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연준이 기준금리를 0.25%p 인하해 3.75~4%로 결정. 근원 인플레이션 3.0%, 헤드라인 2.8%로 목표 2%를 크게 상회해 우려 표명. 고용시장 하방 위험 증가로 정책을 중립 방향으로 이동. 12월 추가 인하는 확정이 아니며 위원 간 견해 차이가 큼. 대차대조표 축소(QT)를 12월 1일부로 종료하고 기관MBS 상환금을 국채 단기물로 재투자.
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rate and it's been stable since September. So that that that tells you that um inflation I you know you can you can uh we're we're we're at 3.0% core inflation 2.8% uh headline. So, we've been well above the 2% uh that that amount whatever it is uh 7.8 or our full percentage point above 2% for some time and that's a concern.
You know, we need to get back down to 2%. And uh we need to keep focused on that even though we do now face some some new inflation from energy. So, I I I'd be hardressed to say that one of them is obviously more at risk than the other. And if I may, what happens uh if there's no Federal Reserve chairman confirmed on May 15th?
Would you stay on? So if my successor is not confirmed by the end of my term as chair, I would serve as chair prom until he is confirmed. Um that is what the law calls for. Uh that's what we've done on several occasions, including involving me, and it's what we're going to do in this situation. Uh, and while I'm at it, um, on the question whether I will leave while the investigation is ongoing, I have no intention of leaving the board until the investigation is well and truly over with transparency and finality.
And I would refer you to the statement that was in the Fed's brief that you will all have seen, and I won't have anything more for you on that. On the question of whether I will then continue to serve as a governor after my term ends and after the investigation is over, I have not made that decision yet.
Uh, and I will make that decision based on what I think is best for the institution and for the people we serve. Figuring you probably were going to set the dominoes off there, Edward. And I'm not going to have any more to say on those issues. By the way, thank you very much. Claire Jones from the Financial Times.
Um, people have drawn quite a few historical parallels with the current situation. We've seen oil price shocks in the past. Um some people have said the first Gulf War and the Fed's response to that where there was a focus on the growth risks um is the right parallel to what extent would you agree with that and to what extent would do you think we're in a different place today?
Thank you. You know we it's it's really hard to say until we see the situation the actual situation. Um in some circumstances that might be the right uh case. In fact, for example, if we do see the kinds of uh of disinflationary progress that we expect to see with due to tariffs that I mentioned, um I think it's hard to say and it will depend to some extent on on the size and duration of the effects we're seeing on prices and and it will depend a lot on uh what we can see in inflation expectations.
And just one follow up if I may just on the BLS report um that was mentioned briefly there. It doesn't seem from the projections or from the comments you've made today about the unemployment rate and focusing on that that your view on the labor market story to a large part being a supply side story has changed um despite the quite negative number in February.
Would that be the right take? And was there anyone else in the room who thought differently and that the February jobs report was cause for concern? So I think you have to take the take the two together. you know, the um in a way the uh January report was a positive surprise and the February report was a negative surprise.
Uh if you put them together, you get something in the middle. And I I think you have to real as you do, I'm sure realize there were there was a strike and there was weather and that's about 80,000 of the negative effect total on the February report. Notwithstanding that, so so what do you what do you see if you take a step back?
Overall there are a number of indicators that suggest a degree of stability but the thing that I I think um good number of people on the committee are concerned are higher than earlier in the year as inflation for goods has picked up in contrast disinflation appears to be continuing for services near-term measures of inflation expectations have moved up on balance over the course of this year on news about tariffs as reflected in both market and surveybased measures beyond the next year or or so.
However, most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to to 3 and 3/4 to 4%.
Higher tariffs are pushing up prices in some categories of goods, resulting in higher overall inflation. A reasonable base case is that the effects on inflation will be relatively short-lived, a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent.
And that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem. In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals.
Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate. With downside risks to employment having increased in recent months, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance.
With today's decision, we remain [clears throat] well positioned to respond in a timely way to potential economic developments. We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks. We continue to face two-sided risks.
In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a preset course. At today's meeting, the committee also decided to conclude the reduction of our aggregate securities holdings as of December 1.
Our long-stated plan has been to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions. Signs have clearly emerged that we have reached that standard. In money markets, repo rates have moved up relative to our administered rates and we have seen more notable pressures on selected dates along with more use of our standing repo facility.
In addition, the effective federal funds rate has begun to move up relative to the rate of interest on reserve balances. These developments are what we expected to see as the size of our balance sheet declined and warrant today's decision to cease runoff. Over the three and a half years that we've been shrinking our balance sheet, our securities holdings have declined by $2.2 trillion.
As a share of nominal GDP, our balance sheet has fallen from 35% to about 21%. In December, we'll enter the next phase of our normalization plans by holding the size of our balance sheet steady for a time while reserve balances continue to move gradually lower as other non-reserve liabilities such as currency keep growing.
We will continue to allow agency securities to run off our balance sheet and will reinvest the proceeds from those securities in Treasury bills, furthering progress toward a portfolio consisting primarily of Treasury securities. This reinvestment strategy will also help move the weighted average maturity of our portfolio closer to that of the outstanding stock of Treasury securities, thus furthering the normalization of the composition of our balance sheet.
The Fed has been assigned two goals for monetary policy, maximum employment and stable prices. We remain committed to supporting max our maximum employment, bringing our inflation sustainably to our 2% goal, and keeping longerterm inflation expectations well anchored. Our success in delivering on these goals matters to all Americans.
We understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions. Nick
Nick Timosro of the Wall Street Journal. Chair Powell, are you uncomfortable with how market pricing has assumed a rate cut is a foregone conclusion at your next meeting? Well, I as I just mentioned, um a further reduction in the policy rate of December meeting is not a foregone conclusion as I've just said.
So, uh, I would say that that needs to be taken on board. We had, um, you know, I would just say this, uh, 19 participants on the committee. Everyone works very hard at this and takes their obligations to serve the American people very seriously. And at a time when we have tension between our our two goals, we have uh, you know, strong views across the committee.
And as I mentioned, uh, there were strongly differing views today. And uh the takeaway from that is that we haven't made a decision about December and you know we're going to be looking at the data that we have uh how that affects the outlook and the balance of risks. And I'll just say that you and some of your colleagues have framed u last month and maybe today uh I won't put words in your mouth.
There's a riskmanagement exercise. At what point do you uh conclude that you've taken out enough insurance? Are you looking for some kind of improvement in the outlook or could this unfold along the lines of last year where you made a sequence of adjustments and then [clears throat] waited to gather more information?
So the way we have been think way I've been thinking about it is um the the the risks to the two goals for a very long time the risk was clearly of higher inflation and then that has changed now and as we saw the particularly after we saw after the July meeting we saw the downward provisions in job creation we saw a very different picture of the labor market and suggested that there were higher downside risks to the labor market than we had thought and that suggested that policy which we had been holding at a at a I would say modestly others people would say moderately restrictive level needed to move more in the direction over time of neutral.
If the two goals are sort of equally at risk then you ought to be at neutral because one of them's calling for you to hike and one of them is calling for you to cut. So if that if that got back into balance then you'd want to be roughly at neutral. So in that sense it was a riskmanagement uh and I would say the same about today sort of the same logic but as I mentioned going forward is is a different thing
CLA um Cla Jones Financial Times um thank you for taking this question um you know we we've [clears throat] we've we've just heard from you that that the um the discussion in December and the conclusion of the discussion is not a foregone conclusion. And I'd like to just dig into that a little bit more about what sort of arguments were brought up.
Was there any consideration for instance of the investment we're seeing in AI and some of the the generation of household wealth through rises in stock prices related to the AI boom. Thank you. You know, I wouldn't say that's a that's that's a factor in everyone's assessment of the economy. I wouldn't say it's the driving factor, I don't think, for anybody.
You know, I guess I would say it this way. Once again, I I would just point out that we have the situation where the risks are to the upside for inflation and to to the downside for employment. We have one tool. You can't do both of those. So, you can't address both those at once. You've got a very different situation.
So, you have some people people have different forecasts, right? So, they'll they'll they'll they'll feel they'll forecast faster or slower progress on one or the other. And they also have different levels of risk aversion. And you know people, some will be more averse to inflation overruns and some will be more averse to underruns of employment.
And so you put that together and as you can see from the SCP and from the public discussion that goes on between the meetings when you know participants go out and talk they're very disperate views and they were reflected in strongly differing views in today's meeting as I as I pointed out in my remarks and that's what leads me to say that you know that we haven't made a decision about about December.
You know, I always say that it's a fact that we don't make decisions in advance, but this is I'm saying something in addition here is that that it's not it's not to be seen as a foregone conclusion. In fact, far from it. Can I just ask a quick follow up on QT? How much of the um the the fund impressions we've seen in money markets are related to the US Treasury issue more shortterm debt?
you know, that could be one of the factors, but the reality is we've seen, you know, the things that we've seen um higher repo rates and federal funds rate moving up. These are the very things that we've se that we that we look for. We actually have a a framework for looking at, you know, what the place we're trying to reach.
What we said for a long time now is that when we uh feel like we're a little bit or a bit above uh what we consider a level that's ample that we would freeze the size of the balance sheet. Of course, reserves will continue to decline from that point forward as non-reserve liabilities grow. So, this happened some of it some things have been happening for some time now showing a gradual tightening in money market conditions.
Really in the last call it 3 weeks or so you've seen more significant tightening and I think a clear assessment that that we're at that place. The other thing is you know we're we're the balance sheet is shrinking at a very very slow pace now. we we've reduced it by half twice. Uh and so there's not a lot of benefit to be you know to be holding on for to get the last few dollars because you know uh again the balance sheets reserves are going to continue to shrink as non-reserves grow.
So, you know, there was support on the committee uh as we thought about it to go ahead with this and and announce effective December 1 that we will be, you know, freezing the size of the balance sheet and that the December 1 date gives the markets a little bit of time to adapt. Colby, thank you. Colobby Smith with the [clears throat] New York Times.
So much of the rationale for cutting interest rates even as inflation moves away from the 2% target seems to be, you know, that there are these mounting downside risks to the labor market. But if those don't materialize and the labor market either stabilizes around current employment levels or even starts to strengthen somewhat, how would that change your perception of how much interest rates need to fall from here?
Would you then be a bit more concerned about underlying inflation and the possibility of second round effects from tariffs? Yeah. I mean, in principle, if if you were to see data that suggested that the labor market strengthening or even that it's stabilizing, you know, that would certainly play into our decisions going forward.
So, and we do have, you know, we get some data. The labor market is a place where we get, for example, we get the state level data on initial claims which which are sending a sort of a signal of more of the same. We also get you job openings. Um, and we'll get lots of survey data. We'll get the Beige Book and things like that.
So, we'll have a we'll have a picture of what's going on in the labor market. And you know, the fact that we're not seeing an uptick in in claims or a downtick really in openings um suggests that you're seeing maybe maybe continued very gradual cooling, but nothing more than that. So that does give you some comfort.
But if this shutdown lasts a while longer and you don't have that data [clears throat] in hand, I I'm just wondering how that hinders the committee's ability to assess the state of the labor market and make the right policy decisions and and also how much is that factoring to the into the debate about December?
Yeah. So, you know, we'll we get we get like I mentioned what we get in the labor area. We get some data in the in inflation, some data in economic activity. Um and we'll get we'll have a picture of what's going on. We also will have the beige book. Again, uh I would say we're not going to be able to have the, you know, the detailed feel uh of of things, but I think if there were a significant or material change in the economy one way or another, I think we'd I think we'd pick that up through this.
So, in terms of how it might affect December, it's really hard to say. December's uh you know, this the meeting is like I guess six weeks away. Um we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds.
Steve Steve Leman CNBC [clears throat] Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides. Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime, we see, you know, a labor market that's kind of I don't want to say stable, but it's it's uh it's not clearly in motion. Not it's not clearly declining quickly.
In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a, you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, [clears throat] um, if you stop at the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So, you're right. the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature we'll reinvest those in treasury bills which will foster both a more treasury balance sheet and also a shorter duration.
So that's what in the meantime if you freeze the size of the balance sheet the non-reserve liabilities currency for example they're going to continue to grow organically and because the size of the balance sheet is frozen you have further shrinkage in in reserves and reserves is the thing that we're that we're managing that has to be ample.
So that'll happen for a time but not not a tremendously long time. We don't know exactly how long, but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy. So, we'll be adding reserves at a certain point.
And that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet. And there's a desire that the that the balance sheet be right now we we're it's it's got a lot more duration than the outstanding universe of Treasury securities.
And we want to move to a place where we're closer to that duration. That'll take some time. We haven't made a decision about the ultimate end point. But we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries and that means a shorter duration uh balance sheet.
Now, this is something that's going to be take a long time and move very very gradually. I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell, [cough] [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report?
So, some components came in lower than expected, but core [clears throat] inflation was still at 3%. So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
uh when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that, good news that housing services inflation has has been coming down and is expected to continue to come down. So, if you remember a year a couple years ago, that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months, but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is but it might be you know five or six uh tenths and so that you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that so that's not so far from your goal.
Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be onetime inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in [clears throat] services inflation, what are some of the things that the Fed could do to address that? Um and especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[cough] Chris, [clears throat] great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] um would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I [clears throat] don't think that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out but I don't think they're particularly interest sensitive compared to some of the other sectors. And then just a quick followup, could you you mentioned that you do have data that you're looking at for inflation and growth in the absence of government data.
Could you give us a sense? I think we know a lot about the jobs data that's out there. Can you give us a sense of what you're looking at to track inflation in the absence of government data? Thank you. So, it's a lot of things and it it doesn't replace government data, but you know, and you know, all of these uh it's you know, it's I'll just mention some of the many many names, price stats, uh Adobe and and others.
uh uh and and um for wage inflation, there's ADP data. Um on spending, you're going to ask about spending at some point. You know, there are lots of other things that we look at, but it's again, it's um it's many u many different sources and again, including what we get out of the of the the Beige book, which will be sort of um come out midcycle as always.
And it doesn't it doesn't replace uh the government data, but it gives us a picture. Again, I think if something material were happening, if there were material developments, I think we would pick that up. I don't think we'll be able to have the very the very granular understanding of the economy uh while this uh while this data is not available.
that isn't the gold standard or that you're relying on your own surveys [clears throat] or the beige book. Do you worry at some point you're going to have to start making policy by anecdote? You know, this is a temporary state of affairs and you know, we're going to do our jobs. We're going to collect ev every scrap of data we can find, evaluate it, and think carefully about it.
And that's that's our job. So that's what we're going to do. If you ask me, could could it affect the the um you know, the December meeting? I'm not saying it's going to, but yeah, you could imagine that that you know, what do you do if what do you do and if you're driving in the fog? You slow down.
So that that could or could not. I don't I don't know how that's going to play into things. Um, we may get the data may come back, but there's a there's a possibility that it would make sense to be more cautious about moving. I'm not I'm not committing to that. I'm just saying it's certainly a possibility that you would say we we really can't see, so let's let's slow down.
As as a followup in the debate on this meeting, uh we saw recently uh some pretty big layoff announcements coming from from Amazon and others. uh wondering if that figured into the discussion at all that you're starting to see the turn this tension between growth and employment starting to be resolved you know to the detriment [clears throat] of employment.
Uh and secondly uh some of the stresses starting to appear in the the bottom spur of the K as they call it uh household uh health premiums that are going to be possibly be going up quite substantially things like that. Has that started to become a factor in your policy discussion? So those are those [clears throat] are both things uh you know that we're watching very very very carefully to to start with uh the layoffs.
You're right. You see a a significant number of companies either announcing that they are not going to be doing much hiring or actually doing layoffs and much of the time they're talking about AI and what it can do. So, we're [clears throat] watching that very carefully in and you know, yes, it could absolutely have implications for job creation.
