Fed Chairman Warsh press conference on Fed policy decision [FULL]

[0:09] Good day. My second FOMC committee meeting as chairman has come quickly. It's probably too [0:18] early to call it a streak, but our discussions again were collegial and constructive. I'm truly [0:25] lucky to work with colleagues so capable and mission focused and so determined like I am [0:32] to sharpen the performance of the Federal Reserve. Today, as you know, our committee decided to vote [0:38] by a nine to three vote to maintain the target range for the federal funds rate at three and one [0:43] half to three and three quarters percent. The committee is continuing its policy of making [0:49] ample reserves in the banking system. The economy is showing impressive resilience. Even with recent [0:57] shocks, the trends are positive and reveal solid growth. Job gains have kept pace with the workforce [1:04] and the unemployment rate has changed little. Inflation remains elevated relative to the [1:11] committee's two percent goal. The committee remains resolute. You've heard this before, but we will [1:18] deliver price stability. As before, the policy statement conveys just the facts. It's steering [1:25] clear of forecasting, a choice we consider especially prudent at these uncertain times. Uncertainty, [1:34] however, does not mean a lack of clarity. For some households, businesses, and market professionals, [1:40] five years of high inflation have left a mistaken impression that's hard to shake. That the Fed's [1:48] implicit inflation target was somehow above two percent. Let me reiterate, there is no soft [1:56] inflation target. There is no soft implicit target, not on this committee's watch. There's only a target [2:04] and it's two percent. Not one of my FOMC colleagues is under any illusion. We have begun a new chapter and we [2:14] understand that the five plus years of inflation above target cannot be cured in nine weeks or by a single month [2:23] of modest price decreases. This Fed will not waver. Our credibility rests on performing our duties and [2:33] delivering on our responsibilities. Americans are right to expect that because our nation's prosperity depends on it. [2:41] To the regulars here in the press room, today's assessment might sound familiar, yet there was nothing [2:49] inertial about our discussions, our policy, or our strategy. Two economic developments are worth [2:56] highlighting. The first is a very notable change since our last meeting 42 days ago. Nominal and real yields [3:05] are materially higher across the treasury curve. In fact, some of the increases in market interest rates [3:13] between FOMC meetings are among the most significant in the last two decades, ranking around the top [3:21] decile or so. But if the committee didn't change its policy rate, what happened? In the intermeeting [3:29] period, market attention centered on real data and real economic developments. Prices reacted in real time [3:37] to incoming information, and the reduction in forward guidance may have been a factor. Market participants [3:46] are learning to play the ball, not the referee. And market prices will continue to respond in the direction and [3:55] magnitude they see fit. This is, in my view, a change for the better. And we're just getting started. After all, the [4:04] central bank need not always and everywhere be the center of attention. I understand the desire for rolling [4:11] forecasts and commentary from this committee. But for our part, we need to observe market reaction to developments, direct and [4:20] unfiltered. I want to stress, of course, that decisions by this committee matter a great deal. And where necessary and [4:30] appropriate, we will not hesitate to act. A second economic development is one that I noted at the [4:38] congressional oversight hearings this month. But it's worth repeating. The most striking feature of the economy is the [4:46] strong growth of business investment. The surge in high-tech CapEx has been remarkable. But that does not necessarily make the [4:55] Fed's role any easier. In the AI-related category of high-tech equipment and software, the most recent data shows four-quarter growth [5:05] rates of nearly 20%. This is helping to sustain the healthy momentum of manufacturing output. More generally, CapEx is preparing the [5:17] ground for future growth. Nonetheless, the precise timing and magnitude of effects on the supply side remain hard to predict. FOMC means the [5:27] future to predict. FOMC meetings produce policy decisions. But just as important is candid discussion of the big things [5:38] that matter most. That, too, is a priority in this new chapter at the Fed. In our meeting, vigorous discussion centered on four [5:48] questions, which I will enumerate. First, we talked a lot about the implications of the past five years of high inflation on the current policy [5:59] juncture. To echo an old phrase, has the past really passed? Second, my colleagues and I considered the economic shocks of [6:11] recent years, strained supply chains arising from the pandemic, military conflicts, energy supply