Fed Chair Kevin Warsh speaks after his first interest rate decision meeting

[0:09] Good day. It's an honor, a true honor to be back at the Federal Reserve [0:15] and to take up this duty at a time of such consequence. I've been especially heartened [0:22] by the warm welcome of old friends and new colleagues both, and I've listened closely [0:29] to my fellow FOMC members for a lot of new ideas, new thinking, and genuine interest [0:37] in moving the Fed forward. This week's FOMC meeting exemplified the very best of the Fed's [0:44] traditions. Rigorous debate, open-mindedness, commitment to mission, responsibility, and [0:54] accountability for performance. In this business, they all add up to one thing, getting monetary [1:01] policy right, or as near to it as we can do. That is our North Star. My colleagues and I are here [1:11] to serve our legislative remit, which you've heard us say before, price stability and maximum [1:18] employment. And these objectives guided our business in the meeting just concluded. As you [1:26] saw a few moments ago, the committee decided to maintain the target range for the Fed funds rate [1:31] at 3.5 to 3.75 percent in support of the Fed's dual mandate. The committee also reaffirmed its [1:41] policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid [1:49] pace, despite elevated uncertainty that owes in part to the conflict in the Middle East. Productivity [1:57] growth and capital investment, both strong. Job gains have kept pace with the workforce, [2:04] and the unemployment rate has changed little. We recognize that inflation has been running well ahead [2:12] of the Fed's long-stated inflation goal of 2 percent. That's been going on for more than five years. [2:20] Persistently high prices are a burden for the American people. But the recent past need not be [2:28] prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous. This committee [2:39] will deliver price stability. At any institution, a change in leadership is a natural and timely [2:49] opportunity to reaffirm its mission, to review current practices, and to consider whether those [2:57] practices best meet our objectives. My Fed colleagues and I will be working in close [3:03] collaboration to ask what changes might improve the conduct of monetary policy. On that score, [3:11] you might have already noticed something, a difference in today's policy statement. It's a bit shorter, [3:18] a bit simpler, and it dispenses with some older language. That statement just gives you the facts [3:24] as best we can judge it. Absent also is so-called forward guidance, which we agreed was not well suited [3:32] to the current policy conjuncture. This afternoon, you also received the usual summary of economic [3:40] projections. It's been the practice of this committee for participants to submit these projections, [3:47] and I have encouraged my colleagues to continue to do so. I, however, have refrained from offering [3:53] any projections of my own, consistent with my long-held views on the SEP, at least as currently [3:59] structured. In the median projections, real GDP rises at 2.2 percent this year, 2.3 percent next year, [4:09] and total PC inflation runs at 3.6 percent this year, 2.3 percent next year. The unemployment rate [4:17] stands at about 4.3 percent. The median participant judges that the appropriate federal funds rate [4:24] to be at 3.8 percent at the end of this year and 3.6 at the end of next. Let me turn now to a few words [4:33] on a key initiative that we're announcing today. I'm appointing a task force in each of five areas [4:41] that are central to the broad conduct of monetary policy. First, Fed communications. Second, the Fed's [4:50] balance sheet. Third, our use and reliance on existing data sources. Fourth, productivity and jobs [5:00] in an era of transformation. And last, the Fed's inflation frameworks. These subjects are timely, [5:08] consequential, and in my view, worthy of a fresh look. My colleagues and I discussed them with energy [5:16] and purpose over the last couple of days. For each of these independent task forces, I'm enlisting some [5:23] of the very best minds, both inside and outside the economics profession. They will be supported by [5:30] subject matter specialists from our superb Fed staff and they'll have a straightforward charge. Start [5:37] with first principles, ask hard questions, examine current practice, consider alternatives, and ultimately [5:47] propose next steps for policymaker consideration. Since last summer, my colleagues discussed possible [5:55] improvements in the form and function of Fed communications. This new task force will build [6:01] on that effort and I expect propose some well-considered changes, including to the SEP I mentioned a few [6:09] moments ago. The second task force, the one on balance sheet policy, will review the benefits and risks of [6:16] the current ample reserves regime and the composition of the Fed's balance sheet. They will assess alternative [6:24] frameworks for the conduct and operation of monetary policy. The third