Jerome Powell speaks at what may be his last interest rate meeting

[0:15] Good afternoon. [0:18] My colleagues and I remain squarely focused [0:20] on achieving our dual mandate goals of maximum employment [0:23] and stable prices for the benefit of the American people. [0:28] The U.S. economy has been expanding at a solid pace. [0:30] While job gains have remained low, [0:32] the unemployment rate has been little changed in recent months. [0:36] Inflation has moved up and has elevated, [0:38] in part reflecting the recent increase [0:40] in global energy prices. [0:43] Today, the FOMC decided to leave our policy rate unchanged. [0:48] We see the current stance of monetary policy [0:50] as appropriate to promote progress toward our maximum employment [0:54] and 2 percent inflation goals. [0:57] Developments in the Middle East are contributing [0:59] to a high level of uncertainty about the economic outlook, [1:02] and we will remain attentive to risks [1:04] to both sides of our dual mandate. [1:07] I'll have more to say about monetary policy [1:08] after briefly reviewing economic developments. [1:13] Recent indicators suggest that economic activity [1:15] has been expanding at a solid pace. [1:18] Consumer spending has been resilient, [1:20] and business fixed investment has continued [1:22] to expand at a brisk pace. [1:25] In contrast, activity in the housing sector has remained weak. [1:30] In the labor market, the unemployment rate was 4.3 percent in March [1:34] and has changed little in recent months. [1:36] Job gains have remained low. [1:39] A good part of the slowing in the pace of the job growth [1:42] over the past year reflects a decline in the growth [1:44] of the labor force due to lower immigration [1:47] and labor force participation, though labor demand has clearly softened as well. [1:53] Other indicators, including job openings, layoffs, hiring, [1:56] and nominal wage growth, generally show little change in recent months. [2:02] Inflation has moved up recently and is elevated relative [2:06] to our 2 percent longer-run goal. [2:09] Estimates based on the Consumer Price Index and other data indicate [2:12] that total PCE prices rose 3.5 percent over the 12 months ending in March, [2:18] boosted by the significant rise in global oil prices [2:21] that has resulted from the conflict in the Middle East. [2:25] Excluding the volatile food and energy categories, [2:27] core PCE prices rose 3.2 percent over the 12 months ending in March. [2:33] This relatively high rate largely reflects the effects of tariffs [2:36] on prices in the goods sector. [2:38] Near-term measures of inflation expectations have risen this year, [2:42] likely because of the substantial rise in oil prices. [2:46] Most measures of longer-term expectations remain consistent [2:49] with our 2 percent inflation goal. [2:53] Our monetary policy actions are guided by our dual mandate [2:56] to promote maximum employment and stable prices [2:58] for the American people. [3:00] At today's meeting, the Committee decided to maintain the target range [3:03] for the federal funds rate at 3.5 to 3.75 percent. [3:08] The economic outlook remains highly uncertain, [3:10] and the conflict in the Middle East has added to this uncertainty. [3:15] In the near term, higher energy prices will push up overall inflation. [3:19] Beyond that, the scope and duration of potential effects [3:22] on the economy remain unclear, [3:24] as does the future course of the conflict itself. [3:28] We will continue to monitor the risks to both sides of our dual mandate. [3:32] We are well-positioned to determine the extent [3:34] and timing of additional adjustments to our policy rate [3:37] based on the incoming data, the evolving outlook, [3:40] and the balance of risks. [3:42] Monetary policy is not on a preset course, [3:45] and we will make our decisions on a meeting-by-meeting basis. [3:50] This is my last press conference as chair, [3:53] and I will close with a few thoughts. [3:56] First, I want to congratulate Kevin Warsh on his advancement [3:59] out of the Senate Banking Committee this morning. [4:01] This is an important step forward, [4:03] and I wish him well as that process continues. [4:08] The Federal Reserve exists for one fundamental purpose, [4:11] to foster the economic conditions in which American families [4:14] and businesses can thrive, stable prices, a strong job market, [4:18] and a financial system they can depend on. [4:22] Every decision we make, whether about interest rates [4:24] or regulatory and supervisory matters or other issues, [4:27] is made in service of that purpose. [4:30] Our decisions reflect the collective judgment [4:32] of the Board of Governors and the Federal Open Market Committee, [4:35] colleagues who demonstrate analytical rigor, [4:37] principled judgment, and a genuine commitment [4:40] to the public interest. [4:42] Our collaborative and deliberative process [4:44] has long reflected a shared commitment [4:46] to finding common ground in service to our mission. [4:50] This institution is resilient, capable, [4:53] and staffed by professionals of extraordinary talent [4:55] and exceptional dedication. [4:58] It has been a privilege to serve alongside [5:00] so many great public servants at the Board of Governors [5:03] and around the Federal Reserve System. [5:07] The Fed's work is only as effective [5:08] as the public's understanding of it, [5:10] and you, the press, are essential [5:12] to keeping the public informed about what we do and why. [5:16] The people we serve benefit from your careful reporting. [5:21] I welcomed the announcement last Friday [5:24] by the U.S. Attorney for the District of Columbia [5:26] that she had closed the criminal investigation. [5:29] She also noted, however, that she would not hesitate [5:31] to restart the investigation. [5:34] Over the weekend, the Department of Justice [5:36] provided assurances that they will not reopen the investigation [5:39] unless there's a criminal referral [5:41] from the Fed's Inspector General. [5:43] And, absent such a referral, if they do appeal the recent court [5:47] decision, they would not seek, as part of that appeal, [5:50] to restart the investigation or send new subpoenas. [5:56] I've said that I will not leave the Board until this investigation is well [5:59] and truly over with transparency and finality, and I stand by that. [6:04] I'm encouraged by recent developments, and I'm watching the remaining steps [6:08] in this process carefully. [6:11] My decisions on these matters will continue to be guided entirely [6:14] by what I believe is in the best interest of the institution [6:17] and the people we serve. [6:19] After my term as chair ends on May 15, I will continue to serve as a governor [6:23] for a period of time to be determined. [6:27] I plan to keep a low profile as a governor. [6:30] There is only ever one chair of the Federal Reserve Board. [6:34] When Kevin Warsh is confirmed and sworn in, he will be that chair. [6:38] Once sworn in as board chair, his new colleagues will elect him [6:41] to chair the FOMC as well. [6:45] As I regularly point out from this podium, our success in delivering our goals [6:49] matters for all Americans. [6:51] I'm confident that the Fed will continue to do its work with objectivity, [6:55] integrity, and