Chairman Powell speaks after Fed hikes interest rates by 0.75% to fight inflation — 9/21/2022

00:44:25
https://www.youtube.com/watch?v=E34J0b5xt60

Sintesi

TLDRThe Federal Reserve is focused on bringing inflation down to its 2% target, having raised interest rates by 0.75% to a range of 3-3.25%. The U.S. economy has slowed, with modest growth in spending and production, while the labor market remains tight. Inflation is currently above the target, with projections indicating a gradual decrease over the next few years. The Fed aims to balance employment and price stability, recognizing the economic pain that may result from necessary rate hikes. The committee will continue to assess economic data to determine future rate adjustments.

Punti di forza

  • 📉 The Fed raised interest rates by 0.75% to combat inflation.
  • 🎯 The inflation target is set at 2%.
  • 📊 GDP growth is projected at 0.2% this year.
  • 👷‍♂️ The labor market remains tight with low unemployment.
  • 📈 Inflation is expected to decrease gradually over the next few years.
  • ⚖️ The Fed aims to balance employment and price stability.
  • 💼 Economic pain may be necessary to restore price stability.
  • 📅 Future rate adjustments will depend on incoming economic data.
  • 🌍 Global economic conditions are considered in policy decisions.
  • 🔍 The Fed is committed to achieving its inflation target.

Linea temporale

  • 00:00:00 - 00:05:00

    The speaker emphasizes the commitment to reducing inflation to a 2% target, highlighting the importance of price stability for the economy and labor market. The Federal Reserve has raised interest rates by 0.75% and plans to continue increasing rates to achieve this goal, while also reducing the size of its balance sheet.

  • 00:05:00 - 00:10:00

    The U.S. economy has slowed down from the high growth rates of 2021, with modest growth in spending and production. Consumer spending growth has decreased, and the housing sector has weakened due to higher mortgage rates. Economic projections indicate low GDP growth for the current and next year, while the labor market remains tight with low unemployment and high job vacancies.

  • 00:10:00 - 00:15:00

    Despite a slowdown in growth, the labor market is still strong, with significant job gains. However, the labor force participation rate has not changed much. The Federal Open Market Committee (FOMC) expects labor market conditions to balance over time, which may ease wage and price pressures. Unemployment is projected to rise to 4.4% by the end of next year.

  • 00:15:00 - 00:20:00

    Inflation remains above the 2% target, with significant price increases in various sectors. The FOMC projects total PCE inflation to be 5.4% this year, decreasing to 2% by 2025. While long-term inflation expectations are stable, there are risks of entrenched inflation if high rates persist.

  • 00:20:00 - 00:25:00

    The Fed is committed to achieving maximum employment and price stability, acknowledging the hardships caused by high inflation. The target range for the federal funds rate has been raised to 3-3.25%, and the Fed will continue to monitor inflation trends to determine future rate increases.

  • 00:25:00 - 00:30:00

    The Fed's approach involves assessing economic data to decide when to slow down rate increases. The focus remains on achieving a restrictive policy stance to bring inflation down to the target, with a need for below-trend growth and a balanced labor market.

  • 00:30:00 - 00:35:00

    The Fed acknowledges the challenges of achieving a soft landing while raising rates, with a modest increase in unemployment expected. The current economic situation is influenced by unique factors, including supply shocks and high job vacancies, which may allow for a less severe increase in unemployment than in past cycles.

  • 00:35:00 - 00:44:25

    The Fed is aware of the global economic context and the potential risks of simultaneous tightening by central banks worldwide. Ongoing communication with other central banks helps inform their decisions, but the Fed's primary focus remains on domestic objectives.

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Mappa mentale

Video Domande e Risposte

  • What is the current interest rate set by the Federal Reserve?

    The current interest rate is set in a range of 3% to 3.25%.

  • What is the Federal Reserve's inflation target?

    The Federal Reserve's inflation target is 2%.

  • What are the projections for GDP growth?

    The median projection for real GDP growth is 0.2% for this year and 1.2% for next year.

  • How does the Fed plan to address high inflation?

    The Fed plans to raise interest rates and maintain a restrictive policy stance until inflation is back to the 2% target.

  • What is the expected unemployment rate by the end of next year?

    The median projection for the unemployment rate is expected to rise to 4.4% by the end of next year.

  • What factors are contributing to current inflation?

    Current inflation is influenced by supply chain disruptions, increased energy prices due to geopolitical events, and high consumer demand.

  • How does the Fed view the current labor market?

    The labor market remains tight, with job vacancies high and unemployment near a 50-year low.

  • What is the Fed's approach to monetary policy?

    The Fed's approach is to adjust interest rates based on incoming economic data and the evolving outlook.

  • What is the expected trend for inflation in the coming years?

    Inflation is projected to decrease to 5.4% this year, 2.8% next year, and reach 2% by 2025.

  • What is the Fed's stance on economic pain due to rate hikes?

    The Fed acknowledges that economic pain is necessary to restore price stability and is committed to achieving its inflation target.