task force, the one on data, [6:32] will evaluate new information sources and consider methodological changes to improve data gathering with [6:40] the aim of giving policymakers more accurate, relevant, contemporaneous, and perhaps most important, [6:48] actionable information on the state of our economy. Fourth, the task force on productivity and jobs. [6:55] It'll survey the pace, the reach, the economic impact of new general purpose technologies, including AI. [7:04] And explore the implications for the Fed in pursuit of our employment and inflation mandates. [7:12] The last task force, the one on inflation frameworks. That'll examine the drivers of inflation, [7:19] first principles, and weigh the full range of ideas for delivering price stability in a changing economy. [7:27] You'll hear quite a bit more about these task forces and this overall initiative in the coming weeks, [7:33] enough for now to make a simple statement. Each task force will serve an objected shared by everyone [7:40] in the system, shared by everyone around that table that I sat with over the last couple of days. [7:45] A Federal Reserve that is clear-eyed about its mission, fit for purpose, and focused on the future. [7:53] And with that, I appreciate your attention. I'm happy to take your questions. [7:56] Hi, Chairman Howard Schneider with Rotors. Good to see you again and welcome back. [8:06] This is a lot to be putting in motion so fast. What is the timeline you have in mind for each of these? [8:12] So I think it'll depend on the task force. It also depends on the urgency in which we need clear answers. [8:21] My expectation, I'm still in the business of recruiting and finalizing them. My expectation is the task [8:28] task forces will begin work in the next couple of weeks and we'll start to get some more information [8:34] from them, some more framing of how they see things starting in the fall and hopefully most, [8:39] if not all, of them concluding by year end. [8:41] And just specifically on the inflation framework, you talk about first principles. Does this include [8:48] a review of the 2% target itself? You've mentioned that things to the right of the decimal point don't [8:54] matter. Should this be starting from a premise that 2% as a point estimate is too strict? [9:02] Let me break that into two pieces. First, on the inflation framework review, their remit is [9:09] what are the drivers of inflation? What's the Fed's responsibility for inflation? In part, [9:15] how do we measure inflation? But that'll overlap with my data group. On the 2% inflation objective, [9:21] that is the Federal Reserve's long-held objective of 2%. You've heard me say before, I tend to focus [9:29] on the left of the decimal point. Well, the 2 is the left of the decimal point. For now, 0 is to the [9:34] right. I see no reason until we have reestablished our commitment and ability to deliver on the 2% [9:42] inflation objective to revisit that. So that'll be outside the scope of what we're taking on. [9:46] Colby. Thank you so much. Colby Swift from the New York Times. You've in the past said that [9:55] inflation is a choice. And in the policy statement, it includes this pledge to deliver price stability, [10:00] as you've reiterated today. But looking at the SEP, the bulk of your colleagues expect core PCE to run [10:05] around 3.3% by year end, and for the 2% inflation target not to be reached until 2028. So I'm curious [10:13] how patient you think the Fed can afford to be at this juncture in terms of waiting for one-time [10:19] inflation waves to wash through and for underlying inflation to step down after so many years of [10:25] inflation running above target. And under what circumstances you would support the Fed taking [10:31] some action and raising rates? Sure. So quite a bit there. Let me try to break that into pieces. [10:37] First, we have the capability and commitment to deliver on our price stability objective of 2%. [10:43] 2%. That's exactly what we're going to do. In the Fed's review of its strategy over the last [10:51] any number of years, in January, the Fed, including the strategy that we're still bound by, [10:57] the Fed's statement says that inflation is primarily determined by monetary policy. You bet it is. [11:03] I've said for years inflation is a choice. You bet it is. And today I'm announcing that this committee [11:10] unambiguously and unanimously have decided we are going to deliver on that. The rest of your questions [11:16] sounded like a encouragement for me to give forward guidance. We've dropped forward guidance. Some [11:23] along the committee, I think dropped it, I suspect from our discussion last couple of days, because they [11:28] said at this moment in time, it doesn't feel as though providing forward guidance is right. Others have, [11:34] I'd say, different views and think as a general proposition, forward guidance isn't the business we [11:40] should be in. But that'll be taken up by the Task Force on Communications and my policymaker [11:47] colleagues. We're going to listen hard to what