a deep commitment to serve the American people. [6:59] Thank you, and I look forward to your questions. [7:01] Thank you, Mr. Chair. [7:09] I appreciate the kind words about the press. [7:11] It often doesn't come from the podium in different places, [7:13] but I appreciate that. [7:15] Can you talk about what has gone into your decision to remain on the board? [7:19] What kind of criteria are you weighing, and how long might you stay? [7:22] Thank you. [7:23] Sure. [7:24] So, you know, my concern is really about the series of legal attacks [7:29] on the Fed, which threaten our ability to conduct monetary policy [7:32] without considering political factors. [7:34] And I want to note here, this has nothing whatever [7:37] to do with verbal criticism by elected officials. [7:41] I've never suggested that such verbal criticism is a problem, [7:44] and neither has anyone else here. [7:46] But these legal actions by the administration [7:48] are unprecedented in our 113-year history, [7:51] and there are ongoing threats of additional such actions. [7:55] I worry that these attacks are battering the institution [7:58] and putting at risk the thing that really matters to the public, [8:01] which is the ability to conduct monetary policy [8:03] without taking into consideration political factors. [8:06] It is so important for our economy, for the people that we serve, [8:10] that they can depend over time on a central bank [8:12] that operates that way free of political influence. [8:16] It's part of the absolute foundation [8:18] of this amazing economy that we have. [8:20] It's just one of the many reasons why the U.S. economy [8:23] is the envy of the world. [8:25] That piece of institutional architecture separates successful countries [8:29] from unsuccessful countries. [8:31] It is extremely important, not for the people who work at the Fed [8:34] at any given time, but for the people that we serve, [8:37] that the Fed remain able to conduct monetary policy in a way [8:39] that doesn't get pulled into politics, trying to help or hurt [8:42] any particular politician or political party. [8:45] It's critical for the people that we serve. [8:47] In terms of when I would leave, I will leave when I think it's appropriate to do so. [8:52] Was that all your questions, or was that not? [8:54] Well, I just have a follow-up, which is, what would you say to the criticism [8:57] that by remaining on the board, you're actually taking a political act [9:00] and denying President Trump the majority of the board, [9:04] which as president he would have if you left? [9:07] I don't see that at all. [9:08] As I mentioned, you know, I'm literally staying [9:11] because of the actions that have been taken. [9:13] I had long planned to be retiring. [9:16] And, you know, the things that have happened really in the last three months [9:19] have, I think, left me no choice but to stay until I see them [9:23] through at least that long. [9:26] You know, in addition, I don't see how this will interfere. [9:30] My intention is not to interfere. [9:32] You know, I was a governor for almost six years. [9:35] And the tradition is at the Fed that governors who understand [9:39] how difficult the role of chair is, and as a soon-to-be former chair, [9:43] I do understand how hard it is to get consensus with 19 strong-minded people. [9:48] You work with the chair. [9:49] You try to be heard, but also collaborate with the chair [9:56] and try to support the chair when you can. [9:58] When you can't, you can't. [9:59] And I think that's the attitude that people generally take, [10:01] and that's the attitude that I'll take. [10:06] Nick. [10:10] Chair Powell, if I could ask about the inflation outlook. [10:13] In March, you described the standard practice [10:17] of looking through energy shocks as conditional [10:20] on inflation expectations staying anchored. [10:23] Since that meeting, there has been very little progress [10:26] reopening key energy trade corridors. [10:29] Can you help us understand how the inflation outlook has changed [10:33] in the intermeeting period, beginning with the prospects [10:36] for tariff pass-through resolving on the timeline [10:38] that you had outlined in March before getting [10:41] to the energy shock that is now on top? [10:44] So, you know, I would look at it this way. [10:49] For a long time, we've been working on the hypothesis, really, [10:54] that tariffs would lead to a one-time price increase [10:59] and that that would go away over time. [11:00] In other words, there would be no further change, [11:02] so measured inflation wouldn't reflect that higher level going up more and more. [11:07] And it's time for that to happen. [11:09] You know, we really do expect that to be happening in the next two quarters. [11:13] So we'll be watching very carefully to see that what we've thought all along would happen, [11:17] that's kind of a critical part of the forecast. [11:19] We need to really see that. [11:21] With energy, it's so hard to say. [11:24] I mentioned, you know, in, you know, sort of the textbook, [11:28] you would look through an oil shock because they tend to be short-lived [11:32] and they tend to revert, and monetary policy works with long and variable lags. [11:36] So, you know, you wouldn't necessarily react right away. [11:39] I think that is all the more true, given that we're several years above 2 percent inflation, [11:44] and that we're already looking through the tariff shock. [11:47] So I think we're going to be very cautious about that. [11:50] But the question about looking through energy really is not in front of us right now. [11:55] It hasn't even peaked yet. [11:56] And I think we'd want to see the backside of that and progress on tariffs [12:00] before we even thought about reducing rates. [12:04] So if I could follow up, the statement today preserves language [12:07] that has taken on some meaning as it was socialized [12:11] when the committee was actively lowering rates. [12:13] Why is that easing bias still ripe, [12:18] given how different the inflation outlook is now versus a meeting or two ago? [12:23] And what more would have to happen for it to get evicted? [12:27] So that was, as you will recall, we had a discussion about that at the last meeting, [12:33] and we talked about it in the press conference after the March meeting. [12:36] We had the same today. [12:37] We had quite a vigorous discussion about that very issue and the guidance, [12:41] and is it still appropriate, and that kind of thing. [12:43] And I would say that the, you know, number of people on the committee [12:46] who either could support that language change, changing to a more neutral stance [12:52] so that a hike is as likely as a cut, [12:55] that number has increased over the intermeeting period. [12:58] And it's easy to see why. [12:59] I mean, it's a good question, right? [13:02] You see inflation has moved up over the interim a bit. [13:05] Core inflation is 3.2 now, moving, albeit just a little bit, [13:09] in the wrong direction. [13:11] And we know that there will be, you know, [13:13] that there's headline inflation coming out of the Gulf, [13:17] and we don't know how much that will be. [13:19] We just – we're going to need to see. [13:21] So it makes all the sense in the world that people would look