We don't really see it in the um in the initial claims data yet. Now, it's not a surprise that we don't. It takes some time for it to get in there, but we're watching that that really carefully. Um but again, don't don't see it yet in the in the um in the in the initial claims data. on on the the K-shaped economy [clears throat] thing, I would say the same thing or similar thing.
We are uh if you if you listen to the earnings calls or the reports of you know big public consumerf facing companies many many of them are are saying that there's a bifurcated economy there and that um consumers at the lower end are struggling and buying less and shifting to lower cost products but that at the top people are spending at the higher income and wealth and there so you so much much uh an anecdotal data on that and so we think there's something there.
Um so Edward, thank you. Edward Lawrence with um Fox Business. Uh so Mr. Chairman, I want to take another crack at the at the uh further [clears throat] um reduction in rates is not a foregone conclusion. So in December he said far from it. So if a cut might not be on the table for December because of lack of data, what does the other concerns then stem from?
So if it's not lack of data as as the reason December is is not a foregone conclusion, what other things could be the concern then? Well, the perspectives on pe of people on the committee that you know we've now moved 150 basis points and that we're down into you know you're into the that range between three and four where most estimates of many estimates of the neutral rate live in that 3 to 4% here.
You're you're there now. you're you're above the median number for the committee, but I think there are people on the committee who have higher estimates of the neutral rate, and that's a you know, you can argue these positions since it can't be directly observed the neutral rate. So, you know, I I think for for for some part of the committee, you know, it's time to maybe take a step back and and uh and and see whether there there really are uh downside risks to the labor market or see whether in fact the the growth uh that the stronger growth that we're seeing is is real.
Um ordinarily the labor market is a better indicator of the momentum of the economy than the spending data. That's the lore in this case that gives a more downbeat read. Um so people just have you know there again we've cut 50 more basis points um in the last two meetings and there was a sense like let's from some let's let's let's pause here kind of thing and a sense from others wanting to go ahead but that's why I say um differing views strongly differing views.
So on that division then you're talking about [clears throat] uh going forward. So what's more important to in this division? Is it inflation risks? Is it employment risk or is is there a deeper philosophy division among the board? I I look everybody on the committee is deeply committed to doing the right thing to achieve our goals maximum employment and stable prices.
you have differences on how to do that and as I mentioned some of that is different forecasts but a lot of it is also um different risk aversions to the different two to two different variables which is common through you know through all federal reserves there they're people just have different risk tolerances let's say so that leads you to people with disperate views you will know that from the speeches you've been listening to from my colleagues and uh and so we're at a place now where we have in fact cut two more times And you know, we're now we're 150 basis points closer to neutral, wherever that may be, than we were a year ago.
And so there's there's a growing chorus now of of feeling like maybe this is where we should at least wait a cycle, something like that. That's that's what it is. It's just what you think it would be. It's and again, you've seen it in in the uh the September summer of economic projections. You've seen this in in the public remarks of FOMC participants.
and and now I'm telling you that's what that's what you can expect that in the minutes and um I'm just telling you that's what happened in the meeting. Elizabeth, [clears throat] thank you so much. Liza Schelsey with ABC News. Uh what is your explanation for why the job market is weakening right now and what will this rate cut do to improve the job market?
So the I think the um there are two things affecting the job market and one of them is just a dramatic reduction in the supply of new workers. So and [clears throat] that's two things that's uh declining labor force participation which is a cyclical thing and then there's declining immigration which is just a big policy change that actually began in the last administration and it has been accelerated now.
So a big part of the whole story is that that supply side story. Okay. In addition, labor demand has declined and and you know the so the labor the unemployment rate has gone down meaning that demand for workers has gone down a little more than supply. So um that's that's what's going on and but it is mostly a supply function a you know it's mostly a function of of the change in supply I think and many people think.
So the question then is what does what does the um you know our tool do which supports demand and you know so and I would just say when you're when you're in a situation where job job creation if you adjust for likely overounting in the way that BLS does its work is pretty close to zero. So maximum employment doesn't on a sustainable basis doesn't if it's if you're making creating zero jobs if it's in equilibrium if it's if it's in balance it's a pretty as I as I said before a pretty curious balance.
So you know I thought and many of my colleagues thought in fact you've seen the last two meetings that it was appropriate for us to react by supporting demand with our with our uh rates and we've done that. We've we've reduced so that rates are looser there. I wouldn't say that they're accommodative right now, but they're meaningfully less tight than they were.
And that should help um so that at least the labor market doesn't doesn't get worse. Though it's it's a complicated situation and and some people argue that that this is supply and we really can't affect it much with our tools, but others argue, as I do, that that there is an effect from demand and that that we should use our tools to support the labor market when we see this happening.
You also talked about tariffs [clears throat] causing a one-time price increase. Should American households consumers expect that inflation will continue to go up this year because of those tariffs? So, the the basic expectation is that there will be some additional increase inflation because it takes a while for tariffs to work their way through the through the production chain and finally get to consumers.
And we see this now from the from the tariffs that were put in place now many months ago. We see those effects. But if you put tariffs in effect and they've been coming into effect consistently in, you know, February, March, April, May, and that's all happening. So that'll continue to happen for some time, probably into the spring.
These are not big increases, though. These are a tenth or so on inflation. They may be big increases on a particular product that's been tariffed, but overall, these are fairly modest. I think you know some projections go we're at 2.8% 8% inflation. You might get two or three more tents or four more tents maybe.
But then as as all the tariffs are in, they stop generating inflation. You've had a one-time price increase. As long as you're not, at least this is this is the theory. This is how we believe and hope that it will work out. Once there once the last tariff is is put on something, at that point it becomes it becomes a higher price level, but it's it stops going up, if you will.
Prices stop going up. They'll just be at that level. and then measured inflation will come back down to non-tariff inflation as I mentioned non-tariff inflation is not so far from 2% now now consumers don't are not interested in that story they're they're their prices are higher more than that the reason they're so unhappy about inflation is the inflation that we had in 2021 2 and three because you know you can say that prices aren't going up as much but that doesn't mean people aren't feeling those higher prices from the inflation we had two or three years ago they are and that's I think a large part of why the public if you sample people inflation is still very much making people quite unhappy even you know and it's nice that you know that that prices are are not going up as fast as they were but they're still much higher than they were and it'll take some time for that effect to wear off as real incomes rise it will feel better over time but that's going to take time Michael McKe from Bloomberg television radio.
Uh do you have any concerns that [clears throat] equity markets are or are close to being overvalued at this point? You know we we don't look at any one asset price and say hey that's wrong. You know that's it's not our job to do that. We look at the overall uh financial system and we ask whether it's stable and whether it could withstand shocks.
Right? So uh you know banks are well capitalized while some households are clearly under stress in the aggregate the you know households are are in good shape financially relatively you know relatively manageable uh levels of debt I at the at the lower income spectrum you are seeing rising defaults particularly around subprime auto but nonetheless in the aggregate pretty good um and uh you don't see so you don't see t too much leverage in the banking system or the financial system it's a mixed picture, but it's not an over overly troubling picture.
And again, I'm not you I it's not appropriate. You know, we don't we don't set asset prices. Markets do that. Well, are you you must be well aware that by [clears throat] lowering interest rates, you're contributing to additional uh asset price increases. And I wonder how you balance the idea that lowering rates would help the labor market with the reality that uh it seems more likely to be stimulating [clears throat] increased investment in AI, which is the rationale for thousands of job cuts that have been announced in the last few weeks.
Yeah, I I don't I don't think interest rates are an important part of the AI of the data center story. I I I think, you know, people think they're great economics in building these data centers and they're making a lot of money building them and they they think they have very high present value and all that sort of thing.
It's not it's not really about it's not a it's not, you know, about 25 basis points here or there. Um, you know, we use our tools to support the labor market and to to create uh price stability. That's what we do. That's our two jobs, right? So we're here to by by lowering rates at the margins are higher than earlier in the year as inflation for goods has picked up.
In contrast, disinflation appears to be continuing for services. Near-term measures of inflation expectations have moved up on balance over the course of this year on news about tariffs as reflected in both market and surveybased measures. Beyond the next year or two or so, however, most measures of longerterm expectations remain consistent with our 2% inflation goal.
Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to to three and three/4ers to 4%. Higher tariffs are pushing up prices in some categories of goods, resulting in higher overall inflation.
A reasonable base case is that the effects on inflation will be relatively short-lived, a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent. And that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem.
In the near term, risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.
With downside risks to employment having increased in recent months, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance. With today's decision, [clears throat] we remain well positioned to respond in a timely way to potential economic developments.
We will continue to determine the appropriate stance of monetary policy based on the incoming data, the evolving outlook, and the balance of risks. We continue to face two-sided risks. In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December.
A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a preset course. At today's meeting, the committee also decided to conclude the reduction of our aggregate securities holdings as of December 1. Our long-stated plan has been to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions.
Signs have clearly emerged that we have reached that standard. In money markets, repo rates have moved up relative to our administered rates and we have seen more notable pressures on selected dates along with more use of our standing repo facility. In addition, the effective federal funds rate has begun to move up relative to the rate of interest on reserve balances.
These developments are what we expected to see as the size of our balance sheet declined and warrant today's decision to seize runoff. Over the three and a half years that we've been shrinking our balance sheet, our securities holdings have declined by $2.2 trillion. As a share of nominal GDP, our balance sheet has fallen from 35% to about 21%.
In December, we'll enter the next phase of our normalization plans by holding the size of our balance sheet steady for a time while reserve balances continue to move gradually lower as other non-reserve liabilities such as currency keep growing. We will continue to allow agency securities to run off our balance sheet and will reinvest the proceeds from those securities in Treasury bills, furthering progress toward a portfolio consisting primarily of Treasury securities.
This reinvestment strategy will also help move the weighted average maturity of our portfolio closer to that of the outstanding stock of Treasury securities, thus furthering the normalization of the composition of our balance sheet. The Fed has been assigned two goals for monetary policy, maximum employment and stable prices.
We remain committed to supporting max our maximum employment, bringing our inflation sustainably to our 2% goal, and keeping longerterm inflation expectations well anchored. Our success in delivering on these goals matters to all Americans. We understand that our actions affect communities, families, and businesses across the country.
Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions. Nick, Nick Timmeros of the Wall Street Journal. Chair Powell, are you uncomfortable with how market pricing has assumed a rate cut is a foregone conclusion at your next meeting?
Well, I as I just mentioned, um, a further reduction in the policy rate of December meeting is not a foregone conclusion, as I've just said. So, uh, I would say that that needs to be taken on board. We had, um, you know, I would just say this, uh, 19 participants on the committee. Everyone works very hard at this and takes their obligations to serve the American people very seriously.
And at a time when we have tension between our our two goals, we have uh, you know, strong views across the committee. And as I mentioned, uh, there were strongly differing views today. And uh the takeaway from that is that we haven't made a decision about December and you know we're going to be looking at the data that we have uh how that affects the outlook and the balance of risks.
And I'll just say that you and some of your colleagues have framed u last month and maybe today uh I won't put words in your mouth. There's a riskmanagement exercise. At what point do you uh conclude that you've taken out enough insurance? Are you looking for some kind of improvement in the outlook or could this unfold along the lines of last year where you made a sequence of adjustments and then [clears throat] waited to gather more information?
So the way we have been think way I've been thinking about it is um the the the risks to the two goals for a very long time the risk was clearly of higher inflation and then that has changed now and as we saw the particularly after we saw after the July meeting we saw the downward provisions in job creation we saw a very different picture of the labor market and suggested that there were higher downside risks to the labor market than we had thought and that suggested did that policy which we had been holding at a at a I would say modestly others people would say moderately restrictive level needed to move more in the direction over time of neutral.
If the two goals are sort of equally at risk then you ought to be at neutral because one of them's calling for you to hike and one of them is calling for you to cut. So if that if that got back into balance then you'd want to be roughly at neutral. So in that sense it was a riskmanagement uh and I would say the same about today sort of the same logic but as I mentioned going forward is is a different thing
claim cla financial times um thank you for taking this question um you know we we've [clears throat] we've we've just heard from you that that the um the discussion in December and the conclusion of the discussion is not a foregone conclusion. I'd like to just dig into that a little bit more about what sort of arguments were brought up.
Was there any consideration for instance of the investment we're seeing in AI and some of the the generation of household wealth through rises in stock prices related to the AI boom. Thank you. You know, I wouldn't say that's a that's that's a factor in everyone's assessment of the economy. I wouldn't say it's the driving factor, I don't think, for anybody.
You know, I guess I would say it this way. Once again, I I would just point out that we have the situation where the risks are to the upside for inflation and to to the downside for employment. We have one tool. You can't do both of those. You can't address both of those at once. You've got a very different situation.
So, you have some people people have different forecasts, right? So, they'll they'll they'll they'll feel they'll forecast faster or slower progress on one or the other. And they also have different levels of risk aversion. And you know people some will be more averse to inflation overruns and some will be more averse to underruns of employment.
And so you put that together and as you can see from the SCP and from the public discussion that goes on between the meetings when you participants go out and talk they're very disperate views and they were reflected in strongly differing views in today's meeting as I as I pointed out in my remarks and that's what leads me to say that you know that we haven't made a decision about about December.
You know, I always say that it's a fact that we don't make decisions in advance, but this is I'm saying something in addition here is that that it's not it's not to be seen as a foregone conclusion. In fact, far from it. Can I just ask a quick follow up on QT? How much of the um the the fund impressions we've seen in money markets are related to the US Treasury issue more shortterm debt?
you know, that could be one of the factors, but the reality is we've seen, you know, the things that we've seen um higher repo rates and federal funds rate moving up. These are the very things that we've se that we that we look for. We actually have a a framework for looking at, you know, what the place we're trying to reach.
What we said for a long time now is that when we uh feel like we're a little bit or a bit above uh what we consider a level that's ample that we would freeze the size of the balance sheet. Of course, reserves will continue to decline from that point forward as non-reserve liabilities grow. So this happened some of it some things have been happening for some time now showing a gradual tightening in money market conditions.
really in the last call it three weeks or so you've seen more significant tightening and I think a clear assessment that that we're at that place. The other thing is you know we're we're the balance sheet is shrinking at a very very slow pace now. We we've reduced it by half twice. uh and so there's not a lot of benefit to be you know to be holding on for to get the last few dollars because you know uh again the balance sheets reserves are going to continue to shrink as non-reserves grow so you know there was support on the committee as we thought about it to go ahead with this and and announce effective December 1 that we will be you know freezing the size of the balance sheet and that the December one date gives the markets a little bit of time to adapt.
Colobby, thank you. Colobby Smith with the [clears throat] New York Times. So much of the rationale for cutting interest rates even as inflation moves away from the 2% target seems to be, you know, that there are these mounting downside risks to the labor market. But if those don't materialize and the labor market either stabilizes around current employment levels or even starts to strengthen somewhat, how would that change your perception of how much interest rates need to fall from here?
Would you then be a bit more concerned about underlying inflation and the possibility of second round effects from tariffs? Yeah, I mean in principle if if you were to see data that suggested the labor market's strengthening or even that it's stabilizing, you know, that would certainly play into our decisions going forward.
So, and we do have, you know, we get some data. The labor market is a place where we get, for example, we get the state level data on initial claims which which are sending sort of a signal of more of the same. We also get you job openings. Um, and we'll get lots of survey data. We'll get the Beige book and things like that.
So, we'll have a we'll have a picture of what's going on in the labor market. And, you know, the fact that we're not seeing an uptick in in claims or a downtick really in openings um suggests that you're seeing maybe maybe continued very gradual cooling, but nothing more than that. So, that does give you some comfort.
