Warsh Asked: What Would You Tell Person At Store Watching Price Tags Rise Faster Than Paychecks?

[00:00:00] Speaker ?: Claire. [00:00:01] Speaker 1: Thanks a lot, Claire Jones, Financial Times. You know, coming to this blind, reading this very nice short statement that I think we've all appreciated in the room, one might wonder why you didn't raise rates today considering what you're saying here about the risks to U.S. inflation and your mandate. I guess, why not and what would you need to see in order to get to that place? And secondly, on your task forces, are there any best practices at other central banks that you'd consider looking at? Thank you. [00:00:42] Speaker 2: I'm glad they're in the practice of giving you two questions because my answer to your first question was going to be very curt. I've got nothing more to say than the statement itself. And to the point of the question I got before, market reactions to what we say unfiltered, I think is more helpful than having delivered a statement to me than improvising further upon it. Best practices of task forces. This is a subject I've thought some about. I've been on a task force or two in my life. Best practice. Find the best minds. Make sure that the task forces have a range of people both by backgrounds and predispositions, so they too can have a bit of a family fight. Make sure when you establish a task force that the group that's going to be the recipient of the information feels as if they've got some equities in it too. That's why we're looking for, haven't done the final roll call, some of the most significant talent we have in the building and across the reserve banks on each of these and in some sense seconding them to this group for a period of some number of months so that the leaders of the task force know what the most analytical central bank in the world thinks about that. They can reflect on it and the final best practice, we're not outsourcing decisions to anybody. Administrations past and present, reserve banks have chosen a group of 19 people around the table. These will be our decisions. We can agree to some of the recommendations, disagree with others, have a good family fight about it, but what comes from them will, I hope and believe, make the discussion we have internally better, stronger, more of a dialectic so that we can finally deliver on that price stability objective. [00:02:30] Speaker 1: Just a quick follow up on your markets point, if you look at two year yields, they're really suggesting that markets think more tightening is needed. Would that be your read on what the two year yield is saying as well? [00:02:42] Speaker 2: We were in such a good place. This is why we don't do third questions, I presume. I'm not going to offer any commentary on market reaction over the last 30 or 60 minutes. What we've given markets is a new chapter for the central bank, some fresh thinking. What we've given markets and households and businesses, I think, is a commitment to ask ourselves hard questions such that we can deliver on the promises that we've made before. This is a lot of change for financial markets to digest. I wouldn't be particularly intrigued by how they react in the first several minutes or even for several days. What I think is most important is that financial markets, and at least as important, households and businesses know that this central bank will deliver on price stability. [00:03:34] Speaker ?: Brian. [00:03:35] Speaker 3: Hi there, Chairman Worsha. Brian Chung with NBC News. Thank you for taking our questions. So when you say that we've dropped forward guidance for the layperson, that might sound like the Fed's going to say less or offer less insight into where their borrowing costs might go. So for the person that maybe you might run into at the grocery store where the price tags are rising at a faster pace than their wages at the moment, how would you explain it to them? I don't know if task force might be the answer there, but how would you kind of communicate this era, this chapter of the Fed? [00:04:03] Speaker 2: If I told somebody in the milk aisle that I had a task force for that, I think that would be doing a very poor job. So I appreciate it. If I saw somebody in the grocery store, what I would say to them is that we cannot have a very significant effect on particular prices. The price of oil in the markets today or even the price of a dozen eggs. That does not have first order consequences to what we're doing. But we do have a really important job there. And it's to make sure that those changes in oil or beef or eggs or milk don't broaden in the economy. Don't have second and third order effects. That's our job. That's our commitment. That's our capability. And we're going to deliver on it. [00:04:47] Speaker 3: And then is the Fed's relationship with the Treasury also under review? There was the normal breakfast meetings with the Treasury Secretary. Is that something you intend to continue doing? And have you had conversations with the President since you're swearing in? [00:05:00] Speaker 2: So on the President, I don't have anything for you. With respect to the Treasury Secretary, he has been posting pictures of our breakfast. So I don't think I can deny that. The long tradition at the Central Bank is that the Fed Chairman and the Treasury Secretary meet weekly. I think we've pulled off three of those so far. I believe he's overseas this week. So this will be the exception of the rule. I think they're very useful discussions. The Central Bank's objectives and our roles and responsibilities are quite delineated from the fiscal authorities. And in my view, monetary policy is independent in the conduct of what we do. But that doesn't mean we're not interested in what's happening with the fiscal authorities. The way I think about it is this central bank needs to have a wide lens, but a narrow remit. We need to be quite interested in what's happening in the world. I won't be breaking any news here to suggest I'm quite interested in what's happening in the Middle East. That does have some effect on our day job. That doesn't mean it's our responsibility, but I think we're going to keep a wide lens. And my meetings with Secretary Besson to this point have helped widen that aperture. So we're aware of things that could affect our day job, even if it isn't. [00:06:19] Speaker ?: Steve. [00:06:22] Speaker 2: Steve Leisman, CNBC, Mississippi.