The Federal Reserve said Wednesday afternoon it won’t move interest rates, matching expectations from economists and investors for the central bank, despite repeated, loud requests from the Oval Office to slash rates.
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NewsTranscript
00:00Good afternoon.
00:24My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum
00:28employment and stable prices for the benefit of the American people.
00:33Despite heightened uncertainty, the economy is still in a solid position.
00:38The unemployment rate remains low, and the labor market is at or near maximum employment.
00:44Inflation has come down a great deal, but has been running somewhat above our 2% longer
00:48run objective.
00:52In support of our goals, today the Federal Open Market Committee decided to leave our
00:55policy interest rate unchanged.
00:59The risks of higher unemployment and higher inflation appear to have risen, and we believe
01:03that the current stance of monetary policy leaves us well positioned to respond in a timely way
01:09to potential economic developments.
01:12I will have more to say about monetary policy after briefly reviewing economic developments.
01:20Using growth of 2.5% last year, GDP was reported to have edged down in the first quarter, reflecting
01:27swings in net exports that were likely driven by businesses bringing in imports ahead of potential
01:32tariffs.
01:34This unusual swing complicated GDP measurement last quarter.
01:39Private domestic final purchases, or PDFP, which excludes net exports, inventory investment,
01:44and government spending, grew at a solid 3% rate in the first quarter, the same as last
01:50year's pace.
01:51Within PDFP, growth of consumer spending moderated, while investment in equipment and intangibles
01:56rebounded from weakness in the fourth quarter.
02:00Surveys of households and businesses, however, report a sharp decline in sentiment and elevated
02:04uncertainty about the economic outlook, largely reflecting trade policy concerns.
02:11It remains to be seen how these developments might affect future spending and investment.
02:17In the labor market, conditions have remained solid.
02:20Payroll job gains averaged $155,000 per month over the past three months.
02:25The unemployment rate at 4.2% remains low and has stayed in a narrow range for the past year.
02:32Wage growth has continued to moderate, while still outpacing inflation.
02:36Overall, a wide set of indicators suggest that conditions in the labor market are broadly
02:41in balance and consistent with maximum employment.
02:45The labor market is not a source of significant inflationary pressures.
02:51Inflation has eased significantly from its highs in mid-2022, but remains somewhat elevated
02:56relative to our 2% longer-run goal.
03:00Overall PCE prices rose 2.3% over the 12 months ending in March.
03:05Excluding the volatile food and energy categories, core PCE prices rose 2.6%.
03:12Near-term measures of inflation expectations have moved up, as reflected in both market and
03:16survey-based measures.
03:19Survey respondents, including consumers, businesses, and professional forecasters, point to tariffs
03:23as the driving factor.
03:26Over the next year or so, however, most measures of longer-term expectations remain consistent
03:31with our 2% inflation goal.
03:35Our monetary policy actions are guided by our dual mandate to promote maximum employment
03:40and stable prices for the American people.
03:43At today's meeting, the committee decided to maintain the target range for the federal funds
03:47rate at 4.25% to 4.5% and to continue reducing the size of the balance sheet.
03:54The new administration is in the process of implementing substantial policy changes in four distinct
03:59areas – trade, immigration, fiscal policy, and regulation.
04:04The tariff increases announced so far have been significantly larger than anticipated.
04:09All of these policies are still evolving, however, and their effects on the economy remain highly
04:13uncertain.
04:15As economic conditions evolve, we will continue to determine the appropriate stance of monetary
04:20policy based on the incoming data, the outlook, and the balance of risks.
04:26If the large increases in tariffs that have been announced are sustained, they are likely
04:31to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.
04:37The effects on inflation could be short-lived, reflecting a one-time shift in the price level.
04:42It is also possible that the inflationary effects could instead be more persistent.
04:48Avoiding that outcome will depend on the size of the tariff effects, on how long it takes
04:52for them to pass through fully into prices, and ultimately on keeping longer-term inflation
04:57expectations well anchored.
05:00Our obligation is to keep longer-term inflation expectations well anchored and to prevent a
05:04one-time increase in the price level from becoming an ongoing inflation problem.
05:09As we act to meet that obligation, we will balance our maximum employment and price stability
05:14mandates, keeping in mind that, without price stability, we cannot achieve the long periods
05:18of strong labor market conditions that benefit all Americans.
05:23We may find ourselves in the challenging scenario in which our dual mandate goals are in tension.
05:28If that were to occur, we would consider how far the economy is from each goal and the potentially
05:34different time horizons over which those respective gaps would be anticipated to close.
05:40For the time being, we are well positioned to wait for greater clarity before considering
05:44any adjustments to our policy stance.
05:48At this meeting, the Committee continued its discussions as part of our five-year review of
05:52our monetary policy framework.
05:54We focused on inflation dynamics and the implications for our monetary policy strategy.
06:00Our review includes outreach and public events involving a wide range of parties, including
06:05Fed listens events around the country and a research conference next week.
