FOMC Press Conference June 15, 2022 AI文字起こし

FOMC Press Conference June 15, 2022

Good afternoon. I will begin with one overarching message. We at the Fed understand the hardship that high inflation is causing. We're strongly committed to bringing inflation back down. And we're moving expeditiously to do so. We have both the tools we need and the result that it will take to restore price stability on behalf of American families and businesses. The economy and the country have been through a lot over the past two and a half years and have proved resilient. It is essential that we bring inflation down if we were to have a sustained period of strong labor market conditions that benefit all from the standpoint of our congressional mandate to promote maximum employment and price stability. The current picture is plain to see the labor market is extremely tight, and inflation is much too high. Against this backdrop, today, the Federal Open Market Committee raised its policy interest rate by three quarters of a percentage point and anticipates that ongoing increases in that rate will be appropriate. In addition, we are continuing the process of significantly reducing the size of our balance sheet. I'll have more to say about today's monetary policy actions after briefly reviewing economic developments. overall economic activity edged down in the first quarter as unusually sharp swings in inventories and net exports more than offset continued strong underlying demand. Recent indicators suggest that real GDP growth has picked up this quarter with consumption spending remaining strong. In contrast, growth and business fixed investment appears to be slowing. And activity in the housing sector looks to be softening, in part reflecting higher mortgage rates. The tightening in financial conditions that we've seen in recent months should continue to temper growth and help bring demand into better balance with supply. As shown in our summary of economic projections FOMC participants have marked down their projections for economic activity, with the median projection for real GDP growth, running below 2% through 2024. The labor market has remained extremely tight with the unemployment rate near a 50 year low job vacancies at historical highs and wage growth elevated. Over the past three months, employment rose by an average of 408,000 jobs per month, down from the average pace seen earlier in the year, but still robust. Improvements in labor market conditions have been widespread, including for workers at the lower end of the wage distribution, as well as for African Americans and Hispanics. labor demand is very strong, while labor supply remains subdued, with the labor force participation rate little changed since January FOMC. participants expect supply and demand conditions in a labor market to come into better balance, easing the upward pressures on wages and prices. The median projection in the SCP for the unemployment rate rises somewhat over the next few years, moving from 3.7% at the end of this year to 4.1% in 2024 levels that are noticeably above the march projections. inflation remains well above our longer run goal of 2% over the 12 months ending in April, total PCE prices rose 6.3% Excluding the volatile food and energy categories core prices rose 4.9%. In May the 12 month change in the consumer price index came in above expectations at 8.6%. And the change in the core CPI was 6%. Aggregate demand is strong supply constraints have been larger and long lasting than anticipated and price pressures have spread to a broad range of goods and services. The surge in prices of crude oil and other commodities that resulted from Russia's invasion of Ukraine is boosting prices for gasoline and food and it's creating additional upward pressure on inflation. And COVID Ready COVID related lockdowns in China are likely to exacerbate supply chain disruptions. FOMC participants have revised up their projections for inflation this year, particularly for total PCE inflation given developments in food energy prices. The median projection is 5.2% this year and false 2.6% next year and 2.2% in 2024. Participants continue to see risks to inflation as waited to the upside. The Fed's monetary policy actions are guided by our mandate to promote maximum employment and price and stable prices for the American people. My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation.

We are highly attentive to the risks high inflation poses to both both sides have our mandate and we're strongly committed to returning inflation to our 2% objective. Against the backdrop of the rapidly evolving economic environment, our policy has been adapting and it will continue to do so. At today's meeting, the committee raised the target range for the federal funds rate by three quarters of a percentage point resulting in a one and a half percentage point increase in the target range so far this year. The committee reiterated that it anticipates that ongoing increases in the target range will be appropriate and we are continuing the process of significantly reducing the size of our balance sheet which plays an important role in firming the stance of monetary policy. Coming out of our last meeting in May, there was a broad sense on the committee that a half percentage point increase in the target range should be considered at this meeting. If economic and financial conditions evolved in line with expectations. We also stated that we were highly attentive to inflation risks and that we would be nimble in responding to incoming data and the evolving outlook. Since then, inflation has again surprised to the upside. Some indicators of inflation expectations have risen. And projections for inflation this year have been revised, revised up notably. In response to these developments, the committee decided that a larger increase in the target range was warranted at today's meeting. This continues our approach of expeditiously moving our policy rate up to more normal levels, and it will help ensure that longer term inflation expectations remain well anchored at 2%. As shown in the SCP the median projection for the appropriate level of the federal funds rate is 3.4% at the end of this year, percentage point and a half higher than projected in March and point nine percentage point above the median estimate of its longer run value. The median projection rises further to 3.8% at the end of next year, and declines to 3.4% in 2024, still above the median longer run value of course, these projections do not represent a committee plan or decision and no one knows with any certainty where the economy will be a year or more from now. over coming months, we will be looking for compelling evidence that inflation is moving down consistent with inflation returning to 2% we anticipate that ongoing rate increases will be appropriate. The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy. Clearly today's 75 basis point increase is an unusually large one and I do not expect moves of this size to be common. From the perspective of today either a 50 basis point or a 75 basis point increase seems most likely at our next meeting. We will however make our decisions meeting by meeting and we'll continue to communicate our thinking as clearly as we can. Our overarching focus is using our tools to bring inflation back down to our 2% goal and to keep longer term inflation expectations well anchored. Making appropriate monetary policy in this uncertain environment requires a recognition that the economy often evolves in unexpected ways. Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook. And we will strive to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain time. We were highly intent, attentive to inflation risks, risks and determined to take the measures necessary to restore price stability. The American economy is very strong and well positioned to handle tighter monetary policy. To conclude we understand that our actions affect communities, families and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you and I look forward to your questions. Thank you Howard