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Sottotitoli
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Scorrimento automatico:
  • 00:01:02
    thank you
  • 00:01:21
    good afternoon
  • 00:01:23
    my colleagues and I are strongly
  • 00:01:25
    committed to Bringing inflation back
  • 00:01:27
    down to our two percent goal
  • 00:01:29
    we have both the tools we need and the
  • 00:01:31
    resolve that it will take to restore
  • 00:01:33
    price stability on behalf of American
  • 00:01:35
    families and businesses
  • 00:01:37
    price stability is the responsibility of
  • 00:01:39
    the Federal Reserve and serves as the
  • 00:01:41
    Bedrock of our economy
  • 00:01:43
    without price stability the economy does
  • 00:01:45
    not work for anyone
  • 00:01:46
    in particular without price stability we
  • 00:01:49
    will not achieve a sustained period of
  • 00:01:51
    strong labor market conditions that
  • 00:01:52
    benefit all
  • 00:01:55
    today the fomc raised its policy
  • 00:01:58
    interest rate by three quarters of a
  • 00:01:59
    percentage point
  • 00:02:00
    and we anticipate that ongoing increases
  • 00:02:03
    will be appropriate
  • 00:02:05
    we are moving our policy stance
  • 00:02:06
    purposefully to a level that will be
  • 00:02:08
    sufficiently restrictive to return
  • 00:02:10
    inflation to two percent
  • 00:02:13
    in addition We are continuing the
  • 00:02:15
    process of significantly reducing the
  • 00:02:17
    size of our balance sheet
  • 00:02:19
    I will have more to say about today's
  • 00:02:21
    monetary policy actions after briefly
  • 00:02:23
    reviewing economic developments
  • 00:02:27
    the U.S economy has slowed from the
  • 00:02:30
    historically high growth rates of 2021
  • 00:02:32
    which reflected the reopening of the
  • 00:02:34
    economy following the pandemic recession
  • 00:02:37
    recent indicators point to modest growth
  • 00:02:40
    of spending and production
  • 00:02:42
    growth in consumer spending has slowed
  • 00:02:44
    from last year's rapid Pace in part
  • 00:02:46
    reflecting lower real disposable income
  • 00:02:49
    and Tighter Financial conditions
  • 00:02:51
    activity in the housing sector sector
  • 00:02:53
    has weakened significantly in large part
  • 00:02:56
    reflecting higher mortgage rates
  • 00:02:59
    higher interest rates and slower output
  • 00:03:01
    growth also appear to be weighing on
  • 00:03:03
    business fixed investment while weaker
  • 00:03:05
    economic growth abroad is restraining
  • 00:03:07
    exports
  • 00:03:09
    as shown in our summary of economic
  • 00:03:11
    projections since June fomc participants
  • 00:03:14
    have marked down their projections for
  • 00:03:16
    economic activity with the median
  • 00:03:18
    projection for real GDP growth standing
  • 00:03:20
    at just 0.2 percent this year and 1.2
  • 00:03:24
    percent next year well below the median
  • 00:03:26
    estimate of the longer run normal growth
  • 00:03:28
    rate
  • 00:03:31
    despite the slowdown in growth the labor
  • 00:03:33
    market has remained extremely tight with
  • 00:03:35
    the unemployment rate near a 50-year low
  • 00:03:36
    job vacancies near historical highs and
  • 00:03:39
    wage growth elevated
  • 00:03:42
    job gains have been robust with employee
  • 00:03:44
    employment Rising by an average of 378
  • 00:03:47
    000 jobs per month over the last three
  • 00:03:49
    months
  • 00:03:51
    the labor market continues to be out of
  • 00:03:53
    balance with demand for workers
  • 00:03:55
    substantially exceeding the supply of
  • 00:03:57
    available workers
  • 00:03:59
    the labor force participation rate
  • 00:04:01
    showed a welcome uptick in August but as
  • 00:04:04
    little changed since the beginning of
  • 00:04:05
    the year
  • 00:04:07
    fomc participants expect supply and
  • 00:04:09
    demand conditions in the labor market to
  • 00:04:11
    come into better balance over time
  • 00:04:13
    easing the upward pressure on wages and
  • 00:04:15
    prices
  • 00:04:17
    the median projection in the SCP for the
  • 00:04:19
    unemployment rate Rises to 4.4 percent
  • 00:04:21
    at the end of next year a half
  • 00:04:23
    percentage Point higher than in the June
  • 00:04:25
    projections
  • 00:04:26
    over the next three years the median
  • 00:04:29
    unemployment rate runs above the median
  • 00:04:31
    estimate of its longer run normal level
  • 00:04:35
    inflation remains well above our two
  • 00:04:37
    percent longer run goal over the 12
  • 00:04:40
    months ending in July total pce Prices
  • 00:04:42
    rose 6.3 percent
  • 00:04:44
    excluding the volatile food and energy
  • 00:04:46
    categories core pce prices Rose 4.6
  • 00:04:49
    percent
  • 00:04:51
    in August the 12-month change in
  • 00:04:53
    consumer in the Consumer Price Index was
  • 00:04:55
    8.3 percent and the change in the core
  • 00:04:57
    CPI was 6.3 percent
  • 00:05:01
    price pressures remain evident across a
  • 00:05:03
    broad range of goods and services
  • 00:05:06
    although gasoline prices have turned
  • 00:05:08
    down in recent months they remain well
  • 00:05:10
    above year earlier levels in part
  • 00:05:12
    reflecting Russia's war against Ukraine
  • 00:05:14
    which has boosted prices for energy and
  • 00:05:17
    food and has created additional upward
  • 00:05:18
    pressure on inflation
  • 00:05:21
    the median projection in the SCP for
  • 00:05:24
    total pce inflation is 5.4 percent this
  • 00:05:27
    year and Falls to 2.8 percent next year
  • 00:05:30
    2.3 percent in 2024 and 2 in 2025.
  • 00:05:36
    participants continue to see risks to
  • 00:05:39
    inflation as weighted to the upside
  • 00:05:42
    despite elevated inflation longer-term
  • 00:05:45
    inflation expectations appear to remain
  • 00:05:47
    well anchored as reflected in a broad
  • 00:05:49
    range of surveys of households
  • 00:05:51
    businesses and forecasters as well as
  • 00:05:54
    measures from financial markets
  • 00:05:56
    but that is not grounds for complacency
  • 00:05:59
    the longer the current bound of bout of
  • 00:06:01
    high inflation continues the greater the
  • 00:06:03
    chance that expectations of higher
  • 00:06:05
    inflation will become entrenched
  • 00:06:08
    the fed's monetary policy actions are
  • 00:06:10
    Guided by our mandate to promote maximum
  • 00:06:12
    employment and stable prices for the
  • 00:06:14
    American people
  • 00:06:16
    my colleagues and I are acutely aware
  • 00:06:18
    that high inflation imposes significant
  • 00:06:20
    hardship as it erodes purchasing power
  • 00:06:23
    especially for those least able to meet
  • 00:06:25
    the higher costs of Essentials like food
  • 00:06:27
    housing and transportation
  • 00:06:30
    we are highly attentive to the risks
  • 00:06:32
    that high inflation poses to both sides
  • 00:06:34
    of our mandate and we are strongly
  • 00:06:36
    committed to returning inflation to our
  • 00:06:38
    two percent objective
  • 00:06:40
    at today's meeting the committee raised
  • 00:06:42
    the target range for the federal funds
  • 00:06:43
    rate by three quarters of a percentage
  • 00:06:45
    Point bringing the target range to three
  • 00:06:47
    to three and a quarter percent
  • 00:06:49
    and we are continuing the process of
  • 00:06:51
    significantly reducing the size of our
  • 00:06:53
    balance sheet which plays an important
  • 00:06:55
    role in firming The Stance of monetary
  • 00:06:57
    policy
  • 00:06:59
    overcoming months we will be looking for
  • 00:07:01
    compelling evidence that inflation is
  • 00:07:03
    moving down consistent with inflation
  • 00:07:04
    returning to two percent
  • 00:07:07
    we anticipate that ongoing increases in
  • 00:07:11
    the target range for the federal funds
  • 00:07:12
    rate will be appropriate the pace of
  • 00:07:14
    those increases will continue to depend
  • 00:07:16
    on the incoming data and the evolving
  • 00:07:19
    outlook for the economy
  • 00:07:21
    with today's action we have raised
  • 00:07:22