But if this shutdown lasts a while longer and you don't have that data [clears throat] in hand, I'm just wondering how that hinders the committee's ability to assess the state of the labor market and make the right policy decisions and and also how much is that factoring to the into the debate about December.
Yeah. So, you know, we'll we get we get like I mentioned what we get in the labor area. We get some data in the in inflation, some data in economic activity. Um, and we'll get we'll have a picture of what's going on. We also will have the beige book. Again, uh I would say we're not going to be able to have the, you know, the detailed feel uh of of things, but I think if there were a significant or material change in the economy one way or another, I think we'd I think we'd pick that up through this.
So, in terms of how it might affect December, it's really hard to say. December's uh you know, this the meeting is like I guess six weeks away. Um we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds.
Steve Steve Leeman CNBC [clears throat] Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides. Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying you know they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime, we see, you know, a labor market that's kind of I don't want to say stable, but it's it's uh it's not clearly in motion. Not it's not clearly declining quickly.
In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a, you know, you read the SCP, you read the speeches, you know, there are differing views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, [clears throat] um, if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percent of GDP and become a tightening factor? So you're right, the the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature, we'll reinvest those in treasury bills, which will foster both a more treasury balance sheet and also a shorter duration.
So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically. And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample.
So that'll happen for a time, but not not a tremendously long time. We don't know exactly how long, but at a certain point, you'll want to start grow you want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy. So we'll be adding reserves at a certain point.
And that's the that's the last point. Even then we'll be we'll be um we didn't make decisions about this today but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration that'll take some time.
We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat and cough] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tighten city economy from that. So if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be you know five or six uh ten. And so that you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in [clears throat] services inflation, what are some of the things that the Fed could do to address that? Um and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you mentioned. Service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[clears throat] Chris, great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] um would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't [clears throat] think that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interestsensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the good sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation. She also noted, however, that she would not hesitate to restart the investigation.
Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've [clears throat] said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair. Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well.
As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people. Thank you, and I look forward to your questions. [clears throat] Thank you, Mr.
Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay? Thank you. Sure. So, you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors.
And I I want to note here this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats uh of additional such actions.
I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way free of political influence.
It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned, uh you know, I'm literally staying because of the actions that have been taken. I had long planned to be retiring. uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. I'm my intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people.
You work with the chair. You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, Jerpal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned, you know, in you know, sort of the textbook, you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know, you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now.
We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates. So, if I could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates.
Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting.
We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut.
that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know. Well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just a follow on [clears throat] um the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pal with aios um can you tell us if you've been uh in touch with with incoming chairman wars uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick follow-up. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweing the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. And just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three denters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision.
Right? So people are not saying we need to hike now. It's more a question of you know don't we kind of feel that we should be neutral and markets are markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got uh three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Worsh is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps. Uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, I it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernanki for two years. But um you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and you know here we are with three descents.
Now what do you see as the prospect of of a core inflation? You know they're those prospects are real. Remember though our are um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the dot plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much o on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard. Uh it's hard if you do it at the staff. So it's you know it's been it works.
I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world. Thank you. Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish [clears throat] outcome for the Fed is still one in which the committee just extends the pause in rate cuts?
And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now? Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher.
Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place. Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite.
I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now. Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't.
And as it relates to the war at what [clears throat] point do you think the risk to growth will be larger than the risk to inflation as this conflict drags on? you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s.
Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia who are feeling much greater effects from from these things. are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome.
If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of [clears throat] course, I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now and that hurts that and these are those those hikes may continue to happen and other other things are going to start to reflect air airline fairs I've mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum.
People are going to start to feel that. Edward, thank you. Thank [clears throat] you, Chair. Ever Lawrence with uh Fox Business. So I guess I'll just ask you directly on this. The markets don't see a rate cut. policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say.
Um, and I want to follow up on some of the other questions about [clears throat] uh your future a little bit. The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the [clears throat] thing to remember is uh uh we have always had vigorous debates and and uh they're excellent debates.
I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation. So we've we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike.
So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do? You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do.
But these are really tough, difficult judgments. You've got to have a forecast for each variable. You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways.
They're going to have different risk tolerances and that kind of thing. I mean, if everybody agreed, that would be that would be surprising. uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. [clears throat]
Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon.
Inflation just hit a two-year high. Should Americans expect to be paying higher gas prices for the rest of this year. And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year.
And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing. But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP.
So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious. uh exanti whether you whether you should move your rate over over because of that we'll have to see how it evolves and the message it says to President Trump by staying on
I'll stand on what I said earlier Victoria hi Victoriao with Politico um during your tenure fed independence has come under pressure and a The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices.
Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institutions.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's you know that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch? Is this something that others have uh you know talked to you about?
So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. and uh you know and that would be a problem and um so [clears throat]
um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks um what you know do you have any thoughts on on centralizing some of those functions and the way he described and then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular Chris Waller is particularly passionate about that. Of course so are the reserve so are the presidents and you know it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past five years and in inflation still misbehaving.
What's your message to American families who feel like inflation has not been under control for them really since since the co reopening? You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate, we've been there for a long time.
So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you chair pal. Jennifer Shawn Ber with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And [clears throat] you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. there was a difference over whether to do it at this meeting at a at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said moments ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a checkin balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Eaggan. Thanks, Chair Powell. Matt Eaggan with CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy. Are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal signal out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
This is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've, you know, we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
Every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will re lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on the in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of about an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. So we we we want to just we just work directly for the American people doing these things. We don't think, "Oh, this I want to do this because the president says it's a good idea or because there's an election coming up and I want to I want to speed up or slow down the economy." I mean, that think about that.
If that's if that if that's what we were doing, we'd have no credibility. Markets would lose faith in us and our ability to control inflation and and and have any respect would be, you know, would be gone. And let me say, whatever people say, the markets believe in that we will produce 2% inflation.
If you look at longer run expectations, markets believe that they there's there's no sense in which our credibility in the markets has weakened. It's just not the case. It's it's people do get it that this is our commitment and that we will achieve it and it's priced in. If you disagree with that, then you can go ahead and bet against the markets, but the markets are pricing in Fed credibility.
Okay, we'll go to Richard for the last one. Thank you, Chairp. Richard Escobido with CBS News. Uh, we talked a lot about gasoline prices and and even you mentioned airline ticket prices, both of which are up dramatically because of the war in Iran. And so I wonder, are you seeing that weigh down consumer spending in other parts of the economy?
Um, and if so, how worried are you that that will be a drag on growth? You don't see you don't see it in spending yet. You really don't. I mean, as one of your colleagues said, the economy has been resilient. It really has. Not just this time, but it's been remarkably resilient for some years now. The US economy has just powered through shock after shock.
And consumers are still spending. And that's that's what the banks will tell you, credit card companies will tell you, the retail sales numbers that we got most recently. People are still spending. And um you know, how long can that go on in a world where if gas prices were to go up a bunch more, that's taking otherwise spendable money out of people's pockets.
But right now we we don't actually see much slowdown in uh yet and certainly none from from this. But you think logically you will because people have a certain amount of money to spend if they're spending 25% more on gas or something like that then you know that's going to come out of other spending.
But we again we don't see it yet. Um one last thing you mentioned those economies in Southeast Asia that are particularly dependent on petroleum. Um they make a lot of the stuff that American consumers buy. So was there any discussion today about whether or not those costs getting passed along to consumers is a real concern and whether or not that might push up inflation?
So all of those things are in there are are in the models that that we use to calculate inflation. So, you know, they're they're just parts. You can ask about anything like that and they are they have a place the staff has a place where they're looking at that and pricing in what will happen with higher prices and that kind of thing.
Uh so it's there the effects are not that big yet. Uh you know we're a huge economy. The import sector is only 10% of the economy. So we're not like a European country where 50% of the uh external of the GDP is in the external sector. We're also, you know, as I mentioned, we're an oil exporter, so we're not feeling the same kind of pain and we're not likely to feel the same kind of pain that economies in in Western Europe and and certainly in Asia are feeling.
Anyway, thank you very much everyone. I won't see you next time. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat up here. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. Heat. touche. Um what that Yeah. walk down the steps. uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. No, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I you know, I was a chair. I was a governor for six years and I know what that's like.
I know and I I had a you know pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years but um you know I I I was brand new at that time so I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go in if you can.
If you can't, you can't. But and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus. And if people won't be, you know, they they won't if they're not flexible at all, then how do you ever do that? And so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus.
And I, you know, I I prop I propose to be a very constructive participant in that process. uh really out of respect for for the office of the chair and uh in your view as a a soontobe governor, how do you see the risks of oil prices bleeding into core inflation in coming weeks? Because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents.
There were elevated concerns about the bleed into core and you know here we are with three descents now. What do you see as the prospect of of a core inflation? You know there those prospects are real. Remember though, our our um and the real and the real thing is we're going to have to wait and see.
We're going to need to see. And the good news is we think our policy stance is just is in a very good place for us to wait and see. We you know we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be.
So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core. You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed?
You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to wait and let things develop. Thank you. Uh thanks Mr. Chairman. Um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs.
Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference. So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that with our press conference, I think, would have been quite challenging.
It's become the industry norm. It's the standard. I don't know whether that has to remain that way. I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard at the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world
thank you Um, Colby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the [clears throat] hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. If we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what [clears throat] point do you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia.
We're feeling much greater effects from from these things. the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more.
And of [clears throat] course, I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now and that hurts that and these are those those hikes may continue to happen and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum.
People are going to start to feel that. Edward, thank you. Thank [clears throat] you, Chair. Ed Lawrence with uh Fox Business. So I guess I'll just ask you directly on this. The markets don't see a rate cut at all this year is what they're predicting. Do you think that we are at the neutral rate? Why or why not?
You know, the the neutral rate is a we cannot know it with uh with certainty. I think pretty close to the neutral rate. Yeah, I I always had it, you know, between 3 and 4%. We're a little north of three and a half. So that's well in the range of what I would consider a reasonable reasonable but at the higher end of the range of what I would consider reasonable neutral rate.
Um you know I think you're the labor market is still probably cooling off just a little bit. Um and I I don't think there's a much of a case for any case really for the for uh policy looking you know meaningfully restrictive maybe mildly restrictive or neutral I would say. Um, and I want to follow up on some of the other questions [clears throat] about uh your future a little bit.
The the first time we've seen four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to [clears throat] remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and we're in an unusually difficult situation.
So we we've really had four supply shocks. You actually can you can say more than four, but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs, and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know, you're it's it's the central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough, difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. Uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump?
So, he he testified very strongly to that effect in his hearing, and I and I take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high, should Americans expect to be paying higher gas prices for the rest of this year? And in your view, does that take a rate cut off of the table?
And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year and um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious uh exanti whether you whether you should move your rate o over because of that.
We'll have to see how it evolves. And the message it says to President Trump by staying on. I'll stand on what I said earlier. [clears throat] Victoria. Hi Victoria Aguido with Politico. Um, during your tenure, Fed independence has come under pressure in a lot of different ways. And I was just wondering, practically speaking, where do you see Fed independence as coming from?
Is it the law? Is it political support from Congress? Is it the actions of the Fed? What what sustains Fed independence? Well, it's, you know, it's it's to to a significant extent it is the law. And, you know, we've had to go to court to successfully so far to defend it. But you know the the law does create a setting in which the Fed can and is directed to uh make monetary policy without consideration of political factors.
And so so part of it is law but but it goes beyond that though. There's a set of customs. There's there's a boundary line between the Fed and the administration between the Fed and the Treasury Department. And we need to respect those continue to respect those boundaries about what the Feds are responsible for and what the Treasury is responsible for and what the the rest of the administration's respons responsible.
So some some of it is legal. Um in fact it's all legal at the end of the day. But there it's it's more than just monetary policy. We you know we don't we don't want to use our tools to we haven't wanted to use our tools to achieve goals that are really clearly outside our mandate. Every administration looks at our tools and thinks that would be good to repurpose those to serve other purposes, but that gets drag that's dragging us into politics and into fiscal policy.
So, we've resisted that. Well, and maybe another way of asking it too is do you think that Fed independence is as strong now as when you became chair? And if so, why? Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things.
We're having to resort to, you know, the courts to to enforce our legal, you know, in not even it's not so much independence. It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful.
so far. But that's not over. None of that has concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution. It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians.
It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason. So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations.
But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing. We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public.
We're all human. don't expect for perfection but do expect us to make you know decisions without political considerations and and the very best analysis we can bring. Katarina [clears throat] Katarina Sariva Bloomberg News. Um how would you characterize um what you've heard from your colleagues on your decision to stay?
Um do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch? Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves, but you know yeah there are there are widespread concerns that these things may continue.
That's all that's all I'll say. And uh you know and that would be a problem. And um So, um, and then I just also wanted to ask about, um, Governor Waller's speech on the reserve banks. Um, what, you know, do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular Chris Waller is particularly passionate about that of course. So are the reserve, so are the presidents. And you know, it's a question of how do you accomplish it. Uh we we of course and and Chris said this in his speech, we you know, we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know, there are things that are done in all 12 which could well be done at one, much more efficient.
The meeting is like I guess 6 weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leeman CNBC Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views.
Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December. You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut.
This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying you know they're they're noticing stronger economic activity. you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially.
Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion not it's not clearly declining quickly. In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances.
And so there's a you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said. And just to follow up on the balance sheet, um [clears throat] if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percent of GDP and become a tightening factor?
So you're right, the the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature, we'll reinvest those in treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time, but not not a tremendously long time. We don't know exactly how long, but at a certain point, you'll want to start grow you want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point. And that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration.
That'll take some time. We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or PPI report? We didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months, but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So, if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. And we we we estimate people have different estimates of what that is, but it might be, you know, five or six uh ten. And so that, you know, if it's 2.8, then then, you know, uh core PCE not including tariffs might be 2.3 or 2.4 in that range, something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services [clears throat] inflation, what are some of the things that the Fed could do to address that? Um and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean a financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[clears throat and cough] Chris, great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] um would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't [clears throat] think that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting by meeting basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the [clears throat] announcement last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek as part of that appeal to restart the investigation or send new subpoenas.
I've [clears throat] said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one [clears throat] chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. [clears throat] Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, [clears throat] you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I I want to note here this has nothing whatever to do with verbal criticism by elected officials.
Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned uh you know I'm literally staying because of the actions that have been taken. I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until they're till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. My intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is, and as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair.
You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, J Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned you know in you know sort of the textbook you you would look through it an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lag. So you you know you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So I think we're going to be very cautious about that. It's but the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates.
So, if [clears throat] I could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates. Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago?
And what more would have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing.
And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut. uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, so Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know, well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just to follow up on [clears throat] um the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pow with axios um can you tell us if you've been uh in touch with with incoming chairman Borsch uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks.
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. [clears throat] Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens, the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um and you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweighting the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. Just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got uh three descents [clears throat] uh in favor of a two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh, I mean, if you think about it, any every new Fed Fed chair has the same situation, which is you've got 18 colleagues on the FOMC, 11 of them vote during any year, and you have to your job is to create consensus is it's to talk to them, understand them, you know, be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair. Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch Touche um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years, but um you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go in if you can.
If you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that? And so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because That was it seems like the commentary that was coming from particularly some of the reserve bank presidents. They were elevated concerns about the bleed into core and you know here we are with three descents.
Now what do you see as the prospect of of a core inflation? You know they're those prospects are real. Remember though our are um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we you know we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that with our press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. [clears throat] The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have. And uh you know, I was never the world's biggest fan of the dot plot, but you you can't can't beat something with nothing. And you know, there's a that we've looked at a bunch of things. And uh you know, it's something like I said, I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard at the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world
thank you Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish [clears throat] outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. If we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point [clears throat] do you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia.