Snyder with Reuters have two related questions. Chair Powell. Do you feel you box yourself in with the language you use to the last press conference on a 50 basis point hikes in June and July? And would you please give us as detailed a sensor you can of what role you played in reshaping market expectations so quickly on Monday. So

as you know we we always aim to provide as much clarity as we can about our policy intentions, subject to the inherent uncertainty in the economic outlook because we think monetary policy is more effective when market participants understand how policy will will evolve when they understand our objective function or reaction function. In the current highly unusual circumstances with inflation well above our goal, we think it's helpful helpful to Priety provide even more clarity than usual. Again, subject to uncertainty in the Outlook. So and I think over the course of over the course of this year. Financial markets have responded and and have generally shown that they understand the path where we're we're laying out it of course it remains data dependent. And so that's what we generally think about guidance, and that's why we offer it. And of course when we offered that when I offered that guidance. It's the last meeting. I did say that it was subject to the economy performing about in line with expectations. I also said that if the economy performed if data came in worse than expected, then we would consider moving even more aggressively. So we got the we got the CPI data and also some data on inflation expectations late last week, and we thought for a while and we thought, well, this is the appropriate thing to do. So then the question is, what do you do? And do you wait six weeks to do it at the next meeting? And I think the answer is that's not where we are with this. So we decided we needed to go ahead. And so we did and that's really that's really how we made the decision

thanks for taking our questions genius Malik with the New York Times. You I guess I wonder if you could describe for us a little bit how you're deciding how aggressive you need to be so obviously 75 Today, what did 75 achieve that 50 Wouldn't have and why not just go for a full percentage point at some point? Sure.

So if you take a step back, what we're looking for is compelling evidence. That inflationary pressures are abating. And then inflation is moving back down. And we'd like to see that in in the form of a series of declining monthly inflation readings. That's what we're looking for. And by this point, we have actually been expecting to see clear signs of at least inflation flattening out and ideally beginning to decline. We've said that we'd be data dependent focused on incoming data highly attended to inflation risks to things that I mentioned to our moments ago, so contrary to expectations, inflation, again, surprised to the upside indicators, some indicators that inflation expectations have risen and projections of this year have moved up, notably, so we thought that strong action was warranted at this meeting. And today we delivered that in the form of a 75 basis point rate hike, as I mentioned, so what was the point of it really, is this. We've been moving rates up expeditiously to more normal levels and over the course of the seven months since we, since we pivoted and began moving in this direction. We've seen financial conditions tighten and appropriately so. But the federal funds rate even after this move is at 1.6%. So again, the committee is moving rates up expeditiously to more normal levels. And we came to the view that we'd like to do a little more front end loading on that. So I think that the SCP gives you the levels that people think are appropriate at a given given points in time. This was really about the speed with which you would get there. So as I mentioned, we 75 basis points today I said the next meeting, could could well be about a decision between 50 and 75. That would put us at the end of the July meeting, you know, in that range of in that more normal range. And that's a desirable place to be because you begin to have more optionality there about the speed with which you would proceed going forward. Just just talking about the SCP for a second. What it really says is that Committee participants widely would like to see policy at a modestly restrictive restrictive level at the end of this year and that's six months from now and you know, so much data and so much can happen so remember how highly uncertain this is, but so that is generally a range of three to three and a half percent. That's where people are and that's it. That's what they want to see knowing what they know now and understanding that we need to be we need to show results but also be flexible. To incoming data as we see it. If things are better. We don't need to do that much. It's so if they're not, then we you know, either do that much or possible even more. But in any case, it will be very data dependent, then you're looking at next year and what you're seeing is people see more, a bit more tightening and in a range of maybe three and a half to 4%. And that's generally what people see as the appropriate path for getting inflation under control and starting back down and then getting back down to 2%. So 75 basis points seemed like the right the right thing to do at this meeting. And and that's what we did.