disruptions, substantial [6:22] increases in tariff rates, and, yes, the surge in AI-related investment. These differ in their sources. Do they also differ in their [6:31] effects on output and employment? Third, we took up the related question of price increases arising from shocks. [6:42] The business CapEx boom, for example, is driving up prices of memory and logic chips and associated AI infrastructure. [6:49] Do these changes indicate a broader inflationary dynamic, or do we just focus on them because they are under the bright [6:57] streetlight? Finally, we discuss monetary policy tools and strategies for achieving stable prices. If, as the Fed has [7:09] long held, interest rate policy should be its primary monetary policy instrument, how much accommodation are we [7:16] getting from the balance sheet? In all of this, our work is advancing at the Fed. We're asking the right questions. And in this [7:25] consequential time, we know how very much depends on getting the right answers. Of course, you've all arrived with [7:32] questions of your own, so let's turn to them now. Thank you for taking our questions, Mr. Chairman. Sure. [7:38] You've had a couple of months now, or nine weeks, or whatever number it is, to see the markets behave in the [7:53] absence of forward guidance. I'm wondering if you could tell me what message are you getting from the markets to [8:01] where policy ought to be right now? Yeah, so I think officially it's eight weeks and four days, but I'm not [8:10] counting. The message from markets is the message from markets. What I've really been trying to do, Steve, as I [8:17] think you appreciate, your colleagues appreciate, is getting an unfiltered message from [8:21] markets, getting a direct message, letting buyers and sellers meet at prices for treasuries for the foreign exchange [8:29] value of the dollar, and then trying to judge for ourselves what does that mean about our remit? How are we [8:35] doing on inflation? How are we doing on employment? We're trying not to interfere with that market signal. [8:41] That's part of the reason why we've been somewhat spare in our words, when we pulled back from forward [8:47] guidance. So they're reacting to events, I would say, much more directly over the 42 days since we last met. This is a good [8:55] thing. As I mentioned in the prepared remarks, we've seen a material tightening, not just in nominal rates, [9:02] but in real rates, too. And we're observing it. We're trying to stay out of that because, you know, many of you [9:09] might be interested in our reaction function. We're interested in the reaction of financial markets. [9:15] I get that, Mr. Chairman. And I guess the follow-up question is, if the markets are talking to you, what do you hear them [9:23] saying? And if it's real rates or higher, it would suggest that that's where the funds rate ought to go. [9:30] Yeah, so. Sorry. I'm sorry. It's your question. So interpreting markets is an imperfect business. We central bankers like [9:42] market pros can think these things are over-determined, but let me offer some speculation. First, as we said in the FOMC [9:52] statement that you got at 2 o'clock, the economy output is solid. CapEx and productivity are strong. [10:03] Labor markets, solid, steady. The bond market, the Treasury market, it seems to be saying that as well. If I were to [10:13] try to break down, disaggregate the Treasury market signals, I wouldn't be able to do it perfectly. But the bond [10:19] market is saying many of those same things. And that's why we're seeing a tightening, both in [10:24] nominals and in reels. Even while at some level we haven't done much in 42 days, the markets have [10:31] done quite a bit. [10:32] Claire Jones, Financial Times. You seem to have got the family fight you were after at this [10:42] meeting. We saw three dissents. Could you characterize the arguments that those dissenters put forward, [10:50] please, and tell us a little bit why you weren't persuaded by them at this stage? Thank you. [10:55] So I guess I shouldn't give you their best arguments. I'll give you some others. So you're right. I [11:01] asked for a good family fight and I got one. That's the purpose. That's the design feature. I come into this [11:08] meeting, even this press conference, heartened by what I've experienced the last two days. Most of our [11:14] discussion were on the big questions that matter to the conduct of monetary policy. We didn't sort [11:22] of hide from them. We weren't scared of them. There was a lot more interaction between and among my [11:27] colleagues. It was a real family fight. My view, which you've long heard, is that's the better way to [11:35] get policy right. That's our North Star. So there was a lot of agreement that I heard that we have the powers, the [11:44] tools, also the authority to deliver stable prices. No walking back from our [11:49] responsibilities. There was a large majority support for the decision that we made in the [11:54] room. But I also want to leave you, Claire, with one other impression. There was nothing inertial about [12:00] that discussion. It