We're feeling much greater effects from from these things. the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more.
And of course, [clears throat] I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now, and that hurts that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum people are going to start to feel that
Edward thank you thank you chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this the markets don't see a rate policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about [clears throat] uh your future a little bit.
The the first time we've seen four descents now since October of 1992, are you handing off a divided Fed? You know, the [clears throat] thing to remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's the central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough, difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. Uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. [clears throat] Thank you so much, Chair Powell. Selena Wayne with ABC News.
Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing, and I and I take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high, should Americans expect to be paying higher gas prices for the rest of this year.
And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year and um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious uh exanti whether you whether you should move your rate o over because of that.
We'll have to see how it evolves. And the message it says to President Trump by staying on. I'll stand on what I said earlier. [clears throat] Victoria. Hi Victoria Aguido with Politico. Um during your tenure Fed independence has come under pressure and a The unemployment rate has been little changed in recent months.
Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. John, look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. Don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch? Is this something that others have uh you know talked to you about?
So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves but you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem. And um so [clears throat]
um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do you are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing reserve bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past 5 years and in inflation still misbehaving. What's your message to American families who feel like inflation has not been under control for them really since since the co reopening?
You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate.
We've been there for a long time. So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you. Chair Pal Jennifer Sean Burgerer with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And [clears throat] you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. There was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. and and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, [clears throat] Chair Pow. Matt Eaggan, CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to single single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
So every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like I guess 6 weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leeman CNBC Mr.
Chairman can you characterize the uh the meeting in terms of you said strongly differing views. Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion. It not it's not clearly declining quickly.
In any case it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a you know, you read the SCP, you read the speeches, you know, there are differing views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um, [clears throat] if you stop it, the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percent of GDP and become a tightening factor? So, you're right. The the the place we'll be on December 1 is that the size of the balance sheet is frozen.
And as mortgage back securities mature, we'll reinvest those in Treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time but not not a tremendously long time. We don't know exactly how long but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with you know the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point and that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration.
That'll take some time. We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be you know five or six uh t you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
And one of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully this this is a risk we have to monitor and ultimately manage. With the stubborn in [clears throat] services inflation, what are some of the things that the Fed could do to address that? Um and especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
Chris, [clears throat] great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I [clears throat] don't think that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement [clears throat] last Friday by the US attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek as part of that appeal to restart the investigation or send new subpoenas with transparency and finality and I stand by that.
I'm encouraged by recent developments and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.
I plan to keep a low profile as a governor. There is only ever one [clears throat] chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair. Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans.
I'm confident that that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people. Thank you, and I look forward to your questions. [clears throat] Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that.
Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay? Thank you. Sure. So, you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors.
And I I want to note here this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats uh of additional such actions.
I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way free of political influence.
It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned, uh you know, I'm literally staying because of the actions that have been taken. I had long planned to be retiring. uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. I'm my intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soontobe former chair, I do understand how hard it is to get consensus with 19 strong-minded people.
You work with the chair. You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, Cher Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned, you know, in you know, sort of the textbook, you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know, you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now.
We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates. So, if [clears throat] I could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates.
Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting.
We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut.
uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know. Well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a, you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just a follow on um [clears throat] the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pal with aios [clears throat] um can you tell us if you've been uh in touch with with incoming chairman wars uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. [clears throat] Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out.
and it was it was a very healthy sort of set of societal dynamics. So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweing the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation so we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well actually during the during the pandemic recovery the labor market was super overheated and tight and that's when we had to worry about it but but not now.
And just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? You know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg television and radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got uh three dissents uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh, I mean, if you think about it, any every new fair Fed chair has the same situation, which is you've got 18 colleagues on the FOMC, 11 of them vote during any year, and you have to your job is to create consensus is it's to talk to them, understand them, you know, be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Worsh is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. Howard, uh thank you, Chair Howard Schneider with Reuters.
You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps. Uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, I it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernanki for two years, but um you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the reserve bank presidents there were elevated concerns about the bleed into core and you know here we are with three descents now what do you see as the prospect of of a core inflation
you know they're those prospects are real remember though our are um and they're real and the real thing is we're going to have to wait and see we're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see we you know we're right kind of at the high end of neutral or perhaps mildly restrict perspective.
U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in airfares of course but you may see it in many other places. uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
[clears throat] Uh thanks Mr. Chairman. Um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean, I it's it's just something people have become used to. And I I do think it's quite helpful to, you know, to uh I mean, I I I try to deliver a message on behalf of the committee rather than 18 people, 18 other people going out and delivering their message. And it's, you know, it's going to be all over the place because we do thankfully have widely disperate views.
Um Okay, thanks. [clears throat] The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much o on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard. Uh it's hard if you do it at the staff. So it's you know it's been it works.
I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world. [clears throat] Thank you. Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish [clears throat] outcome for the Fed is still one in which the committee just extends the pause in rate cuts?
And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now? Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher.
Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place. Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite.
I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now. Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't.
And as it relates to the war at what point do [clears throat] you think the risk to growth will be larger than the risk to inflation as this conflict drags on? you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s.
Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia who are feeling much greater effects from from these things. are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome.
If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of course, [clears throat] I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now and that hurts that and these are those those hikes may continue to happen and other other things are going to start to reflect air airline fairs I've mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum.
People are going to start to feel that. Edward, thank you. [clears throat] Thank you, Chair. Ever Lawrence with uh Fox Business. So I guess I'll just ask you directly on this. The markets don't see a rate cut. policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say.
Um, and I want to follow up on some of the other questions [clears throat] about uh your future a little bit. The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to [clears throat] remember is uh uh we have always had vigorous debates and and uh they're excellent debates.
I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation. So we've we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike.
So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do? You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do.
But these are really tough, difficult judgments. You've got to have a forecast for each variable. You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways.
They're going to have different risk tolerances and that kind of thing. I mean, if everybody agreed, that would be that would be surprising. uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell.
Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a two-year high.
Should Americans expect to be paying higher gas prices for the rest of this year. And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year.
And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing. But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP.
So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious. uh xanti whether you whether you should move your rate over over because of that we'll have to see how it evolves and the message by staying on I'll stand on what I said earlier
Victoria hi Victoriao with politico um during your tenure fed independence has come under pressure and The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged.
We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. John, look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institutions.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's you know that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, [clears throat] Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem.
And um so um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular Chris Waller is particularly passionate about that of course so are the reserve so are the presidents and you know it's a question of how do you accomplish it uh we we of course and and Chris said this in his speech we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings.
And so there's a back and forth going on on that, but everybody everybody's on the same page. The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different views on monetary policy. I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine, thanks Sher Pow. Christine Romans, NBC News. I want to ask about legacy. when the history books are written, how do you think your stewardship at the Fed will be remembered for the past eight years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past 5 years and in inflation still misbehaving. What's your message to American families who feel like inflation has not been under control for them really since since the co reopening?
You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that, but we try to get there over time in a way that does the least damage possible. And you know, our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So it's actually quite resilient I would say cuz it's a positive thing if I can if I can have that amendment. Yeah, that the you know growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good and some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. The if you look at the unemployment rate it's 4.3%. So that's a low rate that's pretty close to mainstream estimates of the natural rate.
We've been there for a long time. So, it's it's it doesn't feel like a good labor market to some who who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So, that's a that's you know, in a sense, the labor market is in balance, but it's an unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So, um so that's pretty good. You know, inflation is the thing we need to work on, and it's partly tariffs, which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated, and that should start happening pretty soon.
The energy inflation that we're getting should go through fairly quickly. Uh, and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer [clears throat] Thank you, Chair Pal. Jennifer Shawn Burgerer with Yahoo Finance.
At the risk of beating the dead horse here, clearly three members objected to keeping that easing bias in the statement. [clears throat] And you said that the majority still didn't need still didn't need to uh move to new language at this point. So does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think, you know, uh there's a lot of signaling going on when you change guidance like that. And so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
Uh and but maybe it'll come to that and and the reason is because, you know, we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. But there was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said moments ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, [clears throat] Chair Powell. Matt Egan with CNN. Um, you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal signal out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years. And that's just a very different situation than for a very long time. what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives and by the way central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So, that's been challenging and we've, you know, we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
Now, to follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
So, every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians and the reason is elected politicians are always running for election and they'll always want low rates and that will re lead to inflation over time.
So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years. Then we had the pandemic inflation everywhere on the in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well.
So but what I would say to the general public is that's that's the backstory is that um it don't think about an institution being independent. Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them.
It's this isn't bipartisan. This is nonpartisan. This the meeting is like 6 weeks away. Um we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve
Steve Leman CNBC [clears throat] Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views. Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying you know they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime, we see, you know, a labor market that's kind of I don't want to say stable, but it's it's uh it's not clearly in motion. Not it's not clearly declining quickly.
In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a, you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um, [clears throat] if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So you're right, the the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature, we'll reinvest those in Treasury bills, which will foster both a more treasury balance sheet and also a shorter duration.
So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically. And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. and reserves is the thing that we're that we're managing that has to be ample.
So that'll happen for a time but not not a tremendously long time. We don't know exactly how long but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with you know the size of the banking system and the size of the economy. So we'll be adding reserves at a certain point and that's the that's the last point.
Even then we'll be we'll be um we didn't make decisions about this today but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration that'll take some time.
We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months, but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So, if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be, you know, five or six uh ten. And so that, you know, if it's 2.8, then then, you know, uh core PCE not including tariffs might be 2.3 or 2.4 in that range, something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services [clears throat] inflation, what are some of the things that the Fed could do to address that? Um and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you mentioned. Service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean a financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[clears throat] Chris, great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't think [clears throat] that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting by meeting basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the [clears throat] announcement last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've [clears throat] said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one [clears throat] chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I I want to note here this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here.
But these legal actions by the administration are unprecedented in our 113year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned uh you know I'm literally staying because of the actions that have been taken. I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. My intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people.
You work with the chair. You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, J Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy. It's it's so hard to say.
Um I I mentioned you know in you know sort of the textbook you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know you wouldn't necessarily re react right away. I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock.
So I think we're going to be very cautious about that. It's but the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates.
So, if I could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates. Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have to happen for it to get evicted?
So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing.
And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut. uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, so Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude um if it stays around those levels six weeks from now what would be your guess best guess as to whether the easing bias will still be in the statement thank you I I wouldn't want to guess you know well first of all we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that so uh I won't be standing here this podium to answer your question so um I don't know as I mentioned that's all I can really say is that we had we had a great discussion question about that today.
It's a, you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am. Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting.
Thank you. And just to follow up, um [clears throat] the new leadership also seem rather lukewarm on press conferences and on the dot plots. what would your advice to him be on these communication tools? So, I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing.
I mean, communications is it's very complex and uh you know, you can always be uh be looking at new things and and if that happens feels like it's going to happen, that's completely appropriate thing. Hi chair, chair pal with Axios. Um, can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was a you know, we were sitting down the hall from each other.
So, it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So, that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um, during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh, and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh, are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um, I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um and you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweighting the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. Just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg television and radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three denters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having, good discussion to be having.
So, and it came out the way it came out. Well, you've got uh three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on not driving my my thinking now? I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh, I mean, if you think about it, any every every new fair Fed chair has the same situation, which is you've got 18 colleagues on the FOMC, 11 of them vote during any year, and you have to your job is to create consensus is it's to talk to them, understand them, you know, be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch Touche um what that Yeah. walk down the steps. Uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. you know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the author party the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soon to be governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of of a core inflation? You know there those prospects are real. Remember though our are um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard at the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point [clears throat] do you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia who are feeling much greater effects from from these things.
the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of course, [clears throat] I'm talking about aggregate inflation numbers.
We know, we're very well aware that people are experiencing higher gas prices all over the country now and that hurts that and these are those those hikes may continue to happen and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum.
People are going to start to feel that. Edward, thank you. Thank you, Chair. Ever Lawrence with uh Fox Business. So I guess I'll just ask you directly on this. The markets don't see a rate cut. policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing [clears throat] to remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we we've really had four supply shocks. You actually can you can say more than four, but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs, and now we have of Iran and the oil um you know, the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know, you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed that would be that would be surprising. uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. [clears throat] Thank you so much, Chair Powell. Selena Wayne with ABC News.
Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high. Should Americans expect to be paying higher gas prices for the rest of this year.
And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year. And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious.
uh exanti whether you whether you should move your rate o over because of that we'll have to see how it evolves and the message it says president by staying on I'll stand on what I said earlier Victoria hi Victoria Aguido with politico um during your tenure fed independence has come under pressure and The unemployment rate has been little changed in recent months.
Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence, it's it's really the ability to do monetary to make monetary policy without political considerations.
That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution. It's about the benefits of a central bank that makes decisions based on analysis and our best thinking.
Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. Don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch? Is this something that others have uh you know talked to you about?
So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem. And um so um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks.
um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do you are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. [clears throat] Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past five years and in inflation still misbehaving.
What's your message to American families who feel like inflation has not been under control for them really since since the co reopening? You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate.
We've been there for a long time. So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy [snorts] in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you chair pal.
Jennifer Shawn Burgerer with Yahoo Finance. at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And [clears throat] you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. But there was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. and and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, Chair Powell. Matt Eaggan, CNN, U. You've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard. I wouldn't want to signal single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock. supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
Every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like I guess 6 weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leman CNBC Mr.
Chairman can you characterize the uh the meeting in terms of you said strongly differing views. Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime, we see, you know, a labor market that's kind of I don't want to say stable, but it's it's uh it's not clearly in motion. It not it's not clearly declining quickly.
In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a, you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um, [clears throat] if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So, you're right. the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature we'll reinvest those in treasury bills which will foster both a more treasury balance sheet and also a shorter duration.
So that's what in the meantime if you freeze the size of the balance sheet the non-reserve liabilities currency for example they're going to continue to grow organically and because the size of the balance sheet is frozen you have further shrinkage in in reserves and reserves is the thing that we're that we're managing that has to be ample.
So that'll happen for a time but not not a tremendously long time. We don't know exactly how long, but at a certain point, you'll want to start grow you want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy. So, we'll be adding reserves at a certain point.
And that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet. And there's a desire that the that the balance sheet be right now we we're it's it's got a lot more duration than the outstanding universe of Treasury securities.
And we want to move to a place where we're closer to that duration. That'll take some time. We haven't made a decision about the ultimate end point. But we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries and that means a shorter duration uh balance sheet.
Now, this is something that's going to be take a long time and move very very gradually. I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell, [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So, some components came in lower than expected, but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
uh when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that, good news that housing services inflation has has been coming down and is expected to continue to come down. So, if you remember a year a couple years ago, that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months, but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is but it might be you know five or six uh tenths and so that you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that so that's not so far from your goal.
Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be a one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in [clears throat] services inflation, what are some of the things that the Fed could do to address that? Um and especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that but also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
Chris, [clears throat] great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] um would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't [clears throat] think that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effect expectations have risen this year, likely because of the substantial rise in oil prices.
Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 1/2 to 3 and 3/4%.
The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation. Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself.
We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks. Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis.
This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues. The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive.
Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose. Our decisions reflect the collective judgment of the board of governors and the federal open market committee.
Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission. This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication.
It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it. And you, the press, are essential to keeping the public informed about we about what we do and why.
The people we serve, benefit from your careful reporting. I welcomed the announcement [clears throat] last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation. She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General.
And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas. [clears throat] I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that.
I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined.
I plan to keep a low profile as a governor. There is only ever one [clears throat] chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair. Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans.
I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people. Thank you, and I look forward to your questions. Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that.
Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay? Thank you. Sure. So, you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors.
And I I want to note here this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats uh of additional such actions.