    interest rates by three percentage
  • 00:07:24
    points this year
  • 00:07:26
    at some point as The Stance of monetary
  • 00:07:28
    policy tightens further it will become
  • 00:07:30
    appropriate to slow the pace of
  • 00:07:32
    increases while we assess how our
  • 00:07:34
    cumulative policy adjustments are
  • 00:07:36
    affecting the economy and inflation
  • 00:07:38
    we will continue to make our decisions
  • 00:07:40
    meeting by meeting and communicate our
  • 00:07:43
    thinking as clearly as possible
  • 00:07:46
    restoring price stability will likely
  • 00:07:48
    require maintaining a restrictive policy
  • 00:07:50
    stance for some time
  • 00:07:52
    the historical record cautions strongly
  • 00:07:54
    against prematurely loosening policy
  • 00:07:58
    as shown in the SCP the median
  • 00:08:00
    projection for the appropriate level of
  • 00:08:02
    the federal funds rate is 4.4 percent at
  • 00:08:05
    the end of this year one percentage
  • 00:08:07
    Point higher than projected in June
  • 00:08:10
    the median projection Rises to 4.6
  • 00:08:12
    percent at the end of next year and
  • 00:08:14
    declines 2.9 percent by the end of 2025.
  • 00:08:17
    still above the median estimate of its
  • 00:08:20
    longer run value
  • 00:08:21
    of course these projections do not
  • 00:08:23
    represent a committee decision or plan
  • 00:08:25
    and no one knows with any certainty
  • 00:08:27
    where the economy will be a year or more
  • 00:08:29
    from now
  • 00:08:31
    we are taking forceful and Rapid steps
  • 00:08:33
    to moderate demand so that it comes into
  • 00:08:35
    better alignment with Supply
  • 00:08:37
    our overarching focus is using our tools
  • 00:08:40
    to bring inflation back down to our two
  • 00:08:42
    percent goal and to keep longer term
  • 00:08:44
    inflation expectations well anchored
  • 00:08:47
    reducing inflation is likely to require
  • 00:08:49
    a sustained period of below Trend growth
  • 00:08:52
    and there will very likely be some
  • 00:08:54
    softening of labor market conditions
  • 00:08:57
    restoring price stability is essential
  • 00:08:59
    to step to set the stage for achieving
  • 00:09:01
    maximum employment and stable prices
  • 00:09:03
    over the longer run
  • 00:09:06
    we will keep at it until we're confident
  • 00:09:08
    the job is done
  • 00:09:10
    to conclude we understand that our
  • 00:09:12
    actions affect communities families and
  • 00:09:14
    businesses across the country everything
  • 00:09:16
    we do is in service to our public
  • 00:09:18
    mission
  • 00:09:19
    we at the FED will do everything we can
  • 00:09:21
    to achieve our maximum employment and
  • 00:09:23
    price stability goals
  • 00:09:25
    thank you and I look forward to your
  • 00:09:26
    questions
  • 00:09:33
    hi chair pal thank you for taking our
  • 00:09:34
    questions Gina Smiley from The New York
  • 00:09:36
    Times I wonder if you could give us a
  • 00:09:38
    little detail around how you'll know
  • 00:09:40
    when to slow down these rate increases
  • 00:09:42
    and how you'll eventually know when to
  • 00:09:44
    stop
  • 00:09:47
    so I will answer your I will answer your
  • 00:09:50
    question directly but I want to start
  • 00:09:51
    here today by saying that my main
  • 00:09:53
    message has not changed at all since
  • 00:09:55
    Jackson Hole uh the fomc is strongly
  • 00:09:59
    resolved to bring inflation down to two
  • 00:10:00
    percent
  • 00:10:01
    and we will keep at it until the job is
  • 00:10:03
    done
  • 00:10:05
    so
  • 00:10:06
    um the way we're thinking about this is
  • 00:10:09
    um
  • 00:10:10
    the overarching focus of the committee
  • 00:10:12
    is getting inflation back down to two
  • 00:10:13
    percent uh to accomplish that we think
  • 00:10:16
    we'll need to do two things in
  • 00:10:18
    particular to achieve a period of growth
  • 00:10:20
    below Trend and also some softening in
  • 00:10:22
    labor market conditions to foster a
  • 00:10:24
    better balance between demand and Supply
  • 00:10:25
    in the labor market
  • 00:10:27
    so on the first uh committee's forecasts
  • 00:10:30
    and those of most outside forecasters do
  • 00:10:32
    show growth running below its longer run
  • 00:10:35
    potential this year and next year on the
  • 00:10:37
    second though so far there's only modest
  • 00:10:39
    evidence that the labor market is
  • 00:10:42
    cooling off
  • 00:10:43
    job openings are down a bit as you know
  • 00:10:46
    quits are off their all-time highs
  • 00:10:48
    there's some signs that some wage
  • 00:10:50
    measures may be flattening out but not
  • 00:10:52
    moving up payroll gains have moderated
  • 00:10:53
    but not much
  • 00:10:55
    and in light of the
  • 00:10:57
    high inflation we're seeing we think
  • 00:10:59
    we'll need to and in light of what I
  • 00:11:01
    just said we we think that we'll need to
  • 00:11:03
    bring our our funds rate to a
  • 00:11:07
    restrictive level and to keep it there
  • 00:11:08
    for some time so
  • 00:11:10
    um what will we be looking at I guess is
  • 00:11:12
    your question so we'll be looking at a
  • 00:11:14
    few things first we'll want to see
  • 00:11:16
    growth continuing to run below Trend
  • 00:11:17
    we'll want to see movements in the labor
  • 00:11:20
    market showing a return to a better
  • 00:11:21
    balance between supply and demand
  • 00:11:23
    and ultimately we'll want to see clear
  • 00:11:25
    evidence that inflation is moving back
  • 00:11:27
    down to two percent
  • 00:11:30
    so that's what we'll be looking for
  • 00:11:33
    um
  • 00:11:33
    in terms of
  • 00:11:36
    of reducing rates I think we'd want to
  • 00:11:38
    be very confident that inflation is
  • 00:11:40
    moving back down uh to two to two
  • 00:11:42
    percent
  • 00:11:43
    before we would consider that
  • 00:11:50
    thank you Mr chairman Steve leesman CNBC
  • 00:11:53
    can you talk about how you factor in uh
  • 00:11:56
    the variable lags on inflation and the
  • 00:11:59
    extent to which um
  • 00:12:02
    the outlook for rates should be seen as
  • 00:12:05
    linear in the sense that you keep
  • 00:12:06
    raising rates or can you envision a time
  • 00:12:09
    when there's a pause to uh kind of look
  • 00:12:11
    at what has been wrought in the economy
  • 00:12:13
    from the rate increases thank you
  • 00:12:16
    sure
  • 00:12:18
    so
  • 00:12:19
    um of course monetary policy does does
  • 00:12:22
    famously work with long and variable
  • 00:12:24
    lags the way I think of it is our policy
  • 00:12:27
    decisions affect financial conditions
  • 00:12:29
    immediately in fact Financial conditions
  • 00:12:31
    have usually been affected well before
  • 00:12:33
    we actually announce our decisions then
  • 00:12:35
    changes in financial conditions begin to
  • 00:12:37
    affect
  • 00:12:38
    act economic activity fairly quickly
  • 00:12:41
    within a few months but it's likely to
  • 00:12:43
    take some time
  • 00:12:45
    to see the full full effects of changing
  • 00:12:48
    Financial conditions on inflation so we
  • 00:12:51
    are we are very much mindful for that
  • 00:12:52
    and that's why I noted in my in my
  • 00:12:55
    opening remarks that at some point as
  • 00:12:57
    The Stance of policy tightens further it
  • 00:12:59
    will become appropriate to slow the pace
  • 00:13:00
    of rate hikes while we assess how our
  • 00:13:02
    cumulative policy adjustments are
  • 00:13:04
    affecting the economy and inflation
  • 00:13:06
    so that's how we think about that your
  • 00:13:08
    second question sorry was
  • 00:13:11
    pausing is it linear that we keep
  • 00:13:13
    raising rights or is there oh I'm sorry
  • 00:13:16
    I should know better than to not talk
  • 00:13:17
    with my microphone um I know better than
  • 00:13:20
    to answer your second question
  • 00:13:22
    oh there you go
  • 00:13:24
    um is it linear do you keep raising
  • 00:13:26
    razor is there a pause that you could
  • 00:13:28
    Envision where you kind of figure out uh
