FOMC Press Conference, July 29, 2026

[00:00:00] Speaker ?: Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Transcription by CastingWords Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. [00:55:58] Speaker 1: Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. [01:03:28] Speaker 2: Thank you. [01:03:58] Speaker 1: Thank you. Thank you. Thank you. Thank you. Thank you. [01:06:28] Speaker 3: Thank you. [01:06:58] Speaker 1: Thank you. Thank you. but i also want to leave you claire with one other impression there was nothing inertial about that discussion it was an active robust discussion about what's in the full range of what we can do and might want to do in the period ahead you characterized accurately there was a disagreement about a decision today i would say that doesn't sort of capture the full essence of the discussion the path to central bank heaven requires delivering on our remit these days that means delivering on price stability i wouldn't measure that path in 42 days or any one particular meeting and i came out of that meeting even more confident that this is the right team to win the battle against uh high [01:08:42] Speaker 3: inflation how much do you think um not going in july was down to the cool cpi print for june [01:08:49] Speaker 1: so in two words not much not much um i'd like to believe that the committee shares my views which is the historic problem with data dependence is the data and the dependence we are not relying on any one individual piece of data as cover or as an excuse or as validation what i care about and what i think the committee cares about is trends on the data um sure we got some encouraging inflation data i think at the meeting 42 days ago i said something like 63 months of inflation above target i didn't say 64 though the final calculation might be a close one so we'll be we'll be watching inflation data over the period ahead but i also don't want you to leave the misimpression that we're sort of breathlessly waiting that um i've called for a task force to revisit both the private and public data we use to make our decision making that task force is out doing their work i'll be checking back in with them the next couple of weeks but i wouldn't say we overly relied on on any one piece of data including that data which surprised some a couple of weeks ago [01:10:09] Speaker 4: hi uh thanks uh neil erwin with axios thank you for taking our questions um so the fed funds rate is now about 75 basis points below the two-year yield uh suggests markets think you'll have to tighten eventually about 100 basis points below most taylor rule estimates you're hitting your employment mandate inflation stays high why should rates not be higher today there's a lot in there neil [01:10:30] Speaker 1: so rates are higher today than they were 42 days ago markets have made decisions because we step back in part from trying to influence those market judgments have moved up on what nominal rates are across the treasury curve that doesn't mean we take them as by dictation but we're observing them so i think it's a mischaracterization to say that markets haven't reacted because we didn't move today markets are reacting in real time in the period ahead we've got important decisions to make about the policy rate markets in the intervening period i think have quite a bit of uh decisions to make i'll see if i can put it this way monetary policy matters not just by what we say or even what we do monetary policy matters by how it affects the real economy and these prices that we see in financial markets is one of the many ways in which it affects the real economy we'll be continuing to watch that market information see how it responds to incoming events and that can help inform our decision making when we meet in seven or eight weeks how would you [01:11:47] Speaker 4: characterize of the in the family fight the last couple of days of you and the other eight members who wanted to hold was that a strong conviction or was that a hair trigger uh close call on holding versus [01:11:56] Speaker 1: tightening well i think uh you know the vote the vote was nine to three um the broader discussion to my ear over the course of the last days showed a lot of agreement on the hard questions uh the four questions i raised at the outset about what's really happening in the economy with the shocks and absent the shocks what are our tools and our capabilities um what's the effect on prices on output i heard a lot of commonality on the questions were there different liens on the answers you bet there was um so could people come to different conclusions absolutely but my own judgment is this is a period of watchful thinking not watchful waiting and i think the score on that vote was unanimous uh colby [01:12:56] Speaker 5: thank you colby smith of the new york times you've mentioned that looking at the feds policy tools is one element of a three-pronged strategy to address the inflation problem so i'm curious how you view the effectiveness of those tools if inflation is too high and not coming down is the best remedy to raise interest [01:13:13] Speaker 1: rates so that's that was the discussion in the last two days is that the dominant remedy if inflation continues to be elevated through the forecast period interest rates could well be part of that solution but i wouldn't say it's in isolation i tried to describe in my remarks today a point that i made into the oversight committees a couple weeks ago i think there was a misimpression by some in financial markets by some households and businesses that central bankers like me we said a two percent inflation target but maybe we were more tolerable of a somewhat higher inflation target in economics we'd call that the revealed preference and so might it have been rational for people to think well their inflation targets somewhat higher the what i heard in the last two days what i've heard in eight and a half weeks is no we will deliver the two percent inflation target that is the committee's definition of price stability so one way absent the tools that you reference to ensure that we get there is ensure that expectations are centered around the right number and i think we've made some progress on that i am not suggesting we're done on that it's worth reiterating and ultimately the business we're in colby is performance we are going to be judged by how we perform and that's what we intend to do the inflation target making clear expectations is one part of it making sure we demonstrate we're responsible for it we're not blaming as another and our policy tools like you referenced is the third and uh equally consequential [01:14:55] Speaker 5: part how are you factoring the fact that a large portion of the inflation overshoot is being caused by supply