was an active, robust discussion about what's in the full range of [12:05] what we can do and might want to do in the period ahead. You characterized accurately there was a [12:12] disagreement about a decision today. I would say that doesn't sort of capture the full essence of the [12:19] discussion. The path to central bank heaven requires delivering on our remit. These days that means [12:26] delivering on price stability. I wouldn't measure that path in 42 days or any one particular meeting. And I [12:34] came out of that meeting even more confident that this is the right team to win the battle against high [12:40] inflation. How much do you think not going in July was down to the cool CPI print for June? [12:46] So in two words, not much, not much. I'd like to believe that the committee shares my views, which is the [12:57] historic problem with data dependence is the data and the dependence. We are not relying on any one individual [13:06] piece of data as cover or as an excuse or as validation. What I care about and what I think the [13:14] committee cares about is trends on the data. Sure, we got some encouraging inflation data. I think at the [13:21] meeting 42 days ago, I said something like 63 months of inflation above target. I didn't say 64, though the final [13:29] calculation might might be a close one. So we'll be we'll be watching inflation data over the period [13:35] ahead. But I also don't want you to leave the misimpression that we're sort of breathlessly [13:40] waiting that I've called for a task force to revisit both the private and public data we use to make our [13:49] decision making. That task force is out doing their work. I'll be checking back in with them the next couple of [13:54] weeks. But I wouldn't say we overly relied on on any one piece of data, including that data which surprised [14:00] some a couple of weeks ago. Hi, Chairman Warsh. Thanks. Neal Irwin with Axios. Thank you for taking our [14:09] questions. So the Fed funds rate is now about 75 basis points below the two year yield suggests markets think [14:15] you'll have to tighten eventually about 100 basis points below most Taylor rule estimates. You're hitting your employment [14:20] mandate. Inflation stays high. Why should rates not be higher today? There's a lot in there, Neal. So I [14:28] So rates are higher today than they were 42 days ago. Markets have made decisions because we step back in [14:38] part from trying to influence those market judgments have moved up on what nominal rates are across the [14:47] Treasury curve. That doesn't mean we take them as by dictation, but we're observing them. So I think it's a [14:55] mischaracterization to say that markets haven't reacted because we didn't move today. Markets are reacting [15:01] in real time. In the period ahead, we've got important decisions to make about the policy rate. Markets in the [15:08] intervening period, I think, have quite a bit of decisions to make. I'll see if I can put it this way. Monetary policy [15:17] matters not just by what we say or even what we do. Monetary policy matters by how it affects the real [15:25] economy. And these prices that we see in financial markets is one of the many ways in which it affects the [15:32] real economy. We'll be continuing to watch that market information, see how it responds to incoming [15:38] events. And that can help inform our decision making when we meet in seven or eight weeks. How would you [15:44] characterize in the family fight the last couple of days of you and the other eight members who [15:49] wanted to hold? Was that a strong conviction or was that a hair trigger close call on holding versus [15:54] tightening? Well, I think, you know, the vote was nine to three. The broader discussion to my ear over the [16:05] course of the last days showed a lot of agreement on the hard questions. The four questions I raised at the [16:11] outset about what's really happening in the economy with the shocks and absent the shocks. What are our [16:18] tools and our capabilities? What's the effect on prices on output? I heard a lot of commonality on the [16:27] questions. Were there different liens on the answers? You bet there was. So, could people come to [16:33] different conclusions? Absolutely. But my own judgment is this is a period of watchful thinking, not [16:42] watchful waiting. And I think the score on that vote was unanimous. [16:46] Thank you. Colby Smith of the New York Times. You've mentioned that looking at the [16:56] Fed's policy tools is one element of a three prong strategy to address the inflation problem. So I'm [17:02] curious how you view the effectiveness of those tools. If inflation is too high and not coming down, [17:08] is the best remedy to raise interest rates? So that was the discussion in the last two days. Is that the [17:17] dominant remedy? If inflation continues to be elevated through the forecast period, interest [17:25] rates could well be part of that solution. But I wouldn't say it's in isolation. I tried to describe in my [17:32] remarks today a point that I made into the oversight committees a couple