  • 00:13:30
    what what has happened to the economy
  • 00:13:32
    and give uh time to catch up in the real
  • 00:13:35
    economy the rate increase time to catch
  • 00:13:36
    up with the real economy thank you so so
  • 00:13:38
    I think I think it's it's very hard to
  • 00:13:40
    say with a precise certainty the way
  • 00:13:43
    this is going to unfold as I mentioned
  • 00:13:46
    what we think we need to do and should
  • 00:13:48
    do is to move our policy rate to a
  • 00:13:50
    restrictive level that's restrictive
  • 00:13:51
    enough to bring inflation down to two
  • 00:13:54
    percent where we have confidence of that
  • 00:13:56
    and what you see in the SCP numbers is
  • 00:13:58
    people's views as of as of today as of
  • 00:14:01
    this meeting as to the kind of levels
  • 00:14:04
    that will be appropriate now those those
  • 00:14:05
    will those will evolve over time
  • 00:14:08
    and I think we'll we'll
  • 00:14:10
    um we'll just have to to see how that
  • 00:14:12
    goes I I there is a possibility
  • 00:14:13
    certainly that we would go to go to a
  • 00:14:15
    certain level that we we're confident in
  • 00:14:17
    and and stay there for a Time
  • 00:14:20
    um but we're not at that level clearly
  • 00:14:22
    today we're you know we're just uh we've
  • 00:14:25
    just moved I think probably into the
  • 00:14:27
    very the very lowest level of what might
  • 00:14:29
    be restrictive and and certainly in my
  • 00:14:31
    view in the view of the committee
  • 00:14:33
    there's uh there's a ways to go
  • 00:14:42
    Siegel from Washington Post thank you
  • 00:14:44
    for taking our questions the projections
  • 00:14:46
    show the unemployment rate rising to 4.4
  • 00:14:49
    percent next year and historically that
  • 00:14:52
    kind of rise in the unemployment rate
  • 00:14:54
    would typically bring a recession with
  • 00:14:55
    it should we interpret that to mean no
  • 00:14:58
    soft landing and is that kind of Rise
  • 00:15:00
    necessary to get inflation down
  • 00:15:02
    right so um so you're right in in the in
  • 00:15:05
    the SCP there's a what I would
  • 00:15:07
    characterize as a relatively modest
  • 00:15:09
    increase in the unemployment rate from a
  • 00:15:10
    historical perspective given the
  • 00:15:12
    expected to decline in inflation now why
  • 00:15:14
    is that so really it is that is um what
  • 00:15:19
    we generally expect uh because we see
  • 00:15:21
    the current situation as
  • 00:15:23
    um outside of historical experience in a
  • 00:15:26
    number of ways and I'll mention a couple
  • 00:15:28
    of those first and you know these but
  • 00:15:30
    first job openings are incredibly High
  • 00:15:32
    relative to the number of people looking
  • 00:15:34
    for work uh it's plausible I'll say that
  • 00:15:38
    job openings could come down
  • 00:15:39
    significantly and they need to without
  • 00:15:41
    as much of an increase in unemployment
  • 00:15:44
    as has happened in earlier historical
  • 00:15:46
    episodes so that's one thing in addition
  • 00:15:48
    in this cycle longer run inflation
  • 00:15:51
    expectations are have generally been
  • 00:15:53
    fairly well anchored uh and I've as I've
  • 00:15:56
    said there's no no basis for complacency
  • 00:15:58
    there but to the extent that uh
  • 00:16:01
    continues to be the case that should
  • 00:16:02
    make it easier to restore price
  • 00:16:04
    stability and I guess the third thing I
  • 00:16:06
    would point to that's different this
  • 00:16:07
    time is that part of this inflation is
  • 00:16:10
    caused by this series of Supply shocks
  • 00:16:12
    that we've had beginning with the
  • 00:16:13
    pandemic and railing with really with
  • 00:16:15
    the reopening of the economy and more
  • 00:16:17
    recently Amplified and added to by
  • 00:16:19
    Russia's invasion of Ukraine have all
  • 00:16:22
    contributed to the sharp increase in
  • 00:16:23
    inflation so these are these are the
  • 00:16:26
    kinds of events that are not really seen
  • 00:16:27
    in in Prior business cycles and in
  • 00:16:30
    principle if those things start to get
  • 00:16:33
    better and we do see some evidence of
  • 00:16:35
    the beginnings of that it's not much
  • 00:16:37
    more than that but it's good to see that
  • 00:16:39
    for example commodity prices look like
  • 00:16:41
    they may have peaked for now supply
  • 00:16:43
    chain disruptions are beginning to
  • 00:16:44
    resolve those developments if sustained
  • 00:16:47
    could help ease the pressures on
  • 00:16:48
    inflation so
  • 00:16:50
    let me just say how much these factors
  • 00:16:53
    will turn out to really matter in in
  • 00:16:55
    this in this sequence of events it
  • 00:16:57
    remains to be seen we have always
  • 00:16:59
    understood that restoring price
  • 00:17:01
    stability while achieving a relatively
  • 00:17:03
    modest decline a rather increase in
  • 00:17:05
    unemployment and a soft Landing would be
  • 00:17:08
    would be very challenging and and we
  • 00:17:10
    don't know no one knows whether this
  • 00:17:12
    process will lead to a recession or if
  • 00:17:14
    so how significant that recession would
  • 00:17:16
    be that's going to depend on how quickly
  • 00:17:19
    wage and price inflation inflation
  • 00:17:21
    pressures come down whether expectations
  • 00:17:23
    remain anchored and whether you know
  • 00:17:26
    also do we get more labor Supply which
  • 00:17:28
    would help as well in addition the
  • 00:17:30
    chances of a soft lending Landing are
  • 00:17:32
    likely to diminish to the extent that
  • 00:17:33
    policy needs to be more restrictive
  • 00:17:36
    or restrictive for longer nonetheless
  • 00:17:38
    we're committed to getting inflation
  • 00:17:40
    back down to two percent because we
  • 00:17:42
    think that a failure to restore price
  • 00:17:44
    stability would mean far greater pain
  • 00:17:46
    later on
  • 00:17:49
    our vacancies still at the top of your
  • 00:17:51
    list in terms of understanding the labor
  • 00:17:53
    market and how much room there is there
  • 00:17:55
    yes vacancies are still almost two to
  • 00:17:58
    one ratio to unemployed people that's a
  • 00:18:02
    that and quits are are really very good
  • 00:18:05
    ways to look at how tight the labor
  • 00:18:07
    market is and how different it is from
  • 00:18:08
    other Cycles where which where the
  • 00:18:11
    generally the unemployment rate itself
  • 00:18:13
    is the is the single best indicator we
  • 00:18:14
    think those things have for quite a time
  • 00:18:16
    now uh really added value in terms of
  • 00:18:19
    understanding where the labor market is
  • 00:18:22
    okay
  • 00:18:27
    Nick tamaros of the Wall Street Journal
  • 00:18:29
    uh you said not too long ago uh in
  • 00:18:31
    describing the policy destination
  • 00:18:33
    there's still a way to go but I I
  • 00:18:37
    imagine you have to have some idea about
  • 00:18:39
    how you're thinking about your
  • 00:18:40
    destination whether it's a stopping
  • 00:18:42
    point or a pausing point and so I was
  • 00:18:44
    wondering if you could discuss how you
  • 00:18:47
    are thinking about uh as the data come
  • 00:18:50
    in where that destination is how it's
  • 00:18:53
    moving up if inflation doesn't perform
  • 00:18:55
    as you expect do you want to have a
  • 00:18:58
    policy rate it's above the underlying
  • 00:19:01
    inflation rate for example and do you
  • 00:19:04
    have an estimate for where you think the
  • 00:19:05
    underlying inflation rate might be in
  • 00:19:08
    the economy right now
  • 00:19:10
    well so
  • 00:19:12
    again we
  • 00:19:13
    we believe that we need to
  • 00:19:16
    raise our policy stance overall to a
  • 00:19:19
    level that is restrictive and by that I
  • 00:19:21
    mean is is meaningfully put putting mean
  • 00:19:25
    meaningful downward pressure on
  • 00:19:27
    inflation that's what we that's what we
  • 00:19:29
    need to
  • 00:19:30
    see in in The Stance of policy we also