I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence.
It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned uh you know I'm literally staying because of the actions that have been taken. I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. I'm my intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people.
You work with the chair. You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, J Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had [clears throat] outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy. It's it's so hard to say.
Um I I mentioned you know in you know sort of the textbook you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know you wouldn't necessarily re react right away. I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock.
So I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet. And I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates.
So, if I [clears throat] could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates. Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago?
And what more would [clears throat] have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing.
And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut. uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And you know, that makes all the sense in the world, it seems to me. Claire, so Cla Jones, Financial Times. Um just just going back to this issue of the the easing bias. Um we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know. Well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just a follow on um the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pow with aios um can you tell us if you've been uh in touch with with incoming chairman wars uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. [clears throat] Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um and you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweighting the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. Just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three denters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision.
Right? So people are not saying we need to hike now. It's more a question of you know don't we kind of feel that we should be neutral and markets are markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got uh three [clears throat] descents uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So, I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. Howard, uh thank you, Chair Howard Schneider with Reuters.
You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch Touche um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion how you're able to uh to have your intervention and not be a shadowed chair and not have a kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has The authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soon to be governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of of a core inflation? You know there those prospects are real. Remember though our are um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to wait and let things develop.
Thank you. [clears throat] Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. [clears throat] The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have and uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing and you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish [clears throat] outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. If we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point do [clears throat] you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia.
We're feeling much greater effects from from these things. are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more.
And of course, I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now, and that hurts that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum people are going to start to feel that
Edward thank you thank you chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this the markets don't see a rate Cut. policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions [clears throat] about uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to [clears throat] remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're we're in an unusually difficult situation.
So we we've really had four supply shocks. You can actually you can you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed that would be that would be surprising. uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump?
So, he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high. Should Americans expect to be paying higher gas prices for the rest of this year. And in your view, does that take a rate cut off of the table?
And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year. And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious.
uh exanti whether you whether you should move your rate over over because of that we'll have to see how it evolves and the message as president by staying on I'll stand on what I said earlier [clears throat] Victoria hi Victoria Aguido with Politico um during your tenure Fed independence has come under pressure and The unemployment rate has been little changed in recent months.
Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence, it's it's really the ability to do monetary to make monetary policy without political considerations.
That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution. It's about the benefits of a central bank that makes decisions based on analysis and our best thinking.
Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, [clears throat] Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem.
And um so [clears throat] um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So, we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller, is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing reserve bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Cher Pal. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past five years and in inflation still misbehaving.
What's your message to American families who feel like inflation has not been under control for them really since since the co reopening? You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate, we've been there for a long time.
So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you. Chair Pal Jennifer Shawn Burgerer with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. [clears throat] And you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So it was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. There was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said moments ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. and and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, Chair [clears throat] Powell. Matt Eaggan with CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard. I wouldn't want to signal single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
Now, to follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
Every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere in in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like I guess 6 weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leman CNBC [clears throat] Mr.
Chairman can you characterize the uh the meeting in terms of you said strongly differing views was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides. Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially. Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion. It not it's not clearly declining quickly.
In any case it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um, [clears throat] if you stop at the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So, you're right. The the the place we'll be on December 1 is that the size of the balance sheet is frozen.
And as mortgage back securities mature, we'll reinvest those in treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time but not not a tremendously long time. We don't know exactly how long but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with you know the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point and that's the that's the last point. Even then we'll be we'll be um we didn't make decisions about this today but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration that'll take some time.
We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Janelle [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tighten city economy from that. So, if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be, you know, five or six uh ten. And so that, you know, if it's 2.8, then then, you know, uh core PCE not including tariffs might be 2.3 or 2.4 in that range, something like that.
So, that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be a one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services inflation, what are some of the things that the Fed could do to address that? Um and especially when we're seeing potentially labor supply challenges. Sorry, say say the first the stubborn services inflation that you
service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down. the non-housing the non-market part of it should come down.
It largely reflects higher stock prices and and I mean a financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[clears throat] Chris, great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] um would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't think [clears throat] that the uh you're right there's a there are a lot of data centers being built and other investments being made around the [clears throat] country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting by meeting basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement [clears throat] last Friday by the US attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've said [clears throat] that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair. Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well.
As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people. Thank you, and I look forward to your questions. Thank you, Mr.
Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay? Thank you. Sure. So, you know, [clears throat] my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors.
And I I want to note here this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113year history and there are ongoing threats uh of additional such actions.
I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence.
It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the envi envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned, uh you know, I'm literally staying because of the actions that have been taken. I had long planned to be retiring. uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. I'm my intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people.
You work with the chair. You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, J Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned you know in you know sort of the textbook you you would look through it an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lag. So you you know you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So I think we're going to be very cautious about that. It's but the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates.
So, if I could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates. Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have to happen for it to get evicted?
So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing.
And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut. uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. You know, that makes all the sense in the world, it seems to me. Claire, so Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know, well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a, you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just to follow on um [clears throat] the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pow with axios um can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks.
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. Chris, hi. Uh, thanks [clears throat] for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um and you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweighting the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. Just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got u three descents [clears throat] uh in favor of a two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Worsh is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go in if you can.
If you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that? And so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair.
And uh in your view as a a soontobe governor, how do you see the risks of oil prices bleeding into core inflation in coming weeks? Because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents. They were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of a core inflation? You know, they're those prospects are real. Remember though, our our um and the real and the real thing is we're going to have to wait and see. We're going to need to see. And the good news is we think our policy stance is just is in a very good place for us to wait and see.
We you know we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to wait and let things develop.
Thank you. Uh thanks Mr. Chairman. Um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that with our press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point do [clears throat] you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia who are feeling much greater effects from from these things.
the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of course, [clears throat] I'm talking about aggregate inflation numbers.
We know, we're very well aware that people are experiencing higher gas prices all over the country now, and that hurts that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum people are going to start to feel that
Edward thank you thank you chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this markets don't see a rate policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about uh your future a little bit.
The the first time we've seen four descents now since October of 1992, are you handing off a divided Fed? You know, the thing [clears throat] to remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's the central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough, difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. Uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. [clears throat] Thank you so much, Chair Powell. Selena Wayne with ABC News.
Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing, and I and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high, should Americans expect to be paying higher gas prices for the rest of this year?
And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year and um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious uh exanti whether you whether you should move your rate o over because of that.
We'll have to see how it evolves. And the message says the president by staying on. I'll stand on what I said earlier. Victoria. Hi Victoria Aguido with Politico. Um during your tenure Fed independence has come under pressure and The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices.
Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. John, look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not even it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. Don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina [clears throat] Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem.
And um so um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do you are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents, and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know, we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know, there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings.
And so there's a back and forth going on on that, but everybody everybody's on the same page. The other thing he touched on was was uh the idea of removing reserve bank presidents from office over different pol different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past 5 years and in inflation still misbehaving. What's your message to American families who feel like inflation has not been under control for them really since since the co reopening?
You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible. And you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate.
We've been there for a long time. So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you. Chair Pal Jennifer Shawn Burgerer with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And you [clears throat] said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. there was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. and and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, Chair Powell. Matt Eaggan, CNN. Um, you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to single single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock. supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
So every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of about an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like six weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leman CNBC Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views.
Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December. You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut.
This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity. you know forecasters generally broadly have raised their economic growth forecasts for this year and next year in some cases quite materially.
Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion. It not it's not clearly declining quickly. In any case it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances.
And so there's a you know, you read the SEP, you read the speeches, you know, there are differing views on the committee and and to the point where I where I said what I said. And just to follow up on the balance sheet, um, [clears throat] if you stop it, the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percent of GDP and become a tightening factor?
So, you're right. The the the place we'll be on December 1 is that the size of the balance sheet is frozen. And as mortgage back securities mature, we'll reinvest those in Treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time but not not a tremendously long time. We don't know exactly how long but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with you know the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point and that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration.
That'll take some time. We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be you know five or six uh ten so that you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services [clears throat] inflation, what are some of the things that the Fed could do to address that? Um and especially when we're seeing potentially labor supply challenges. Sorry, say say the first.
The stubborn services inflation that you service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
Chris, [clears throat] great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't think [clears throat] that the uh you're right there's a there are a lot of data centers being built and other investments being made around [clears throat] the country and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement last [clears throat] Friday by the US attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's inspector general. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've [clears throat] said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There's only ever one chair of [clears throat] the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, you know, my my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I want to note here, this has nothing whatever to do with verbal criticism by elected officials. Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here.
But these legal actions by the administration are unprecedented in our 113year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the envi envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup, which is what would you say to [clears throat] the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board, which as president he would have if he left.
I I don't see that at all. As I mentioned, uh you know, I'm literally staying because of the actions that have been taken. I I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. My intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is, and as a as a soontobe former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair.
You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, Cher Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermedating period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned, you know, in you know, sort of the textbook, you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lag. So you you know, you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So, I think we're going to be very cautious about that. It's but the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet.
And I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates. So, if I could follow [clears throat] up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates.
Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago and what more would have to [clears throat] happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting.
We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut.
that number has increased over the intermedating period and it's easy to see why. I mean, it's it's a it's it's a good question, right? You see inflation has moved up over the interim a bit. Core inflation's 3.2 now, moving, albeit just a little bit, in the wrong direction. And we we know that there will be, you know, that there's uh headline inflation coming out of the Gulf, and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, so Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know, well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just a follow on um the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pal with axios um can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweighting the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. Just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Blueber Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets are markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got u three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with chair yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the authority ity the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the reserve bank presidents. They were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of a core inflation? You know they're those prospects are real. Remember though our our um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to wait and let things develop.
Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So yeah, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the dot plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much o on on that as we might have and uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing and you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish [clears throat] outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. If we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is and as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point [clears throat] do you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia.
We're feeling much greater effects from from these things. the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more.
And of course, [clears throat] I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now, and that hurts that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of of petroleum people are going to start to feel that
Edward thank you thank you [clears throat] chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this markets don't see a rate policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about [clears throat] uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the [clears throat] thing to remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the UK of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough, difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. Uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump?
So, he he testified very strongly to that effect in his hearing, and I and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high. Should Americans expect to be paying higher gas prices for the rest of this year? And in your view, does that take a rate cut off of the table?
And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year and um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious uh exanti whether you whether you should move your rate over over because of that.
We'll have to see how it evolves. And the message as the president by staying on I'll stand on what I said earlier Victoria. Hi Victoria Aguido with Politico. Um during your tenure Fed independence has come under pressure and The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices.
Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. John, look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not even it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that has concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. Don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina [clears throat] Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem.
And um so [clears throat] um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described and then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So, we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different pol different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Cher Powell. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past 5 years and in inflation still misbehaving. What's your message to American families who feel like inflation has not been under control for them really since since the co reopening?
You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, the the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
the the most recent data are good and some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate.
We've been there for a long time. So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh, and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you, Chair Pal. Jennifer Sean Burgerer with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And [clears throat] you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So it was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. there was a difference over whether to do it at this meeting at a at a meeting at which all but one of us agreed that that that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a checkin balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Eaggan. Thanks, Chair Pow. [clears throat] Matt Eaggan with CNN. Um, you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy. Are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
So every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will re lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of about an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like I guess 6 weeks away. U we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leeman CNBC Mr.
Chairman can you characterize the uh the meeting in terms of you said strongly differing views. Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December.
You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying you know they're they're noticing stronger economic activity.
you know forecasters generally broadly have raised their economic growth forecasts for this year and next year in some cases quite materially. Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion. It not it's not clearly declining quickly.
In any case it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a you know, you read the SCP, you read the speeches, you know, there are differing views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um, [clears throat] if you stop it, the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So, you're right. the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature we'll reinvest those in treasury bills which will foster both a more treasury balance sheet and also a shorter duration.
So that's what in the meantime if you freeze the size of the balance sheet the non-reserve liabilities currency for example they're going to continue to grow organically and because the size of the balance sheet is frozen you have further shrinkage in in reserves and reserves is the thing that we're that we're managing that has to be ample.
So that'll happen for a time but not not a tremendously long time. We don't know exactly how long, but at a certain point you'll want to start grow. You will want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy. So, we'll be adding reserves at a certain point.
And that's the that's the last point. Even then, we'll be we'll be um we didn't make decisions about this today, but you we did talk today about the composition of the balance sheet. And there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities.
And we want to move to a place where we're closer to that duration. That'll take some time. We haven't made a decision about the ultimate end point. But we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries and that means a shorter duration uh balance sheet.
Now, this is something that's going to be take a long time and move very very gradually. I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell, [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So, some components came in lower than expected, but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that, good news that housing services inflation has has been coming down and is expected to continue to come down. So, if you remember a year a couple years ago, that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tighten city economy from that. So if you add all that up a couple things to say one is that inflation away from tariffs is actually not so far from our 2% goal.
We we we estimate people have different estimates of what that is but it might be you know five or six uh tents and so that you know if it's 2.8 then then you know uh core PCE not including tariffs might be 2.3 or 2.4 in that range something like that so that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase.
And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation. One of those would be, you know, a really tight labor market. We don't see that.
Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be onetime inflation. We understand fully that this is a risk we have to monitor and ultimately manage.
With the stubborn in [clears throat] services inflation, what are some of the things that the Fed could do to address that? Um, and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first the stubborn services inflation that you mentioned. Service inflation. Yeah.
Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down. the non-housing the non-market part of it should come down.
It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
Chris, [clears throat] great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't [clears throat] think that the uh you're right there's a there are a lot of data centers being built and other investments being made around the country and [clears throat] around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interestsensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the good sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement [clears throat] last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's inspector general. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
[clears throat] I've said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one chair [clears throat] of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, you know, my [clears throat] my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I I want to note here this has nothing whatever to do with verbal criticism by elected officials.
Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the envi envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say [clears throat] to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned uh you know I'm literally staying because of the actions that have been taken. I I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. My intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is. And as a as a soontobe former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair.
You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, Cher Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermedating period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned, you know, in you know, sort of the textbook, you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know, you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So, I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now.
We it hasn't even peaked yet. And I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates. So, if I could [clears throat] follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates.
Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago? And what more would have [clears throat] to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting.
We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut.
that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So you know it was a it was a it's a close it's it's a much closer thing on the committee than it was in March and you know that makes all the sense in the world it seems to me. Claire. So, Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark um Brent crude.
Um, if it stays around those levels, six weeks from now, what would be your guess, best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know, well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question in the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level.
And I I that's where I am. Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. And just to follow on, um the [clears throat] new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here. But I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing.
me. Hi, Chair Chair Pal [clears throat] with Axios. Um, can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. you know, the the last process was with uh Janet Yellen with whom I had worked for six years and so it was a you know, we were sitting down the hall from each other.
So, it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So, that's that's what I expect. I have every reason to think it will be. Quick follow up. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. [clears throat] Chris. Hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um, during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh, and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh, are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um, I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweing the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. And just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having good discussion to be having.
So and it came out the way it came out. Well, you've got uh three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. Uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on? Not not driving my my thinking now. I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. Howard, uh thank you, Chair Howard Schneider with Reuters.
You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has The authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and you know here we are with three descents.
Now what do you see as the prospect of of a core inflation? You know they're those prospects are real. Remember though our are u and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
[clears throat] Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The [clears throat] other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um [clears throat] making making changes making really large changes, for example, to the dot plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much o on on that as we might have. And uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard. Uh it's hard if you do it at the staff. So it's you know it's been it works.
I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world. [clears throat] Thank you. Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts?
And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now? Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher.
Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place. Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite.
I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now. Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is and as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't.
And as it relates to the war at what point do you [clears throat] think the risk to growth will be larger than the risk to inflation as this conflict drags on? you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s.
Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia. We're feeling much greater effects from from these things. are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome.
If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of [clears throat] course, I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now. And that hurts that and these are those those hikes may continue to happen and other other things are going to start to reflect air airline fairs I've mentioned and and other other products and services that are dependent upon petroleum and derivatives of of petroleum people are going to start to feel that
Edward thank you thank [clears throat] you chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this the markets don't see a rate Cut. policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about [clears throat] uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to remember [clears throat] is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we've we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the UK of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. Uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump?
So he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a two-year high. Should Americans expect to be paying higher gas prices for the rest of this year. And in your view, does that take a rate cut off of the table?
And secondly, by staying on as uh Fed governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year. And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious.
uh xanti whether you whether you should move your rate over over because of that we'll have to see how it evolves and the message it says president by staying on I'll stand on what I said earlier [clears throat] Victoria hi Victoriao with politico um during your tenure fed independence has come under pressure and The unemployment rate has been little changed in recent months.
Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not even it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institutions.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's you know that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, [clears throat] Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem.
And um so [clears throat] um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So, we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past five years and in inflation still misbehaving.
What's your message to American families who feel like inflation has not been under control for them really since since the co reopening? You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate, we've been there for a long time.
So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, thank you chair pal. Jennifer Shawn Ber with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. there was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a checkin balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Eaggan. Thanks, Chair Powell. [clears throat] Matt Eaggan with CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy. Are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal signal out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
Every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to a different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere in the in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of about an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general public and to try to achieve economic goals which are maximum employment and price stability and focus only on that and ignore political considerations completely ignore them. It's this isn't bipartisan.
This is nonpartisan. This the meeting is like 6 weeks away. Um we just don't know what we're going to get. Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leman CNBC Mr. [clears throat] Chairman can you characterize the uh the meeting in terms of you said strongly differing views.
Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides? Thanks. So I I was referring to uh the discussion about to the extent it related to December. You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut.
This the strongly u uh differing views were really about about the future. What does that look like? And I think people are saying, you know, they're they're noticing stronger economic activity. you know forecasters generally broadly have raised their economic growth forecast for this year and next year in some cases quite materially.
Uh in the meantime, we see, you know, a labor market that's kind of I don't want to say stable, but it's it's uh it's not clearly in motion. Not it's not clearly declining quickly. In any case, it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances.
And so there's a, you know, you read the SCP, you read the speeches, you know, there are different views on the committee and and to the point where I where I said what I said. And just to follow up on the balance sheet, um, [clears throat] if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor?
So you're right, the the the the place we'll be on December 1 is that the size of the balance sheet is frozen and as mortgage back securities mature, we'll reinvest those in Treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. and reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time but not not a tremendously long time. We don't know exactly how long but at a certain point you'll want to start grow you want to start reserves to start gradually growing to keep up with you know the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point and that's the that's the last point. Even then we'll be we'll be um we didn't make decisions about this today but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration.
That'll take some time. We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Janelle [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core inflation [clears throat] was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now, it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months, but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So, if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be, you know, five or six uh ten. And so that, you know, if it's 2.8 then then, you know, uh core PCE not including tariffs might be 2.3 or 2.4 in that range, something like that.
So that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services inflation, what are some of the things that the Fed could do to address that? Um and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first the stubborn services inflation that you mentioned.
Service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down. the non-housing the non-market part of it should come down.
It largely reflects higher stock prices and and I mean a financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
[clears throat] Chris, great. Thank you. Uh Chris Rugver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I [clears throat] don't think that the uh you're right there's a there are a lot of data centers being built and other investments being made around the country [clears throat] and around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interest sensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the goods sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 1/2 to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement [clears throat] last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's Inspector General. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've said that [clears throat] I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There is only ever one [clears throat] chair of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, you know, my [clears throat] my concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I I want to note here this has nothing whatever to do with verbal criticism by elected officials.
Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way, free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the env envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned uh you know I'm literally staying because of the actions that have been taken. I I had long planned to be retiring. Uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere. My intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is, and as a as a soon to be former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair.
You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, J Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermitting period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy. It's it's so hard to say.
Um I I mentioned you know in you know sort of the textbook you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know you wouldn't necessarily re react right away. I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock.
So I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now. We it hasn't even peaked yet and I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates.
So, if I [clears throat] could follow up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates. Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago?
And what more would have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting. We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing.
And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut. that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So, you know, it was a it was a it's a close it's it's a much closer thing on the committee than it was in March. And, you know, that makes all the sense in the world, it seems to me. Claire, so Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
um Brent crude. Um if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know. Well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question than the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level and I I that's where I am.
Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. Just to follow up on um [clears throat] the new leadership also seem rather lukewarm on press conferences and on the dot plots. What would your advice to him be on these communication tools?
So I'm I'm not going to give him any advice through you today here, but I've you know uh I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing
hi chair chair pow [clears throat] with aios um can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the last process was with uh Janet Yellen with whom I had worked for six years and so it was you know we were sitting down the hall from each other.
So it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out.
and it was it was a very healthy sort of set of societal dynamics. So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweing the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation so we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well actually during the during the pandemic recovery the labor market was super overheated and tight and that's when we had to worry about it but but not now.
And just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? You know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. Michael McKe from Bloomberg television and radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three denters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets or markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too. As I as I mentioned, it's a perfectly good argument to be having, good discussion to be having.
So, and it came out the way it came out. Well, you've got uh three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on not driving my my thinking now? I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh, I mean, if you think about it, any every new fair Fed chair has the same situation, which is you've got 18 colleagues on the FOMC, 11 of them vote during any year, and you have to your job is to create consensus is it's to talk to them, understand them, you know, be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well. He has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. [clears throat] Howard,
uh thank you, Chair. Howard Schneider with Reuters. You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps. Uh what that looks like and particularly around the policy discussion, how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with Chair Yellen to whom I I was close when I when I I was worked with Chairman Bernanki for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the authority the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soon to be governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the Reserve Bank presidents, they were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of a core inflation? You know there those prospects are real. Remember though our are um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. U the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
[clears throat] Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. [clears throat] The other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So, I'm not going to go into the the real small specifics, but what we found very quickly was that um making making changes making really large changes, for example, to the DOT plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much on on that as we might have and uh you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing. And you know there's a that we've looked at a bunch of things and uh you know it's something like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome [clears throat] for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. If we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is. You as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point do [clears throat] you think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia who are feeling much greater effects from from these things.
are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more. And of course, [clears throat] I'm talking about aggregate inflation numbers.
We know, we're very well aware that people are experiencing higher gas prices all over the country now, and that hurts [clears throat] that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of petroleum people are going to start to feel that
Edward thank you thank you chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this the markets don't see a rate policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to [clears throat] remember is uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we've we've really had four supply shocks. You can actually you can you can say more than four but at a minimum we've we had the pandemic we had the invasion of the of Ukraine we had tariffs and now we have of Iran and the oil um you know the oil spike so those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do you know you're it's it's central bank has a really hard time knowing what to do so the right thing to do is to try to balance the achievement of those two goals and that's what our framework calls for us to do.
But these are really tough difficult judgments. You've got to have a forecast for each variable. You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways.
They're going to have different risk tolerances and that kind of thing. I mean, if everybody agreed, that would be that would be surprising. And I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five, six years. [clears throat]
Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump? So, he he testified very strongly to that effect in his hearing and and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon.
Inflation just hit a 2-year high. Should Americans expect to be paying higher gas prices for the rest of this year. And in your view, does that take a rate cut off of the table? And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year.
And um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing. But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP.
So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious. uh exanti whether you whether you should move your rate over over because of that we'll have to see how it evolves and the message is president by staying on
I'll stand on what I said earlier [clears throat] Victoria hi Victoria Aguido with Politico um during your tenure fed independence has come under pressure and The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices.
Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. Look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. Don't expect for perfection, but do expect us to make, you know, decisions without political considerations and and the very best analysis we can bring.
Katarina, Katarina Sariva, Bloomberg News. Um, how would you characterize um what you've heard from your colleagues on your decision to stay? Um, do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch? Is this something that others have uh you know talked to you about?
So I think that um I I don't want to report on what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say. And uh you know and that would be a problem. And um so um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks.
um what you know do you have any thoughts on on centralizing some of those functions in the way he described? And then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So, we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller, is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Cher Pal. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past five years and in inflation still misbehaving.
What's your message to American families who feel like inflation has not been under control for them really since since the co reopening? You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is um that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate, we've been there for a long time.
So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, [clears throat] thank you chair pal. Jennifer Shawn Burgerer with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And you said [clears throat] that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So it was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. But there was a difference over whether to do it at this meeting at at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said moments ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a check and balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Egan. Thanks, Chair [clears throat] Powell. Matt Eaggan with CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal signal out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
To follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules against Lisa Cook or the Fed in the future decides to make decisions more around the political calendar instead of the economic data?
Every major advanced economy in the world has made the same decision the United States has made and that is that they want to take the making of monetary policy, the setting of interest rates to support the economy to achieve maximum employment and price stability. They want to take that out of the direct control of elected politicians.
And the reason is elected politicians are always running for election and they'll always want low rates and that will lead to inflation over time. So after you know literally centuries of experience with that the whole world moved to the different model and it's it's worked great. I mean this is this is the era in which inflation was under control for 40 years.
Then we had the pandemic inflation everywhere on in the world and now we have inflation that had gone pretty much all the way back to target really close to all the way back to target and now is being buffeted by the energy shock and the US buffeted by the by the tariff shock as well. So but what I would say to the general public is that's that's the backstory is that um it don't think of an institution being independent.
Think about it this way that you want people to make monetary policy and set interest rates to benefit the general publicly on that and ignore political considerations completely ignore them. It's this isn't bipartisan. This is nonpartisan. This the meeting is like I guess 6 weeks away. U we just don't know what we're going to get.
Um if if there is a very high level of uncertainty then you know it that could be an argument in favor of caution about moving but we'll have to see how it unfolds. Steve Steve Leeman CNBC Mr. Chairman can you characterize the uh the meeting in terms of you said strongly differing views. Was this a close call this cut or was it a close call maybe the other way because you had dissents on both sides?
Thanks. So I I was referring to uh the discussion about to the extent it related to December. You saw we had we had two descents, one for 50 and one for no cut. So um you know that was a strong solid vote in favor of this cut. This the strongly u uh differing views were really about about the future.
What does that look like? And I think people are saying you know they're they're noticing stronger economic activity. you know forecasters generally broadly have raised their economic growth forecasts for this year and next year in some cases quite materially. Uh in the meantime we see you know a labor market that's kind of I don't want to say stable but it's it's uh it's not clearly in motion.
It not it's not clearly declining quickly. In any case it may be just continuing to gradually cool. And again, people have different they have different forecasts and expectations about the economy and different different uh risk tolerances. And so there's a you know, you read the SCP, you read the speeches, you know, there are differing views on the committee and and to the point where I where I said what I said.
And just to follow up on the balance sheet, um [clears throat] if you stop it the runoff now, does that mean you have to go back to actually adding assets sometime next year so that the balance sheet doesn't shrink as a percentage of GDP and become a tightening factor? So you're right. The the the the place we'll be on December 1 is that the size of the balance sheet is frozen.
And as mortgage back securities mature, we'll reinvest those in Treasury bills, which will foster both a more treasury balance sheet and also a shorter duration. So that's what in the meantime, if you freeze the size of the balance sheet, the non-reserve liabilities, currency for example, they're going to continue to grow organically.
And because the size of the balance sheet is frozen, you have further shrinkage in in reserves. And reserves is the thing that we're that we're managing that has to be ample. So that'll happen for a time, but not not a tremendously long time. We don't know exactly how long, but at a certain point, you'll want to start grow you want to start reserves to start gradually growing to keep up with, you know, the size of the banking system and the size of the economy.
So we'll be adding reserves at a certain point. And that's the that's the last point. Even then we'll be we'll be um we didn't make decisions about this today but you we did talk today about the composition of the balance sheet and there's a desire that the that the balance sheet be right now we where it it's it's got a lot more duration than the outstanding universe of Treasury securities and we want to move to a place where we're closer to that duration that'll take some time.
We haven't made a decision about the ultimate end point, but we all agree that we want to move more in the direction of a of a balance sheet that more closely reflects the outstanding treasuries, and that means a shorter duration uh balance sheet. Now, this is something that's going to be take a long time and move very very gradually.
I don't think you'll notice it in market conditions, but but that's that's the direction of things. Johnell [clears throat] Janelle Marte with Bloomberg. How are officials interpreting the latest CPI report? So some components came in lower than expected but core [clears throat] inflation was still at 3%.
So at this moment are what what are you learning about the drivers and also what are do you view that the risks are greater that the Fed makes a mistake on employment or inflation? So okay so the September um CPI report we didn't get PPI after that which is which is important for translation into what we look at which is PCE inflation but we can still make a a pretty good assessment of what that will be.
Um when we get PPI there might be some adjustments but so directionally uh you know it was a little softer than expected and we always break it down into the three components. So basically um you've seen goods prices increasing and that's really due to tariffs and that's due that's in compared to a longer run trend of very very mild deflation in goods.
So that's moving inflation up. On the other side of that good news that housing services inflation has has been coming down and is expected to continue to come down. So if you remember a year a couple years ago that's the one that just we kept expecting it to to to do that. Now it's doing it's been doing that for some time and we expect to continue that.
That leaves the the biggest category is services other than housing services and that's kind of been moving sideways uh over the last few months but a significant part of that is uh non-market services and we don't take a lot of signal about the tightness of the economy from that. So, if you add all that up, a couple things to say.
One is that inflation away from tariffs is actually not so far from our 2% goal. We we we estimate people have different estimates of what that is, but it might be, you know, five or six uh tents. And so that, you know, if it's 2.8 then then, you know, uh core PCE not including tariffs might be 2.3 or 2.4 in that range, something like that.
So, that's not so far from your goal. Um uh so that we look at that and the the thing about tariff inflation is the base case is that it will come and it probably will increase further but it is that it will be a one-time increase. And you know we've been very focused for all of this year at making sure that that's the case and thinking carefully about what are the what are the pathways through which it could become something else troublesome inflation.
One of those would be, you know, a really tight labor market. We don't see that. Another could be inflation expectations moving. We don't see that. So, I think, you know, we we're we're watching this very carefully. I think it's it's not the case that we're just assuming that it's going to be one-time inflation.
We understand fully that this is a risk we have to monitor and ultimately manage. With the stubborn in services [clears throat] inflation, what are some of the things that the Fed could do to address that? Um and if especially when we're seeing potentially labor supply challenges. Sorry, say say the first
the stubborn services inflation that you mentioned. Service inflation. Yeah. Well, again, the part of services inflation that is that that isn't uh coming down as we would like it to is the non-market part of of um non-housing services. And you know, overall that that's just something that that we we expect will come down.
the non-housing the non-market part of it should come down. It largely reflects higher stock prices and and I mean financial services that are imputed rather than actually paid is uh is a big part of that. But also just you know we think policy is still modestly restrictive in my telling. So that's the kind of thing that should lead to a gradually cooling economy.
That's one of the reasons you see a gradually cooling labor market is because you know the uh Fed policy is modestly restrictive. So that that that should also help get that. I I want to say though, we're absolutely committed to returning inflation to 2%. If you look at longerterm surve surveys or market pricing, you will see that that that's a credible commitment and there there should be no question that that's that that's where we're going.
Chris, [clears throat] great. Thank you. Uh Chris Raver at Associated Press. So there's a big investment boom in AI infrastructure right now as you know and wondering if the existence of such a boom [clears throat] u would indicate that rates are not that restrictive after all and could further rate cuts at this point perhaps fuel an excess level of investment there or uh market bubbles.