shocks as it's mentioned again in the statement does that blunt the effectiveness of rate hikes [01:15:07] Speaker 1: in your view um first on the premise of your question it was almost as if you were listening to our discussion in the last day and a half a lot of our focus was on trying to understand and identify underlying inflation dynamics amid shocks we take these shocks seriously there have been a series of them that have been hitting this economy we're not looking through them and saying oh they don't matter but we're trying to understand is to what extent are these shocks broadening in their effects broadening and their impact on prices that are quite far removed from it our goal is to have growth that is broadening and inflation that is becoming more limited more circumscribed i'll be the first to admit the shocks make this job in this policy conjuncture a little tougher but that's among the chief questions we've asked ourselves and around the room people have different views on it i tend to think in the coming months we're going to refine that view and have a better judgment and we're going to market prices trying to help inform it too [01:16:18] Speaker 6: uh thank you mr chairman uh edward lawrence from fox business i guess i want to drill down maybe a little bit what specifically in your mind would be the argument then for a pause today [01:16:29] Speaker 1: so i wouldn't characterize what we did as anything like a pause i would characterize what we did as a rigorous review of the economic situation i would characterize what we did as a review of the big hard questions and i'd characterize it 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 description that this was a pause i would say financial market prices would take the other side of that financial market prices in this intermediate period they didn't pause they reacted to the inflation data in one direction strong economic growth in the other direction 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 [01:17:28] Speaker 6: and if i could i did want to ask not for guidance but looking forward traditionally a federal reserve chairman uses the jackson hole summit as a sort of a reset of monetary policy how do you look at the [01:17:39] Speaker 1: speech that you're going to make in august i look at it like a blank piece of paper right now um i i have not begun consideration with the incredible team here what would go into that document i think you've characterized it correctly historically at least from my first tour of duty at the fed to more recent periods it 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 judgments on that but um those are judgments we'll have to come to if i could in the high mountain air in jackson wyoming i'd like to also frame the big questions there is a tendency especially with the proliferation of meetings and press conferences to get caught up in the myopic did you do this by a quarter or do that ultimately whether we deliver on price stability matters some the decisions we make in six or seven or eight week periods but they matter more what are the big questions what's really happening with productivity what's really happening with demographics what's really happening to the global economy amid the shocks um haven't made a decision whether it's going to be a big picture speech or whether it's going to be a more traditional setup for all the action we're going to have between september and december i will tell you one other thing that i am doing between now and jackson hole so i'm checking with those task forces my first principle of establishing a task force is find the best subject matter experts anywhere in the world and put them together especially put them together with other people who might disagree with them in the next couple weeks i'm going to be doing a check back in uh giving them time to sort of think hard about their agenda their debate their schedule and when they might be ready for prime time i'll be do a little bit of that checking and uh that may or may not inform anything i have to say in jackson [01:19:41] Speaker 7: nick timmeros of the wall street journal uh chairman warsha i want to follow up on colby's question about policy transmission you've said there's no cruel choice between stable prices and full employment rates bring inflation down by cooling 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 yeah so let me go back to first principles [01:20:07] Speaker 1: nick um i don't believe that uh either part of our mandate is generally at war with the other part i do not believe that price stability and full employment isn't either or proposition there have been policy makers uh over the last several generations who have thought that there is a strict trade-off there 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 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 you would run a period of high inflation that's variable such that employers businesses wouldn't really know what's going on so i think the two parts of our mandate are equally important we have no legislative orphans here i've been talking mostly about price stability because we're doing pretty well collectively as a country as policy makers on the full employment side but we're doing considerably less well on prices that's why we describe them as elevated and that's what's taken most of our discussion in terms of transmission mechanisms of monetary policy i think different tools work through different transmission mechanisms the interest rates work through lending channels and credit channels maybe confidence channels and foreign exchange the balance sheet probably works through some other channels like signaling and portfolio balance we're keeping full abreast of all these tools and making policy but if the suggestion is somehow we're going to be fine-tuning aggregate demand so it catches supply that's not my mental model i don't think we're great in the fine-tuning business 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 so i think we've got a reasonable sense of what aggregate demand looks like in this economy we're inferring aggregate supply we're making a judgment about what productivity is and in some sense there's a race between supply and demand and the surge in business capex in around ai it's making that calculation a little harder to judge but in the period ahead we're going to be trying to judge just that and if i could ask where [01:22:30] Speaker 7: where exactly was the disagreement today was it about the inflation forecast or was it something more around the the risks uh the tactics yeah so i'm going to let the i'll let the dissenters speak for [01:22:43] Speaker 1: themselves um the way i heard it over the last two days was overwhelming agreement on objectives and