  • 00:19:33
    know that there are long and variable
  • 00:19:35
    lags particularly as they relate to
  • 00:19:36
    inflation so it's a challenging
  • 00:19:38
    assessment so what do you look at you
  • 00:19:40
    look at broader Financial conditions as
  • 00:19:42
    you know are you look you look at where
  • 00:19:44
    rates are real and nominal in some cases
  • 00:19:46
    you look at credit spreads you look at
  • 00:19:48
    at Financial conditions indexes we also
  • 00:19:51
    I would think and you see this in the
  • 00:19:54
    this is something we talked about today
  • 00:19:55
    in the meeting and talk about in all of
  • 00:19:57
    our meetings and you see this I think in
  • 00:19:58
    in the committee forecast you want to be
  • 00:20:00
    at a place where real rates are positive
  • 00:20:02
    across the entire yield curve and I I
  • 00:20:05
    think that would be the case if you look
  • 00:20:06
    at the the numbers that were that we're
  • 00:20:08
    writing down and think about
  • 00:20:11
    um uh you measure those against some
  • 00:20:14
    sort of forward-looking assessment of
  • 00:20:16
    inflation inflation expectations I think
  • 00:20:18
    you would see at that time you'd see
  • 00:20:20
    positive real rates across the which
  • 00:20:23
    across the yield curve and that that is
  • 00:20:25
    also an important consideration
  • 00:20:29
    power
  • 00:20:31
    hi uh Howard Schneider with Reuters
  • 00:20:34
    thanks for uh the opportunity I I just
  • 00:20:37
    want to be clear on the on the steps
  • 00:20:40
    you say it's meeting by meeting but it
  • 00:20:42
    sure looks like we're going 75 50 25
  • 00:20:46
    um is 75 uh next month the Baseline
  • 00:20:50
    so
  • 00:20:51
    we we make one decision per meeting and
  • 00:20:54
    the meeting decision we made today was
  • 00:20:56
    to raise the federal funds rate by by
  • 00:20:58
    75.
  • 00:21:00
    um you're right that a uh you know a
  • 00:21:04
    the median for uh for the year-end
  • 00:21:07
    suggests another 125 basis points and
  • 00:21:10
    rate increases but there's also there's
  • 00:21:13
    a you know there's another fairly large
  • 00:21:14
    group that saw 100 basis points addition
  • 00:21:17
    to where we are today so that would be
  • 00:21:20
    25 basis points less so you know we're
  • 00:21:22
    going to make that decision at the
  • 00:21:23
    meeting we had we didn't make that
  • 00:21:24
    decision today we didn't vote on that
  • 00:21:27
    um I would say that you know we're
  • 00:21:28
    committed to getting to a restrictive
  • 00:21:30
    level of um uh for the federal funds
  • 00:21:34
    rate and getting there pretty quickly
  • 00:21:36
    and uh that's what we're thinking about
  • 00:21:38
    so just as a follow-up to that I'm
  • 00:21:41
    wondering about this sort of risk
  • 00:21:42
    management considerations here given
  • 00:21:43
    there's some discussion now of of
  • 00:21:45
    overdoing it what's the incentive to
  • 00:21:48
    continue front loading right now
  • 00:21:50
    um is it a lack of progress on inflation
  • 00:21:53
    seen in the CPI reports or is it a
  • 00:21:56
    motivation to get as much done while the
  • 00:21:59
    job market is still as strong as it is
  • 00:22:01
    so what we've seen is inflation has
  • 00:22:04
    we've our expectation has been that we
  • 00:22:07
    would begin to see inflation come down
  • 00:22:08
    largely because of of supply-side
  • 00:22:10
    healing by now we would have thought
  • 00:22:12
    that we would have seen some of that we
  • 00:22:14
    haven't we have seen some supply-side
  • 00:22:16
    healing but inflation has not really
  • 00:22:18
    come down if you look at at core pce
  • 00:22:20
    inflation which is you know a good
  • 00:22:22
    measure of where inflation is running
  • 00:22:24
    now if you look at it on a 3 6 and 12
  • 00:22:27
    month trailing annualized basis you'll
  • 00:22:30
    see that that inflation is at 4.8
  • 00:22:33
    percent 4.5 percent and 4.8 percent so
  • 00:22:36
    that's those that's a pretty good
  • 00:22:38
    summary of where we are with inflation
  • 00:22:39
    and that's not where we expected or
  • 00:22:41
    wanted to be so what that tells us is
  • 00:22:44
    that we need to continue and we can keep
  • 00:22:47
    doing these uh and we did today do
  • 00:22:49
    another large increase as we approach
  • 00:22:52
    the level that we think we need to get
  • 00:22:54
    to and we're still discovering what that
  • 00:22:55
    level is but people are writing that
  • 00:22:57
    down in their SCP where they think
  • 00:23:00
    policy needs to be so that that's how
  • 00:23:02
    that's how we're thinking about it
  • 00:23:04
    let's go to Colby
  • 00:23:09
    thank you Colby Smith for the financial
  • 00:23:11
    times uh chair pal how should we
  • 00:23:13
    interpret the fact that cornflation is
  • 00:23:15
    still not forecast in the SCP to be back
  • 00:23:17
    to Target in 2025 and yet the Dot Plot
  • 00:23:21
    projects Cuts as early as 2024. and does
  • 00:23:25
    that mean there's a level of inflation
  • 00:23:28
    um above the two percent Target that the
  • 00:23:30
    FED is willing to tolerate
  • 00:23:35
    so I guess core is at 2.1 in 2025 and in
  • 00:23:40
    the median and and and headline is at
  • 00:23:42
    2.0 so that's pretty close I mean we we
  • 00:23:45
    write down our forecasts and we we
  • 00:23:48
    figure out what the median is and we
  • 00:23:50
    publish it so it's not um I mean I would
  • 00:23:53
    say that if you know if if if actually
  • 00:23:56
    if the economy followed this path this
  • 00:23:57
    would be a pretty good outcome but
  • 00:23:59
    you're right it is a tenth higher than
  • 00:24:00
    two percent
  • 00:24:04
    inflation is becoming more entrenched
  • 00:24:07
    perhaps each month than why forego the
  • 00:24:10
    more aggressive 100 basis point increase
  • 00:24:13
    today and does that risk having to do
  • 00:24:15
    more later on yeah so we um as we as we
  • 00:24:18
    said you know at the last press
  • 00:24:19
    conference and in between that one and
  • 00:24:22
    this one we said that we would make our
  • 00:24:24
    decision based on the overall data
  • 00:24:26
    coming in so if you remember we we got a
  • 00:24:28
    we got a surprisingly low reading in
  • 00:24:30
    July and then a surprising High
  • 00:24:32
    surprisingly High reading for August so
  • 00:24:34
    I think you have to you can't really you
  • 00:24:37
    never want to overreact too much to any
  • 00:24:38
    one data point so if you look if you
  • 00:24:40
    look at them together and as I just
  • 00:24:42
    mentioned if you really really look at
  • 00:24:43
    this year's inflation 3 6 and 12-month
  • 00:24:46
    trailing you see inflation is running
  • 00:24:48
    too high it's running 4.5 or above you
  • 00:24:52
    don't need to know much more than that
  • 00:24:53
    if that's the one thing you know you
  • 00:24:55
    know that this committee is committed to
  • 00:24:57
    getting to a you know meaningfully
  • 00:24:59
    restrictive stance of policy and staying
  • 00:25:01
    there until until we feel confident that
  • 00:25:04
    inflation is coming down that's how we
  • 00:25:06
    that's how we think about it
  • 00:25:13
    hi Victoria Guido with Politico I
  • 00:25:16
    talk about the balance sheet you all
  • 00:25:18
    have left open the possibility that you
  • 00:25:21
    might sell mortgage-backed Securities
  • 00:25:22
    but we've seen significant slowing in
  • 00:25:25
    the housing market mortgage rates have
  • 00:25:26
    gone up significantly and I'm just
  • 00:25:27
    wondering whether conditions there
  • 00:25:30
    might affect your plans for for how
  • 00:25:33
    quickly you have the runoff on the MBS
  • 00:25:35
    side
  • 00:25:35
    so we what we said as you know was that
  • 00:25:38
    um we would consider that uh once
  • 00:25:41
    balance sheet uh
  • 00:25:43
    runoff is well underway I would say it's
  • 00:25:45
    not something we're considering right
  • 00:25:46
    now and not something I expect to be
