Economy has made considerable progress Toward our dual mandate Objectives inflation has eased Substantially over the past year while The labor market has remained strong and That's very good news but inflation is Still too high further progress in Bringing it down is not assured and the Path forward is Uncertain we are fully committed to Returning inflation to our 2% goal Restoring price stability is essential To achieve a sustainably strong labor Market that benefits All today the fomc decided to leave our Policy interest rate unchanged and to Continue to reduce our Securities Holdings though at a slower Pace our restrictive stance of monetary Policy has been putting downward Pressure on economic activity and Inflation and the risks to achieving our Employment and inflation goals have Moved toward better balance over the Past Year however in recent months inflation Has shown a lack of further progress Toward our 2% objective and we remain Highly attentive to inflation Risks I'll have more to say about Monetary policy after briefly reviewing Economic Developments recent indicators suggest That economic activity has continued to
Expand at a solid Pace although GDP Growth moderated from 3.4% in the fourth Quarter of last year to 1.6% in the First quarter private domestic final Purchases which excludes inventory Investment government spending and net Exports and usually sends a clearer Signal on underlying demand was 3.1% in The first quarter as strong as the Second half of 2023 consumer spending has been robust Over the past several quarters even as High interest rates have weighed on Housing and Equipment Investment improving Supply conditions Have supported resilient demand and the Strong performance of the U Eon US Economy over the past year The labor market remains relatively Tight but supply and demand conditions Have come into better Balance payroll job gains averaged 276,000 jobs per month in the first Quarter while the unemployment rate Remains low at 3.8% strong job creation over the past Year has been accompanied by an increase In the supply of workers reflecting Increases in participation among Individuals aged 25 to 54 years and a Continued strong pace of Immigration nominal wage growth has Eased over the past year and the jobs to Workers Gap has narrowed but labor
Demand still exceeds the supply of Available Workers inflation has eased notably over The past year but remains above our Longer run goal of 2% total pce Prices rose 2.7% over the 12 months ending in March excluding the Volatile food and energy categories core Pce Prices rose 2. 8% the inflation data received so far This year have been higher than expected Although some measures of short-term Inflation expectations have increased in Recent months longer term inflation Expectations appear to remain well Anchored as reflected in a broad range Of surveys of households businesses and Forecasters as well as measures from Financial Markets the fed's monetary policy Actions are Guided by our mandate to Promote maximum employment and stable Prices for for the American people my Colleagues and I are acutely aware that High inflation imposes significant Hardship as it erods purchasing power Especially for those least able to meet The higher costs of Essentials like food Housing and Transportation we are strongly committed To returning inflation to our 2% Objective the committee decided at Today's meeting to maintain the target Range for the federal funds rate at 5
And a quar to 5 and a half% and to Continue the process of significantly Reducing our Securities Holdings though At a slower Pace over the past year as labor market Tightness has eased and inflation has Declined the risks to achieving our Employment and inflation goals have Moved toward better Balance the economic Outlook is Uncertain however and we remain highly Attentive to inflation Risks we've stated that we do not expect That it will be appropriate to reduce The target range for the federal funds Rate and until we have gained greater Confidence that inflation is moving Sustainably toward 2% so far this year the data have not Given us that greater confidence in Particular and as I noted earlier Readings on inflation have come in above Expectations it is likely that gaining Such greater confidence will take longer Than previously Expected we are prepared to maintain the Current target range for the federal Funds rate for as long as Appropriate we're also prepared to Respond to an unexpected weakening in The labor Market we know that reducing policy Restraint too soon or too much could Result in a reversal of the progress
We've seen on Inflation at the same time reducing Policy restraint too late or too little Could unduly weaken economic activity And Employment in considering any Adjustments to the target range for the Federal funds rate the committee will Carefully assess incoming data the Evolving Outlook and the balance of Risks policy is well positioned to deal With the risks and uncertainties that we Face in pursuing both sides of our dual Mandate we will continue to make Decisions meeting by Meeting turning to our balance sheet the Committee decided at today's meeting to Slow the pace of decline in our Securities Holdings consistent with the Plans we released Previously specifically the cap on Treasury redemptions will be lowered From the current 60 billion per month to 25 billion per month as of June 1 Consistent with the committee's Intention to hold primarily treasury Securities in the longer run we're Leaving the cap on agency Securities Unchanged per month and we will re Reinvest any proceeds in excess of this Cap in treasury Securities with principal payments on Agency Securities currently running at About $15 billion per month total