of weeks ago. I think there was a [17:38] misimpression by some in financial markets, by some households and businesses, that central bankers [17:44] like me, we set a 2% inflation target. But maybe we were more tolerable of a somewhat higher inflation [17:50] target. In economics, we'd call that the revealed preference. And so might it have been rational for [17:56] people to think, well, their inflation target's somewhat higher? What I heard in the last two days, what I've [18:02] heard in eight and a half weeks is no, we will deliver the 2% inflation target. That is the committee's [18:10] definition of price stability. So one way, absent the tools that you reference to ensure that we get there, is [18:18] to ensure that expectations are centered around the right number. And I think we've made some progress on [18:24] that. I am not suggesting we're done on that. It's worth reiterating. And ultimately, the business [18:31] we're in, Colby, is performance. We are going to be judged by how we perform. And that's what we intend to do. [18:38] The inflation target, making clear expectations is one part of it, making sure we demonstrate we're responsible [18:45] for it. We're not blaming as another. And our policy tools, like you referenced, is the third and equally [18:52] consequential part. How are you factoring the fact that a large portion of the inflation overshoot is [18:58] being caused by supply shocks, as it's mentioned again in the statement? Does that blunt the [19:03] effectiveness of rate hikes, in your view? First on the premise of your question, it was almost as if you were [19:09] listening to our discussion in the last day and a half. A lot of our focus was on trying to understand [19:15] and identify underlying inflation dynamics amid shocks. We take these shocks seriously. There have been a series of [19:25] them that have been hitting this economy. We're not looking through them and saying, oh, they don't matter. [19:31] What we're trying to understand is to what extent are these shocks broadening in their effects, broadening in their [19:38] impact on prices that are quite far removed from it. Our goal is to have growth that is broadening and [19:45] inflation that is becoming more limited, more circumscribed. I'll be the first to admit the shocks make this [19:51] job and this policy conjuncture a little tougher. But that's among the chief questions we've asked ourselves. [19:58] And around the room, people have different views on it. I tend to think in the coming months, we're going to refine [20:04] that view and have a better judgment. And we're going to market prices trying to help inform it, too. [20:10] Thank you, Mr. Chairman. Edward Lawrence from Fox Business. I guess I want to drill down maybe a little bit. [20:21] What specifically in your mind would be the argument then for a pause today? [20:25] So I wouldn't characterize what we did as anything like a pause. I would characterize what we did as a rigorous [20:34] review of the economic situation. I would characterize what we did as a review of the big hard questions. And I'd characterize it [20:45] as a view of what our own homework is to try to resolve those questions in the period ahead. If you were to try to force a [20:55] description that this was a pause, I would say financial market prices would take the other side of that. Financial market prices in this [21:03] intermeeting period. They didn't pause. They reacted to the inflation data in one direction, strong economic growth in the other direction. [21:13] And nominal and real rates went up. Did the Fed take an explicit change in its policy rate today? No. But I think that's the beginning of the story, not the end of the story. [21:26] And if I could, I did want to ask, not forward guidance, but looking forward. Traditionally, a Federal Reserve Chairman uses the [21:32] Jackson Hole Summit as a sort of a reset of monetary policy. How do you look at the speech that you're going to make in August? [21:39] I look at it like a blank piece of paper right now. I have not begun consideration with the incredible team here, what would go into that document. [21:50] I think you characterized it correctly. Historically, at least from my first tour of duty at the Fed to more recent periods, it [21:58] would be sort of a setting up speech more often than not of what was going to be happening in the fall. I haven't made any [22:04] judgments on that, but those are judgments we'll have to come to. If I could, in the high mountain air in Jackson, Wyoming, I'd like to [22:14] also frame the big questions. There is a tendency, especially with the proliferation of meetings and press conferences, [22:22] to get caught up in the myopic. Did you do this by a quarter or do that? Ultimately, whether we deliver on price stability [22:31] matters some the decisions we make in six or seven or eight week periods, but they matter more. What are the big questions? [22:37] What's really happening with productivity? What's really happening with demographics? What's really [22:43] happening to the global economy amid the shocks? I haven't made a