  • 00:25:48
    considering uh in the near term it's
  • 00:25:50
    just uh it's something I think we will
  • 00:25:52
    turn to but that time the time for
  • 00:25:54
    turning to it
  • 00:25:55
    has not come and is not close well and
  • 00:25:58
    what
  • 00:26:01
    I think a number of things might affect
  • 00:26:03
    that decision but the main thing is
  • 00:26:04
    we're not considering that decision and
  • 00:26:05
    I don't expect that we will anytime soon
  • 00:26:09
    meal
  • 00:26:11
    I think Neil Irwin with axios a number
  • 00:26:15
    of commentators have uh come to the view
  • 00:26:17
    and including over at the World Bank
  • 00:26:19
    that simultaneous Global tightening
  • 00:26:21
    around the world is uh creates a risk of
  • 00:26:23
    a global recession that's worse than is
  • 00:26:24
    necessary to bring inflation down how do
  • 00:26:26
    you see that risk how do you think of
  • 00:26:28
    coordination with your fellow Central
  • 00:26:30
    bankers and is there is there much risk
  • 00:26:33
    of overdoing it on a global level
  • 00:26:36
    um so we
  • 00:26:38
    um actually my colleagues and I a number
  • 00:26:39
    of my FMC colleagues and I just got back
  • 00:26:41
    from one of our
  • 00:26:43
    frequent trips to Basel Switzerland to
  • 00:26:46
    meet with other senior Central Bank
  • 00:26:48
    officials from around the world we are
  • 00:26:50
    in pretty regular contact and we
  • 00:26:51
    exchange of course we all serve a
  • 00:26:53
    domestic mandate domestic objectives in
  • 00:26:55
    our case the Dual mandate maximum
  • 00:26:56
    employment price stability but we
  • 00:26:58
    regularly discuss uh
  • 00:27:00
    uh what we're seeing in terms of our own
  • 00:27:03
    economy and international spillovers and
  • 00:27:04
    it's it's a very ongoing constant kind
  • 00:27:07
    of a process so we are very aware of
  • 00:27:11
    what's going on in in other economies
  • 00:27:13
    around the world and what that means for
  • 00:27:14
    us and vice versa our the forecast that
  • 00:27:18
    we that we put together that our staff
  • 00:27:20
    puts together and that we put together
  • 00:27:21
    on our own always take all of that try
  • 00:27:24
    to take all that into account I mean I
  • 00:27:25
    can't say that we do it perfectly but
  • 00:27:27
    it's not it's not as if we don't think
  • 00:27:29
    about you know the the policy decisions
  • 00:27:31
    monetary policy and otherwise the
  • 00:27:33
    economic developments that are taking
  • 00:27:35
    place in major economies that can have
  • 00:27:37
    an effect on the US economy that is very
  • 00:27:39
    much baked into our our own forecast and
  • 00:27:42
    our own understanding of of you know of
  • 00:27:44
    the US economy as best we can it won't
  • 00:27:46
    be perfect
  • 00:27:48
    so you know I I don't see that it's hard
  • 00:27:51
    to talk about collaboration
  • 00:27:53
    in a world where people have very
  • 00:27:55
    different uh levels of interest rates if
  • 00:27:57
    you remember there were coordinated cuts
  • 00:27:59
    and raises and things like that at
  • 00:28:00
    various times and but really really
  • 00:28:02
    we're all we're in very different
  • 00:28:03
    situations but I I will tell you that
  • 00:28:06
    our our contact is more or less ongoing
  • 00:28:09
    and it's not coordination but there's a
  • 00:28:11
    lot of information sharing and we all I
  • 00:28:13
    think are informed by what by what other
  • 00:28:16
    important economies and contact minors
  • 00:28:18
    that are important to the United States
  • 00:28:19
    are doing
  • 00:28:22
    uh Craig
  • 00:28:26
    Torres from Bloomberg uh chair pal you
  • 00:28:29
    talked about some ways the higher
  • 00:28:31
    interest rates are affecting the economy
  • 00:28:33
    but we've also seen a resilient labor
  • 00:28:36
    market with durable consumption uh
  • 00:28:39
    strong corporate profits
  • 00:28:41
    and I'm wondering what your story is on
  • 00:28:44
    the resilience of the economy after all
  • 00:28:46
    you and your colleagues said well we
  • 00:28:48
    started tightening in March when we were
  • 00:28:49
    talking about interest rates in the
  • 00:28:51
    future and indeed treasury rates moved
  • 00:28:54
    up so we should have had a lot of
  • 00:28:56
    tightening
  • 00:28:57
    um taking effect
  • 00:28:59
    why is the economy in your view
  • 00:29:02
    so resilient and does it mean that we
  • 00:29:04
    might need a possibly higher terminal
  • 00:29:06
    rate
  • 00:29:07
    you're right of course the labor market
  • 00:29:09
    in particular has been has been very
  • 00:29:11
    strong but there are the you know the
  • 00:29:14
    the sectors of the economy that are most
  • 00:29:17
    interest rate Senate of are sensitive
  • 00:29:19
    are certainly uh showing the effects of
  • 00:29:22
    our tightening and of course the obvious
  • 00:29:23
    example is housing where you see
  • 00:29:26
    declining activity and of all different
  • 00:29:28
    kinds and and housing price increases
  • 00:29:31
    moving down so we're having an effect on
  • 00:29:35
    on interest sensitive spending uh I
  • 00:29:38
    think through through exchange rates
  • 00:29:41
    were having an effect on on exports and
  • 00:29:43
    imports
  • 00:29:44
    I think um so all of that's happening
  • 00:29:49
    but you're right it's just and we've
  • 00:29:51
    we've we've said this you know this is a
  • 00:29:52
    this is a strong robust economy
  • 00:29:55
    um people have savings on their balance
  • 00:29:57
    sheet from the period when they couldn't
  • 00:29:59
    spend and where they were getting
  • 00:30:01
    government transfers they're still very
  • 00:30:02
    significant savings out there although
  • 00:30:04
    not as much at the lower end of the
  • 00:30:07
    income Spectrum but still some savings
  • 00:30:09
    out there to support growth the the the
  • 00:30:12
    states are very flush with cash so
  • 00:30:15
    there's a good reason to think that this
  • 00:30:17
    this will continue to be a reasonably
  • 00:30:19
    strong economy now the data the data
  • 00:30:21
    sort of are showing that
  • 00:30:24
    growth is is is going to be below Trend
  • 00:30:27
    this year we think of trend as being
  • 00:30:28
    about 1.8 percent in or in that range
  • 00:30:32
    um we we we're forecasting growth well
  • 00:30:34
    below that and most forecasters are but
  • 00:30:37
    you're right there is a there's there's
  • 00:30:38
    certainly a possibility that that that
  • 00:30:40
    growth can be stronger than that and you
  • 00:30:43
    know that's a good thing because because
  • 00:30:44
    that means the economy will be more
  • 00:30:46
    resistant to uh you know to a
  • 00:30:49
    significant downturn
  • 00:30:51
    um you know but of course we are focused
  • 00:30:53
    on the thing I started with it which is
  • 00:30:55
    getting inflation back down to two
  • 00:30:57
    percent
  • 00:30:58
    um we we can't fail to do that if we I
  • 00:31:02
    mean that's if we were to fail to do
  • 00:31:04
    that that would be the thing that would
  • 00:31:05
    be most painful for the people that we
  • 00:31:07
    serve so for now that has to be our our
  • 00:31:11
    overarching focus and you see that I
  • 00:31:14
    think in the uh in the SCP in in the
  • 00:31:17
    levels of rates that we'll be moving to
  • 00:31:19
    reasonably quickly uh assuming things
  • 00:31:22
    turn out roughly in line with the SCP
  • 00:31:24
    so that's how we think about it
  • 00:31:31
    thank you Mr chairman in a world of
  • 00:31:33
    euphemisms that we live in here with uh
  • 00:31:36
    below Trend growth and modest increase
  • 00:31:38
    in unemployment I'm wondering if I could
  • 00:31:39
    ask you a couple of direct questions for
  • 00:31:41
    the American people uh do the odds now
  • 00:31:44
    favor given where you are and where
  • 00:31:45
    you're going with interest rates favor a
  • 00:31:47
    recession
  • 00:31:49
    um 4.4 unemployment is about 1.3 million