the experts say and make our own decision. [11:52] But I can't give any forward guidance about what we're going to do next. The good news [11:56] is we'll be meeting in six weeks. So just following up, I guess, on the current policy settings then, [12:01] I am curious how restrictive you think things are at the current moment, given the flow of data that we've [12:07] seen and, you know, forecasts that are coming down the pipeline. I've heard characterizations, [12:14] both inside and the Fed, about that. I'll give you my own. It's uneven. If I look at the housing markets [12:20] as one example, Fed policy isn't the single determinant of the state of the housing market. [12:27] But broadly, I would say there, Fed policy appears to be somewhat restrictive. I would have a hard time [12:34] managing to say those words if I were to see what's happening in financial markets. So I'd say it's [12:40] uneven. That's perhaps a function of different transmission mechanisms of monetary policy, [12:47] whether monetary policy is coming from our interest rate tool or a balance sheet tool. [12:51] But the good news, we have a task force on that, too. And the balance sheet task [12:54] course will be looking more at that subject. You said you don't like forward guidance. You dropped it [13:03] from the statement this time. But with the dot plot, nine members suggested that they want a rate [13:09] increase by the end of the year. And the markets have taken that as forward guidance. So what does [13:15] this mean in terms of how you guide the markets and in terms of what the dot plot's future is? [13:26] I'm going to have to give you the same answer I gave to Ms. Smith. We've got a task force for that. [13:31] I'll give you a little bit more. I reviewed the dot plots. And when I saw the submissions, [13:39] I noted that all the submissions were coming in with pencils, you know, those kinds with the big [13:43] erasers. That's to say that I think my colleagues around the table, when they submitted their dots, [13:51] understand the world is changing quite quickly. And they didn't feel bound by them six weeks from now [13:56] or six days from now in the event that their circumstances change. I'll note a couple other [14:02] things. What I heard around the table was, as they submitted their modal forecasts, their modal [14:08] forecasts, to be clear, weren't this was more likely than not. This was more likely than their other [14:16] scenarios. So I didn't hear tons of conviction. What I heard was the kind of humility that I think we [14:23] should have. I did not submit a dot. For me, it's not helpful in the conduct of policy. I suspect by [14:31] year end, as I mentioned in my opening statements, there'll be a review about communications broadly, [14:39] press conferences, dots, meetings and the like, transcripts, minutes. This will be part of that. [14:47] I don't want to prejudge the outcomes there, but I'm pretty open-minded about what they could be. [14:52] And I was just incredibly impressed over the last couple of days. My colleagues over the last two [14:58] days, and frankly, the first three weeks I've been here, they've been very open about changes, [15:04] changes in easy, changes filled with risk. But our number one goal is to get monetary policy right. [15:10] The way to get monetary policy right is to deliver on the remit that Congress gave us, [15:15] to deliver on price stability. And there was no disagreement on any of those points. [15:20] At the risk of possibly getting the same answer about task forces, communications, [15:27] what is your feeling about these news conferences? Are you going to continue [15:31] one after every meeting? Do you find them useful? What is the future for the way Kevin Warsh will [15:38] communicate? Well, this one's probably got another 15 or 20 minutes in it, so I don't want to prejudge the [15:43] outcome. Press conferences can be a very useful way to communicate with households, businesses, [15:52] and more broadly, through using the likes of you. I had a great old mentor named George Schultz, [15:59] and his mantra was press conferences are useful. But when you have one, you want to make sure you have [16:04] something important to say. Today, I think we had something important to say about our commitment to [16:09] deliver on price stability, our commitment to rethink practices with an eye of moving the Fed forward, [16:16] and to give you and the American people a sense that these aren't idle thoughts. These are concrete [16:21] thoughts that we're going to seek out the best minds, both the best thinking inside of the Federal [16:26] Reserve and the best people I know in business and economics and the academy and technology and the rest [16:33] to share their views. That's what we're going to be doing here, the pursuit of truth. [16:36] I think we're going to come up with some new and interesting things. We made some changes today. [16:42] I expect more changes to come, and some of those might well be worthy of a press conference. [16:48] Chris Rugeber. Hi, Chris Rugeber at