Portfolio runoff will amount to roughly $40 billion per Month the decision to slow the pace of Runoff does not mean that our balance Sheet will ultimately shrink by less Than it would otherwise but rather Allows us to approach its ultimate level More Gradually in particular slowing the pace Of runoff will help ensure a smooth Transition reducing the possibility that Money markets experience stress and Thereby facilitating the ongoing decline In our Securities Holdings consist that Are consistent with reaching the Appropriate level of ample Reserves we remain committed to Bringing Inflation back down to our 2% goal and To keeping longer term inflation Expectations well anchored restoring Price stability is essential to set the Stage for achieving maximum employment And stable prices over the longer run to Conclude we understand that our actions Affect communities families and Businesses across the Country everything we do is in service To our public Mission we at the FED will Do everything we can to achieve our Maximum employment and price stability Goals thank you I look forward to your Questions Thank you Howard schneid with Reuters um A question to follow if I could uh do
You consider the current policy rate uh Still uh you confident that it's Sufficiently restrictive to get Inflation back to 2% so I I do I do Think the evidence shows you know pretty Clearly that policy is restrictive and Is Weighing on demand and um there are a Few places I would point to for that you Can start with the labor market um so Demand is still strong the demand of the Labor market in particular but it's Cooled from its extremely high level of A couple years ago and you see that in In job openings you saw it more evidence Of that today in the joltz report as You'll know uh it's still higher than Pre- pandemic but it has been coming Down both in the indeed report and in The joltz report that's that's demand Cooling uh the same is true of quits and Hiring rates which have essentially Normalized um I also look at the we look At surveys of workers and pardon me Surveys of workers and businesses and Ask workers are jobs plentiful and ask Businesses are workers plentiful is it Easy to find workers and you've seen That the answers to those have come back Down to pre pre pandemic levels you also See in in intensitive spending like Housing and investment you also see that Higher interest rates are weighing on Those activities so I do think it's Clear that um that policy is restrictive
Sufficiently restrictive I guess so I I Would say that we We Believe believe it Is restrictive and we believe over time It will be sufficiently restrictive that Will be a question that that the data Will have to answer so as a followup if Inflation continues running roughly Sideways as it has been uh the job Market stays reasonably strong Unemployment low and expectations are Anchored and maintained would you Disrupt that for expectations are not Anchored or anchored or anchored stable Roughly would you disrupt that for the Last half point on pce you know I don't Want to get into complicated Hypotheticals but I would say that you Know we're committed to retain retaining Our current uh restrictive stance of Policy for as long as it's appropriate And we'll do That thanks for taking our questions Chair pal um I wonder you know obviously Michelle Bowman has been saying that There is a risk that rates may need to Increase further although it's not her Baseline Outlook I wonder if you see That as a risk as well and if so what Change in conditions would Merit Considering raising rates at this point So I think it's unlikely uh that the Next policy rate move will be a hike I'd Say it's unlikely um you know our policy Focus is really what I just mentioned
Which is which is how long to keep Policy restrictive you asked what would It take you know I think we'd need to See persuasive evidence that our policy Stance is not sufficiently restrictive To bring inflation sustainably down to 2% over time that's not that's not what We think we're seeing as I as I Mentioned but that that's something like That is what it would take we look at The totality of the data answer to that Question that would include inflation Inflation expectations and all the other Data Tooer well I think again the the test What I'm saying is if we were to come to That conclusion that policy weren't Tight enough to achieve that so it would Be the totality of of all the things We're be looking at it it could be Expectations it could be a combination Of things but if we if we reach that Conclusion and we we don't see evidence Supporting that conclusion that's what It would take I think for us to to take That step Chris uh thank you Chris rugaber at Associated Press uh you didn't mention The idea that rates are at a peak uh for The cycle and didn't mention the idea That it might be appropriate to cut Rates later this year uh as you have at Previous press conferences so has the FED sort of dropped its easing bias