at that [13:24] and we'd have a vigorous discussion about that. [13:26] You saw that three people dissented over the language. [13:29] I think all of those people agreed with the right decision. [13:33] So the majority of the committee did not want to do that, [13:36] and I was – I didn't think we needed to do it at this meeting. [13:40] It really was just a question of what's – why do we need to do that now? [13:44] You know, we have so much to learn. [13:45] There's so much uncertainty about the path ahead. [13:48] There doesn't need to be any rush to make that decision now, [13:51] because, you know, what happens in the next 30, 60 days, [13:54] even by the next meeting, could really change the picture [13:57] around that language. [13:59] So, you know, it was a – it's a close – it's a much closer thing [14:03] on the committee than it was in March. [14:05] And, you know, that makes all the sense in the world, it seems to me. [14:08] Claire. [14:10] So Claire Jones, Financial Times. [14:14] Just going back to this issue of the easing bias, [14:20] we've now got oil approaching $120 a barrel when it comes to the benchmark, [14:27] Brent crude. [14:29] If it stays around those levels six weeks from now, [14:32] what would be your best guess as to whether the easing bias [14:35] will still be in the statement? [14:37] Thank you. [14:38] I wouldn't want to guess. [14:39] You know, well, first of all, we're going to have new leadership [14:41] in all likelihood by then, and new leadership is going to have [14:44] a very important role to play in that. [14:46] So I won't be standing here at this podium to answer your question. [14:50] So I don't know. [14:52] As I mentioned, that's all I can really say, [14:54] is that we had a great discussion about that today. [14:56] It's a – you know, it's gotten to be a better question [14:59] than the interim period. [15:00] We had the discussion. [15:01] The majority are still on the page of not feeling the need [15:05] to move to that level, and that's where I am. [15:08] I get it, though. [15:09] You know, at a certain point, you would move, [15:11] and that conceivably could come as soon as the next meeting. [15:15] Thank you. [15:15] Just to follow up, the new leadership also seemed rather lukewarm [15:20] on press conferences and on the dot plots. [15:23] What would your advice to him be on these communication tools? [15:26] So I'm not going to give him any advice through you today here, [15:30] but, you know, I think communications generally is – [15:35] I think every incoming chair takes a look at communications, [15:38] and it's a very healthy thing. [15:39] I mean, communications is – it's very complex, [15:42] and, you know, you can always be looking at new things. [15:46] And if that happens – it feels like it's going to happen, [15:49] that's a completely appropriate thing. [15:50] Hi, Chair Powell. [15:56] Neil with Axios. [15:57] Can you tell us, if you've been in touch [15:59] with incoming Chairman Warsh, any – to what extent is this [16:04] a normal transition process versus all the things swirling around, [16:08] something unusual, and what can we expect when he takes that podium in a few weeks? [16:12] I haven't seen him since seeing him at a dinner in January, [16:16] where I congratulated him and had a nice chat with him. [16:19] I haven't seen him. [16:20] I don't know what a normal process is. [16:21] You know, the last process was with Janet Yellen, [16:24] with whom I had worked for six years. [16:26] And so it was – you know, we were sitting down the hall from each other, [16:29] so it was a very different thing. [16:30] I think this is and will be a very normal standard kind of a transition process. [16:35] So that's what I expect. [16:37] I have every reason to think it will be. [16:38] A quick follow-up. [16:39] Is the Supreme Court ruling on Governor Cook a factor in when you may leave as a governor? [16:43] I wasn't thinking of it as such, but no, not really. [16:47] I mean, I'm thinking more of the other things I mentioned. [16:50] Chris. [16:53] Hi. [16:55] Thanks for taking our question. [16:57] I wanted to ask a question about your tenure and Chris Rugeber at Associated Press. [17:01] During your tenure as chair, you often spoke about how disadvantaged Americans [17:07] benefited from extended periods of low unemployment. [17:10] In the new framework the Fed adopted in 2020, some economists say, [17:13] elevated the Fed's employment mandate. [17:16] Are you worried that the pandemic inflation spike that followed [17:20] will make future Fed chairs more reluctant to pursue a hot jobs market? [17:24] And should they be? [17:26] I don't know the answer to that. [17:31] I mean, so what we experienced in the teens, the mid-teens, [17:40] was really low levels of unemployment for a long period of time [17:45] and no reaction from inflation. [17:47] And we all very much took notice of that. [17:50] We also noticed that the biggest wage gains were going to people [17:55] at the bottom end of the income spectrum. [17:57] And we had many, many reports of—I mean, it felt like a fairly stable equilibrium, [18:02] and a lot of benefits were flowing to people at the bottom end of the income spectrum, [18:06] including companies were, you know, setting up in—you know, people who were confined [18:14] and, like, training them before they got out. [18:16] And it was a very healthy sort of set of societal dynamics. [18:20] So, of course, I think anybody would love to get back to that. [18:22] I don't think that anything that happened to create the global pandemic inflation [18:31] was in any way related to overweighting the employment market. [18:34] I mean, it was a global shock that happened essentially very, [18:38] very similarly all over the world. [18:40] It had to do with closing reopening stimulus and all that. [18:43] And, I mean, you could look at a graph of 10 big economies on the page [18:48] and not know which was the U.S. and which was Germany, France, and things like that. [18:51] So, I don't think that that insight was in any way responsible [18:56] for the high inflation that we experienced. [18:59] So, I mean, I think it's always been a balance. [19:04] You've got to—you've got to be strong on both of our dual mandates. [19:09] And we—for example, now, we don't feel that the labor market [19:13] is at all a source of inflation, so we don't need to be worrying about that. [19:16] It's been a long time since we have had to worry about that. [19:18] Well, actually, during the pandemic recovery, the labor market was super overheated and tight, [19:24] and that's when we had to worry about it, but not now. [19:26] Just on the other issue, are you—would you need—do you need more assurance [19:32] from the Justice Department before stepping down? [19:34] Is that what you're waiting for, or what else is going to affect you? [19:37] I'm waiting for the investigation to be well and truly over with finality and transparency. [19:43] And I'm waiting for that, and I will leave when I think it's appropriate to do so. [19:48] Michael McKee. [19:51] Michael McKee from Bloomberg Television and Radio. [19:56] I'd like to ask you if you could explain a little more or characterize a little more [20:00] the discussion about the two-sided view and interest rates, [20:05] because