06:10Throughout this process, we are open to new ideas and critical feedback, and we will take
06:14on board lessons of the last five years in determining our findings.
06:19We intend to wrap up the review by late summer.
06:23The Fed has been assigned two goals for monetary policy – maximum employment and stable prices.
06:28We remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal,
06:34and keeping longer-term inflation expectations well anchored.
06:38Our success in delivering on these goals matters to all Americans.
06:42We understand that our actions affect communities, families, and businesses across the country.
06:48Everything we do is in service to our public mission.
06:51We at the Fed will do everything we can to achieve our maximum employment and price stability goals.
06:57I look forward to your questions.
06:58Steve.
06:59Steve Leesman, CNBC.
07:02Thank you, Mr. Chairman, for taking my question.
07:06A lot has happened since the last meeting.
07:09There's been tariffs put on, tariffs taken off, and meanwhile, there's a bill advancing in Congress.
07:13I just wonder if I could press you on the last part of your statement.
07:16Are you any closer now to deciding which side of the mandate is going to need urgent care first?
07:23Well, so as we noted in our statement, post-meeting statement, we've judged that the risks to higher employment and higher inflation have both risen.
07:35And this, by the way, of course, is compared to March.
07:39So that's what we can say.
07:41I don't think we can say, you know, which way this will shake out.
07:46I think there's a great deal of uncertainty about, for example, where tariff policies are going to settle out, and also when they do settle out, what will be the implications for the economy, for growth, and for employment.
07:57I think it's too early to know that.
07:59So, I mean, ultimately, we think our policy rate is in a good place to stay as we await further clarity on tariffs and ultimately our implications for the economy.
08:10Hearing you describe what you're looking for in terms of being able to make a decision, it sounded like that's a long-term process before you sound like you're going to be comfortable, or the committee would be comfortable, to act on what the data is telling you.
08:24I don't think we know.
08:25You know, I think, look where we are today.
08:29We have an economy that, if you look through, you know, the sort of distortions in Q1 GDP, you've still got an economy that looks like it's growing at a solid pace.
08:38The labor market appears to be solid.
08:41Inflation is running just a bit above 2%.
08:43So it's an economy that's been resilient and is in good shape.
08:47And our policy is sort of modestly or moderately restrictive.
08:51It's 100 basis points less restrictive than it was last fall.
08:56And so we think that leaves us in a good place to wait and see.
08:59We don't think we need to be in a hurry.
09:00We think we can be patient.
09:02We're going to be watching the data.
09:03The data may move quickly or slowly, but we do think we're in a good position where we are to let things evolve and become clearer in terms of what should be the monetary policy response.
09:16Nick.
09:17Nick Camaro is the Wall Street Journal.
09:22Check out, there's naturally a lot of ETSD around 2021 with supply shocks, but there are some who argue that the current situation has notable differences.
09:31Energy costs are down.
09:33Housing imbalances look nothing like they did four years ago.
09:37Labor demand appears to be gradually cooling with wage growth running below 4%.
09:41What do you see right now that could nourish higher inflation beyond a rise in goods prices this year?
09:50I think the underlying inflation picture is good.
09:55It's what you see, which is inflation now running a bit above 2%.
09:59And we've had basically decent readings in housing services and non-housing services, which is a big part of it.
10:05So that part, I think, is moving along well.
10:11But there's just so much that we don't know.
10:14I think – and we're in a good position to wait and see is the thing.
10:19We don't have to be in a hurry.
10:20The economy has been resilient and is doing fairly well.
10:24Our policy is well positioned.
10:25The costs of waiting to see further are fairly low, we think.
10:31So that's what we're doing.
10:32And, you know, we'll see the administration is entering into negotiations with many countries over tariffs.
10:40We'll know more with each week and month that goes by about where tariffs are going to land.
10:48And we'll know what the effects will be when we start to see those things.
10:51So we think we'll be learning.
10:52I can't tell you how long it will take, but for now it does seem like it's a fairly clear decision for us to wait and see and watch.
11:01So when you say that you don't need to be in a hurry, does that mean that – could the outlook change in such a way that a change in your stance could be warranted as soon as your next meeting?
11:12You know, as I said, we're – we are comfortable with our policy stance.
11:19We think we're in the right place to wait and see how things evolve.
11:23We don't feel like we need to be in a hurry.
11:25We feel like it's appropriate to be patient.
11:28And, you know, when things develop, of course, we have a record of – we can move quickly when that's appropriate.
11:35But we think right now the appropriate thing to do is to wait and see how things evolve.
11:39There's so much uncertainty.
11:40If you talk to businesses or market participants or forecasters, everyone is just – is just waiting to see how developments play out.
11:49And then we'll be able to make a better assessment of what the appropriate path for monetary policy is.
11:55So we're not in that place.
11:56And, you know, as that develops – and I can't – I can't really give you a time frame on that.
12:00Janelle Marte with Bloomberg.
12:07So many economists have been pricing in higher odds of a recession,
12:12and several are noting that it is more difficult for the Fed to cut rates preemptively given the higher risks for higher inflation.
