that goes.
• 1:01:57
  Speaker 7: You know, will it be There have been many many
• 1:02:00
  Speaker 7: things written about how it's going to be more inflationary time.
• 1:02:03
  Speaker 7: That's possible, it's not guaranteed. You know, AI could cut
• 1:02:06
  Speaker 7: in the very other direction. AI could make people much
• 1:02:09
  Speaker 7: more productive and pushing the other direction. I don't know
• 1:02:13
  Speaker 7: that so, but you're right. But honestly, our focus is
• 1:02:16
  Speaker 7: a much more practical one, and that is how do
• 1:02:18
  Speaker 7: we keep inflation low and employment high in the near term.
• 1:02:23
  Speaker 7: That's that's really what we're about.
• 1:02:27
  Speaker 9: Mark Marketing.
• 1:02:31
  Speaker 24: A Hello, Chairman Powell, Mark Hamrick with bank Rate, What
• 1:02:38
  Speaker 24: is the view about the growing amount of slack in
• 1:02:40
  Speaker 24: the job market, including the softening and payrolls, the forecast
• 1:02:44
  Speaker 24: of a modest rise, and the unemployment rate and the
• 1:02:47
  Speaker 24: ability of workers to demand wage hikes or not.
• 1:02:50
  Speaker 8: In this environment where you have inflation surging.
• 1:02:55
  Speaker 7: You don't see you don't really see unemployment going up.
• 1:02:58
  Speaker 7: You don't see increased slack really margin Remember you're at
• 1:03:01
  Speaker 7: four point two percent unemployment. That was for many, many years,
• 1:03:05
  Speaker 7: that was an extremely low level. It happens to have
• 1:03:08
  Speaker 7: come up off of an even lower level as we
• 1:03:10
  Speaker 7: came out of the pandemic. We were as low as
• 1:03:11
  Speaker 7: three point four percent. But four point two percent is
• 1:03:14
  Speaker 7: probably at the low end of estimates of the longer run,
• 1:03:18
  Speaker 7: you know, sustainable level of natural rate run employment. So
• 1:03:23
  Speaker 7: I wouldn't I guess I wouldn't agree with that. And
• 1:03:25
  Speaker 7: also in terms of wages, you know, real wages after
• 1:03:29
  Speaker 7: inflation have been moving up sort of more than was
• 1:03:33
  Speaker 7: consistent with two percent inflation. They're still moving up at
• 1:03:36
  Speaker 7: a healthy clip, and I think much more consistent with
• 1:03:40
  Speaker 7: two percent inflation given a reasonable assessment of trend productivity.
• 1:03:46
  Speaker 8: So it's a pretty good labor market.
• 1:03:48
  Speaker 7: You know, you're right the level of job creation has
• 1:03:51
  Speaker 7: come down, but so has the supply of workers, the
• 1:03:53
  Speaker 7: change in the supply, the new supply. So you've you've
• 1:03:57
  Speaker 7: seen the unemployment rate remain pretty stable at four point two.
• 1:04:00
  Speaker 7: It's been as high as four point three. But you know,
• 1:04:03
  Speaker 7: there's are there's a good numbers, so it's pretty good
• 1:04:05
  Speaker 7: labor market. There's the thing is there's a more concerning
• 1:04:08
  Speaker 7: thing is there's not there's not a lot of layoffs,
• 1:04:10
  Speaker 7: but there are not a lot of job creation. The
• 1:04:13
  Speaker 7: number if you're out of work, it's it's hard to
• 1:04:16
  Speaker 7: find a job, but there are very few people.
• 1:04:18
  Speaker 8: Are being laid off at this point.
• 1:04:20
  Speaker 7: So that's a that's an equilibrium we watch very very
• 1:04:24
  Speaker 7: carefully because if there were to be, you know, significant
• 1:04:28
  Speaker 7: layoffs and the job finding rate were to remain this slow,
• 1:04:31
  Speaker 7: you would have a lot you would have an increase
• 1:04:32
  Speaker 7: in unemployment fairly quickly.
• 1:04:34
  Speaker 8: But that hasn't happened. It really hasn't happened.
• 1:04:36
  Speaker 7: Where So the US economy has defined all kinds of
• 1:04:40
  Speaker 7: forecasts for it to uh to weaken really over the
• 1:04:43
  Speaker 7: last three years, and it's been remarkable to see just
• 1:04:47
  Speaker 7: again and again when people think it's going to weaken now.
• 1:04:49
  Speaker 7: Eventually it will, but we don't see signs of that now.