Steve Liesman CNBC, thank you for taking my question, Mr. Chairman, you have not used the phrase in a long time monetary policy is in a good place, which is a phrase they used to use often. Now that the committee is projecting 4% or 3.8% Next year in terms of the funds rate, which is similar to where the market is now the the futures market and 4% funds rate next year. Do you think that's a level that is going to be sufficiently high enough to deal with and bring down the inflation problem? And just as a follow up, could you break that apart for me, how much of that is restrictive? And how much of that is a normal positive rate that ought to be embedded or not, in your opinion, in the funds rate? Thank you.

Sure. So the question really is, how high does the rate really need to go and this is, you know, the estimates on the committee are in that range of three and a half to 4%. And how do you think about that, what you can think about the the longer run neutral rate, you can compare it to that and we think that's in the mid twos. You can look frankly at broader financial conditions. So you can look at you know, asset prices you can look at the effect you're having on the economy rates, asset prices, credit spreads, all of those things go into that. You can also look at the yield curve and ask all along the yield curve, where is where is the policy rate. So, for much of the yield curve now, real rates are positive. That's not true at the short end at the short end of the yield curve in the early years. You don't have real neck, you have negative rates still. So that but that really is one data point. It's one part of financial conditions. So I think you have to look at it this way. We move the policy rate that affects financial conditions, and that affects the economy. You know, we have, of course, ways, rigorous ways to think about it, but ultimately it comes down to do we think financial conditions are in a place where they're having the desired effect on the economy. And that desired effect is we'd like to see you know, demand moderating demand is very hot still in the economy. We'd like to see the labor market getting better and better at and balance between supply and demand. And that can happen both from supply and demand. Right now, there's demand is substantially higher than than available supply, though. So we feel that there's a role for us in moderating demand. Those are the things we can affect with our, with our policy tools. There are many things we can affect. And those would be you know, things the commodity price issues that we're having around the world due to the war in Ukraine and and the fallout from that and also just all of the supply side, things that are still, you know, pushing upward on inflation. So that's that's really how I think I would think about it.

3.8% focus and get it done. Does it get the job done?

I think it's certainly in the range of plausible numbers. I think we'll know when we get there. Really, I mean, honestly, that that would be you would have positive real rates, I think and inflation coming down by then I think you'd have positive real rates across the curve. I think that that, you know, the neutral rate is pretty low these days. So I would think it would, but you know what we're gonna do we're gonna find that out. Empirically. We're not we're not going to be completely model driven about this. We're going to we're going to be looking at this keeping our eyes open and reacting to incoming data, both on financial conditions and on what's happening in the economy.

Thanks, Nick, Jim rose to the Wall Street Journal. At Churchill, you've said that you'd like your policy to work through expectations. And now obviously, this decision was something quite different from how you and almost all of your colleagues had set those expectations during the intermeeting period. And I know you just said that what changed was really the inflation data, the inflation expectations, data, but I'm wondering on the inflation expectations data, was there something you saw that was unsettling enough to risk eroding the credibility of your verbal guidance by doing something so different from what you had socialized? before?

So if you look at it, we look at a broad range of inflation expectations. So you've got the public, you've got surveys of the public and of experts. And you've also got market based and I think if you look across that broad range of data, what you see is that expectations are still in the place very much in the place where short term inflation is going to be high, but comes down sharply over the next couple of years. That's that's really where inflation expectations are. And also, as you get away from this episode, they get back down close to 2%. And so this is really very important to us that that remain the case. And I think if you look for most measures, most of the time, that's what you see, too, even if we even see a couple of indicators that that bring that into question. We take that very seriously. We do not take this for granted. We take it very seriously. So the preliminary Michigan reading, it's a preliminary reading, it might be revised. Nonetheless, it was quite eye catching. And we noticed that we also noticed that the index of common inflation expectations at the board has moved up after being pretty flat for a long time. So we're watching that and we're thinking this is something we need to take seriously. And that is one of the factors. As I mentioned, one of the factors in our deciding to move ahead with 75 basis points today was what we saw in inflation expectations were absolutely determined to keep them anchored at 2%. That was one of the reasons the other was just the CPI rating.