12:23So given the outlook, do you still see a path for a soft landing, and what does that look like?
12:30Well, let me say – I mean, so let's look back and see where we are.
12:38So go through 2024 up to the day.
12:42We've had, you know, unemployment in the low fours for more than a year.
12:45We've had inflation coming down in the – now in the mid to low twos.
12:49We've had an economy growing at 2.5%.
12:51So that is the economy as we see it now.
12:56What looks likely, given the scope and scale of the tariffs, is that we will see – certainly the risks to higher inflation,
13:06higher unemployment have increased.
13:08And if that's what we do see, and if the tariffs are ultimately put in place at those levels, which we don't know,
13:13then we will see – we won't see further progress toward our goals.
13:18But we might see a delay in that.
13:20I think in the – you know, in our thinking, we would get – we would never – we never do anything but keep achieving those goals.
13:26But we would – at least for the next, let's say, year, we would not be making progress toward those goals.
13:32Again, if that is – if that's the way the tariffs shake out.
13:35The thing is, we don't know that.
13:36There's so much uncertainty about the scale, scope, timing, and persistence of the tariffs.
13:43So that's that.
13:44In terms of preemption, you know, I think you can look back at the 2019 cuts as preemptive.
13:52I wouldn't say that what we did last fall was at all preemptive.
13:55If anything, it was a little late.
13:57But 2019, we did cut three times.
14:00But the situation was you had a weakening economy and you had inflation at 1.6%.
14:05So that's a situation where you can move preemptively.
14:08Now we have inflation running above target.
14:11It has been above target for four years.
14:13It's not so far above target now.
14:15And we have an expectation, conditional on what happens, that we'll see upward pressure on inflation.
14:22If you look at where forecasters are, they're all forecasting an increase in inflation.
14:26So it makes it – and then we've also got, you know, forecasts of weakening in the economy.
14:32And some have recession forecasts.
14:33We don't make a – we don't make a – publish a forecast about that.
14:37We don't publish a forecast that assesses how likely a recession is.
14:40But in any case, it's not a situation where we can be preemptive because we actually don't know what the right response to the data will be until we see more data.
14:51Colby.
14:57Colby Smith with the New York Times.
14:59How much weakness does the committee need to see, though, in the labor market and the economy more broadly to lower interest rates again?
15:05Is it about a certain increase in the unemployment rate over a period of time or perhaps a certain number of negative monthly job reports?
15:14I mean, how are you making that assessment?
15:17You know, so first of all, we don't see that yet, right?
15:19We have 4.2 percent unemployment, good participation, wages behaving very well, participation, I mentioned, at a good level.
15:27So, you know, with the labor market, we would look at the totality of the data.
15:32We'd look at the level of the unemployment rate.
15:34We'd look at the speed with which it's changing.
15:36We would look at the whole huge array of labor market data to get a sense of whether conditions are really deteriorating or not.
15:45And at the same time, we'd be looking at the other side of the mandate.
15:48We could be in a position of having to balance those two things, which is, of course, a very difficult balancing judgment that we'd have to make.
15:57On that point about balancing, I mean, you've mentioned that the committee would consider how far the economy is from each goal
16:04and the time it would take to kind of get back to that point.
16:06But what does that mean in practice?
16:08I mean, how much of that assessment will be rooted in a forecast versus a data dependence?
16:14It would be a combination of the two.
16:16I mean, let's just say this would be a complicated and challenging judgment that we would have to make.
16:23And we're not in this situation, but the situation is if the two goals are in tension.
16:27So let's say that unemployment is moving up in an uncomfortable way, and so is inflation.
16:33Not the situation we're in, hypothetically, but we would look at how far they are from the goals,
16:38how far they're expected to be from the goals, what's the expected time to get back to their goals.
16:43We'd look at all those things and make a difficult judgment.
16:45And that's in our framework.
16:47It's always been in our thinking.
16:48You know, we haven't faced that question in a very long time.
16:52And so, again, difficult judgment to make, and not one that we face today, and we may never face it.
17:00But, you know, we have to be keeping it in our thinking now.
17:05Edward.
17:09Edward Lawrence with Fox Business.
17:10So we had the CPI report that came out that showed month over month the first decrease in inflation in about three years.
17:18The jobs report, you said, solid, that we saw.
17:20At the same time, we have those new tariffs that we're living under.
17:23So given this, should the Federal Reserve be cutting rates at all this year?
17:29You know, it's going to depend.
17:30I think you have to just take a step back and realize this is why we are where we are, is, you know, we're going to need to see how this evolves.
17:39There are cases in which it would be appropriate for us to cut rates this year.
17:43There are cases in which it wouldn't.
17:45And we just don't know.
17:47Until we know more about how this is going to settle out and what the economic implications are for employment and for inflation,
17:58I couldn't confidently say that I know what the appropriate path will be.