• 1:04:54
  Speaker 18: Good a gene for the last question, I share a
• 1:04:58
  Speaker 18: peril gene young with M and I Market News. There's
• 1:05:01
  Speaker 18: been a lot of talk about cuts. I wanted to
• 1:05:04
  Speaker 18: ask you, why do you think there are no forecasts
• 1:05:06
  Speaker 18: for rates to rise or even to stay where they
• 1:05:10
  Speaker 18: are next year, given that the projection for inflation is
• 1:05:14
  Speaker 18: to rise to three percent and there's a lot of
• 1:05:17
  Speaker 18: there's some skepticism over whether those price hikes will be
• 1:05:21
  Speaker 18: a one time event.
• 1:05:23
  Speaker 7: So there are a number of people in the committee
• 1:05:26
  Speaker 7: who wrote down no cuts this year, but some cuts
• 1:05:28
  Speaker 7: next year. So look, I think you know, people are
• 1:05:32
  Speaker 7: writing down their most likely path, right. They're not saying
• 1:05:35
  Speaker 7: there's zero possibility of other things. Really, really, it's think
• 1:05:39
  Speaker 7: of it as the least unlikely path in a situation
• 1:05:42
  Speaker 7: like this where uncertainty is very high. I think again,
• 1:05:46
  Speaker 7: people they write down their their rate paths, and they
• 1:05:50
  Speaker 7: do not have like a really high conviction that this
• 1:05:52
  Speaker 7: is exactly what's going to happen over the next two years.
• 1:05:54
  Speaker 7: No one feels that way about their rate path. They
• 1:05:56
  Speaker 7: feel like, what am I going to write down? I mean,
• 1:05:58
  Speaker 7: what would you write down. Not easy to be to
• 1:06:01
  Speaker 7: do that with confidence, so I would just say it
• 1:06:04
  Speaker 7: that way. We don't rule things in or out. Certainly
• 1:06:07
  Speaker 7: a hike is not the base case at all. It's
• 1:06:10
  Speaker 7: not something people are writing down. But in the meantime,
• 1:06:15
  Speaker 7: we do the best we can with these forecasts, and
• 1:06:17
  Speaker 7: I think they're representative of you, of the different forecasts
• 1:06:20
  Speaker 7: and different reaction functions that people in the committee have.
• 1:06:23
  Speaker 8: So thank you very much.
• 1:06:24
  Speaker 1: Thanks up his news conference there, and as you can
• 1:06:31
  Speaker 1: kind of see a little bit sideways market, of course,
• 1:06:33
  Speaker 1: as we're monitoring right now in the ten second chart.
• 1:06:36
  Speaker 1: I know you guys wanted to see the one second chart,
• 1:06:38
  Speaker 1: but the point being is that market's still somewhat unchanged,
• 1:06:42
  Speaker 1: trading bitcoin at around one hundred and four two. I
• 1:06:44
  Speaker 1: think the question here now is boiling down to what
• 1:06:48
  Speaker 1: is the forecast going forward? Do we get a rate
• 1:06:50
  Speaker 1: cut or not get a ray cut this year? A
• 1:06:53
  Speaker 1: lot of this is going to really depend on how
• 1:06:55
  Speaker 1: and he mentioned this is that tariffs are still one
• 1:06:58
  Speaker 1: of the core uncertainties. Obviously we don't know what's going
• 1:07:00
  Speaker 1: to happen with Israel and Iran, but the point being
• 1:07:04
  Speaker 1: is that when we look at the market in the
• 1:07:06
  Speaker 1: condition it's in right now, and I think jobs is
• 1:07:08
  Speaker 1: the one you've got to look for the most. If
• 1:07:11
  Speaker 1: jobs do start to come in and we do finally
• 1:07:15
  Speaker 1: see pressure, because remember he said early on in the
• 1:07:18
  Speaker 1: discussion that actually was from a clip we had, that
• 1:07:22
  Speaker 1: was the fact that we are not necessarily seeing companies
• 1:07:25
  Speaker 1: take price, meaning raising prices yet, so you're not seeing
• 1:07:28
  Speaker 1: that inflation push. He's still anticipating that. So this is
• 1:07:31
  Speaker 1: still data that is not necessarily speed to market. And
• 1:07:35
  Speaker 1: this is an argument I have around the FED, is
• 1:07:38
  Speaker 1: that there is so much information available to us right
• 1:07:41
  Speaker 1: now that shows inflation has been curtailed and jobs, at
• 1:07:45
  Speaker 1: least at this point are in a good position which
• 1:07:48
  Speaker 1: could get into stagflation. That's the thing you've got to
• 1:07:51
  Speaker 1: worry about the most, which is rising inflation and rising jobs.
• 1:07:56
  Speaker 1: Do we get any kind of those significant factors going
• 1:07:59
  Speaker 1: forward all of that. Do you guys like these live
• 1:08:01
  Speaker 1: streams when we do these FED let us know in
• 1:08:03
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• 1:08:06
  Speaker 1: I know you guys had some fun with polls today,
• 1:08:08
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• 1:08:11
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• 1:08:22
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