Associated Press. Thanks for taking our questions. [16:57] Could you give us a sense of how you see inflation more in the long term? I know you may not want to [17:02] comment on the ups and downs, but is this mainly driven by energy prices in the Iran war at this point, [17:08] or do you have any concerns about underlying inflation pressures in the economy? Thank you. [17:13] So I can't do much better than the committee just did, so let me restate it. Inflation remains [17:20] elevated relative to the committee's 2 percent goal, in part reflecting supply shocks that have driven [17:26] price increases in certain sectors, including energy. The paragraph goes on to say, but to be clear, [17:33] the Fed will deliver price stability. My own judgment is the committee spent quite a bit of time, [17:38] not just in two days, but over iterations of a couple of weeks. That's what we're prepared [17:43] to say about inflation, but the commitment to deliver is strong, unanimous, and unambiguous. [17:51] And that's, I think, an important message. We've missed for five years, and we're going to fix that. [17:56] Well, great. And then just on the data task force and everything else, I mean, generally speaking, [18:02] I think people feel the Fed looks at everything already. Certainly that was the sense from before. [18:10] What's, is there data that you feel is not given enough weight? I mean, you mentioned the trimmed [18:14] mean in the past, but again, that's well known to certainly most Fed members. So what is that task [18:19] force looking at, and what might be the, I mean, I know you don't want to prejudge the outcome, but [18:24] are there examples of data that you expect might be given more weight? Thank you. [18:29] So you're answering my question. So let me say, I don't want to prejudge the outcome. [18:34] I also don't want to say too much about what they're going to do, because I still have a phone [18:37] call or two to make before I've nailed down the people that are doing that. I'm interested in what [18:42] the outside experts view is on the subject. I'll say this generally. Most of the data that central bankers [18:52] and other government officials in the United States consume come with old fashioned survey methods, [19:00] a national accounts of what the US economy looks like that looks very little like the US economy in [19:06] 2026. Survey methods that don't have response rates that we need, asking questions that might [19:14] have been quite applicable a generation ago that are less applicable now. So even inside of official [19:19] statistics, I would be open minded if the task force and our own best thinking had recommendations [19:26] how those official statistics can be brought up to a standard of our time using new analytic methods. [19:33] I'd also say this, almost every private company CEO that's running his or her business are doing so [19:41] with real time information that isn't subject to much revision. That is telling them what just happened [19:47] at that very moment. As you know, there are normal long and variable lags in the conduct of monetary [19:53] policy. What we're really interested in is what's happening right now. What we're less interested in is [20:00] echoes of history. And you're hearing from my answer that some of the data that we receive, [20:06] that we're waiting on the first Friday after the month of payroll index or something else, [20:12] that might be an echo of history that's quite useful on its third revision. We need to take those [20:17] error bounds down because we have to make hard decisions in real time. I'm really open-minded [20:24] that there is a lot of new data sources that we can learn from the private sector, from reforms in [20:30] the official sector, and new analytic techniques that are far more refined than asking a simple [20:36] question about whether something was core or non-core. Thanks. Welcome, Mr. Chairman. Edward Lawrence with [20:45] Fox Business. So if you don't give a lot of ongoing forward guidance, won't the markets have more [20:52] volatility? And shouldn't Americans have more access into what you're thinking going forward? [20:58] So I think financial markets perform best when they react to incoming data. I think the financial [21:07] markets work less efficiently when they ask a question, how will the Federal Reserve react to [21:13] that incoming information? The more that markets are paying attention to what's happening in the real [21:21] economy, deciding what's good data and what's less good data, the more financial markets can price what [21:28] they believe is the most likely and what are the tail risks. Financial market prices are probably the most [21:35] important source of information to guide central bankers. But when all the financial markets are doing [21:42] is reflecting back what we've said, then we're taking the most important source of information, [21:47] and we're being blind to it. I'd like us to create a system where those blinders come off, [21:52] where markets are following data that they efficiently think is