18:04So following on that, just, you know, so then how does President Trump calling on you personally as well as the Federal Reserve to make rate cuts affect your decision today and affect your job difficulty?
18:16Doesn't affect our doing our job at all.
18:18So, you know, we're always going to do the same thing, which is we're going to use our tools to foster maximum employment and price stability for the benefit of the American people.
18:27We're always going to consider only the economic data, the outlook, the balance of risks, and that's it.
18:34That's all we're going to consider.
18:35So it really doesn't affect either our job or the way we do it.
18:39Howard.
18:43Hi.
18:43Howard Schneider with Reuters, and thanks for the time.
18:46I'm wondering, I mean, given the complexity about the first quarter GDP and what lies ahead,
18:51I'm just wondering what your intuition tells you about the underlying direction of the economy right now.
18:57Many of your colleagues have said they feel growth is slowing.
19:00If so, do you have any sense of by how much to what degree the slowdown may be?
19:06What does your gut tell you about how things are evolving out there?
19:09My gut tells me that uncertainty about the path of the economy is extremely elevated
19:14and that the downside risks have increased.
19:20The risk is, as we pointed out in our statement, the risks of higher unemployment and higher inflation have risen,
19:28but they haven't materialized yet.
19:31They're really not in the data yet.
19:34So that tells me more than by intuition, because I think it's obvious, actually,
19:39that the right thing for us to do is that we're in a good place, our policy is in a very good place,
19:45and the right thing to do is await further clarity.
19:50And, you know, there's usually things clarify and the appropriate direction becomes clear.
19:57That's what usually happens.
19:58Right now, it's very hard to say what that would be.
20:01In the meantime, the economy is doing fine.
20:04Our policy isn't, you know, it's not highly restrictive.
20:07It's somewhat restrictive.
20:08It's 100 basis points less restrictive than it was, you know, last summer.
20:12So we think it's in a good place, and we think the appropriate thing is for us to wait and see
20:17and get more clarity about the direction of the economy.
20:21Well, let me press you on this idea of the economy being fine right now,
20:24because reading the Beige book very closely the last time around,
20:28there was a lot of, you know, negative stuff, negative sentiment that was in there.
20:33And I know that everybody is looking at soft data right now.
20:36You mentioned it yourself that the sentiment's sour.
20:40But the Beige book was talking about, you know, the beginnings of layoffs in some industries,
20:44prices rising in some places, and an awful lot of investment decisions being pushed to the sideline.
20:51Doesn't that point to a slowdown?
20:54It may well.
20:56It just hasn't shown up yet.
20:58And, you know, we all look at all these sentiments and read many, many individual comments just to get a better feel.
21:06And, you know, businesses and households very broadly are concerned and, you know, postponing economic decisions of various kinds.
21:15And, yes, if that continues and nothing happens to sort of alleviate those concerns,
21:20then you would expect that to begin to show up in economic data.
21:24It wouldn't maybe show up overnight, but it would show up over weeks and months.
21:28And that may be what happens.
21:30But it hadn't happened yet.
21:31And also there are things that can happen that will change that narrative.
21:35I mean, they haven't happened, but it's possible to imagine things.
21:39But in the meantime, yes, we're watching it extremely carefully, like everyone is,
21:43but don't see really much evidence of it in actual economic data yet.
21:49And, by the way, consumers keep spending, credit card spending.
21:52It's, you know, it's still a healthy economy, albeit one that is shrouded in some very downbeat sentiment on the part of people and businesses.
22:05Michael McKee from Bloomberg Radio and Television.
22:11The Fed's been criticized recently by a former governor for what he calls mission creep.
22:16You take on more problems, use more tools, and then end up building tools to deal with the fallout of those tools,
22:22which then makes it a given that you will act more aggressively in the future.
22:26Is that a fair critique, and is that something you would be looking at in your framework review?
22:31Sorry, say the critique again.
22:33That the Fed has been involved in mission creep, gets involved in using too many new tools to deal with problems and to go too far.
22:41Is that something that the critique was based around the fact that you did QE and QE and QE and went beyond the narrow confines of your mandate?
22:59So, well, I mean, there are a couple.
23:01That's not really beyond the confines of our mandate.
23:03Look, I would say this.
23:04We, you know, we did things.
23:06Essentially, we're on an emergency footing for a couple of years in the pandemic,
23:10and it's very fair and very welcome for people to look back over what we did and say, hey, you could have done this better and different.
23:17And one thing we hear a lot is we could have explained QE a little better.
23:20We did think we were explaining it in real time.
23:24I completely accept the thought that we could have explained it better.
23:29There's a lot of thinking that we went on too long with QE.
23:31I can tell you that the reason we did was we were concerned that we didn't want a sharp tightening in financial conditions at a time when we thought the economy was still vulnerable.
23:43And so we did hold on for a long time to QE, and we, of course, tapered and everything.
23:48And then we immediately went into QT, and, you know, we're down a couple of trillion.
23:54But I get that, you know, we certainly, with the benefit of hindsight, could have tapered earlier or faster.