  • 00:31:53
    jobs is that acceptable job loss and
  • 00:31:55
    then given that the data you look at is
  • 00:31:58
    backward looking and the lags in your
  • 00:32:00
    policy are forward-looking and you don't
  • 00:32:02
    know what they are how will you know or
  • 00:32:05
    will you know if you've gone too far
  • 00:32:08
    so I I don't um I don't know what the
  • 00:32:12
    odds are I think that that there's a
  • 00:32:14
    very high likelihood that we'll have uh
  • 00:32:17
    a period of
  • 00:32:19
    what I've mentioned is below trend of
  • 00:32:21
    growth by which I mean much lower growth
  • 00:32:23
    and we're seeing that now so the median
  • 00:32:25
    forecast I think this year for among my
  • 00:32:28
    colleagues and me was 0.2 percent growth
  • 00:32:31
    so that's that's very slow growth and
  • 00:32:32
    and then below Trend next year I think
  • 00:32:34
    the medium was 1.2 also well below so
  • 00:32:37
    that's a slower uh it's a it's a very
  • 00:32:40
    slow level of growth and it could give
  • 00:32:42
    rise to increases in unemployment but I
  • 00:32:45
    think that's so that is something that
  • 00:32:46
    that we think we need to have and we
  • 00:32:48
    think we need to have softer labor
  • 00:32:50
    market conditions as well
  • 00:32:52
    um you know we're never going to say
  • 00:32:54
    that there that there are too many
  • 00:32:55
    people working but the real point is
  • 00:32:58
    this
  • 00:32:59
    um inflation what we hear from people
  • 00:33:01
    when we meet with them is that that they
  • 00:33:04
    really are suffering from inflation and
  • 00:33:06
    if we want to set ourselves up really
  • 00:33:08
    really light the way to another period
  • 00:33:10
    of a very strong labor market we have
  • 00:33:13
    got to get inflation behind us I wish
  • 00:33:16
    there were a painless way to do that
  • 00:33:18
    there isn't so what we need to do is get
  • 00:33:21
    rates up to to the point where we're
  • 00:33:22
    putting meaningful downward pressure on
  • 00:33:25
    inflation
  • 00:33:26
    and that's what we're that's what we're
  • 00:33:28
    doing and um we we don't certainly don't
  • 00:33:30
    don't hope we we certainly haven't given
  • 00:33:33
    up the idea that we can have a
  • 00:33:35
    relatively modest increase in in
  • 00:33:37
    unemployment nonetheless we need to
  • 00:33:39
    complete this task
  • 00:33:43
    if you've gone too far
  • 00:33:46
    it's hard to hard to hypothetically deal
  • 00:33:49
    with that question I mean our again our
  • 00:33:51
    our really tight Focus now continues to
  • 00:33:53
    be ongoing rate increases to get the
  • 00:33:55
    policy rate up up where it needs to be
  • 00:33:58
    and as I said you can look at the look
  • 00:34:00
    at this SCP as today's estimate of where
  • 00:34:04
    we think those rates would be of course
  • 00:34:05
    they will evolve over time
  • 00:34:07
    Chris we're Gabriel
  • 00:34:10
    thank you Christopher I wanted to follow
  • 00:34:13
    up with what you uh just mentioned about
  • 00:34:15
    the labor market
  • 00:34:17
    you said several times that to have the
  • 00:34:19
    labor market we want we need price
  • 00:34:21
    stability
  • 00:34:23
    I suggested maybe there isn't a
  • 00:34:24
    trade-off in the long run but in the
  • 00:34:26
    short run there is a lot of concern as
  • 00:34:28
    people have been expressing here about
  • 00:34:30
    higher unemployment as a result of these
  • 00:34:32
    uh rate hikes or as a result of the rate
  • 00:34:34
    of hikes so can you explain though uh
  • 00:34:37
    what about high inflation now
  • 00:34:40
    threatens the job market I mean you seem
  • 00:34:41
    to suggest then
  • 00:34:43
    inflation High inflation will you know
  • 00:34:47
    will eventually lead to a weaker job
  • 00:34:49
    market so can you spell that out a
  • 00:34:50
    little more for the general public and
  • 00:34:52
    how that would work so for starters
  • 00:34:53
    people are seeing their wage increases
  • 00:34:55
    their their wage increases eaten up by
  • 00:34:58
    inflation
  • 00:34:59
    so if you're if you your family is one
  • 00:35:01
    where you spend most of your paycheck
  • 00:35:04
    every paycheck cycle on gas food
  • 00:35:07
    Transportation clothing basics of life
  • 00:35:10
    and prices go up the way they've been
  • 00:35:12
    going up you're in trouble right away
  • 00:35:14
    you don't have a cushion and this is
  • 00:35:17
    very painful for people at the lower end
  • 00:35:19
    of the income and wealth Spectrum so
  • 00:35:21
    that's what we're hearing from people is
  • 00:35:22
    you know it very much that inflation is
  • 00:35:25
    really hurting so how do we get rid of
  • 00:35:27
    inflation and as I mentioned it would be
  • 00:35:30
    nice if there were you know a way to
  • 00:35:32
    just wish it away but there isn't
  • 00:35:34
    um we have to get supply and demand back
  • 00:35:36
    into alignment and the way we do that is
  • 00:35:39
    by slowing the economy hopefully we do
  • 00:35:41
    that by slowing the economy and we see
  • 00:35:44
    some softening in labor market
  • 00:35:46
    conditions and we see a big contribution
  • 00:35:49
    from supply side uh you know
  • 00:35:51
    improvements and things like that but
  • 00:35:53
    none of that is guaranteed in any case
  • 00:35:55
    we our job is to deliver price stability
  • 00:35:58
    and I think you can think of price
  • 00:35:59
    stability as an asset that just delivers
  • 00:36:02
    large benefits to society over a long
  • 00:36:05
    period of time we really saw that for a
  • 00:36:08
    long time the United States had two
  • 00:36:10
    percent inflation didn't move around
  • 00:36:12
    much and that was enormously beneficial
  • 00:36:14
    to the public that we that we serve and
  • 00:36:17
    we have to get back to that and and and
  • 00:36:19
    keep it for another long period of time
  • 00:36:21
    to to pull back from the task of doing
  • 00:36:24
    that is you're just you're just
  • 00:36:25
    postponing the record shows that if you
  • 00:36:28
    postpone that that delay is only likely
  • 00:36:31
    to lead to more pain so
  • 00:36:34
    um you know I think we're moving
  • 00:36:36
    to to do what we need to do and do our
  • 00:36:38
    jobs and and uh and that's what you see
  • 00:36:41
    us doing
  • 00:36:46
    thank you for taking the question Mr
  • 00:36:47
    chairman Edward Lawrence for Fox
  • 00:36:48
    Business
  • 00:36:49
    um so you had said that Americans and
  • 00:36:51
    businesses need to feel some economic
  • 00:36:52
    pain as we go forward how long from here
  • 00:36:54
    should Americans be prepared for that
  • 00:36:57
    economic pain
  • 00:36:58
    how long I mean it it really depends on
  • 00:37:01
    how long it takes for wages and and more
  • 00:37:03
    than that price is to to come down for
  • 00:37:05
    for inflation to come down and you you
  • 00:37:07
    so you what you see in our in our
  • 00:37:09
    projections today is that uh inflation
  • 00:37:13
    moves down uh you know significantly
  • 00:37:16
    over the course of next year and then
  • 00:37:18
    more the next year after that and you
  • 00:37:20
    know I think I think um once you're on
  • 00:37:23
    that path that's that's a good thing and
  • 00:37:25
    things will start to feel better to
  • 00:37:27
    people they'll feel lower inflation
  • 00:37:28
    they'll feel the economy is improving
  • 00:37:30
    and also if our if our projections are
  • 00:37:32
    are close to right you'll see you will
  • 00:37:35
    see that you know that the costs in
  • 00:37:37
    unemployment are they're meaningful and
  • 00:37:40
    they're certainly very meaningful to the
  • 00:37:42
    people who lose their jobs and we talk
  • 00:37:43
    about that in our meetings
  • 00:37:45
    um quite a lot but at the same time we'd
  • 00:37:48
    be setting the economy up for another
  • 00:37:49
    long period this this era has been noted
  • 00:37:53
    for very long expansions we've had three
  • 00:37:55