decision whether it's going to be a big [22:49] picture speech or whether it's going to be a more traditional setup for all the action we're going to have [22:55] between September and December. I will tell you one other thing that I am doing between now and Jackson Hole, [23:01] so I'm checking with those task forces. My first principle of establishing a task force is find the best [23:08] subject matter experts anywhere in the world and put them together, especially put them together with [23:14] other people who might disagree with them. In the next couple weeks, I'm going to be doing a check back in, [23:20] giving them time to sort of think hard about their agenda, their debate, their schedule, and when they [23:26] might be ready for prime time. I'll be doing a little bit of that checking and that may or may not in front of [23:30] anything I have to say in Jackson. Nick Tamarose of the Wall Street Journal. [23:40] Chairman Warsh, I want to follow up on Colby's question about policy transmission. [23:46] You've said there's no cruel choice between stable prices and full employment. Rates bring inflation down by cooling [23:53] demand. It's generally thought that can show up in the labor market. If that's not the channel you're relying on, what is? [24:01] So let me go back to first principles, Nick. I don't believe that either part of our mandate is generally at war [24:13] with the other part. I do not believe that price stability and full employment isn't either or proposition. [24:20] There have been policymakers over the last several generations who have thought that there is a strict tradeoff there. [24:27] That isn't my judgment. In fact, my judgment is if and when we deliver on our remit, we're going to be satisfying both prongs. [24:39] We're going to have price stability and full employment. And in fact, if you want to do the most harm to the labor markets, [24:46] you would run a period of high inflation that's variable such that employers, businesses, wouldn't really know what's going on. [24:54] So I think the two parts of our mandate are equally important. We have no legislative orphans here. [25:00] I've been talking mostly about price stability because we're doing pretty well collectively as a country, as policymakers on the full employment side. [25:08] But we're doing considerably less well on prices. That's why we describe them as elevated. [25:13] And that's what's taken most of our discussion. In terms of transmission mechanisms of monetary policy, [25:21] I think different tools work through different transmission mechanisms. [25:25] The interest rates work through lending channels and credit channels, [25:29] maybe confidence channels and foreign exchange. The balance sheet probably works through some other channels [25:34] like signaling and portfolio balance. We're keeping full abreast of all these tools in making policy. [25:40] But if the suggestion is somehow we're going to be fine tuning aggregate demand so it catches supply, [25:48] that's not my mental model. I don't think we're great in the fine tuning business. [25:52] We're trying to get supply and demand in broad order. But really what we're doing as we sit here today at this press conference, [25:59] I think we've got a reasonable sense of what aggregate demand looks like in this economy. We're inferring aggregate supply. [26:09] We're making a judgment about what productivity is. And in some sense, there's a race between supply and demand. [26:16] And the surge in business capex in and around AI, it's making that calculation a little harder to judge. [26:24] But in the period ahead, we're going to be trying to judge just that. [26:27] And if I could ask, where exactly was the disagreement today? Was it about the inflation forecast? [26:32] Or was it something more around the risks, the tactics? [26:37] Yeah. So I'm going to let the, I'll let the dissenters speak for themselves. [26:42] The way I heard it over the last two days was overwhelming agreement on objectives and authority and commitment. [26:52] I didn't hear anybody walking away from it. [26:56] The judgments as to how best to achieve the price stability. [27:00] That was probably the question that we were trying to answer. [27:03] What's the best move? What's the best strategy? [27:08] What's the best way to achieve it? [27:10] And a second question that was asked is when do we need to make those harder calls? [27:15] When do we need to make those decisions? [27:18] And like I said to one of your colleagues, I was comforted that markets in the intermeeting period [27:25] weren't reacting to us. [27:27] They weren't reacting to dots or to speeches. [27:29] They appeared more than ever to be reacting to real time events. [27:34] So they're gauging themselves how restrictive the treasury curve should be. [27:41] And that I think has been a useful development. [27:44] We don't endorse any particular market move. [27:47] But I'd also suggest we observe them with keen interest. [27:51] Janelle Marte with Bloomberg. [27:59] Following up on that, there was more uncertainty in the markets about what the Fed would