24:00That's absolutely right.
24:01But this is all very welcome.
24:03You know, we knew doing this in real time that we weren't going to get it perfect.
24:07And those kind of, you know, after action kind of looks are essential.
24:15And we're doing the same thing, you know, in our review on some issues.
24:20The other part of that critique is that you've taken on topics that are outside of the mandate,
24:26such as climate change and trying to ensure that certain groups are benefited by your economic policies in terms of employment, et cetera.
24:39So, okay, on climate, you've heard me say over and over again that we will not be climate policymakers
24:46and that our role on climate is a very, very narrow one.
24:52And I think that's what we've done.
24:54And we've done really very little on climate.
24:57You can say that little bit that we've done was too much.
25:01But I wouldn't want to give any impression that, you know, we take – that we've taken climate in.
25:06It's something that we're spending a lot of time and energy on.
25:09We're not.
25:10We have very, very narrow things.
25:11We did one thing – one guidance for the banks, and then we did a one-time stress analysis, climate stress analysis, and that's it.
25:21And, you know, we dropped out of the network of green in the financial system.
25:25So we didn't do much on climate.
25:28But – and I do think – and I've said this publicly several times – I think it's a real danger for us to try to take on a mandate like that,
25:37which is very narrow application to our work.
25:41And, you know, the risk is if you – if you go for things that are really not on your mandate, you know, then why are you independent?
25:48And, you know, I think that's a very fair question.
25:50I do think we've done a whole lot less on climate than some people seem to think we did.
25:56Anyway, that's what I think.
25:57Should you have taken on the question of bringing unemployment rates down for specific categories?
26:04We didn't do that.
26:05You know, we said – what we said was that we never targeted any unemployment rate for individual racial or demographic groups.
26:12What we said was that maximum employment was a broad and inclusive goal.
26:16And I think what we meant by that was we're going to consider the totality of the country as we look at our maximum employment goal.
26:27Of course, we were never going to target any individual group with that.
26:30But I think some people, you know, wanted to hear it that way.
26:34But that's not at all what we meant.
26:37But – so that's just not a correct reading of our – but I can see how, you know, maybe people found that confusing.
26:43And, you know, we have to take that into consideration.
26:47Jolene.
26:50Hi, Chair Powell.
26:51Thanks for taking our questions today.
26:53I'm Jolene Kent with CBS News.
26:55You've said wait and see, and the economy is doing fine today.
26:58But the impact of tariffs are already showing up at the ports.
27:02Businesses, big and small, are telling us that they feel it.
27:05And most importantly, consumers say they feel it.
27:07That the challenges are here.
27:09And there's no waiting and seeing.
27:11For Main Street, what is the breaking point?
27:13What would have to happen to prompt a rate cut?
27:16Specifically?
27:17Well, you know, so we really don't see in the data yet big economic effects.
27:25We see sentiment.
27:28There are concerns that higher prices may be coming or things like that.
27:32So people are – they're worried now about inflation.
27:34They're worried about, you know, a shock from the tariffs.
27:38But they really haven't – that shock hasn't hit yet.
27:40Okay, so, you know, we're going to be looking at the – not just the sentiment data, but also the real economic data as we assess what it is we should do.
27:50And remember, there will be two effects.
27:52One of them would be weakening economy, weakening economic activity, which translates into higher unemployment.
27:59And the other would be potentially higher inflation.
28:02Again, to say it again, the timing, the scope, the scale, and the persistence of those effects are very, very uncertain.
28:09So it's not at all clear what the appropriate response for monetary policy is at this time.
28:16And, you know, and by the way, our policy is in a good place, so we think we can wait and move when it is clear what the right thing to do is.
28:24Really not at all clear what it is we should do.
28:26So, people are feeling stress and concern, but unemployment hasn't gone up.
28:32Job creation is fine.
28:34Wages are in good shape.
28:36You know, people are not – layoffs are – people are not getting laid off at high levels.
28:41You know, initial claims for unemployment are not increasing, you know, in any kind of impressive way.
28:47So the economy itself is still, you know, in solid shape.
28:52Just a quick follow-up.
28:53Well, President Trump now says he does not plan to remove you as chair.
28:58When you heard that, what did you think?
29:01I don't have anything more for you on that.
29:03I've pretty much covered that issue.
29:06Chris.
29:09Hi.
29:10Chris Ruggaber, Associated Press.
29:13Well, I just wanted to follow up.
29:14Earlier, it sounded like you said it was unclear how the Fed – you know, what kind of interest rate decisions you will make later this year.
29:22So does that – you know, in March, there was guidance that two cuts might happen – you know, two cuts were penciled in for this year.
29:29Is that now – that guidance from the last press conference, has that been overtaken by events at this point?
29:36You know, we don't do a summary of economic projections at every meeting, as you know.
29:41We do it every other meeting, and so this was the meeting when we didn't do it.
29:45And I – you know, we don't also kind of poll people, so I really wouldn't want to try to make a specific projection for where we are relative to that.