So if you saw a movement like that, again, another tick up in inflation expectations, would that put a 75 or even 100 basis point increase in play at your next meeting?

You know, we're going to just say we're going to react to the incoming data. And appropriately I think, so I wouldn't want to put a number on what that might be. The main thing is to get to get rates up. And then pretty soon we'll be in an area where we're, we're, we're, I think, as you get closer to the end of the year, you're in you're in a range where you've got restrictive policy, which is appropriate 4040 year highs and inflation. We think that policy is going to need to be restricted. And we don't know how restrictive so I think that's how we'll take it.

I chair Powell Neil Irwin from Axios, thanks for taking our questions. The late breaking kind of decision to go to 75 basis points. Do you worry that that will make policy guidance a less effective tool in the future? And should we think of that as a kind of symmetrical reaction function if we start to get soft readings on inflation or if labor market starts to roll over

to take your second question first? Yes, I mean, I think we're again we're we're going we're resolved to take this on, but we're going to be flexible in the implementation of it. Sorry, and your question was guidance. So again, the overall exercise is we try to be provide as much clarity about policy intentions as we can because we think that makes monetary policy work better. There's always a trade off, because you have to live with that guidance. And so you do it and it helps a lot of the time. I frankly think this year has been a demonstration of how well it can work. We've been with the with us having really just done a very little in the way of raising interest rates. financial conditions have tightened quite significantly through through the expectations channel, as we've made it clear what our plans are. So I think that's been a very healthy thing. To be happening. So and I would hope that our that our it's, it's always going to be any any guidance that we give is always going to be subject to things working out about as we expect. And in this particular situation. You know, we're looking for something specific and that is progress on inflation. We want to see progress. We want to see inflation can't go down until it flattens out. And that's what we're looking to see. And if we don't see that, then that's the kind of thing that will cause if we think we don't see progress for a longer period that could cause us to react. But we will we will soon enough we will be seeing some progress at some point. And and we'll react appropriately to that too. But I would I would like to think though that our guidance is still credible, but it's always going to be conditional on on what happens. This is an unusual situation to get, you know, some data late in in during blackout, pretty close very close to our meeting very unusual to one that would actually change the outcome. So I've only seen in my 10 years plus here at the Fed have only seen in something like that even close to that one or two times. So I don't think it's something that will come up a great deal.

Call me. Thank you so much for taking your questions. Colby Smith for the Financial Times on the clear and convincing threshold for the inflation trajectory. What is the level of realized inflation that meets that criteria? And how is the committee thinking about the potential trade off of much higher unemployment than even for cat than even what's forecasted in Sep? If inflation is not moderating, you know, at this acceptable pace. The second part is if you know what the potential trade off with higher unemployment, that and even what's forecasted in the SEP, if inflation is not moderating at an acceptable pace,

right? So what we want to see is is you know, a series of declining monthly readings for inflation and we'd like to see inflation headed down. So but you know, in right right now, our policy rate is well below neutral, right? So the soon enough we'll have our policy rate. Let's assume the world works out about like the SCP says the policy rate will be up where we think it should be and then the question would be, do you slow down? And does it make you you know, that you'll be making these judgments about is it appropriate now to slow down from 50 to 25, let's say or speed up, you know that so that's the kind of thinking we'll we'll be doing and we'll be, again, we're looking ultimately, we're not going to declare victory until we see a series of these, you know, really see convincing evidence, compelling evidence that inflation is coming down. And that's what I mean by that's what it would take for us to say, Okay, we think we think this is this job is done, because we saw it and frankly, we saw last year, inflation came down over the course of the summer and then turn right around and went back up. So I think we're going to be careful about about declaring victory. But again, the implementation of our policy is going to be going to be flexible and sensitive to incoming data.

Are you more concerned now that to bring down inflation it's going to require more than just some pain at this point?