    of the four longest in measured history
  • 00:37:56
    since we got
  • 00:37:58
    inflation under control and that's
  • 00:38:00
    that's not an accident so when inflation
  • 00:38:02
    is low and stable you can have these 9
  • 00:38:04
    10 11 10-year anyway
  • 00:38:08
    expansions and you saw you can see what
  • 00:38:11
    we saw in
  • 00:38:12
    2018-19 and 20 which was very low on
  • 00:38:16
    employment that the biggest wage gains
  • 00:38:18
    going to people at the low end of the
  • 00:38:19
    spectrum the smallest racial gaps that
  • 00:38:22
    we've seen in since we started keeping
  • 00:38:24
    track of that so we want to get back to
  • 00:38:26
    that but to get there we're going to
  • 00:38:28
    have to get supply and demand back in
  • 00:38:31
    alignment and that's going to take tight
  • 00:38:33
    uh
  • 00:38:34
    you know tight monetary policy for a
  • 00:38:36
    period of time period of time
  • 00:38:38
    what is that economic pain in your mind
  • 00:38:40
    is it job losses is it the higher
  • 00:38:42
    interest rates on credit cards what is
  • 00:38:44
    that economic pain so it's all of those
  • 00:38:45
    things you know higher interest rates
  • 00:38:47
    slower growth and softening labor market
  • 00:38:50
    are are all painful for the public that
  • 00:38:53
    we serve but they're not as painful as
  • 00:38:56
    failing to to restore price stability
  • 00:38:59
    and then having to come back and do it
  • 00:39:02
    uh you know down the road again and
  • 00:39:05
    doing at a time when actually now people
  • 00:39:07
    have really come to expect
  • 00:39:09
    uh you know in high inflation if if the
  • 00:39:12
    if the concept of high inflation becomes
  • 00:39:15
    entrenched in people's economic thinking
  • 00:39:17
    about their decisions then then sort of
  • 00:39:20
    getting back to price stability the cost
  • 00:39:22
    the cost of getting back to price
  • 00:39:23
    stability just Rises and so we want to
  • 00:39:26
    avoid that we want to we want to act
  • 00:39:28
    aggressively now and get this job done
  • 00:39:30
    and keep at it until it's done
  • 00:39:36
    thank you chairman Paul Nicole good kind
  • 00:39:38
    scene on business
  • 00:39:40
    um existing home sales have fallen for
  • 00:39:42
    seven months straight mortgage rates are
  • 00:39:44
    at their highest level since 2008
  • 00:39:46
    um yet mortgage demand increase this
  • 00:39:48
    week and housing prices are still
  • 00:39:49
    elevated now at the end of your June
  • 00:39:51
    press conference you mentioned plans to
  • 00:39:53
    reset the housing market I was wondering
  • 00:39:56
    if you could elaborate on what you mean
  • 00:39:57
    when you say reset and uh what you think
  • 00:40:00
    it will take to actually get there
  • 00:40:04
    so we when I say reset I'm not looking
  • 00:40:06
    at a particular specific you know set of
  • 00:40:08
    data or anything what I'm really saying
  • 00:40:10
    is that we've we've had it we've had a
  • 00:40:12
    time of of a red hot housing market all
  • 00:40:15
    over the country where you know famously
  • 00:40:17
    houses were selling to
  • 00:40:19
    the first buyer at 10 above the the ask
  • 00:40:22
    before even seeing the house that kind
  • 00:40:24
    of thing so
  • 00:40:26
    um there was a big imbalance between
  • 00:40:27
    supply and demand housing prices were
  • 00:40:29
    going up at an unsustainably fast level
  • 00:40:31
    so the deceleration housing prices that
  • 00:40:34
    we're seeing should help bring sort of
  • 00:40:36
    prices more closely in line with rents
  • 00:40:38
    and other housing market fundamentals
  • 00:40:41
    um and you know that's a good thing for
  • 00:40:43
    the longer term what we need is supply
  • 00:40:45
    and demand to get better aligned so that
  • 00:40:48
    housing prices go up at a reasonable
  • 00:40:49
    level at a reasonable pace and that
  • 00:40:53
    people can afford houses again and I
  • 00:40:55
    think we so we probably in the housing
  • 00:40:56
    market have to go through a correction
  • 00:40:58
    to get back to that place there's also
  • 00:41:00
    they're also longer run issues though
  • 00:41:02
    with the housing market as you know
  • 00:41:03
    we're we're you know uh
  • 00:41:06
    it's it's difficult to find Lots now
  • 00:41:10
    close close enough to cities and things
  • 00:41:12
    like that so Builders are having a hard
  • 00:41:13
    time getting zoning and lots and workers
  • 00:41:15
    and materials and things like that but
  • 00:41:17
    from a sort of business cycle standpoint
  • 00:41:19
    this difficult correction should put the
  • 00:41:23
    housing market back into better better
  • 00:41:25
    balance
  • 00:41:30
    doctor made up such a large part of this
  • 00:41:32
    hot CPI report that we saw do you think
  • 00:41:35
    that there is a lag and that we will see
  • 00:41:37
    that come down in the coming months or
  • 00:41:38
    do you think that there's still this
  • 00:41:39
    imbalance that needs to be addressed
  • 00:41:42
    you know I think that shelter shelter
  • 00:41:45
    inflation is going to remain high for
  • 00:41:46
    some time you know we're looking for it
  • 00:41:48
    to come down but it's not exactly clear
  • 00:41:50
    when that will happen
  • 00:41:52
    um so
  • 00:41:53
    it may take some time so I think that I
  • 00:41:56
    think you know hope for the best plan
  • 00:41:57
    for the worst so I think on shelter
  • 00:41:59
    inflation you just got to assume that
  • 00:42:01
    it's going to remain pretty high for a
  • 00:42:03
    while
  • 00:42:04
    okay we'll go to Gene for the last
  • 00:42:06
    question
  • 00:42:08
    hi Gene Young with market news
  • 00:42:11
    um you've talked about the need to get
  • 00:42:12
    real rates into positive territory and
  • 00:42:15
    you said earlier that policy is just
  • 00:42:17
    moving into that territory now so I'm
  • 00:42:21
    curious um how restrictive is rates at
  • 00:42:24
    4.6 percent expected is is that expected
  • 00:42:28
    to be next year how restrictive
  • 00:42:31
    so I think if you look you know when we
  • 00:42:34
    get to if we let's assume we do get to
  • 00:42:36
    that level
  • 00:42:37
    um which I think is likely uh you know
  • 00:42:41
    you what you're going to do is you're
  • 00:42:42
    going to adjust that for some forward
  • 00:42:44
    measure looking measure of of uh of um
  • 00:42:48
    of inflation and you know that could be
  • 00:42:51
    you pick your measure it could be you
  • 00:42:53
    know there there are all kinds of
  • 00:42:54
    different things you could pick and you
  • 00:42:55
    get but what you'll get is a positive
  • 00:42:57
    number in all cases you will get forward
  • 00:42:59
    inflation expectations in the short term
  • 00:43:01
    I think that are going to be
  • 00:43:03
    assuming that we're doing our jobs
  • 00:43:04
    appropriately that will be significant
  • 00:43:06
    so you'll have a positive of federal
  • 00:43:08
    funds rate
  • 00:43:10
    at that point by which could be one
  • 00:43:12
    percent or so but I mean I don't know
  • 00:43:14
    exactly what it would be but it would be
  • 00:43:15
    significantly positive when we get to
  • 00:43:17
    that level and let me say you know we've
  • 00:43:19
    written down what we think is is a
  • 00:43:23
    plausible path for the federal funds
  • 00:43:25
    rate the path that we actually execute
  • 00:43:27
    will be enough it will be enough to
  • 00:43:29
    restore price stability so this is this
  • 00:43:31
    is something that as you can see they've
  • 00:43:33
    they've moved up and we're going to
  • 00:43:35
    continue to watch incoming data and the
  • 00:43:38
    evolving Outlook and and ask ourselves
  • 00:43:39
    where our whether our policy is in the
  • 00:43:42
    right place as we go
  • 00:43:44
    thank you very much
Tag
  • Federal Reserve
  • inflation
  • interest rates
  • economic growth
  • labor market
  • monetary policy
  • price stability
  • GDP
  • unemployment
  • economic projections