29:55We will – in six weeks, we have the June meeting, and you'll have another SEP.
29:59I'm not going to hazard a guess here today as to what it would be.
30:05Again, what I would say is that we think our policy rate is in a good place.
30:10We think it leaves us well-positioned to respond in a timely way to potential developments.
30:15That's where we are.
30:15And that, depending on the way things play out, that could include rate hikes – sorry, rate cuts.
30:22You know, it could include us holding where we are.
30:27We just are going to need to see, you know, how things play out before we make those decisions.
30:34Great.
30:34And just to follow up on that, I mean, when you addressed the issue of how the Fed would handle both rising unemployment and rising inflation,
30:42how are you thinking about the fact that addressing one could exacerbate the other?
30:47So a rate cut to reduce unemployment could worsen inflation and vice versa.
30:51How does that – how do you handle those challenges?
30:54Well, you just captured the – this is the issue with the two goals being in tension.
30:59It's a very challenging question.
31:01Now, there can be a case in which one goal is very far – one variable is very far from its goal, much farther than the other.
31:09And if so, you concentrate on that one.
31:10And, frankly, that was the case – well, it wasn't a case where they were really in tension.
31:16But if you go back to 2022, it was very clear that we needed to focus on inflation.
31:21The labor market was also super tight, so it wasn't – it wasn't really a tradeoff.
31:26You know, if – I think you know what our framework document says.
31:31It says we'll look at how far each goal – each variable is from its goal, and also we'll factor in the time it would take to get there.
31:38So, you know, that's going to be potentially a very difficult judgment.
31:44But the data could break in a way that it's not.
31:47You know, I just don't think we know that.
31:48The data could easily favor one or the other.
31:51And right now, there's no way to – no need to make a choice and no real basis for doing so.
31:58Victoria.
32:03Hi.
32:04Victoria Guido with Politico.
32:05I wanted to ask, Congress is currently debating spending cuts alongside extending the tax cuts.
32:12And I know you've talked many times about how the path of the debt is unsustainable.
32:16But given that we're also talking right now about the economy slowing, potentially even recession,
32:21I was just wondering, is there a danger that spending cuts now could slow growth a lot more?
32:25You know, we don't give Congress fiscal advice.
32:32They're going to – we take what they do as a given, and we put it in our models and in our assessment of the economy.
32:37So I wouldn't want to, you know, speculate on that.
32:41I mean, I think we do know that the debt is on an unsustainable level – on an unsustainable path.
32:46Not at an unsustainable level, but an unsustainable path.
32:48And it's up – it's on Congress to figure out how to – how to get us back on a sustainable path.
32:54And, you know, it's not up to us to give them advice.
32:57Well, do you think that they should take macroeconomic conditions into account as they look at this?
33:02I think they don't need my advice and our advice on how to do fiscal policy any more than we need their advice on monetary policy.
33:12Andrew.
33:13Thanks, Mr. Chairman.
33:17Andrew Ackerman with The Washington Post.
33:19In your Jackson Hole comments last year, you said you would not welcome further cooling in labor market conditions.
33:25The unemployment rate then was 4.2 percent, which is what it is now.
33:29Forecasters – many forecasters now predict a higher – a jobless rate.
33:33How has your tolerance for weakening labor market conditions changed compared to a year ago?
33:38So it was quite a different situation.
33:41What was happening last year is that over the space of six, eight, seven months, the unemployment rate went up by almost a full percentage point.
33:52And it was click, click, click, click, click each month.
33:55And, you know, everywhere people were talking about downside risks to the labor market.
34:00At the same time, payroll job numbers were getting softer and softer.
34:04So there was a really obvious concern about downside risk to the labor market.
34:10And so at Jackson Hole and then in September, you know, we wanted to address that forthrightly.
34:15We wanted to show that we were there for the – I mean, we'd been there for inflation for a couple of years.
34:20And we wanted to show also that we're there for the labor market.
34:23And it was important that we send that signal.
34:25Now, fortunately, since then, the labor market has really – and the unemployment rate have really been moving sideways at a level that is, you know,
34:33well in the range of mainstream estimates of maximum employment.
34:36So that concern has gotten a lot less.
34:41So, you know, you're at 4.2 percent unemployment.
34:44I think we were in a very different situation.
34:46Now we have a situation where, you know, the risks to higher inflation and higher unemployment have both gone up, as we noted in our statement.
34:53And we've got to monitor both of those.
34:55We actually have a potential situation where there may be a tradeoff or a tension between the two.
35:01Potentially.
35:01We don't have it yet.
35:02And we may not have it.
35:03But that's what we have.
35:05And that's why I think it's a very different situation.
35:07I mean, I guess I want to follow up by asking how much of a rise in the jobless rate you could tolerate.
35:12I can't give you a – you know, I'm not going to try to give you a specific number.
35:17I'll just say we have to now be looking at both variables and which of them is, you know, demanding – if one of them is demanding our focus more than the other,
35:27that would tell us what to do with policy.