do at this meeting. [28:05] To some extent, you might think that's what you want to see. [28:07] But my question is about is there a point at which you would not want to surprise the markets [28:12] if they were pricing in something with higher certainty that was opposite of what you were intending to do? [28:17] What are the risks that you see associated with that? [28:20] Yeah. So it's a good question. [28:22] Surprise is not the objective function. [28:26] Surprise is not what we're solving for. [28:29] We have a clear north star. [28:31] What we're solving for is how to make the best decisions. [28:33] Almost everything else should be in service to that goal. [28:38] By not spoon feeding markets. [28:42] By not previewing our decisions. [28:45] By not sort of giving nudges and leans. [28:48] My colleagues and I have found in the intermeeting period, what we're getting is the views from a very accomplished economist. [28:55] That's the internals of financial markets. [28:58] Instead of just repeating or echoing what we're saying back to us, they're giving us somewhat, not perfect, their own judgment. [29:06] So surprises are not the objective. [29:12] But at the same time, I would say we didn't come into this meeting feeling constrained by the full range of alternatives we had in front of us. [29:21] So some of your peers have continued to discuss how they think about policy decisions. [29:26] And if you don't offer your reaction function or your way of thinking about it, how concerned are you that you're ceding control of the narrative? [29:35] So not very concerned. [29:38] That's a short answer to the question. [29:40] When some people that follow the Fed say, well, we don't want your forecast. [29:47] We don't want your dot. [29:48] We just want your reaction function. [29:50] Part of me here is the what we really want is your forecast. [29:53] And what we really want is your dot. [29:55] In terms of reaction function, let me sort of disabuse people of a question that may or may not be real and be out there. [30:04] Any central banker, especially a central banker where the labor markets are more or less at equilibrium. [30:14] Any central banker, when he or she sees underlying inflation moving higher, he or she is more inclined to tighten policy. [30:24] Again, when you've achieved the other side of your mandate and you see underlying inflation falling, he's more inclined to loosen policy. [30:34] That's my reaction function. [30:36] And I don't suspect it will cause people to not continue to pry for more. [30:42] Because the truth is, for a very long time in a lot of countries, coming out of the 2008 crisis, where in crisis mode, we were purposefully providing a lot of information, [30:54] trying to provide a lot of assurance, trying to tell people exactly what we're going to do, offering forward guidance with clarity as if we're tying our own hands behind our back. [31:04] Well, in crisis mode, that strikes me as a very prudent policy. [31:08] But in more benign conditions, it strikes me as worth revisiting. [31:13] But markets and market participants and reporters have learned to devour all that information. [31:19] So I take seriously that the pullback of forward guidance requires some transition. [31:25] Reform isn't easy, but our general judgment is going to help us make better decisions and in so doing satisfy our remit. [31:33] Thank you. [31:43] When you talk about the 2% inflation target, what measure are you relying on? [31:50] So I'll give two answers. [31:53] First, let me give the proper standard answer. [31:57] The Federal Reserve every January outlines a statement of purposes and strategy. [32:04] And in that strategy document, which I believe was dated January of this year, it describes a measure of PC inflation as the objective function there. [32:16] I have enough of my own. [32:18] So that's our number. [32:19] We're sticking with it. [32:20] Who knows, come after next January, what we might say about strategy. [32:24] I suspect the task forces might have something to add. [32:27] But I'll say this. [32:29] Some version of the Lucas critique, some version of Goodhart's law and economics should remind us that when we talk about measures of inflation or something else, [32:43] and we describe those measures as being consistent with our objectives, we might make them such that they're not very good measures or very good objectives. [32:53] Broadly, if you said to me standing in front of you, I abide fully by the strategy document, we're going to deliver 2% inflation and not a whisper more. [33:03] But to achieve that, I'm looking at a broader set of inflation data than PCE. [33:10] So without sort of fully revealing my cards, I'm trying to understand like my colleagues, what's the underlying generalized change in prices that are happening in the economy. [33:22] It is not a perfect science. [33:24] I might have said 42 days ago, I've got a task course for that. [33:29] But we have a data project that's trying to look and see whether we can't separate the noise from the signal. [33:36] And so if you would hear a message from