there were some members of the Open Market Committee [20:07] who've been suggesting that we may need to raise interest rates, [20:11] even absent the war because inflation was not coming down fast enough. [20:16] Is there any sense that interest rates might have to go up, [20:20] or was this just a setup to sort of warn people [20:25] that you're worried about the war impacts? [20:28] MR. So nobody—the three dissenters and others who could have supported that, [20:34] and others who were, you know, who were voters and preferred—nonvoters who preferred it, [20:37] but they all supported the right decision, right? [20:40] So people are not saying we need to hike now. [20:42] It's more a question of, you know, don't we kind of feel that we should be neutral, [20:48] and markets are—or markets—what are markets doing? [20:50] People argue that this is consistent with what markets are doing. [20:54] And, again, it's a very fair question, but, you know, these changes, there is—you know, [20:59] it's a form of forward guidance, and you want to make—you don't want to make them—you want [21:04] to make them in a way that will be sustained and continue to make sense, [21:07] and not something you need to take back, you know, fairly quickly. [21:11] So I think we just—a group of us, including me, didn't feel like we needed to be in a hurry [21:16] on that, that markets are not confused about our reaction function. [21:20] We don't have a problem to solve on that. [21:22] But the other side of the argument is a good argument, too, as I mentioned. [21:25] It's a perfectly good argument to be having, good discussion to be having. [21:29] So—and it came out the way it came out. [21:31] Well, you've got three dissents in favor of a two-sided warning. [21:37] You've got yourself staying on the board. [21:40] You've got the criticism that does come from elected officials. [21:44] And you've got a lot of critics who have faulted the Fed for being too slow 2021 with inflation. [21:52] Are you worried about Fed credibility under all of this? [21:55] Is that one reason that you want to stay on? [21:57] Not driving my thinking now. [22:01] I mean, monetary policy is going to get made by, you know, 19 people. [22:08] There's a lot of stability there. [22:10] I mean, if you think about it, any—every new Fed chair has the same situation, [22:16] which is you've got 18 colleagues on the FOMC, 11 of them vote during any year, [22:21] and you have to—your job is to create consensus, is to talk to them, understand them, you know, [22:28] be inside their thinking, and be able to pull them together and get consensus and move. [22:33] And that's what every Fed chair has to do. [22:36] And I think Kevin Warsh is actually quite well—he has the capabilities, skills to be very good at that, [22:43] I would think. [22:44] So I think—I'm not so worried about that process. [22:48] You know, I think that'll work itself out. [22:50] Thank you, Chair Powell. [22:56] Howard Schneider with Reuters. [22:57] You mentioned that staying on as a governor, you intend to keep a low profile. [23:02] I'm just wondering if you could give us a little more detail on what that looks like and how you can— [23:06] how you can—touché—what that—yeah, walk down the steps—what that looks like, [23:14] and particularly around the policy discussion, how you're able to have your intervention [23:19] and not be a shadow chair and not have a kind of an outsized influence over the process. [23:24] Yeah, you know, that's just something I would never do, you know, the shadow chair thing. [23:28] No, you know, it's—I don't know what the exact specifics of it will be, [23:32] but I'm going back to being a governor. [23:35] I respect the role of chair. [23:37] I—you know, I was a chair. [23:38] I was a governor for six years, and I know what that's like. [23:41] I know—and I had a, you know, pretty front-row seat with—particularly with Chair Yellen, [23:46] to whom I was close when I—when I worked with Chairman Bernanke for two years. [23:50] But, you know, I was brand new at that time. [23:54] So I got a sense of what it was, and I had real sympathy for how hard it is to get that group to consensus, [24:00] and I always felt like I—you know, I don't want to add to that unnecessarily, [24:03] and that means try to support the chairs where the chair—the direction the chair wants to go, [24:07] and if you can. [24:08] If you can't, you can't. [24:09] But—and I think that's—that's the way it's always worked there, [24:12] because the chair only has one vote plus the ability to develop consensus. [24:16] And if people won't be, you know, they won't—if they're not flexible at all, [24:20] then how do you ever do that? [24:21] And so that's why the chair has—the authority the chair has really is to develop relationships [24:27] with people and work with them and then put something forward that has consensus. [24:32] And, you know, I propose to be a very constructive participant in that process, [24:38] really out of respect for the office of the chair. [24:41] And in your view as a soon-to-be governor, [24:45] how do you see the risks of oil prices bleeding into core inflation in coming weeks? [24:51] Because that was—it seems like the commentary that was coming from particularly some of the [24:55] Reserve Bank presidents, they were elevated concerns about the bleed into core, [24:59] and, you know, here we are with three descents now. [25:01] What do you see as the prospect of a core inflation problem? [25:03] You know, they're—those prospects are real. [25:06] Remember, though, are—they're real, and the real thing is we're going to have to wait and see. [25:11] We're going to need to see. [25:12] And the good news is we think our policy stance is just—is in a very good place for us to wait [25:17] and see. [25:18] We—you know, we're right kind of at the high end of neutral or perhaps mildly restrictive. [25:24] The labor market shows more and more signs of stability, whereas inflation is kind of misbehaving, [25:30] and so maybe a little bit of restriction or the high end of neutral is just the right place to be. [25:35] So we can wait here and see—and see how things work out before we act. [25:40] And we'll see how much that—you know, how much does come through into core. [25:44] You see it already in airfares, of course, but you may see it in many other places. [25:49] You know, we just don't know yet. [25:51] And it's—it's so unknowable because how long will the strait be closed? [25:55] You can develop any number of scenarios that you want, but we really won't know until we know. [26:00] So fortunately, we're in a good place to wait and let things develop. [26:04] Thank you. [26:04] Thanks, Mr. Chairman. [26:11] You started holding post-meeting press conferences for every meeting as opposed to the ones with just—with SEPs. [26:17] Can you talk about why you see that as a net positive? [26:19] So we—we always said when we were doing quarterly press conferences, we always said we can move at any meeting, [26:27] but we only ever moved at the quarterly SEP meetings where we had the press conference. [26:31] So if you think about it, you know, we—during the pandemic, we were moving like a lot at every meeting [26:36] and sometimes between meetings. [26:38] And doing that with our press conference, I