35:29If they're more or less, you know, equally distant and equally – or not distant, then we don't have to make that assessment.
35:37You know, the assessment is you wait.
35:39So I'm not going to try to be really specific about what we need to see in terms of number.
35:45But, look, if we did see, you know, significant deterioration in the labor market, of course that's one of our two variables,
35:53and we would look to be able to support that.
35:55You'd hope that it wasn't also coming at a time when inflation was getting very bad.
36:00And, again, we're speculating here.
36:02We don't know this.
36:03We don't know any of these things.
36:04It's very hypothetical.
36:07We're just going to have to wait and see how it plays out.
36:10Thanks.
36:11Great.
36:16Claire Jones, Financial Times.
36:18In terms of getting some clarity, we've got some talks at the weekend in Geneva between the U.S. and China.
36:27A lot of economists are attaching an awful lot of importance to what we hear from those talks.
36:33How much importance are you attaching to them in terms of judging what will happen to the U.S. economy going forward?
36:39And just in a similar vein, some economists are saying it's days, not weeks, that we have until we start to put the U.S. economy at risk
36:51of seeing the sort of pandemic-era shortages and higher prices if we don't kind of soothe relations between the U.S. and China.
37:01So it would be good to have your view on that, too.
37:03So, you know, these are not talks that we're in any way involved in, so I really can't comment directly on them.
37:09But what I will say is this.
37:10You know, we had, coming out of the March meeting, the public generally had an assessment of where tariffs were going.
37:18And then April 2 happened, and it was really substantially larger than anticipated in the forecasts that I had seen and in our forecasts.
37:26So, and now we have a different – we're in a new phase where it seems to be we're entering a new phase
37:32where the administration is entering into beginning talks with a number of our important trading partners,
37:38and that has the potential to change the picture materially or not.
37:43And so I think it's going to be very important how that shakes out, but, you know, we simply have to wait and see how it works out.
37:51It certainly could change the picture, and we're mindful of not trying to make conclusive judgments about what will happen
37:58at a time when the, you know, when the facts are changing.
38:03And just on the falling shipping volumes from China over these tensions, I mean,
38:09do you share that concern that we could start seeing good shortages and higher prices in the coming weeks if this isn't resolved very quickly?
38:18You know, I don't want to get my – we're not – we shouldn't be involved even verbally in the questions about the timing of these things.
38:24Yes, we're – of course, we follow all that data.
38:27We see the shipping data.
38:28We see all that.
38:29But ultimately, this is for the administration to do.
38:32This is, you know, this is their mandate, not ours.
38:37And I know they're – as you can see, they're, again, having – beginning to have talks with many nations.
38:43And that has the potential to change the picture materially.
38:48So we'll just have to wait and see.
38:49The volume of imported goods increased significantly in the first quarter.
39:06Do you think that this situation could cause a delay in the impact of tariff on inflation?
39:12And does this mean that it will take longer time to reduce uncertainty?
39:18The decision we made today?
39:21Which decision?
39:23So the future decision.
39:26So the volume of the imports – imported goods increased significantly.
39:33So the impact of the imported inflation may delay.
39:40So what is the impact to your future decision?
39:46Okay, so, I mean, I think we – I think we think that the – you know, there was a big spike in imports, right, very big, historically large, really, and to beat tariffs.
39:59And now that should actually reverse so that it's – you know, it's the difference between – it's exports minus imports.
40:06So – and imports were huge, and so that it conveyed a very negative contribution to U.S. GDP, annualized GDP in the first quarter, as we all know.
40:17So that could, in the second quarter, be reversed so that we have, you know, an unusually large contribution to – unusually positive.
40:26That's very likely as imports drop sharply.
40:30You could also have, you know, very likely you'll have restatements of the – of the first quarter.
40:37It'll turn out that consumer spending was higher.
40:40It'll turn out that inventories were higher.
40:42And so you'll see – you'll see those data revised up.
40:45It may actually go into the third quarter, too.
40:47And so I think it's going – this whole process is going to, a little bit, make it harder to make a clean assessment of U.S. demand.
40:56I mentioned private domestic final purchases, which doesn't have inventories government or – inventories government.
41:06Anyway, it's a cleaner read on private demand.
41:12But that, too, probably was flattered a little bit by, you know, by strong demand for imports to beat tariffs.
41:20So that might overstate.
41:22It's a really good reading, 3 percent PDFP in the first quarter.
41:25That might actually overstate.
41:26So it's not really going to – I don't think it's going to affect our decisions.
41:29I will just say, though, that it's a little confusing, and it's probably less confusing to us than it would be to the general public as we try to explain this.
41:38You know, it's complicated, and, you know, GDP is sending a signal, PDFP is sending a signal.
41:44It's a little bit confusing.
41:46But I think we understand what's going on.
41:47It's not really going to change things for us.
41:50Courtney.
41:54Courtney Brown from Axios.
41:56I guess, you know, we talked about some of the indications of potential layoffs, price hikes, an economic slowdown, all being evident in the soft data.