authority and authority and commitment i didn't hear anybody walking away from it um the judgments as to how best to achieve the price stability that was probably the question that we were trying to answer what's the best move what's the best strategy what's the best way to achieve it and a second question that was asked is when do we need to make those harder calls when do we need to make those decisions and like i said to one of your colleagues uh i was comforted that markets in the intermeeting period weren't reacting to us they weren't reacting to dots or to speeches they appeared more than ever to be reacting to real-time events so they're gauging themselves the how restrictive uh uh the treasury curve should be and that i think has been a useful development we don't endorse any particular market move i'd also suggest we observe them with keen interest johnnell marty with bloomberg uh following up on that [01:24:03] Speaker 8: there was more uncertainty in the markets about what the fed would do at this meeting to some extent you might think that's what you want to see but my question is about is there a point at which you would not want to surprise the markets if they were pricing in something with higher certainty that was opposite of what you were intending to do what are the risks that you see associated [01:24:22] Speaker 1: with that yes so it's a good question surprise is not the objective function surprise is not what we're solving for we have a clear north star what we're solving for is how to make the best decisions almost everything else should be in service to that goal by not spoon feeding markets by not previewing our decisions by not sort of giving nudges and liens my colleagues and i have found in the intermeeting period what we're getting is the views from a very accomplished economist that's the internals of financial markets instead of just repeating or echoing what we're saying back to us they're giving us somewhat not perfect their own judgment so surprises are not the objective 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 so some of your [01:25:24] Speaker 8: peers have continued to discuss how they think about policy decisions and if you don't offer your reaction function or your way of thinking about it how concerned are you that you're ceding [01:25:36] Speaker 1: control of the narrative so not very concerned that's a short answer to the question when some people that follow the fed say well we don't want your forecast we don't want your dot we just want your reaction function part of me here is the what we really want is your forecast what we really want is your dot in terms of reaction function let me sort of disabuse uh people of a question that may or may not be real and be out there any central banker especially a central banker where the labor markets are more or less at equilibrium any central banker when he or she sees underlying inflation moving higher he or she is more inclined to tighten policy again when you've achieved the other side of your mandate and you see underlying inflation falling he's more inclined to loosen policy that's my reaction function and i don't suspect it will cause people to not continue to pry for more 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 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 well in crisis mode that strikes me as a very prudent policy but in more benign conditions it strikes me as worth revisiting but markets and market participants and reporters have learned to devour all that information so i take seriously that the pullback of forward guidance requires some transition reform isn't easy but our general judgment is going to help us make better decisions and in so doing satisfy our remit [01:27:40] Speaker 9: thank you um when you talk about the two percent inflation target what measure are you relying on [01:27:54] Speaker 1: yeah so i'll give two answers first let me give the proper standard answer the the federal reserve every january outlines a statement of purposes and strategy and in that strategy document which i believe was dated january of this year it describes a measure of pc inflation as the as the objective function there i have enough of my so that's our number we're sticking with it who knows come after next january what we might say about strategy i suspect the task forces might might have something to add but i'll say this 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 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 broadly if you said to me standing in front of you i abide fully by the strategy document we're going to deliver two percent inflation and not a whisper more but to achieve that i'm looking at a broader set of inflation data than pce 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 it is not a perfect science i might have said 42 days ago i've got a task course for that but we have a data project that's trying to look and see whether we can't separate the noise from the signal and so if you would hear a message from me yes i care about what the pce prints are i care about what the contributions are from cpi and everything else but my my lens is broader than that uh even though the remit is quite narrow [01:30:01] Speaker 10: michael mckee from bloomberg radio and television uh i'm struggling a little bit with some of what you've said today and maybe you can help clarify this uh 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 the market says you're not there yet because they've raised rates 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 so i guess what the american people might be asking is [01:30:39] Speaker 1: what are you waiting for yeah so believe it or not this press conference is not all i've done today we have spent an inordinate amount of time in the last two d two days two weeks looking at our monetary policy strategy evaluating our tools um thinking hard about the sources of data that we have at our disposal and we wish we had we've also thought hard about the period ahead what among these questions will be answered with more clarity certainly not certainty so the decision we've made today the discussion we had in that room was the farthest thing from inertia i can imagine as a point estimate at this very moment in a choice between two alternatives you heard the results of it but i would tell you that this discussion was far more robust and are thinking about how best to achieve that target is advanced and over the coming months i expected to be advanced much more significantly 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 if i were to steal a follow-up question well what's what's what's the world think about what you've done i would again reiterate what we do isn't just about what we say it's not just about what