think, would have been quite challenging. [26:41] It's become the industry norm. [26:43] It's the standard. [26:45] I don't know whether that has to remain that way. [26:47] I don't know. [26:47] I mean, it's just something people have become used to. [26:50] And I do think it's quite helpful to, you know, to—I mean, I try to deliver a message on behalf of the committee [26:57] rather than 18 people, 18 other people going out and delivering their message. [27:01] And it's, you know, it's going to be all over the place because we do, thankfully, have widely disparate views. [27:08] Thanks. [27:09] The other thing I wanted to ask about was the communications review from last year. [27:14] Could you describe the debate last year? [27:16] What changes were considered? [27:17] What you wanted? [27:19] And what prevented action—any action on the—on those changes? [27:24] So, yeah, I'm not going to go into the real small specifics. [27:28] But what we found very quickly was that making—making changes, making really large changes, [27:38] for example, to the DOT plot or the SEP, it didn't have—we couldn't come up with anything [27:45] that had really broad support on the committee, and so we just moved on. [27:49] We didn't really do as much on that as we might have. [27:54] And, you know, I was never the world's biggest fan of the DOT plot, but you can't beat something [27:58] with nothing, and, you know, there's a—we've looked at a bunch of things, and, you know, [28:04] it's something—like I said, I think every new chair is going to look at our suite of communications [28:10] and think about what would be changes. [28:13] And I think that's—we are the only major central bank that doesn't publish a forecast, [28:18] and that's because we have a 19-person committee. [28:20] And, you know, you try to do it—you try to do that on the—at the board, that's hard. [28:24] At the committee, that's hard. [28:25] It's hard if you do it at the staff. [28:27] So it's—you know, it's been—it works. [28:30] I think our communications are fine, but looking at doing it in a different and better way [28:34] is the most natural thing in the world. [28:36] Thank you. [28:43] I'm Colby Smith at The New York Times. [28:45] If I could follow up on Mike's question about hikes, are we right to assume that the hawkish outcome [28:49] for the Fed is still one in which the committee just extends the pause in rate cuts? [28:54] And to what extent is there a growing sense within the committee that monetary policy really isn't [29:00] just restrictive at all right now? [29:03] The economy is holding up relatively well despite this major energy shock. [29:07] The unemployment rate has ticked lower. [29:09] Inflation was moving sideways even before the war and is now moving higher. [29:13] So—so where is the committee at on that debate? [29:16] You know, where we're at is we think our—really, we think our policy rate is in a good place. [29:21] If we need to hike, we will—we will certainly signal that, and we will—and we will certainly do it. [29:26] If we need to—to cut, then—or if it's appropriate to cut, [29:29] then we'll—we'll signal the opposite. [29:31] I think we—because we feel like we're—we're in a good place to move in either direction, [29:38] nobody's calling for a hike right now. [29:41] So it really is going to depend on how things—how things evolve. [29:46] And, you know, that—that's really where it is. [29:48] You know, as I mentioned, you know, much closer question this cycle on changing the guidance, [29:54] but—but ultimately we didn't. [29:55] And as it relates to the war, at what point do you think the risk to growth [30:00] will be larger than the risk to inflation as this conflict drags on? [30:04] You know, you—you just have to find that out empirically. [30:09] You know, with—given our—the fact that we're, you know, a big exporter of energy [30:15] and that our economy is far less energy-intensive, oil-intensive, [30:19] than it was during the 70s, you know, the—the effects on the United States [30:24] are really substantially less than those of Western Europe or—or Asia, [30:29] who are feeling much greater effects from—from these things. [30:32] Our—the effects we're feeling in—you know, in the current situation, currently, [30:37] in—in sort of what's priced in, which is, you know, a relatively quick outcome. [30:42] If—if this goes on for much longer and prices go much higher, [30:46] then we'll feel that much more. [30:47] And, of course, I'm talking about aggregate inflation numbers. [30:51] We know—we're very well aware that people are experiencing higher gas prices [30:56] all over the country now, and that hurts. [30:59] That—and these are—those hikes may continue to happen. [31:01] And other—other things are going to start to reflect—air—airline fares, I've mentioned, [31:06] and—and other—other products and services that are dependent upon petroleum [31:10] and derivatives of petroleum. [31:12] People are going to start to feel that. [31:13] Edward. [31:16] Thank you. [31:18] Thank you, Chair Powell. [31:19] Edward Lawrence with Fox Business. [31:21] So, I guess—I'll just ask you directly on this. [31:23] The markets don't see a rate cut at all this year, is what they're predicting. [31:28] Do you think that we are at the neutral rate? [31:30] Why or why not? [31:31] You know, the—the neutral rate is—we cannot know it with—with certain [31:36] certainty. [31:37] I think pretty close to the neutral rate, yeah. [31:39] I always had it, you know, between 3 and 4 percent. [31:42] We're a little north of 3 and 1⁄2. [31:44] So that's well in the range of what I would consider a reasonable—reasonable. [31:47] But at the higher end of the range of what I would consider a reasonable neutral rate, [31:52] you know, I think you're—the labor market is still probably cooling off just a little bit. [31:58] And I don't think there's much of a case for—any case, really, for policy looking, [32:06] you know, meaningfully restrictive, maybe mildly restrictive or neutral, I would say. [32:11] And I want to follow up on some of the other questions about your future a little bit. [32:15] The—the first time we've seen the four dissents now since October of 1992, [32:21] are you handing off a divided Fed? [32:22] You know, the thing to remember is we have always had vigorous debates, [32:30] and—and they're excellent debates. [32:32] I have to say they're—they've been really good. [32:35] And we're in an unusually difficult situation. [32:38] So we've—we've really had four supply shocks. [32:42] You can—actually, you can say more than four. [32:43] But at a minimum, we've—we had the pandemic. [32:46] We had the invasion of the—of Ukraine. [32:50] We had tariffs. [32:51] And now we have Iran and the oil—you know, the oil spike. [32:55] So those—every—every supply shock has the capability [33:00] of driving inflation up and unemployment up. [33:02] And—and what do you do? [33:04] You know, you're—it's—the central bank has a really hard time knowing what to do. [33:08] So the right thing to do is to try to balance the achievement of those two goals, [33:12] and that's what our framework calls for us to do. [33:14] But these are really tough, difficult judgments. [33:17] You've got to have a forecast for each variable. [33:19] You've got to think how