Again, I think that I do think that their objective and this is what's reflected in the SCP but our objective really is to bring inflation down to 2% while the labor market remains strong, I think that what's becoming more clear, is that that many factors that we don't control are going to play a very significant role in in deciding whether that's possible or not. And there I'm thinking of course of commodity prices, the the war in Ukraine, supply chain, things like that, where we really we really can't the monetary policy stance, you know, stance doesn't affect those things. So But having said that, there is a you know, there is a path, there's a path for us to get there. It's not getting easier. It's getting more challenging because of these external forces and that that path is to move demand down. And you have a lot of surplus demand in the take, for example, in the in the labor market. So you have to vet job vacancies, essentially for every person seek actively seeking a job. And that has led to a real imbalance in wage negotiating. You could get to a place where, where that ratio was more at a more normal level, and you wouldn't, you would expect to see those wage pressures move back down to a level where people are still getting healthy wage increases real wage increases, but at a level that's consistent with 2% inflation. So that's, that's a possibility. And you could say the same thing about some of the product markets where there's just excess capacity. And you know, where the really where the strong demand has gone into soil where there's where there's their capacity constraint, right. So effectively what we think of as a vertical supply curve or close to it. So demand comes in and it's very strong and it shows up in higher prices, not not higher quantities, not more cars, because they can't make the course because they don't have the semiconductors. So in principle that could work in reverse. When demand comes down. You could see and it's not guaranteed, but you could see prices coming down more than the typical economic relationships that you see in the textbooks would suggest because of the unusual situation we're in on the supply side, so there's a pathway there. It is, it is not going to be easy. And you know, the there.

Again, it's our objective, but as I mentioned, it's going to depend to some extent on factors we don't control. Right, Rachel? High Chair Powell. Thank

you for taking our questions. Rachel Siegel from the Washington Post. So the new projection so the unemployment rate ticking up through 2024 is a higher unemployment rate necessary in order to combat inflation and what is lost if the unemployment rate has to go up and people lose their jobs in order to control inflation.

So you're right in the in the SCP we have unemployment going up to four point the median is is is 4.1%. There of course, a range of of actual forecasts. And I would characterize that if you if you were to get inflation down to you know, on its way down to 2%. And the unemployment went up to rate went up to 4.1%. That's still a you know, historically low level. You know, we hadn't seen we hadn't seen rates, unemployment rates below 4%. Until a couple of years ago, four we'd seen it for like one year in the last 50. So the idea that you know, 3.3 point 6% is historically low in the last century, so a 4.1% unemployment rate with inflation, uh, well on its way to 2%. I think that would be I think that would be a successful outcome. So we're not looking to to have a higher unemployment rate, but I would say that we I would certainly look at that as a successful outcome.

You know, we're not again, we're not, we don't seek to put people out of work. Of course, we never think too many people are working and fewer people need to have jobs. But we also think that you really cannot have the kind of labor market we want, without price stability, and we have to we have to go back and establish price stability so we can have that kind of labor market. And that's a labor market where, you know, where workers are getting wage increases maybe that maybe the workers at the lower end of the spectrum are getting the biggest wage increases as they were before the pandemic. We're participation is high, where there's lots of job opportunities, where it's just a really, I mean, the labor market we had before the pandemic was and that's what we want to get back to. And you see, you see, you know, disparities between various groups at historic lows. We'd love to get back to that place but to get there, it's not going to happen with you know, with the levels of inflation we have, so we have to we have to restore that. And it really is in service in the medium and longer term of the kind of labor market we want and hope to achieve.

High Chair Powell, Matthew Bosa with Bloomberg. So, as you just mentioned, the committee is now projecting a half percentage point rise in the unemployment rate and SCPs over the next couple of years, and it removed a line from its policy statement about thinking that the labor market can remain strong. While it tightens policy. You just mentioned that that is still your objective, though. So I'm wondering if you could explain why that line was removed from the statement also whether this means the FOMC is trying to induce a recession now to bring inflation down,

not trying to reduce induce the recession. Now, let's be clear about that. We're trying to achieve 2% inflation consistent with a strong labor market. That's that's what we're trying to do. So let me talk about that sentence. Clearly, it's our goal to bring about 2% inflation while keeping the labor market strong. Right. And that's that's kind of what the SCP says that the SCP has inflation getting down to two to a little above 2% in 2024, with with unemployment of 4.1%. So and this is a strong labor market. This is a good labor market. And as I mentioned, there are pathways to do it. But those pathways have become much more challenging due to factors that are not under our control, again, thinking here of the fallout from the war in Ukraine, which has brought a spike in you know, prices of energy, food, fertilizer, industrial chemicals, and also just the supply chains more broadly, which have been larger than or in longer lasting than anticipated. So the sentence that we deleted said that we believe that appropriate monetary policy effectively alone can bring about the result of 2% inflation with a strong labor market. And so much of it is really not down to monetary policy. It just didn't it just the sentence isn't it kind of says on its face, that monetary policy alone can do this. And that's that's not that just didn't seem appropriate. So we took the sentence out.