we do we're in the performance business um 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 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 but i don't want to leave you with a misimpression we've got no magic wand this isn't something that we're going to be able to carry out in days or weeks but we're going to deliver on the responsibility that congress gave us and today's meeting and the preparation for today's meeting was an important step towards that destination [01:32:49] Speaker 10: 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 in particular given mark andreessen's substantial political spending 25 million dollars in just the past year to back candidates who oppose stricter i ai regulation how can the public be confident that a committee he co-chairs will provide an independent assessment of ai's economic effects rather than one aligned with the interests of the ai industry yeah so i [01:33:19] Speaker 1: i selected 15 uh incredible subject market subject matter experts to tackle five of the most important questions that if we get the answers right we're going to do a far better job in delivering and if we get the answers wrong we have a problem the comfort that i can give you and your listeners is we're the decision makers uh the chairman of the board of the federal reserve and the members of the of the board and the fomc we will be the consumers of the outputs from five different committees the judgments we're making will be informed by but not at all determined by these outside groups my theory of the case in establishing the task forces were to pick people with extraordinary talent uh depth of expertise and a divergence of views inside every committee so they too can have a family fight um this is not outsourcing to people that aren't known and haven't been vetted this is seeing whether new ideas can catalyze a broader better more informed discussion inside the room and i'm very confident that we're going to be able to do that i am impressed by the credentials of these 15 people and full disclosure i've known almost all of them for a very long time and i think they're going to give their best views on the subject but ultimately these are decisions we're going to make and we're accountable to our oversight committees and to the remit congress gave us to deliver [01:35:03] Speaker 11: hi ann safir with reuters nice to see you again um so i need a little help here too you you said repeatedly you have no tolerance for inflation um and yet we are seeing above target inflation repeatedly for five years and through your term so far and sure you have no magic wand but you have not taken action you just gave us a little peek at your reaction function as well you said that if underlying inflation is rising that you would tend to uh think that you might need to tighten and with the exception of the most recent inflation print that is what we've been seeing so could you explain what you mean by no tolerance for inflation and what you plan to do about it sure [01:35:54] Speaker 1: so and i hear from you what i hear more broadly from households and businesses impatience deliver it already um this is not a this is not an excuse this is a fact this fomc this board has been in business for eight and a half weeks um this the the patience the impatience that households and businesses feel have been going on for 63 months um we are on the job we will deliver we are focused like a laser on making sure we can do it um 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 but the discussion the last two days give me more confidence even than i had eight and a half weeks ago 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 and as we resolve those questions get smarter on those we're going to deliver on the remit you don't have to take my word for it if you look broadly at market prices they are certainly not saying all clear but they are working in concert to to keep us on our toes and they have tightened financial conditions in this intra-meeting period and um and that has given us uh uh that has provided us some some some some comfort that uh that we've got the ability and capability to deliver and and in is [01:37:32] Speaker 11: your um read or your i guess faith in markets uh ability to sort of make a judgment and then you to take signal from that judgment is that how does that um affect you when you come up on the september meeting and markets are seeing a near 100 chance of a rate hike as they see now how does that feed into your decision making and your thinking so we're not going to be constrained by [01:38:09] Speaker 1: market prices we're not going to be constrained or take verbatim from what the market's doing 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 but if we're trying to land the plane and deliver two percent inflation and we take a very useful source of information and we get it all fogged up by giving it our own forecasts by providing rolling commentary i can assure you that we're going to have less information less ability to land the plane successfully and deliver price stability we're just trying to make sure that that source of information is as direct and unfiltered as possible it isn't to the exclusion of data sources and opinions and other surveys but if you're hearing from me we wanted to make sure we were getting a better source of information i think in a relatively short time we are [01:39:08] Speaker 12: we'll go to brian chung for the last question hi there chairman brian chung with nbc news um so you said you'd be open to having press conferences when there's news to make so today no change to rates no forward guidance for the average household i guess what was the news today um so apparently it was news [01:39:30] Speaker 1: that i had a press conference um let me just see if i can offer some clarity on that between now and year end my predecessors and the federal reserve committed to press conferences this year i'm committing to press press conferences this year that might be news to the people in this room and of no particular interest to your viewers and your and and your readers back at home um what i can offer as as assurance is that um 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 and i showed up pretty confident um i've been heartened by the reception that i received no doubt in some of your uh commentaries today you'll talk about a divided federal reserve well that's not the feeling i felt the last couple of days and the couple days before it 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 a keenness and open-mindedness and curiosity about that so we have a far better chance to deliver on the remit that congress gave us 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 thank you all very much [01:41:28] Speaker ?: so