long it's going to take to get back to target. [33:22] You've got to think how restrictive or not is policy. [33:25] So it's only natural that you have a range of views on the committee. [33:29] You know, people are going to see it different ways. [33:31] They're going to have different risk tolerances and that kind of thing. [33:33] I mean, if everybody agreed, that would be—that would be surprising. [33:37] And I—I think it's only—it's partly a function of the extraordinarily challenging [33:44] set of supply shocks that we've been dealing with now for five, six years. [33:47] Thank you so much, Chair Powell. [33:54] Selena Wayne with ABC News. [33:56] Are you confident that Kevin Warsh will stand up to political pressure from President Trump? [34:01] So he—he testified very strongly to that effect in his hearing, and I—and I'll take him at his word. [34:06] And when it comes to gas, right now it's over $4 a gallon. [34:10] Inflation just hit a two-year high. [34:12] Should Americans expect to be paying higher gas prices for the rest of this year? [34:17] And in your view, does that take a rate cut off of the table? [34:21] And secondly, by staying on as Fed governor, what message do you think you're sending to the president? [34:26] I—I don't know what gas prices are going to do for the rest of the year. [34:31] And it will depend on how long the straight remains closed and how quick—quickly it can be reopened and that kind of thing. [34:36] But remember, when gas prices go up, that's disposable income coming out of people's pockets, [34:43] so they're going to spend less on other things. [34:44] So there will be a hit to GDP. [34:47] So it's a—you know, it's a—it's a question whether spending, you know, goes down to offset the inflationary effects. [34:55] So it's not—the answer isn't obvious ex ante whether you—whether you should move your rate over—because of that. [35:05] We'll have to see how it evolves. [35:06] That's the question. [35:08] Help by staying on. [35:09] I'll stand on what I said earlier. [35:13] Victoria. [35:14] Hi. [35:17] Victoria Guido with Politico. [35:19] During your tenure, Fed independence has come under pressure in a lot of different ways. [35:24] And I was just wondering, practically speaking, where do you see Fed independence as coming from? [35:30] Is it the law? [35:31] Is it political support from Congress? [35:33] Is it the actions of the Fed? [35:35] What—what sustains Fed independence? [35:37] Well, it's—you know, it's—to a significant extent, it is the law. [35:42] And, you know, we've had to go to court to—successfully so far—to defend it. [35:47] But, you know, the law does create a setting in which the Fed can and is directed to make monetary [35:57] policy without consideration of political factors. And so—so part of it is the law. But it goes [36:04] beyond that, though. There's a set of customs. There's a boundary line between the Fed and the [36:09] administration, between the Fed and the Treasury Department. And we need to respect those—continue [36:14] to respect those boundaries about what the Fed is responsible for and what the Treasury is [36:18] responsible for and what the rest of the administration is responsible for. So some of it is legal. [36:24] In fact, it's all legal at the end of the day. But there—it's more than just monetary policy. [36:29] We—you know, we don't—we don't want to use our tools to—we haven't wanted to use our tools to [36:35] achieve goals that are really clearly outside our mandate. Every administration looks at our tools [36:40] and thinks it would be good to repurpose those to serve other purposes. But that gets dragged—that's [36:46] dragging us into politics and into fiscal policy. So we've resisted that. [36:50] Well, and maybe another way of asking it, too, is do you think that Fed independence is as strong [36:55] now as when you became chair? And if so, why? [36:59] Look, I think it's at risk. I mean, I think these—these, you know, these legal assaults, [37:06] if you will—as I mentioned, you know, we're—the institution is being battered over these things. [37:12] We're having to resort to, you know, the courts to—to enforce our legal, you know—not even—it's not so [37:19] much independence. It's—it's really the ability to do monetary—to make monetary policy without [37:25] political considerations. That's what we're talking about. And we've had to do that, and we've been [37:31] successful so far. But that's not over. None of that is concluded yet. And it's—you know, it's really [37:36] important. It's not about—it's not about people who work at the Fed or the institution. It's about [37:40] the benefits of a central bank that makes decisions based on analysis and our best thinking, [37:49] rather than, you know, trying to help or hurt politicians. It's—you know, that—there's—there's [37:53] a bright line between central banks who do one and do the other, and successful countries have [38:00] uniformly—successful advanced economy countries have a really strong set of protections around their [38:06] central bank just for that reason. So that's what it's all about. I—you know, I—I think—I am [38:11] confident, as I said in my remarks, that the Fed will continue to make its decision based on analysis—rigorous [38:17] analysis and not on political considerations. But we've had to fight for it. And I—you know, [38:23] I'd like to think that—you know, I'd like to think we can get out of that era and go back to respecting, [38:28] you know, what the law says and what custom has been, which is to, you know, let the Fed do our thing. [38:34] We're—you know, we're—we're not—we're—it's a—it's an institution full of human beings who work super [38:39] hard to get things right for the benefit of the public. We're all human. Don't expect perfection. [38:44] But do expect us to make, you know, decisions without political considerations and—and the very [38:50] best analysis we can bring. Katerina Sarajevo, Bloomberg News. How would you characterize [39:02] what you've heard from your colleagues on your decision to stay? Do you have their support? And then [39:08] have you heard concern from your colleagues, um, about continued legal attacks from, um, [39:14] the executive branch? Is this something that others have, uh, you know, talked to you about? [39:19] So I think that, um, I—I don't want to report on what my colleagues think they can—they [39:26] can speak for themselves. But, you know, there—yeah, there are—there are widespread concerns that [39:30] these things may continue. That's all—that's all I'll say. And, uh, you know, and that would be a problem. And, [39:35] um, so. Um, and then I just also wanted to ask about, um, Governor Waller's speech on the reserve [39:44] banks. Um, what—you know, do you have any thoughts on—on centralizing some of those functions and the way [39:51] he described? And then, um, have—you know, do you—are you concerned that something like that could [39:58] potentially be a slippery slope to, um, you know, to consolidate reserve bank functions even more [40:04] in such a way where you—you know, the central bank ultimately loses some of that important [40:10] regional information? So we try to be good stewards of the public's money and efficient. And Chris, [40:18] in particular, Chris Waller, is particularly passionate