How is the Fed thinking about that? So I I don't I don't [clears throat] think that the uh you're right there's a there are a lot of data centers being built and other investments being made around the country and [clears throat] around the world. Um and uh big US companies are just investing a lot of resources in thinking about how AI which will be based on those data data centers run through those data centers is going to affect their businesses.
So it's a big deal. Um I don't think that the spending uh that happens to build data centers all over the country is especially interestsensitive. It's based on longer run it's you know longer run assessments that this is an area where there's going to be a lot of investment and that's going to drive higher productivity and that sorts of things.
I don't I don't know how those investments will work out, but I don't think they're particularly interest from the conflict in the Middle East. Excluding the volatile food and energy categories, core PCE prices rose 3.2% over the 12 months ending in March. This relatively high rate largely reflects the effects of tariffs on prices in the good sector.
Near-term measures of inflation expectations have risen this year, likely because of the substantial rise in oil prices. Most measures of longerterm expectations remain consistent with our 2% inflation goal. Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.
At today's meeting, the committee decided to maintain the target range for the federal funds rate at 3 and a half to 3 and 3/4%. The economic outlook remains highly uncertain and the conflict in the Middle East has added to this uncertainty. In the near term, higher energy prices will push up overall inflation.
Beyond that, the scope and duration of potential effects on the economy remain unclear, as does the future course of the conflict itself. We will continue to monitor the risks to both sides of our dual mandate. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.
Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis. This is my last press conference as chair and I will close with a few thoughts. First, I want to congratulate Kevin Walsh on his ad advancement out of the Senate Banking Committee this morning. This is an important step forward and I wish him well as that process continues.
The Federal Reserve exists for one fundamental purpose, to foster the economic conditions in which American families and businesses can thrive. Stable prices, a strong job market, and a financial system they can depend on. Every decision we make, whether about interest rates or regulatory and supervisory matters or other issues, is made in service of that purpose.
Our decisions reflect the collective judgment of the board of governors and the federal open market committee. Colleagues who demonstrate analytical rigor, principled judgment, and a genuine commitment to the public interest. Our collaborative and deliberative process has long reflected a shared commitment to finding common ground in service to our mission.
This institution is resilient, capable, and staffed by professionals of extraordinary talent and exceptional dedication. It has been a privilege to serve alongside so many great public servants at the board of governors and around the Federal Reserve system. The Fed's work is only as effective as the public's understanding of it.
And you, the press, are essential to keeping the public informed about we about what we do and why. The people we serve, benefit from your careful reporting. I welcomed the announcement last [clears throat] Friday by the US attorney for the District of Columbia that she had closed the criminal investigation.
She also noted, however, that she would not hesitate to restart the investigation. Over the weekend, the Department of Justice provided assurances that they will not reopen the investigation unless there's a criminal referral from the Fed's inspector general. And absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas.
I've [clears throat] said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that. I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There's only ever one chair [clears throat] of the Federal Reserve Board. When Kevin Worsh is confirmed and sworn in, he will be that chair.
Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. As I regularly point out from this podium, our success in delivering our goals matters for all Americans. I'm confident that the Fed will continue to do its work with objectivity, integrity, and a deep commitment to serve the American people.
Thank you, and I look forward to your questions. [clears throat] Thank you, Mr. Chair. Appreciate the kind words about the press. Often doesn't come from the podium in different places, but appreciate that. Um, can you talk about what is gone into your decision to remain on the board? What kind of criteria are you weighing and uh how long might you stay?
Thank you. Sure. So, you know, my my [clears throat] concern is really about the series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors. And I I want to note here this has nothing whatever to do with verbal criticism by elected officials.
Uh I I've never suggested that such ver verbal criticism is a problem and neither has anyone else here. But these legal actions by the administration are unprecedented in our 113year history and there are ongoing threats uh of additional such actions. I I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public which is the ability to conduct monetary policy without taking into consideration political factors.
It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way free of political influence. It's part of the absolute foundation of this amazing economy that we have. It's just one of the many reasons why the US economy is the envi envy of the world.
That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important, not for the people who work at the Fed at any given time, but for the people that we serve, that the Fed remain able to conduct monetary policy in a way that doesn't get pulled into politics trying to help or hurt any particular politician or political party.
It's critical for the people that we serve. In terms of when I would leave, I I will leave when I when I think it's appropriate to do so. Was that all your questions or was that Well, I just have a followup which is what would you say to [clears throat] the criticism that by remaining on the board, you're actually taking a political act and denying uh President Trump the majority of the board which as president he would have if you left.
I I don't see that at all. As I mentioned, uh you know, I'm literally staying because of the actions that have been taken. I had long planned to be retiring. uh and uh you know the things that have happened in really in the last 3 months have have I think left me no choice but to stay until till I see them through at least that long.
Um you know in addition uh I don't see how this will interfere my intention is not to interfere. You know, I was a governor for almost six years, and the tradition is at the Fed that governors uh who understand how difficult the role of chair is, and as a as a soontobe former chair, I do understand how hard it is to get consensus with 19 strong-minded people, you work with the chair.
You you try to you try to uh be heard, but also collaborate with the chair and try to support the chair when you can. When you can't, you can't. And I think that's the attitude that people generally take. And that's the attitude that I'll take. Uh Nick, Cher Pal, if I could ask about the inflation outlook.
In March, you described the standard practice of looking through energy shocks as conditional on inflation expectations staying anchored. Since that meeting, there has been very little progress reopening uh key energy trade corridors. Can you help us understand how the inflation outlook has changed in the intermedating period beginning with the prospects for tariff pass through resolving on the timeline that you had outlined in March before getting to the energy shock that is now on top?
So, you know, I would look at it this way. Um, for a long time, we've been working on on the hypothesis really that tariff uh tariffs would would lead to a one-time price increase and that that would go away over time. In other words, that there would be no further change. So, measured inflation wouldn't reflect that higher level going up more and more.
And it's time for that to happen. You know, we really do expect that to be happening in the next two quarters. So, we'll be watching very carefully to see that what we've thought all along would happen. That's the kind of critical part of the forecast. We we need to really see that with with energy.
It's it's so hard to say. Um I I mentioned, you know, in you know, sort of the textbook, you you would look through an oil shock because they tend to be shortlived and they tend to revert and monetary policy works with long and variable lags. So you you know, you wouldn't necessarily re react right away.
I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock. So, I think we're going to be very cautious about that. It's but the the question about about looking through energy really is not not in front of us right now.
We it hasn't even peaked yet. And I think we'd want to see the backside of that and progress on tariffs before we even thought about uh about reducing rates. So, if I could follow [clears throat] up, the the statement today preserves language that has taken on some meaning uh as it was socialized when the committee was actively lowering rates.
Why is that easing bias still uh ripe given how different the inflation outlook is now versus a meeting or two ago and what more would have to happen for it to get evicted? So um that was uh as you will recall we we had a discussion about that at the last meeting and we talked about it in in the press conference after the March meeting.
We had the same today. We had quite a vigorous discussion about that that very issue and the guidance and is it still appropriate and that kind of thing. And I would say that the you know number of people on the committee who either could support that ch language change changing to a more neutral stance so that a hike is as likely as as a cut.
uh that number has increased over the intermedating period and it's easy to see why. I mean it's it's a it's it's a good question right you see inflation has moved up over the interim a bit core inflation's 3.2 now moving albeit just a little bit in the wrong direction and we we know that there will be you know that there's uh headline inflation coming out of the Gulf and we don't know how much that will be.
We just we're going to need to see. So, it makes all the sense in the world that people would look at that and and we'd have a vigorous discussion about that. You saw that three people desented over the language. I think all of those people agreed with the with the rate decision. Um, so the majority of the committee did not want to do that and and and I I was I didn't think we needed to do it at this meeting.
It really was just a question of what's why do we need to do that now? You know, we have so much to learn. There's so much uncertainty about the path ahead. there doesn't need to be any rush to make that decision now because you know what what happens in the next 30 60 days even by the next meeting could really change the picture around that around that language.
So you know it was a it was a it's a close it's it's a much closer thing on the committee than it was in March and you know that makes all the sense in the world it seems to me. Claire. So, Claire Jones, Financial Times. Um, just just going back to this issue of the the easing bias. Um, we've now got oil approaching $120 a barrel when it comes to the benchmark.
Um, Brent crude. Um, if it stays around those levels six weeks from now, what would be your guess best guess as to whether the easing bias will still be in the statement? Thank you. I I wouldn't want to guess, you know, well, first of all, we're going to have new leadership in all likelihood by then and and new leadership is going to have a very important role to play in that.
So, uh I won't be standing here at this podium to answer your question. So, um I don't know. As I mentioned, that's all I can really say is that we had we had a great discussion about that today. It's a you know, it's got it's gotten to be a better question in the interim period. We had the discussion a majority are still on the page of of not feeling the need to move to that level.
And I I that's where I am. Uh I I get it though, you know, at a certain point you would move and that that conceivably could come as soon as the next meeting. Thank you. And just to follow up on, um the [clears throat] new leadership also seem rather lukewarm on press conferences and on the dot plots.
What would your advice to him be on these communication tools? So I'm I'm not going to give him any advice through you today here. But I've you know I I think communications generally is uh I think every incoming chair takes a look at communications and it's a very healthy thing. I mean communications it's very complex and uh you know you can always be uh be looking at new things and and if that happens feels like it's going to happen that's completely appropriate thing.
Neil, hi Chair, Chair Pal with Axios. Um, can you tell us if you've been uh in touch with with incoming chairman Worsh uh any uh to what extent is this a normal transition process versus all the things swirling around uh something unusual and and what can we expect when when he takes uh takes that podium in a few weeks?
I I haven't seen him since uh seeing him at a dinner in January where I congratulated him and had a nice nice chat with him. Haven't seen him. I don't know what a normal process is. You know, the the last process was with uh Janet Yellen with whom I had worked for six years and so it was uh you know, we were sitting down the hall from each other.
So, it was a very different thing. I think I think this is and will be a very normal standard kind of a kind of a transition process. So, that's that's what I expect. I have every reason to think it will be. Quick followup. Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor?
I wasn't thinking of it as such, but no, not really. I mean, I'm thinking more of the other things I mentioned. [clears throat] Chris, hi. Uh, thanks for taking our question. I wanted to ask a question about your tenure and Chris Rugver at Associated Press. Um, during your tenure as chair, you often spoke about how disadvantaged Americans benefited from extended periods of low unemployment.
Uh, and the new framework the Fed adopted in 2020, some economists say elevated the Fed's employment mandate. Uh, are you worried that the the pandemic inflation spike that followed will make future Fed chairs more reluctant to pursue a hot jobs market and should they be? Um, I don't know the answer to that.
I mean what we so what we experienced um in in uh the in the teens the mid- teens was uh really low low levels of unemployment for a long period of time and no reaction from inflation and we all took very much took notice of that. We also noticed that the biggest wage gains were going to people at the bottom end of the income spectrum.
And we had many many reports of uh I mean it felt like a fairly stable equilibrium and a lot of benefits were flowing to people at the bottom end of the uh income spectrum including companies were you know setting up in um in you know people who were confined and and like training them before they got out and it was it was a very healthy sort of set of societal dynamics.
So of course I think anybody would love to get back to that. Um I I don't think that anything that happened to create the the global pandemic inflation was in any any way related to overweing the employment market. I mean it was it was a global shock that happened essentially very very similarly all over the world that had to do with closing reopening stimulus and all that.
And I mean you could you could look at a graph of 10 big economies on the page and not know which was the US and which was Germany, France and things like that. So I don't think that that that insight was in any way responsible for the high inflation that we experienced. So I mean I think it's always been a balance.
Uh uh you you've got to you've got to be strong on both of our dual mandates and we we just for example now we we don't feel that the uh labor market is at all a source of inflation. So we don't need to be worrying about that. It's been a long time since we have had to worry about that. Well, actually during the during the pandemic recovery, the labor market was super overheated and tight and that's when we had to worry about it.
But but not now. And just on the other issue, um are you would you need do you need more assurance from the Justice Department before stepping down? Is that what you're waiting for or what else? I'm waiting, you know, for the for the investigation to be well and truly over with finality and transparency and and I'm waiting for that and I will leave when I think it's appropriate to do so.
Michael McKe. [clears throat] Michael McKe from Bloomberg Television and Radio. I'd like to ask you if you could explain a little more or characterize a little more the discussion about the two-sided view and interest rates because there were some members of the open market committee who've been suggesting that we may need to raise interest rates even absent the war because inflation was not coming down fast enough.
Uh is there any sense that interest rates might have to go up or was this just a setup to sort of uh warn people that you're worried about the war impacts? So nobody the three dissenters and and others who could have supported that and others who were you know who were voters and prefer non- voters who preferred it they all supported the right decision right so people are not saying we need to hike now it's more a question of you know don't we kind of feel that we should be neutral and markets are markets what are markets doing people argue that's this is consistent what markets are doing and again it's a it's a very fair question but you know these these changes is there is you know it's a form of forward guidance and you want to make you don't want to make them you want to make them in a way that that will be sustained and continue to make sense and not something you need to take back uh you know fairly quickly.
So I I think we just a group of us including me didn't feel like we needed to be in a hurry on that that that markets are not confused about our reaction function. We don't have a problem to solve on that. But the other side of the argument is a good argument too as I as I mentioned. It's a perfectly good argument to be having, good discussion to be having.
So, and it came out the way it came out. Well, you've got uh three dissents [clears throat] uh in favor of uh two-sided uh warning. Uh you've got yourself staying on the board. You've got the criticism that does come from elected officials. uh and you've got a lot of uh critics who have faulted the Fed for being too slow 2021 with inflation.
Are you worried about Fed credibility under all of this? Is that one reason that you want to stay on not driving my my thinking now? I mean, monetary policy is going to get made by, you know, 19 people. There's a lot of stability there. Uh I mean if you think about it any every new fair Fed chair has the same situation which is you've got 18 colleagues on the FOMC 11 of them vote during any year and you have to your job is to create consensus is it's to talk to them understand them you know be inside their thinking and be able to pull them together and and get consensus and move.
And that's that's what every Fed chair has to do. And I I think Kevin Wars is actually quite well he has the capabilities, skills to be to be very good at that, I would think. So I think I I'm not so worried about that process, you know. Uh I think that'll that'll work itself out. Howard, uh thank you, Chair Howard Schneider with Reuters.
You you mentioned that uh staying on as a governor, you intend to keep a low profile. I'm just wondering if you could give us a little more detail on what that looks like and how you can touch um what that Yeah. walk down the steps uh what that looks like and particularly around the policy discussion how you're able to uh to have your intervention and not be a shadowed chair and not have kind of an outsized influence over the process.
Yeah. You know, that's just something I would never do. You know, the shadow chair thing. know, you know, it's it's I I don't know what the exact specifics of it will be, but I'm going back to being a governor. I respect the role of chair. I, you know, I was a chair. I was a governor for six years, and I know what that's like.
I know and I I had a, you know, pretty front row seat with particularly with with chair yellen to whom I I was close when I when I I was worked with Chairman Bernani for two years. But, um, you know, I I I was brand new at that time. So I got a sense of what it was and I had real sympathy for how hard it is to get that group to consensus and I always felt like I you know I don't want to add to that unnecessarily and that means try to support the chairs where the chair the direction the chair wants to go and if you can if you can't you can't but and I think that's that's the way it's always worked there because the chair only has one vote plus the ability to develop consensus and if people won't be you know they they won't if they're not flexible at all then how do you ever do that and so that's why the chair has the authority ity the chair has really is to develop relationships with people and work with them and then and then put something forward that has consensus and I you know I I prop I propose to be a very constructive participant in that process really out of respect for for the office of the chair
and uh in your view as a a soontobe governor how do you see the risks of oil prices bleeding into core inflation in coming weeks because that was it seems like the commentary that was coming from particularly some of the reserve bank presidents. They were elevated concerns about the bleed into core and you know here we are with three descents now.