And given the new projections for the unemployment rate. Could you talk a little bit about what accounts for you know, such reduced confidence confidence again, say a month ago or three months ago that inflation will largely normalize on its own as the supply side issues?

get worked out? Thanks. Well, yeah, I think you've seen again, we've been expecting progress and we didn't get that we got we got sort of the opposite. So I also think the situation really since the, you know, the consequences of the Ukraine war become more and more clear. What you're seeing is the situation getting getting more difficult and you look around the world. I mean, lots of countries are lots of countries are looking at inflation of 10%. And it's largely due to commodities prices, but all over the world. You're seeing these effects and so and we're seeing them here, gas prices, you know, all time highs and things like that. That's not there's not something we can do something about so that that's that is really, and by the way, headline inflation headline inflation is important for expectations. People have the public's expectations. Why would they be distinguishing between core inflation and headline inflation core inflation is something we think about because it is a better predictor of future inflation. But headline inflation is what people experienced. They don't know what core is the white why would they have no reason to? So that's expectations are very much at risk due to high headline inflation. So it's become the environment has become more difficult clearly in the last four or five months. And hence the need for the policy actions that we took today. Hence our resolution to you know, to get rates up and ultimately get them to where we think they need to be in coming months.

Thanks, Chair Powell, Edward Lawrence with Fox Business. I want to ask you, you talked about CPI going to 8.6%. Their retail sales surprised the market by falling and then revisions to the previous months. Were down. Are you hearing from contacts about consumers slowing spending or changing their habits? So we're, of course

watching very, very carefully for that and you know, looking at the retail sale, the big store numbers and all that kind of thing. And so I think the fair summary of what we see is you see continuing shifts in consumption. You see some some things getting the sales going down, but overall, spending is very strong. The consumers are really good shape financially. They're spending. There's no sign of a broader slowdown that I can see in the economy. People are talking about it a lot. Consumer confidence is very low. It's probably related to gas prices and and also just stock prices to some extent for other people. But that's that's what we're seeing. We're not seeing a broad slowdown we see job growth slowing but it's still at quite robust levels. We see the economy slowing a bit but still growth levels, healthy growth levels.

So then as you are raising rates in this economy, how closely are you watching consumer spending or is there something that another indicator that you're watching more closely?

It would be hard too much anything much more closely than we watch consumer spending, but we want you everything, you know, we watch business fixed investment, which actually has softened a bit. And you know, we watch we're responsible for watching everything but corporate consumption is 60 some percent of the economy, two thirds of the economy, so naturally, we spend a lot of time on that. And again, there's a lot going on, there are a lot of flows back and forth, but ultimately, it it does appear that the US economy is is in a strong position and well positioned to to deal with higher interest rates.

Thank you, Mr. Chairman, Michael McKee from Bloomberg Radio and Television.

Are you targeting headline inflation now or core inflation? In other words, how far would you chase Chase oil prices? If they keep going up? If that's going to be the component that drives expectations? Would you risk recession for a headline rate if the core rate is holding steady, or starting to go down? So we're responsible for inflation in the law? And inflation means headline inflation. So that's our ultimate goal. We of course, like all central banks to look very, very carefully at core inflation because it is it's a much better predictor. And it's much it's it's a much better predictor of where inflation is going. And it's also more relevant to our tools. As I mentioned, the parts that don't go into court are mostly outside the scope of our tool. So we look at that, but you know, it's it the current situation is particularly difficult because of what I mentioned about expectations, we can't affect really putting in the energy prices are set by global commodity prices. And most of what food not all of it, but most food prices are pretty heavily influenced by global commodity prices to also other things. So we can't really have much of an effect but we have to be mindful of of the potential effect on inflation expectations from headlines so it's a very difficult situation to be in and we can again, we can't do much about about the difference between the elements that make up headlines that are not in core. But I just as a follow up, get a clarification on the SCP when the members gave their forecasts When were they inserted into the record where they revised after the CPI or Michigan numbers came out in other words, does does the SCP as we have it now reflect the same factors that led you to go to a 75 basis point move? The SCP is is of one piece it you know, it reflects the all of the economic readings, it also reflects the 75 basis point increase. This is important so people have that in hand when they when they're SCPs were submitted. So it's in other words, it's not in addition to what's in the SCP SCP, everyone's SCP reflects their thinking about this rate increase and and what's going forward.

Hi, Victoria, Guido from Politico. I wanted to ask about how you're measuring progress, especially since you've now started front loading rate hikes more. You've talked about how you want to see inflation coming down over a series of reports. And I guess I'm curious whether you think inflation data itself is a really good indicator or whether you might be concerned that it's a lagging indicator, or that it might send confusing signals given that, as you've talked about their sort of supply and demand aspects. And I guess my question is, do you think that inflation will tell you the completion data will tell you when you've gotten to where you need to go or do you just feel like maybe it's better to overshoot and undershoot.