about that. Of course, so are the [40:22] reserves—so are the presidents. And, you know, it's a question of how do you accomplish it? Uh, [40:28] we—we, of course—and Chris said this in his speech—we, you know, we want 12 strong independent [40:34] central banks with their own staffs and their own monetary policy views and all that. But, [40:39] you know, there are things that are done in all 12 which could well be done at 1 much more [40:43] efficiently and with cost savings. And so there's a back and forth going on—on that. But everybody—everybody's [40:48] on the same page. The other thing he touched on was—was, uh, the idea of removing reserve bank presidents [40:55] from office over different views on monetary policy. And I would just agree with him so strongly [41:02] that that would be the beginning of the end of the Fed's ability to make monetary policy [41:08] independently. If every administration could come in and do that, you're just another cabinet agency [41:13] at that point. So that's not something that I would support. Chris said the same thing. [41:18] Christine. Thanks, Chair Powell. Christine Romans, NBC News. I want to ask about legacy. [41:26] When the history books are written, how do you think your stewardship at the Fed will be remembered [41:33] for the past eight years? You know, I'm going to just say that, uh, that's for—that's for someone [41:38] else to say. I'll give you a mulligan on that. All right. I'm going to ask you about, uh, [41:43] misbehaving inflation then. You talked about those four big shocks—supply shocks—over the past five years, [41:49] and inflation still misbehaving. What's your message to American families who feel like [41:53] inflation has not been under control for them really since—since the COVID reopening? [41:58] You know, we're—we're committed to bring inflation back down to 2 percent and—and [42:04] sustainably. That's—that's our goal, and we will—we'll stick at it until that happens. [42:09] We keep getting—these events keep happening, which keep driving up costs. And, you know, [42:15] the best thing we can do is to use our tools to guide inflation back down to 2 percent. I think [42:21] trying to get there really quickly could be very costly in terms of—of, uh, of job loss and things [42:27] like that. But we try to get there over time in a way that does the least damage possible. And, [42:32] you know, our commitment to that is never-ending and unshakable. [42:35] How would you describe the economy outside of the misbehaving inflation? I mean, um, it's still [42:42] awfully resilient, given all of the blows. [42:45] I don't know that you can be awfully resilient. So it's actually quite resilient, I would say, [42:50] because it's a positive thing, if I can—if I can have that amendment. Yeah, the—you know, [42:54] growth is really solid across our economy. Some of that is, um, that consumer spending is hanging [43:01] in pretty well. The—the most recent data are good. And some of it is just the apparently insatiable [43:07] demand for data centers all over the United States. So a lot of, uh, business investment going into [43:12] building data centers and every reason to think that that continues. So you've got an economy that's [43:16] growing at 2 percent or better. PDFP, which is Private Domestic Final Purchases, that—which is [43:23] really a—a better signal of—of, uh, of a momentum in the economy. It's actually higher than that. So [43:28] that's—you know, that's a positive thing. The—if you look at the unemployment rates, 4.3 percent. [43:34] So that's a low rate. That's pretty close to mainstream estimates of the natural rate. We've [43:39] been there for a long time. So it's—it's—it doesn't feel like a good labor market to some [43:43] who don't have jobs, because quits are really low, hires are really low, and there's effectively [43:49] no new net job, uh, creation. So that's a—that's—you know, in a sense, the labor market is in balance. [43:57] But it's an un—unusual and uncomfortable kind of a balance, where people who don't have jobs will [44:03] have a hard time breaking in unless somebody quits their job. So, um, so that's pretty good. [44:07] You know, inflation is the thing we need to work on, and it's partly tariffs, which we think—we [44:13] think that that inflation should subside over the course of this year, because it's—it's kind [44:17] of a one-time increase. It shouldn't be repeated. And that should start happening pretty soon. [44:21] The energy inflation that we're getting should go through fairly quickly, uh, and we'll—we'll [44:28] just have to see how that works out. In the meantime, you know, we think our policy stance [44:32] is in a good place for us to hold and—and wait developments. [44:34] Jennifer. [44:36] Thank you, Chair Powell. Jennifer Schoenberger with Yahoo Finance. [44:41] At the risk of beating the dead horse here, clearly three members objected to keeping that easing [44:48] bias in the statement. And you said that the majority still didn't need—or still didn't [44:54] need to, uh, move to new language at this point. So does the majority of the committee still have [45:00] a bias towards cuts at this point, or has the bias on the committee shifted away from cuts towards [45:07] holding or hikes if that was needed? [45:09] And so I think that, you know, the center is moving toward a more neutral place, and that's [45:17] sort of what markets are saying, too. I just think, you know, uh, there's a lot of signaling [45:23] going on when you change guidance like that. And so we just—I guess the majority—a majority [45:29] of us didn't feel like we needed to send a signal on that right now. Uh, and—but maybe it'll come to [45:35] that. And—and the reason is because, you know, we're kind of waiting to see what happens with—with [45:40] events in the Middle East and what are the implications of those events for the U.S. economy. [45:45] So there was just a—there's a group who feels like we don't need to be in a hurry to do that. [45:49] We—we get it. And, of course, we will move to a hiking bias if we want to hike, and we'll [45:54] move to a new—a neutral bias before that. But there was a difference over whether to do it at this [45:59] meeting—at a—at a meeting at which all but one of us agreed that—that the—that the rate decision [46:04] was correct, which was not to move. [46:05] And you just said a moment ago that you believe Fed independence is at risk. Is it safe to say that [46:12] you want to stay on as a governor to serve as a check and balance on that? [46:18] I—I want to stay until—I—I will stay until it's—I feel it's appropriate for me to leave. And—and [46:23] yes, that is—that is really what is driving this. Uh, I'm not—uh—I'm not looking to be, [46:30] you know, a high-profile, uh, dissident or anything like that. I—I'm—I'm more looking at [46:36] the other aspects of this and wanting to see that things have calmed down and—and [46:40] we're—returning to a traditional model of working with the people that you have and [46:46] bringing them to consensus and respecting that consensus. That's what—that's what I'm—I'm hoping to see. [46:52] Egan. [46:56] Thanks, Chair Powell. Matt Egan with CNN. Uh, you've made many tough decisions in your time at the Fed, [47:05] and as your time as chair comes to a close and