reliable, and they'll be watching data, [21:58] we'll be watching data, they'll come with better information through market prices to us, [22:04] we can make more informed decisions. But ultimately, the goal that I set at the outside, [22:08] deliver on the price stability objective that Congress told us to do, and that we've got to [22:13] get in the business of doing. Yeah, if I could take you in the meeting a little bit. This is your [22:17] first meeting. The board members seem fairly hawkish when you listen to, in general, when you listen to [22:23] what they're saying. Was there any discussion of a rate cut going forward today? There was one proposal [22:30] on the table. There was no discussion of any other proposals. The discussion on that proposal, I would say, [22:37] was quite limited. The group was unanimous and unambiguous on it. It has been the practice of [22:45] this central bank and others to have a range of alternatives. Today, we had one. I thought it [22:52] furthered discussion, deepened it, and made it clear what we needed to do and how we need to deliver. [23:00] I wouldn't prejudge what happens in the future, but there was only one big subject for us. We took it on. [23:06] We had a good family fight on it for a couple of days, and we ended up, I think, in a better place. [23:11] Claire. Thanks a lot, Claire Jones, Financial Times. You know, coming to this blind, reading this very [23:21] nice short statement that I think we've all appreciated in the room, one might wonder why [23:28] you didn't raise rates today, considering what you're saying here about the risks to U.S. inflation [23:37] and your mandate. I guess, why not, and what would you need to see in order to get to that place? [23:45] And secondly, on your task forces, are there any best practices at other central banks that you'd [23:52] consider looking at? Thank you. Yeah. I'm glad they're in the practice of giving you two questions, [23:56] because my answer to your first question was to be very curt. I've got nothing more to say than the [24:00] statement itself. And to the point of the question I got before, market reactions to what we say, [24:07] unfiltered, I think is more helpful than having delivered a statement to me than improvising [24:12] further upon it. Best practices of task forces. This is a subject I've thought some about. I've been [24:18] on a task force or two in my life. Best practice. Find the best minds. Ensure that the task forces have [24:28] a range of people, both by backgrounds and predispositions. So they too can have a bit of [24:34] a family fight. Make sure when you establish a task force that the group that's going to be the [24:41] recipient of the information feels as if they've got some equities in it too. That's why we're looking [24:46] for, having done the final roll call, some of the most significant talent we have in the building and [24:52] across the reserve banks on each of these. And in some sense seconding them to this group for a period of [24:58] some number of months. So that the leaders of the task force know what the most analytical central [25:07] bank in the world thinks about that. They can reflect on it. And a final best practice, we're not [25:13] outsourcing decisions to anybody. Administrations past and present, reserve banks have chosen a group of [25:20] 19 people around the table. These will be our decisions. We can agree to some of the recommendations, [25:26] disagree with others, have a good family fight about it. But what comes from them will, I hope [25:31] and believe, make the discussion we have internally better, stronger, more of a dialectic so that we can [25:39] finally deliver on that price stability objective. Just a quick follow-up on your markets point. [25:45] If you look at two-year yields, they're really suggesting that markets think more tightening is [25:50] needed. Would that be your read on what the two-year yield is saying as well? [25:54] We were in such a good place. This is why we don't do third questions, I presume. [25:58] I'm not going to offer any commentary on market reaction over the last 30 or 60 minutes. [26:05] What we've given markets is a new chapter for the central bank, some fresh thinking. What we've given [26:12] markets and households and businesses, I think, is a commitment to ask ourselves hard questions [26:18] such that we can deliver on the promises that we've made before. This is a lot of change for [26:27] financial markets to digest. I wouldn't be particularly intrigued by how they react in the [26:33] first several minutes or even for several days. What I think is most important is that financial markets, [26:39] and at least as important, households and businesses know that this central bank will deliver [26:44] further on price stability. Brian Chung with NBC News. Thank you for taking our questions. [26:52] So when you say that we've dropped forward guidance for the layperson, that might sound like the Fed's [26:57] going to say less or offer less insight into where their borrowing costs might go. So for the