So no, I think the the role that we can play maybe the way to go is to say that the role that we can play is around demand, right? So and we'll be able to see the areas that we can affect or those that are associated with excess demand, and will be able to see our effect on for example, job openings in real time. So that and that would tell us what's that would tell us about wages. Wages are not principally responsible for the inflation that we're seeing but it going forward they would be very important, particularly in the service sector. So sorry, I'm not sure I'm getting to your question.

My question is, is inflation data itself the best indicator for when you're getting to where you need to go or might it lead you to go too far?

There's always a risk of going too far or going back far enough. And it's going to be a very difficult judgment to make or maybe not, maybe it'll be really clear. But we're, we're we're quite mindful of the, of the dangers, but I will say the, the the worst mistake we could make would be to fail, which it's not an option. You know, we have to restore price stability, we really do. Because everything, it's the bedrock of the economy, if you don't have price stability, the economy's really not going to work. The way it's supposed to it won't work for people their wages will be being eaten up. So we want to get the job done. This is this inflation happened relatively recently. We don't think that it's affecting expectations in any kind of fundamental way. We don't think that we're seeing a wage price spiral. We think that that the public generally sees us as as very likely to be successful in getting inflation down to 2%. And that's critical. It's absolutely key to the whole thing, that that we sustain that confidence. So that's how we're thinking about it.

Hi, I'm Brian Shaw. I'm with Yahoo Finance. I just want to spend I guess, on what you just said now about the general public feeling like you know, you can get this done. When you talk about consumer sentiment being down household inflation expectations being up recession, just broadly being Dinner Table Talk, does the general feel among American households and also businesses square with your explanation of the economy given that the description of inflation misstatement didn't change between major banks?

So clearly, people don't like inflation a lot and many people are experiencing it really for the first time. Because we have we haven't had anything like this kind of inflation. In 40 years. And it's, it's really something people don't like and they're experiencing that and that's showing up in their in surveys and in all kinds of ways. And we understand that and we understand the hardship that people are experiencing from high inflation and we're determined to do what we can to get inflation back down. So that's really what we're saying. We're not I'm not clearly it's it's an incredibly unpopular thing. And it's very painful for people. So, but I guess what I'm saying is the question really critical question from the perspective of doing our job is making sure that the public does have confidence that we have the tools and will use them and they do work to bring inflation back down. Over time. It will take some time we think to get inflation back down, but we will do that.

Thank you. Chris Reid gave her an Associated Press. You have talked about inflation a few times and mentioned oil prices, China lock downs.

So as me

High Chair Powell, Nancy Marshall cancer with marketplace, do you still think a soft dish landing is possible and how would you define that at this point, considering the revised

So I think that I think what's in the SCP would certainly qualify would certainly need that test. You know, if you see you're looking at getting debt back down to almost a 2% inflation by two

Do I still think that we can do that? I do. I think there's I think there's I don't want to be the handicapper here I just that that is our objective. I do think it's possible. I like I said though, I think that events of the last few months have raised the degree of difficulty created great challenges. And again, the answer to the question, can we still do it? It? There's a there's a much bigger chance now that it'll depend on factors that we don't control, which is, you know, fluctuations and spikes in commodity prices could could could wind up taking that option out of our hands. So we just don't know. But we're, you know, we're focused on very, very focused on getting inflation back down to 2%, which we think is essential for the benefit of the public and also to put us on a path back to a sustainably strong labor market like the one we had before the pandemic. Great.

Thank you, Greg Robb from MarketWatch. Chip. I was wondering if you could talk a little bit more, you know, economists are worried that you're kind of hitting the economy with a sledge hammer. And now there's even more risk of a recession than when than a 5050 path of rates. So could you talk a little bit more about that and what evidence would get you to stop rate hikes and maybe even reverse?

Sure. So as I mentioned, financial conditions have tightened over the last seven months, and that's a good thing, we think. But the federal funds rate even after this increase is at 1.6%. So it's hard to see how that that is too high of a rate and if even if we did another, you know, we're so we're gonna get here by the end of the summer somewhere in the twos probably still, that's that's still a low rate. So that's not a rate that is calculated to bring a recession on and will by then we'll have seen a whole lot more data. As I mentioned, a couple times, the committee's views are around a modestly restrictive stance, which will be in the three three and a half percent range by the end of this year. But that's, that's, you know, conditioned on that being the appropriate thing to do. If we see data going in a different direction. It'll be reflected in our in our policy, as you see today. You know, we'll be watching if, if things go in a direction we don't expect and we're going to adapt and I would say this is a highly uncertain environment, extraordinarily uncertain environment. So again, we'll be we'll be determined and resolved but flexible.