What do you see as the prospect of of a core inflation? You know they're those prospects are real. Remember though our our um and they're real and the real thing is we're going to have to wait and see. We're going to need to see and the good news is we think our policy stance is just is in a very good place for us to wait and see.
we, you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. Uh the labor market shows more and more signs of stability whereas inflation is kind of misbehaving and so maybe a little bit of uh of restriction or the high end of neutral is just the right place to be. So we can wait here and see uh and see how things work out before we act and we'll see how much that you know how much does come through into core.
You see it already in air airfares of course but you may see it in many other places. Uh you know uh we just don't know yet and it's it's so unknowable because how how long will the straight be closed? You can develop any number of scenarios that you want but we really won't know till we know. So fortunately we're in a good place to to to wait and let things develop.
[clears throat] Uh thanks Mr. Chairman. um you started holding post uh post meeting press conferences for every meeting as opposed to the ones with just uh with SCPs. Can you talk about why you see that as a net positive? So we um we always said when we were doing quarterly press conferences, we always said we can move at any meeting, but we only ever moved at the quarterly SCP meetings where we had the press conference.
So if you think about it, you know, we during the pandemic, we were moving like a lot at every meeting and sometimes between meetings and and doing that without a press conference, I think would have been quite challenging. It's become the industry norm. It's the standard. I don't know whether that has to remain that way.
I don't know. I mean I it's it's just something people have become used to and I I do think it's quite helpful to you know to uh I mean I I I try to deliver a message on behalf of the committee rather than 18 people 18 other people going out and delivering their message and it's you know it's going to be all over the place because we do thankfully have widely disperate views.
Um okay thanks. The [clears throat] other thing I wanted to ask about was the communications review from last year. Um uh could you describe the debate last year? what changes were considered, what you wanted, and what prevented action um any action uh on the on on those changes. So yeah, I'm not going to go into the the real small specifics, but what we found very quickly was that um [clears throat] making making changes making really large changes, for example, to the dot plot or the SCP um it didn't have we couldn't come up with anything that had really broad support on the committee and and so we just moved on.
We didn't we we didn't really do as much o on on that as we might have and you know I was never the world's biggest fan of the dot plot but you you can't can't beat something with nothing and you know there's a that we've looked at a bunch of things and uh you know it's something I like I said I think every new chair is going to look at our suite of communications and and think about what would be changes.
We we are the only major central bank that doesn't publish a forecast and that's because we have a 19 person committee and you know you try to do it you try to do that on the at the board that's hard or the at the committee that's hard uh it's hard if you do it at the staff so it's you know it's been it works I think our communications are fine but looking at doing it in a different and better way is the most natural thing in the world [clears throat]
thank you Um, Colobby Smith with the New York Times. If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome for the Fed is still one in which the committee just extends the pause in rate cuts? And to what extent is there a growing sense within the committee that monetary policy really isn't just restrictive at all right now?
Um, the economy is holding up relatively well despite this major energy shock. The unemployment rate has ticked lower. inflation was moving sideways even before the war and is now moving higher. Um so so where is the committee at on that debate? You know where we're at is we think our pol really we think our policy rate is in a good place.
Um if we need to hike we will we will certainly signal that and we will and we will certainly do it. And if we need to to cut then if it's appropriate to cut then we'll we'll signal the opposite. I think we because we feel like we're we're in a good place to move in either direction. Um, nobody's calling for a hike right now.
Um, so it really is going to depend on how things how things evolve. Uh, and you know that that's really where it is and as I mentioned clo you know much closer question this cycle on changing the guidance but but ultimately we didn't. And as it relates to the war at what point do you [clears throat] think the risk to growth will be larger than the risk to inflation as this conflict drags on?
you know, you just have to find that out empirically, you know, with given our um the fact that we're, you know, a big exporter of energy and that our economy is far less energy intensive, oil intensive than it was during the 70s. Um, you know, the the effects on the United States are really substantially less than those of Western Europe or or Asia.
We're feeling much greater effects from from these things. are the effects we're feeling in, you know, in the current situation currently and in in sort of what's priced in which is, you know, a relatively quick outcome. If if this goes on for much longer and prices go much higher, then we'll feel that much more.
And of [clears throat] course, I'm talking about aggregate inflation numbers. We know, we're very well aware that people are experiencing higher gas prices all over the country now. And that hurts that and these are those those hikes may continue to happen. and other other things are going to start to reflect air airline fairs I mentioned and and other other products and services that are dependent upon petroleum and derivatives of of petroleum people are going to start to feel that
Edward thank you thank you [clears throat] chair Edward Lawrence with uh Fox Business so I guess I'll just ask you directly on this the markets don't see a rate policy looking, you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. Um, and I want to follow up on some of the other questions about [clears throat] uh your future a little bit.
The the first time we've seen to four descents now since October of 1992, are you handing off a divided Fed? You know, the thing to remember is [clears throat] uh uh we have always had vigorous debates and and uh they're excellent debates. I have to say they're they've been really good. Uh and uh we're in an unusually difficult situation.
So we we've really had four supply shocks. You can actually you can say more than four but at a minimum we've we had the pandemic, we had the invasion of the UK of Ukraine, we had tariffs and now we have of Iran and the oil um you know the oil spike. So those every every supply shock has the capability of right driving inflation up and unemployment up and and what do you do?
You know you're it's it's central bank has a really hard time knowing what to do. So the right thing to do is to try to balance the achievement of those two goals. And that's what our framework calls for us to do. But these are really tough difficult judgments. You've got to have a forecast for each variable.
You've got to think how long it's going to take to get back to target. You got to think how how restrictive or not is policy. So it's only natural that you have a range of views on the committee. You know, people are going to see it different ways. They're going to have different risk tolerances and that kind of thing.
I mean, if everybody agreed, that would be that would be surprising. uh and I I think it's only it's partly a function of the extraordinarily challenging set of supply shocks that we've been dealing with now for five six years. Thank you so much, Chair Powell. Selena Wayne with ABC News. Are you confident that Kevin Worsh will stand up to political pressure from President Trump?
So, he he testified very strongly to that effect in his hearing, and I and I'll take him at his word. And when it comes to gas, right now it's over $4 a gallon. Inflation just hit a 2-year high. Should Americans expect to be paying higher gas prices for the rest of this year? And in your view, does that take a rate cut off of the table?
And secondly, by staying on as uh Fed Governor, what message do you think you're sending to the president? I I don't know what gas prices are going to do for the rest of the year and um it will depend on how long the straight remains closed and how quick quickly it can be reopened and that kind of thing.
But remember when gas prices go up um that's disposable income coming out of people's pockets. So they're going to spend less on other things. So there will be a hit to GDP. So it's a you know it's a it's a question whether spending you know goes down uh to offset the inflationary effects. So it's not the answer isn't obvious uh exanti whether you whether you should move your rate over over because of that.
We'll have to see how it evolves. And the message as the president by staying on I'll stand on what I said earlier [clears throat] Victoria. Hi Victoria Aguido with Politico. Um during your tenure Fed independence has come under pressure and The unemployment rate has been little changed in recent months.
Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices. Today, the FOMC decided to leave our policy rate unchanged. We see the current stance of monetary policy as appropriate to promote progress toward our maximum employment and 2% inflation goals. Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook and we will remain attentive to risks to both sides of our dual mandate.
I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace. Consumer spending has been resilient and business fixed investment has continued to expand at a brisk pace. In contrast, activity in the housing sector has remained weak.
In the labor market, the unemployment rate was 4.3% in March and has changed little in recent months. John, look, I think it's at risk. I mean, I think these these, you know, these legal assaults, if you will, as I mentioned, you know, we're the institution is being battered over these things. We're having to resort to, you know, the courts to to enforce our legal, you know, in not even it's not so much independence.
It's it's really the ability to do monetary to make monetary policy without political considerations. That's what we're talking about. And uh we've had to do that and we've been successful. so far. But that's not over. None of that is concluded yet. And it's, you know, it's really important. It's not about it's not about people who work at the Fed or the institution.
It's about the benefits of a central bank that makes decisions based on analysis and our best thinking. Uh rather than, you know, trying to help or hurt politicians. It's, you know, that there's there's a bright line between central banks who do one and do the other. and successful countries have uniformly successful advanced economy countries have a really strong set of protections around their central bank just for that reason.
So that's what it's all about. I you know I I think I am confident as I said in my remarks that the Fed will continue to make its decision based on analysis, rigorous analysis and not on political considerations. But we've had to fight for it. And I I' you know, I'd like to think that, you know, I'd like to think we can get out of that era and go back to respecting, you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing.
We're, you know, we're we're not we're it's a it's an institution full of human beings who work super hard to get things right for the benefit of the public. We're all human. don't expect for perfection but do expect us to make you know decisions without political considerations and and the very best analysis we can bring.
Katarina [clears throat] Katarina Sariva Bloomberg News. Um how would you characterize um what you've heard from your colleagues on your decision to stay? Um do you have their support? And then have you heard concern from your colleagues um about continued legal attacks from um the executive branch?
Is this something that others have uh you know talked to you about? So I think that um I I don't want to report on [clears throat] what my colleagues think. They can they can speak for themselves. But you know yeah there are there widespread concerns that these things may continue. That's all that's all I'll say.
And uh you know and that would be a problem. And um so [clears throat] um and then I just also wanted to ask about um Governor Waller's speech on the reserve banks. um what you know do you have any thoughts on on centralizing some of those functions in the way he described and then um have you know do are you concerned that something like that could potentially be a slippery slope to um you know to consolidate reserve bank functions even more in such a way where you you know the central bank ultimately loses some of that important regional information.
So we try to be good stewards of the public's money and efficient and Chris in particular, Chris Waller is particularly passionate about that. Of course, so are the reserve, so are the presidents and you know, it's a question of how do you accomplish it? Uh we we of course and and Chris said this in his speech, we you know we want 12 strong independent central banks with their own staffs and their own monetary policy views and all that, but you know there are things that are done in all 12 which could well be done at one much more efficiently and with cost savings and so there's a back and forth going on on that but everybody everybody's on the same page.
The other thing he touched on was was uh the idea of removing Reserve Bank presidents from office over different different views on monetary policy. And I would I would just agree with him so strongly that that would be the beginning of the end of of the Fed's ability to to make monetary policy independently.
If every administration could come in and do that, you're you're just another cabinet agency at that point. So that's not something that I would support. Chris said the same thing. Christine. Thanks, Sher Pow. Christine Romans, NBC News. I want to ask about legacy. When the history books are written, how do you think your stewardship at the Fed will be remembered for the past 8 years?
You know, I'm going to just say that uh that's for that's for someone else to say. I'll give you a mulligan on that. All right. I'm going to ask you about uh misbehaving inflation then. You talked about those four big shocks, supply shocks over the past 5 years and in inflation still misbehaving. What's your message to American families who feel like inflation has not been under control for them really since since the co reopening?
You know, we're we're committed to bring inflation back down to 2% and and sustainably. That's that's our goal and we will we'll stick at it until that happens. We keep getting these events keep happening which keep driving up costs and you know the best thing we can do is to use our tools to guide inflation back down to 2%.
I think trying to get there really quickly could be very costly in terms of of uh of job loss and things like that but we try to get there over time in a way that does the least damage possible and you know our commitment to that is never ending and unshakable. How would you describe the economy outside of the misbehaving inflation?
I mean, um, it's still awfully resilient given all of the blows. I don't know that you can be awfully resilient. So, it's actually quite resilient, I would say, cuz it's a positive thing if I can if I can have that amendment. Yeah, that the, you know, growth is really solid across our economy. Some of that is u that consumer spending is hanging in pretty well.
The the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States. So a lot of uh business investment going into building data centers and every reason to think that that continues. So you've got an economy that's growing at 2% or better.
PDFP which is private domestic final per purchases that which is really a better signal of of uh of a momentum in the economy is actually higher than that. So that's you know that's a positive thing. the if you look at the unemployment rate, it's 4.3%. So that's a low rate. That's pretty close to mainstream estimates of the natural rate, we've been there for a long time.
So it's it's it doesn't feel like a good labor market to some who don't have jobs because quits are really low, hires are really low, and there's effectively no new net job uh creation. So that's a that's you know in a sense the labor market is in balance but it's an un unusual and uncomfortable kind of a balance where people who don't have jobs will have a hard time breaking in unless somebody quits their job.
So um so that's pretty good. You know inflation is the thing we need to work on and it's partly tariffs which we think we think that that inflation should subside over the course of this year because it's it's kind of a one-time increase. It shouldn't be repeated and that should start happening pretty soon.
the energy in inflation that we're getting should go through fairly quickly. Uh and we'll we'll just have to see how that works out. In the meantime, you know, we think our policy stance is in a good place for us to hold and and wait developments. Jennifer, thank you chair pal. Jennifer Shawnberger with Yahoo Finance.
at the risk of beating the dead horse here. Clearly, three members objected to keeping that easing bias in the statement. And [clears throat] you said that the majority still didn't need still didn't need to uh move to new language at this point. So, does the majority of the committee still have a bias towards cuts at this point or has the bias on the committee shifted away from cuts towards holding or hikes if that was needed?
I so I think that you know the the center is moving toward a more neutral place and that's sort of what markets are saying too. I just think you know uh there's a lot of signaling going on when you change guidance like that and so we we just I guess the major a majority of us didn't feel like we needed to send a signal on that right now.
uh and but maybe it'll come to that and and the reason is because you know we're kind of waiting to see what happens with with events in the Middle East and what are the implications of those events for the US economy. So there was just a there's a group who feels like we don't need to be in a hurry to do that.
We we get it and of course we will move to a hiking bias if we want to hike and we'll move to a new a neutral bias before that. there was a difference over whether to do it at this meeting at a at a meeting at which all but one of us agreed that that the that the rate decision was correct which was not to move.
And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that you want to stay on as a governor to serve as a checkin balance on that? I I want to stay until I I will stay until it's I feel it's appropriate for me to leave. And and yes, that is that is really what is driving this.
Uh I'm not uh I'm not looking to be, you know, a high-profile uh dissident or anything like that. I I'm I'm more looking at the other aspects of this and wanting to see that things have calmed down and and returning to a traditional model of working with the people that you have and bringing them to consensus and respecting that consensus.
That's what that's what I'm I'm hoping to see. Matt Eaggan. Thanks, Chair Powell. [clears throat] Matt Eaggan with CNN. U you've made many tough decisions in your time at the Fed and as your time as chair comes to a close and you think about your tenure and perhaps your legacy. Are there any decisions that stand out as ones that you're particularly proud of?
And are there any that with the benefit of hindsight you would take a mulligan on? Yeah, I it's hard I wouldn't want to signal single out individual things at this point. You know, I'll just say uh you know, we all of us together have consistently tried to do what we think is best for the American people based on our tools and our objectives that that Congress has given us.
It's been very challenging because we've been in a situation of supply shock supply shocks really for 6 years and that's just a very different situation than for a very long time what the Fed and other central banks were doing all the time was demand management and you know and there was always the inflation mandate but inflation was low for 25 years.
So this is a very different world and a much more challenging one where you have to balance the two objectives. And by the way, central banks that have a an inflation mandate have to do exactly the same thing because they're balancing economic activity. So that's been challenging and we've you know we've tried to do our very best through these really challenging uh times and I'm really proud of of uh the work that I've done that my that my colleagues and I have done during these uh these years.
Now, to follow up on some of the the discussion around Fed independence, can you explain to the public why this notion of Fed independence, which might sound kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court rules
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