person [27:02] that maybe you might run into at the grocery store where the price tags are rising at a faster pace than [27:07] their wages at the moment, how would you explain it to them? I don't know if task force might be the answer there, [27:12] but how would you kind of communicate this era, this chapter of the Fed? If I told somebody in the [27:18] milk aisle that I had a task force for that, I think that would be doing a very poor job. So I appreciate it. [27:24] If I saw somebody in the grocery store, what I would say to them is that we cannot have a very significant [27:31] effect on particular prices. The price of oil in the markets today or even the price of a dozen eggs, [27:39] that does not have first order consequences to what we're doing. But we do have a really important [27:44] job there. And it's to make sure that those changes in oil or beef or eggs or milk don't [27:51] broaden in the economy, don't have second and third order effects. That's our job. That's our commitment. [27:57] That's our capability. And we're going to deliver on it. And then is the Fed's relationship with the [28:02] Treasury also under review? There was the normal breakfast meetings with the Treasury Secretary. [28:08] Is that something you intend to continue doing? And have you had conversations with the president [28:11] since you're swearing it? So on the president, I don't have anything for you. With respect to the [28:17] Treasury Secretary, he has been posting pictures of our breakfast. So I don't think I can, [28:22] I don't think I can deny that. The long tradition at the central bank is that the [28:27] Fed chairman and the Treasury Secretary meet weekly. I think we've pulled off three of those so far. [28:32] I believe he's overseas this week. So this will be the exception of the rule. [28:35] I think they're very useful discussions. The central bank's objectives and our roles [28:44] and responsibilities are quite delineated from the fiscal authorities. And in my view, [28:49] monetary policy is independent in the conduct of what we do. But that doesn't mean we're not [28:54] interested in what's happening with the fiscal authorities. The way I think about it is this [28:59] central bank needs to have a wide lens, but a narrow remit. We need to be quite interested in [29:06] what's happening in the world. I won't be breaking any news here to suggest I'm quite interested in [29:12] what's happening in the Middle East. That does have some effect on our day job. It doesn't mean it's our [29:18] responsibility, but I think we're going to keep a wide lens. And my meetings with Secretary Besson to [29:23] this point have helped widen that aperture. So we're aware of things that could affect our day job, [29:29] even if it isn't. Steve Leesman, CNBC. Mr. Chair, thank you, Mr. Chairman. Thank you for taking my question. [29:39] You had said in the before you became chairman that you thought productivity was a reason why the [29:47] Federal Reserve could lower interest rates. Do you still believe that to be the case? [29:52] So the committee had a discussion of productivity today. AI came up. The way I thought about it before [30:02] and socialized with the group is that artificial intelligence, the latest generation of general [30:08] purpose technology, is perhaps as important a change in the economy and business and households [30:16] that we've had in my adult lifetime. It is filled with both a huge opportunity and with risks. [30:23] I take both of those very seriously. You may have heard me say before that AI is shorthand perhaps [30:31] for American ingenuity. That doesn't mean that it's going to be easy. That certainly doesn't mean it's [30:37] not going to be disruptive. But over the long term, my conviction, and I heard quite a bit of support for [30:43] this around the committee today, is the United States is a winner as we go down this. The United States [30:50] is ultimately going to be better off in that. Now to bring that back to the conduct of policy, timing, [30:56] scale, speed, implications for output and employment, it's one of the things we have a task force to do. [31:06] If you don't mind a follow-up from the other side, which is that when you look at the strong job growth [31:11] that's out there, the elevated inflation, GDP seems to be going pretty good and the stock market seems [31:16] to be soaring. Do you look around this economy and see the funds rate being restrictive? [31:22] So that's your second question. I'm going to give the same answer that I gave before. [31:27] I'd say as I think about the conduct of policy, what matters is what's the effect of policy? Not [31:32] what do we say, but what happens? And the best way I can describe is it's uneven. I do see some [31:37] restrictedness in things like housing. It's hard to use those same words anywhere else. I'll just make [31:43] one other point. You talked about one of our dual mandates on the employment side. I don't believe [31:52] that we have a cruel choice. I don't share the view that was expressed a few generations ago that