Evan? Evan riser market News International. Thank you, Chair Powell. I was wondering if the Fed has initiated a review of the conduct of monetary policy over the last two years or so, given the inflation and will that be shared with the public? And then secondly, given the illiquidity extraordinary volatility in financial markets, are you concerned that Qt will make that worse?

Sorry, what was your question on Qt,

just given the illiquidity and extraordinary volatility in financial markets, whether Qt will make things worse. So,

of course, we've been looking very carefully and hard at why inflation picked up so much more than expected last year and why it proved so persistent. We it's hard to overstate the extent of interest we have in that question, morning, noon and night. So but you have to put you have to understand the context for really the context is this for you know, decades before the pandemic in the reopening, you had a world where inflation was dominated by disinflationary forces such as declining population or aging demographics, let's call it that. Globalization enabled by technology other factors, low productivity. So and, you know, that's, that's how all the models work is, you know, decades and decades of data. They look at that it's a very flat Phillips Curve work and the supply shocks tend to be transient, right? So we have now experienced an extraordinary series. of shocks. If you think about the pandemic, the response, the reopening inflation, followed by the war in Ukraine, followed by a shutdowns in China. You were in Ukraine, potentially having effects for years here. So we're aware that a different set of forces are driving the economy. We have been obviously for quite a while that this is a different, these forces are different. Inflation is behaving differently. And in our thinking, it really is a question of very strong demand, but you could you couldn't get this kind of inflation without a change on the supply. side, which is fair for anybody to see which is these these blockages and shortages and people dropping out of the labor force and things like that. So that's that's how we're looking at it. And you know, we've done a lot of work internally on you and thinking about about what all that means you don't The thing is you don't know whether those forces are held to what extent are they going to be sustained? In other words, will we go back to a world where that looks a little more like the old world are we going really going to be in a world where major supply shocks go on and on the history is huge. You see these ways of supply shocks as you did in the 70s and then they go away and and you know, sort of that there's a new normal and things settle down, but honestly, we don't know what that's going to be in the meantime, we have to find price stability in this new world and maximum employment in this new world war, clearly, inflationary forces. Are you seeing them everywhere? Again, if you look, look around the world at where inflation levels are. It's absolutely extraordinary. It's not just here. In fact, we're sort of in the middle of the pack, although I think we have we have of course a different kind of inflation and other people have and partly because our economy is stronger and more highly recovered. So that's what we're doing. We've done a lot of introspection of work on that. And sorry, on QT. You know, we've communicated really clearly to the markets about what we're going to do their markets seem to be okay with it. We're, we're facing in Treasury issuance is down quite a lot, quite a lot from where it's been. So I've no reason to think markets are forward looking and they've seen this coming. I have no reason to think it will lead to illiquidity and problems. It seems to be kind of understood and accepted at this point. Thanks for the last question. We're gonna mark

it Mr. Chairman, Mark Hamrick with Bankrate. Wonder what your assessment is about the outlook for the housing market given the years long increase? in home prices, and now the sharp rise in mortgage rates and all that, of course, given the heightened sensitivity around the housing market, given the fact that it was a trigger for the great financial crisis over a decade ago. Thank you. Sure.

So rates were were very low. A good place to start is that rates were very, very low for quite a while because of the pandemic and the end, you know, the need to do everything we could to support the economy when unemployment was 14%. And really our true unemployment rate was was well higher than that. So and that you know, that was a rates are low, and now they're coming back up to more normal or above levels. So in the meantime, while rates were low and want the man was really high, obviously demand for housing changed from wanting to live in urban areas to some extent to living in single family homes in the suburbs, famously and so the demand was just suddenly much higher, and low. So we saw prices moving up very, very strongly for the last couple of years. So that changes now and rates have moved up. We're well aware that rate mortgage rates have moved up a lot and you're you're seeing a changing housing market. We're watching it to see what will happen. How much will it really affect residential investment? Not really sure. What will how much will it affect housing prices? You know, not really sure it's, I mean, obviously we're watching that quite carefully. You would think over time, I mean, that so there's a tremendous amount of supply in the housing market of unfinished homes. And as those come online bid, whereas the supply of finished homes, the inventory of finished homes that are for sale is incredibly low, historically low so that it's still a very tight market. So prices may keep going up for a while, even in a world where rates are up. So it's a complicated situation. We watch it very carefully. You know, I would say if you're if you're a home buyer, somebody or a young person looking to buy a home.