Where are you standing on that so on Um uh let let me address uh Cuts so Obviously our decisions that we make on Our policy rate are going to depend on The incoming data how the Outlook is Evolving and the balance of risks as Always and we'll look at the totality of The data so I think and we think that Policy is well positioned to add address Different paths that the economy might Take um and we've said that we don't Think it would be appropriate to dial Back our restrictive policy stance until We've gained greater confidence that Inflation is moving down sustainably Toward 2% so for example let me take a Path uh if we did have a path where Inflation proves more persistent than Expected and where the labor market Remains strong strong but inflation is Moving sideways and we're not gaining Greater confidence well that would be a Case in which it could be appropriate to Hold off on R Cuts I think there's also Other paths that the economy could take Which which would cause us to want to Consider rate cuts and those would be Two two of those paths would be that we Do gain greater confidence as we've said That inflation is moving sustainably Down to 2% and another path could be you Know an unexpected weakening in the Labor market for example so those are Paths in which in which you could see us
Uh uh cutting rate so I think there it Really will depend on the data in terms Of in terms of peak rate you know I I Think um really the same question I I uh I I think the data will will have to Answer that question for us what and Could you just follow uh on the path Where you might not cut is that you Mentioned that would be inflation Persistent uh I mean is inflation would That be the key data in making that Decision or could you expand a bit more On that thank you again it's it's um We've set ourselves a test that we for Us to begin to reduce policy restriction We'd want to be confident that inflation Is moving you know moving sustainably Down to 2% and for sure one of the Things we'd be looking at is the Performance of inflation we also be Looking at inflation expectations be Looking at the whole story but clearly Incoming uh incoming inflation data Would be at the very heart of that that Decision Nick ose of the Wall Street Journal uh chair Powell to what extent Has the easing in Financial conditions Since November contributed to the re Acceleration in growth and do you now Expect a period of sustained tighter Financial conditions will be needed to Resume the sort of disinflation the Economy saw last year so I I think it's Hard to know that I think we'll we'll be
Able to look back you know from down the Road and look back and and understand it Better you know if you if you look at um Let's look at growth really uh what We've seen so far this year in the first Quarter is growth coming in about Consistent with where it was last year I Know GDP came in lower but you don't see An acceleration in growth I mean the Thought would be that Financial Conditions loosened in in in December And that caused an uptick in activity And that caused inflation presumably That's what or tightening in the labor Market you don't really see that Happening what you see is economic Activity at a level that's roughly the Same as as last year so you know what What's causing this inflation you know We'll we'll have a better sense of that Over time I don't know that there's an Obvious connection there though with the Easing of financial conditions in terms Of tightening you're you're right I mean Rates are certainly higher now and have Been for some time than they were before The December meeting and and uh they're Higher and that's tighter Financial Conditions and you know that's Appropriate given uh given what Inflation has done in the first quarter You you've said in the past that Stronger growth would necessarily Preclude rate Cuts I wonder would
Continued strength in the labor market Change your about the appropriate stance Of policy if it was accompanied by signs That wage growth was reaccelerating so I Just want to be careful that we don't Target wage growth or the labor market And remember what we saw last year very Strong growth a really tight labor Market and historically fast decline in Inflation so we and and that's because We know there are there are two forces That work here there's the unwinding of The pandemic related supply side Distortions and and and demand side Distortions and there's also monetary Policy you know uh restrictive monetary Policy so I I wouldn't rule out that Something like that can can't continue You know I wouldn't give up at this Point on further things happening on the Supply side either because you know we Do see that uh that companies still Report that that that there are supply Side issues that they're facing and also Even when the supply side is issues are Solved it should take some time for that To affect economic activity and Ultimately inflation so there are still Those things so I I I don't like to say That either strong either growth or or a Strong labor market in and of itself Would automatically uh create problems On inflation because of course it didn't Do that last year you ask about wages we