Federal [32:00] Reserve chairmen show up at a podium like this and say, you got to choose. And you're going to have to [32:07] decide whether you're willing to tolerate higher inflation to put more people at work. I don't [32:13] believe in that. What I believe is if we do our job, we can make strong growth, low prices and strong [32:23] employment mutually compatible. And so what you heard from the committee today is we've got some work [32:29] to do on the price stability front. Nick. Thank you. Nick Timmeros with the Wall Street Journal. [32:37] Chairman Warsh, you've said repeatedly credibility is earned by delivering. If credibility requires [32:44] delivering, the move would be to tighten or at least to threaten to. Now, you didn't do that today. Why [32:49] not? That judgment you expressed was not expressed by any of the 19 people around the table. We'll be [32:58] meeting in six weeks. We'll take up the issue again. And if I could ask about AI, the build out is [33:03] generating enormous demand right now. CapEx, data centers, power. The productivity payoff may be [33:09] further out. So in your judgment today, is AI adding more to demand or to supply? It's a good question. [33:17] At the central bank in the economics profession, what we spend most of our time doing is counting [33:25] demand. It's easier. We can see it. We can count it. We can check it. We can revise it. What we do, [33:33] though, is we infer supply. You'll notice in the second paragraph of what one of your colleagues [33:40] described as a very short statement, we have a sentence on the demand side and a sentence about [33:47] the same length on the supply side. They're both important. Just because we can count one better [33:52] than the other doesn't mean we're going to favor one more than the other. With respect to AI and the [33:57] growth of data centers and infrastructure around it, we're counting the demand side. And it is no doubt [34:04] showing up in GDP figures. We can be less certain when we infer the timing and extent of the growth [34:11] in the supply side. It may well be an intuition the supply side is going to expand, but it'll take [34:17] longer. I just describe it this way. There's a race between supply and demand. Milton Friedman says that [34:24] the only thing we know about economics is that there's a supply line and demand line they ultimately [34:28] cross. When they cross and what are the implications for policy, the good news for you is we have a task force [34:34] for that. Andrew. Thanks, Mr. Chairman. It sounded like on the task force on data that you were [34:45] looking at overhauling or completely overhauling the system of national accounts, the way the [34:50] government minds the economy. Is that your ambition? In a word, no. In a few words, much of this data [34:59] gathering happens in other government agencies to which we owe a tremendous amount of respect, [35:05] tremendous amount of deference. But if in the course of this we come up with recommendations, [35:11] which Fed staff have already begun to develop, about things that they could be doing to help inform [35:18] us as policymakers, we're not going to hesitate. Again, I don't want to try to delineate the four [35:25] corners of the research of the task force on data, but I do think there will be a review of official [35:31] statistics and at least as important a view of bringing the best practices from the private sector [35:37] and new analytical tools made possible by AI so we can forge these into a fabric that gives us [35:44] better real-time information. So as I mentioned before, when we're making decisions, we're making [35:50] decisions that we'd say are real contemporaneous data, not data that we call contemporaneous, [35:57] that's really an echo of history. Okay, thanks. The other question I wanted to ask is related to [36:02] the building renovations. Are you considering any changes to the renovations, the projects, [36:08] just in light of the fact that they became kind of a political football in the last year? [36:12] I heard something about that. I don't think I'm breaking any news, but my view, when you show up at [36:20] a new institution, you should go meet with the inspector general just as a matter of good practice. [36:26] It's a practice that I hope to continue. I've had one meeting with the inspector general [36:32] and he told me what I believe the world knows, which he'll be coming out with a report [36:37] on the building and the building projects at some point later this summer, [36:42] and I'll be interested in reading the report. From my perspective with a forward-looking glance, [36:49] is there anything that we can be doing or should be doing from this moment until the completion of [36:54] the project to do what we can to be good stewards of taxpayer money and make sure that we're delivering [37:01] on the promises that we made? Some more work to do. You might not be surprised in the first few weeks. [37:07] I've been somewhat preoccupied on other matters, but I promised to get to the full breadth of the Fed's [37:12] tasks in the weeks ahead. Victoria. Hi, Victoria Guida with Politico. [37:22] So I know that you did not submit a forecast, but you are the person who is authorized to speak on behalf [37:27] of the FOMC. So I'm wondering if you could tell us in the SEP the increase in the expectations for [37:33] inflation. Is that all because of the Iran war? What was the discussion around the expectations for [37:41] inflation being higher and also potentially growth being slower? So my read of what I heard in the [37:50] room reflected, I must admit, in the SEPs is half of my colleagues thought the policy rate, given all [37:58] those developments, should be at this level or lower between now and year-end, and the other half [38:03] thought higher. That 19th voter was me and I didn't submit one. There's a range of views on the questions [38:11] of first and second round effects. No resolution or conviction, but we'll be meeting again in six [38:21] weeks. I think we're going to know more then, and I think that my colleagues are very attentive to [38:29] incoming developments between now and then. And can I just quick follow up on the SEP? [38:34] You said that you're still encouraging your fellow committee members to submit forecasts, [38:39] even if you're not doing it. So what do you think is the benefit of them doing it, even if you don't? [38:44] That's the commitment that the FOMC made, and it's a commitment that I hope we live up to. [38:50] The commitment we made was to deliver price stability. I expect us to live up to it. By the time we get to [38:57] the end of this year, as I mentioned, I wouldn't be surprised if there was a new communications [39:03] framework. There were some changes to the SEP. That's a committee discussion, a robust discussion. [39:09] I think we'll have it. I believe we're going to come to a better mix of communications to [39:17] deliver on what we promised, but I wouldn't want to prejudge what those are. But between now and then, [39:22] I would continue to expect colleagues to submit their SEPs. Some of them, I think, believe that [39:30] the practice is currently structured is okay. But I heard a lot of interest in real reform, generally, [39:36] about all these topics. You didn't ask it, but I'll answer. It was a pretty gracious couple of days, [39:43] and it's been a pretty warm few weeks. The institution wants to figure out how we can do [39:51] better. The institution's going back to first principles, and I'm encouraged that what we've [39:56] done in the statement, what we're thinking about doing with respect to the SEP, that instinct towards [40:02] a new chapter is a real one. And by the end of the year, I hope we can put some points on the board, [40:07] both in form and in substance of delivering. In Bloomberg News, could you guide us through, [40:19] please, some of the principles that guide your own reaction function and tell us a little bit about [40:24] the kind of conditions that you think when the Fed should respond? It's going to be a very [40:31] unsatisfactory answer to the final question. The Federal Reserve has a lot of responsibilities, [40:40] not just in monetary policy, but in supervision and regulation, consumer affairs and payments. [40:46] My own view is our credibility comes from delivering on what we're saying we're going [40:51] to do across everything we do. I've devoted more time in my first three weeks to monetary policy than [40:59] all those things. But the more we deliver on our promises as good supervisors and good regulators, [41:04] the more benefit we get, the more credibility enhancement we have in monetary policy. [41:09] When we deliver on our price stability objectives, which we will, the American people will feel as [41:17] though the hardships that they've been living through in part because of inflation the last [41:21] five years are on the rearview mirror. And that credibility will have dividends across what we [41:27] do. And the institution will come to press conferences like this, always with an impetus to reform, [41:33] always with an impetus to do better. But we're going to put some points on the board. [41:37] Mr. Chairman, we've got strong labor data in recent months. How would you sum up the labor [41:43] market right now? Do you see it as stable and potentially a source of inflation? Thank you. [41:47] Yeah. So the committee, if I were to try to capture how the committee thought about it, [41:54] the committee thought that the labor markets were stable. There were some people around the committee who [42:01] thought that it was trending better than that. Trends matter more than data points. What's happening over [42:09] three or six months matters more than any one data point, any one data release. And I'd say the jobs data [42:16] has been moving in a good direction. If I heard one other thing around that subject over the course of the [42:22] last couple of days, what I heard was that strong productivity-led growth is not something that we [42:31] fear, but something we embrace. Thank you all very much. [42:34] Thank you.