me, yes, I care about what the PCE prints are. [33:41] I care about what the contributions are from CPI and everything else. [33:45] But my lens is broader than that, even though the remit is quite narrow. [33:51] Michael McKee from Bloomberg Radio and Television. [34:01] So I'm struggling a little bit with some of what you've said today, and maybe you can help clarify this. [34:09] You've said over and over again that your job is to bring down prices, to get prices stable, to hit your target, and that you will hit your target. [34:19] The market says you're not there yet because they've raised rates. [34:24] But all you've talked about today is talking about it, and it's not like members of the committee weren't there before you talking about it. [34:34] So I guess what the American people might be asking is, what are you waiting for? [34:38] Yeah. [34:39] So believe it or not, this press conference is not all I've done today. [34:44] We have spent an inordinate amount of time in the last two days, two weeks, looking at our monetary policy strategy, evaluating our tools, [34:57] thinking hard about the sources of data that we have at our disposal and we wish we had. [35:03] We've also thought hard about the period ahead. [35:06] What among these questions will be answered with more clarity, certainly not certainty? [35:12] So the decision we've made today, the discussion we had in that room, was the farthest thing from inertia I can imagine. [35:21] As a point estimate at this very moment, in a choice between two alternatives, you heard the results of it. [35:28] But I would tell you that this discussion was far more robust and our thinking about how best to achieve that target is advanced. [35:38] And over the coming months, I expected to be advanced much more significantly. [35:43] If you were to sort of, if I were to steal a follow-up question, I won't let you, you won't be giving it up. [35:48] If I were to steal a follow-up question, well, what's the world think about what you've done? [35:55] I would again reiterate, what we do isn't just about what we say. [35:59] It's not just about what we do. We're in the performance business. [36:02] And so, so if I look at the Treasury curve, if I look at the dollar, if I look at a lot of things that are internals inside of financial markets, [36:14] I think what they're broadly saying is that this committee does own it, has the credibility to deliver it, and they believe, like I do, that we will. [36:26] But I don't want to leave you with a misimpression. We've got no magic wand. [36:32] This isn't something that we're going to be able to carry out in days or weeks. [36:36] But we're going to deliver on the responsibility that Congress gave us. [36:40] And today's meeting and the preparation for today's meeting was an important step towards that destination. [36:46] I'd like to follow up on the task forces as well and ask, what vetting did you do of the people that you appointed to the task forces? [36:55] In particular, given Marc Andreessen's substantial political spending, $25 million in just the past year to back candidates who oppose stricter AI regulation, [37:06] how can the public be confident that a committee he co-chairs will provide an independent assessment of AI's economic effects, [37:13] rather than one aligned with the interests of the AI industry? [37:17] Yeah, so I selected 15 incredible subject matter experts to tackle five of the most important questions, [37:29] that if we get the answers right, we're going to do a far better job in delivering. [37:34] And if we get the answers wrong, we have a problem. [37:36] The comfort that I can give you and your listeners is we're the decision makers. [37:42] The chairman of the board of the Federal Reserve and the members of the board and the FOMC. [37:48] We will be the consumers of the outputs from five different committees. [37:54] The judgments we're making will be informed by, but not at all determined by these outside groups. [38:01] My theory of the case in establishing the task forces were to pick people with extraordinary talent, depth of expertise, [38:12] and a divergence of views inside every committee. [38:16] So they too can have a family fight. [38:19] This is not outsourcing to people that aren't known and haven't been vetted. [38:24] This is seeing whether new ideas can catalyze a broader, better, more informed discussion inside the room. [38:31] And I'm very confident that we're going to be able to do that. [38:34] I am impressed by the credentials of these 15 people. [38:37] And full disclosure, I've known almost all of them for a very long time. [38:43] And I think they're going to give their best views on the subject. [38:47] But ultimately, these are decisions we're going to make. [38:49] And we're accountable to our oversight committees and to the remit Congress gave us to deliver. [38:54] Hi. [38:55] Ann Safir with Reuters. [39:02] Nice to see you again. [39:03] So I need a little help here, too. [39:07] You've said repeatedly you have no tolerance for inflation. [39:13] And yet we are seeing above target inflation repeatedly for