you think about your tenure and perhaps your legacy, [47:11] are there any decisions that stand out as ones that you're particularly proud of? And are there any [47:17] that, with the benefit of hindsight, you would take a mulligan on? [47:21] Yeah, I—I—it's hard—I wouldn't want to single—single out individual things at this point. You know, [47:27] I'll just say, uh, you know, we—all of us together have consistently tried to do what we think is best for [47:35] the American people based on our tools and our objectives that Congress has given us. It's been [47:41] very challenging because we've been in a situation of supply shock—supply shocks really for six years, [47:49] and that's just a very different situation than for a very long time. What the Fed and other central [47:55] banks were doing all the time was demand management. And, you know, and there was always the inflation [48:01] mandate, but inflation was low for 25 years. So this is a very different world and a much more [48:07] challenging one where you have to balance the two objectives. And, by the way, central banks that have [48:11] a—an inflation mandate have to do exactly the same thing because they're balancing economic activity. [48:16] So that's been challenging. And we've—you know, we've tried to do our very best through [48:21] these really challenging times, and I'm really proud of—of the work that I've done that my—that my [48:27] colleagues and I have done during these years. Now, to follow up on some of the discussion around Fed [48:33] independence, can you explain to the public why this notion of Fed independence, which might sound [48:40] kind of wonky to some, is so critical? I mean, what are the consequences if either the Supreme Court [48:45] rules against Lisa Cook or the Fed in the future decides to make decisions more around the political [48:52] calendar instead of the economic data? So every major advanced economy in the world has made the same [48:59] decision the United States has made, and that is that they want to take the making of monetary policy, [49:05] the setting of interest rates to support the economy to achieve maximum employment and price stability. [49:10] They want to take that out of the direct control of elected politicians. And the reason is elected [49:17] politicians are always running for election, and they'll always want low rates, and that will lead to [49:22] inflation over time. So after, you know, literally centuries of experience with that, the whole world [49:28] moved to the different model. And it's—it's worked great. I mean, this is—this is the era in which [49:33] inflation was under control for 40 years. Then we had the pandemic inflation everywhere in the world, and [49:38] now we have inflation that had gone pretty much all the way back to Target, really close to all the way back to [49:43] Target, and now is being buffeted by the energy shock, and the U.S. buffeted by the tariff shock as well. [49:49] So—but what I would say to the general public is—that's the back story—is that [49:56] don't think about an institution being independent. Think about it this way, that you want people to [50:01] make monetary policy and set interest rates to benefit the general public and to try to achieve [50:06] economic goals, which are maximum employment and price stability, and focus only on that, [50:11] and ignore political considerations—completely ignore them. It's—this isn't bipartisan, [50:17] this is nonpartisan. So we want to just—we just work directly for the American people doing these [50:22] things. We don't think, oh, this—I want to do this because the President says it's a good idea, [50:27] or because there's an election coming up, and I want to—I want to speed up or slow down the economy. [50:32] I mean, think about that. If that's—if that's what we were doing, we'd have no credibility. [50:38] Markets would lose faith in us, and our ability to control inflation and—and have any respect would [50:44] be, you know, would be gone. And let me say, whatever people say, the markets believe in—that we will [50:50] produce 2 percent inflation. If you look at longer-run expectations, markets believe that they—there's [50:55] no sense in which our credibility in the markets has weakened. It's just not the case. It's—it's—people [51:01] do get it, that this is our commitment, and that we will achieve it, and it's priced in. [51:06] If you disagree with that, then you can go ahead and bet against the markets. But the [51:09] markets are pricing in Fed credibility. [51:12] Okay, we'll go to Richard for the last question. [51:16] Thank you, Chair Powell. Richard Escobedo with CBS News. We've talked a lot about gasoline [51:23] prices and—and even you mentioned airline ticket prices, both of which are up dramatically [51:27] because of the war in Iran. And so I wonder, are you seeing that way down consumer spending [51:33] in other parts of the economy? And if so, how worried are you that that will be a drag on growth? [51:38] You don't see—you don't see it in spending yet. You really don't. I mean, [51:42] as one of your colleagues said, the economy has been resilient. It really has. Not just this time, [51:48] but it's been remarkably resilient for some years now. The U.S. economy has just powered through [51:53] shock after shock, and consumers are still spending. And that's what the banks will tell you, [51:57] credit card companies will tell you, the retail sales numbers that we got most recently. People are [52:02] still spending. And, you know, how long can that go on in a world where if gas prices were to go up a [52:08] bunch more, that's taking otherwise spendable money out of people's pockets. But right now, [52:13] we don't actually see much slowdown in—yet, and certainly none from this. But you think, [52:20] logically, you will, because people have a certain amount of money to spend if they're spending 25 percent [52:25] more on gas or something like that, then, you know, that's going to come out of other spending. [52:29] But again, we don't see it yet. One last thing. You mentioned those economies in Southeast [52:33] Asia that are particularly dependent on petroleum. They make a lot of the stuff that American consumers [52:39] buy. So was there any discussion today about whether or not those costs getting passed along to [52:46] consumers is a real concern, and whether or not that might push up inflation? So all of those things [52:52] are in the models that we use to calculate inflation. So we—you know, they're just parts—you can ask [53:02] about anything like that, and they are—they have a place—the staff has a place where they're looking [53:06] at that and pricing in what will happen with higher prices and that kind of thing. So it's there. [53:12] The effects are not that big yet. You know, we're a huge economy. The import sector is only 10 percent [53:19] of the economy. So we're not like a European country where 50 percent of the external—of [53:24] GDP is in the external sector. We're also, you know, as I mentioned, we're an oil exporter. So [53:30] we're not feeling the same kind of pain, and we're not likely to feel the same kind of pain that [53:34] economies in Western Europe and certainly in Asia are feeling. Anyway, thank you very much, [53:40] everyone. I won't see you next time.