42:06I'm curious why the Fed needs to wait for that to translate into hard data to, you know, make any type of monetary policy decision,
42:17especially if the hard data is not as timely or might be warped by tariff-related effects.
42:25Are you worried that the soft data might be some sort of false warning?
42:30No.
42:31I mean, look at the state of the economy.
42:34The labor market is solid.
42:36Inflation is low.
42:37We can afford to be patient as things unfold.
42:39There's no real cost to our waiting at this point.
42:43Also, the sense of it is we're not sure what the right thing will be.
42:47You know, there should be some increase in inflation.
42:50There should be some increase in unemployment.
42:52Those call for different responses.
42:54And so until we know, potentially call for different responses.
42:57And so, you know, until we know more, we have the ability to wait and see.
43:04And it seems to be a pretty clear decision.
43:06Everyone on the committee supported waiting.
43:09And so that's why we're waiting.
43:12Just a very quick follow-up.
43:15There was this sort of vibe session, if you will, where the sentiments expressed in soft data did not translate into the hard economic data.
43:25Are you, how are you thinking about that when interpreting some of the signs in the softer survey data?
43:31You know, I think going back a number of years, the link between sentiment data and consumer spending has been weak.
43:41It's not been a strong link at all.
43:44On the other hand, we haven't had a move of this, you know, speed and size.
43:49So it wouldn't be the case that we're looking at this and just completely dismissing it.
43:55But it's another reason to wait and see.
43:57You're right, though, we had a couple of years during the pandemic where people were saying just very downbeat surveys and going out and spending money.
44:08So that can happen.
44:10And that may happen to some degree here.
44:11We just don't know.
44:12This is an outsized change in sentiment, though.
44:16And so none of us is looking at this and saying that we're sure one way or the other.
44:21We're not.
44:23Matt.
44:24Thanks, Chair Powell.
44:27Matt Egan with CNN.
44:29So you mentioned earlier that you're monitoring the shipping data.
44:33And we have seen in the shipping data that imports from China into the port of Los Angeles have plunged.
44:39And that has raised concerns about potential shortages.
44:42What tools, if any, does the Fed have to ensure that prices and inflation expectations don't get out of hand if tariffs do cause significant supply chain disruptions?
44:55I mean, we don't have, you know, the kind of tools that are good at dealing with supply chain problems.
45:03We don't have that at all.
45:04That's a job for the administration and for the private sector more than anything.
45:08You know, what we can do with our interest rate tool is we can support, be more or less supportive of demand.
45:15And that's that'd be a very inefficient way to try to fix supply chain problems.
45:19But, you know, we don't see that.
45:22We don't see the inflation yet.
45:23We're, of course, reading the same stories and watching the same data as everybody else.
45:27And, you know, right now we see inflation, you know, kind of moving sideways at a fairly low level.
45:35If I could follow up on that, President Trump has indicated that he will likely name a replacement for you when your term as chair expires next year.
45:43But your position on the board runs through January 2028, I believe.
45:48Would you consider remaining on the Fed board even if you're no longer chair?
45:53So I don't have anything for you on that.
45:55My whole focus is on and my colleagues' focus is all on, you know, trying to navigate this tricky passage we're in right now, trying to make the right decisions.
46:06You know, we want to make the best decisions for the people that we serve.
46:10That's what we think about day and night.
46:12And this is a challenging situation, and that's 100 percent of our focus right now.
46:17Let's go to Jennifer for the last question.
46:20Thank you so much, Chair Powell.
46:21Jennifer Schoenberger with Yahoo Finance.
46:23Public records of your schedule so far this year show no meetings with President Trump.
46:29Past Presidents Obama, Bush, and Clinton have all met with Fed chairs, and you met with Trump during his first term.
46:36Why haven't you asked for a meeting yet with the President?
46:39I've never asked for a meeting with any President, and I never will.
46:43It's not – I wouldn't do that.
46:44There's never a reason for me to ask for a meeting.
46:46It's always been the other way.
46:48So would you want to meet with him if given the opportunity to get more information?
46:51I never – it's never an initiative that I take.
46:54It's always an initiative.
46:56You know, I don't think it's up to a Fed chair to seek a meeting with the President, although maybe some have done so.
47:01I've never done so, and I can't imagine myself doing that.
47:04I think it's always – it comes the other way.
47:07A President wants to meet with you, but that hasn't happened.
47:10And if I could just ask one question on monetary policy, when it is time to cut rates,
47:14how will you determine how far down rates will have to come to try to keep a balance on the inflation mandate as employment weakens?
47:22You know, I think once you have a direction, a clear direction, you can make a judgment about how fast to move and that kind of thing.
47:30So it's really – the harder question is the timing, I think, and when will that become clear.
47:37And fortunately, as I mentioned, we have our policy in a good place, the economy is in a good place,
47:42and it's really appropriate, we think, for us to be patient and wait for things to unfold as we get more clarity about what we should do.
47:52Thanks very much.