five years and through your term so far. [39:22] And sure, you have no magic wand, but you have not taken action. [39:26] You just gave us a little peek at your reaction function as well. [39:29] You said that if underlying inflation is rising, that you would tend to think that you might need to tighten. [39:39] And with the exception of the most recent inflation print, that is what we've been seeing. [39:44] So could you explain what you mean by no tolerance for inflation and what you plan to do about it? [39:51] Sure. [39:52] So, Ann, I hear from you what I hear more broadly from households and businesses. [39:58] Impatience. [39:59] Deliver it already. [40:03] This is not an excuse. [40:05] This is a fact. [40:06] This FOMC, this board has been in business for eight and a half weeks. [40:10] The patience, the impatience that households and businesses feel have been going on for 63 months. [40:21] We are on the job. [40:24] We will deliver. [40:25] We are focused like a laser on making sure we can do it. [40:30] But the suggestion that we're going to be able to do it with our magic wand is one I want to disabuse you and everyone else of. [40:37] But the discussion in the last two days give me more confidence even than I had eight and a half weeks ago. [40:43] This team that we have at the FOMC, the support that we have from board staff and the new hard questions we're asking, we need to resolve those. [40:52] And as we resolve those questions, get smarter on those, we're going to deliver on the remit. [40:57] You don't have to take my word for it. [40:59] If you look broadly at market prices, they are certainly not saying all clear, but they are working in concert to keep us on our toes. [41:13] And they have tightened financial conditions in this intra meeting period. [41:17] And that has given us, that has provided us some comfort that we've got the ability and capability to deliver. [41:30] And is your read or your, I guess, faith in markets ability to sort of make a judgment and then you to take signal from that judgment. [41:42] Is that, how does that affect you when you come up on the September meeting and markets are seeing a near 100% chance of a rate hike? [41:56] As they see now, how does that feed into your decision making and your thinking? [42:03] So we're not going to be constrained by market prices. [42:08] We're not going to be constrained or take verbatim from what the market's doing. [42:12] But I think it's useful and to understand that markets can be a very good source of information, not a determinative source, not a perfect source. [42:22] But if we're trying to land the plane and deliver 2% inflation, and we take a very useful source of information and we get it all fogged up by giving it our own forecast by providing rolling commentary. [42:39] I can assure you that we're going to have less information, less ability to land the plane successfully and deliver price stability. [42:46] We're just trying to make sure that that source of information is as direct and unfiltered as possible. [42:51] It isn't to the exclusion of data sources and opinions and other surveys. [42:56] But if you're hearing from me, we wanted to make sure we were getting a better source of information. [43:01] I think in a relatively short time, we are. [43:04] Hi, Chairman Worsh. [43:10] Brian Chung with NBC News. [43:12] So you said you'd be open to having press conferences when there's news to make. [43:17] So today, no change to rates, no forward guidance. [43:20] For the average household, I guess, what was the news today? [43:24] So apparently it was news that I had a press conference. [43:30] Let me just see if I can offer some clarity on that. [43:34] Between now and year end, my predecessors and the Federal Reserve committed to press conferences this year. [43:41] I'm committing to press conferences this year. [43:43] That might be news to the people in this room and of no particular interest to your viewers and your readers back at home. [43:51] What I can offer as assurance is that the Fed's on the case, that this Fed chairman feels better about this board and this committee's ability to deliver than I did when I showed up here on the first day. [44:06] And I showed up pretty confident. [44:09] I've been heartened by the reception that I received. [44:13] No doubt in some of your commentaries today, you'll talk about a divided Federal Reserve. [44:19] Well, that's not the feeling I felt the last couple of days and the couple of days before it. [44:23] What I felt was a group of professionals, all the different perspectives, different views, different judgments, but eager to roll up their sleeves and have a family fight and eager to reform the way in which the Fed does policy. [44:38] A keenness and open mindedness and curiosity about that. [44:42] So we have a far better chance to deliver on the remit that Congress gave us. [44:48] And so I want to leave you with the optimism of a new central banker that we're committed as ever to deliver and to offer an assurance we will. [44:58] Thank you all very much. [44:59] Thank you all very much. [45:00] .