We we we also don't we don't Target Wages we we T Target price inflation it Is one of the inputs the point with Wages is of course we we like everyone Else like to see high wages but we we Also want to see them not eaten up by uh By high inflation and that's really what We're what we're trying to do is to is To cool the economy and and work with What's happening on the supply side to Bring uh to bring the economy back to 2% Inflation and part of that will probably Be uh having wage increases move down Incrementally toward levels that are More Sustainable Rachel hi chair pal Rachel seagull from The Washington Post thanks for taking Our questions you talked about needing Time to gain more confidence that Inflation is sustainably moving back Down to 2% it's may now do you have time This year to cut three times just given The calendar yeah I'm not really Thinking of it that way um you know the What I what we said is that we we need To be more confident and we've said my Colleagues and I today said that uh U we Didn't see progress in the first uh uh In the first quarter and I've said that It it it appears then that uh it's going To take longer for us to to reach that Point of conference so I don't know how Long it'll take I I you know I can just
Say uh that when we get that confidence Then then rate Cuts will be will be in Scope and I don't know exactly when that Will be and with hindsite are there any Signs that you can look back on now Looking at the reports from January or February or March that suggested Something more worrying than just Expected bumpiness I you know not really you know what what Um so I I thought it was appropriate to Reserve judgment until until we had the Full quarters data until we saw the March data and so take a step back what Do we now see in the first quarter we See strong uh economic activity we see a Strong labor market and we see inflation We see three inflation Readings and and you so I think you're At a point there where you where you Should take some signal I I we don't Like to react to one or two months data But this is a full quarter and I think It's appropriate to take signal now and We are taking signal and the signal that We're taking is that it's likely to take Longer for us to gain confidence that we Are on a sustainable path down a 2% Inflation that's the signal that we're Taking you Know and Mr CH if I could Steve at lean CNBC if I could follow up on that um What particular areas were sort of Temporary or blips in the inflation date
In the first quarter and what's the Dynamic by which you expect them to work Work out in the coming uh months and Quarters yeah so we we will um you know We will put the thing we have put the Thing under a microscope I will say Nothing is going to come out of that That's going to change the view I think That in fact uh we didn't gain Confidence and that it's going to take Longer to get that conference but Confidence I I just think you I mean you Know the story what what um what's Happened since December is you've seen Uh higher Goods inflation than expected And you've seen higher uh n Housing Services inflation that expected and Those two are working together to to Sort of be higher than than we had Thought and there are stories behind how That happened uh and you know we I think I think my expectation is that we will Over the course of this year see Inflation move back down that that's my My forecast I I think my confidence in That is lower than it was uh because of The data that we've seen so you know We're looking at those things we also Continue to expect and I can continue to Expect that Housing Services inflation Given where Market rents are those will Show up in in uh in measured Housing Services inflation over time uh we Believe that it will it just it looks
Like the L that there are substantial Lags between when uh you know lower Market rates turned up and and for new Tenants and and when it shows up for Existing tenants or or for in Housing Services so if I could just follow up is There a bit of a contradiction in the Idea that you are reducing quantitative Tightening which is sort of an easing While you're holding rates steady at a Restrictive rate to try to slow and cool The economy and inflation thank you I I Wouldn't say that no I mean the active Tool of monetary policy is of course Interest rates and uh this is this is a A long a plan we've long had in place to To slow really not not in order to um uh You know To provide accommodation to the economy But to or to to be less restrictive to The economy it really is to ensure that The process of shrinking the balance Sheet down to where we want to get it is A smooth one it doesn't wind up uh in um With with financial Market turmoil the Way it did the last the last time we did This and the only other time we've ever Done This from Bloomberg uh two questions first simple One um given the Run of data since March has the probability in your mind Of no Cuts this year increased or stayed The same that's first question second
Question chair pal you joined the board In 2012 and I'm sure you remember as I Do what the jobless recovery was like um Lawyers accountants all kinds of Highly Qualified people who couldn't get jobs And given your history there I wonder if There's an argument for being more Patient With inflation here um we have strong Productivity growth that's helping wages Grow up go up we have good employment And so it seems to me there's a lot of Hysteria about inflation I I agree it's You know nobody likes it but but is There an argument for being patient and Working with the economic cycle to get It down over time thank you so on your First question I don't have a Probability estimate for you but all I Can say is That uh you know we've said we that we Didn't think it'd be appropriate to cut Until we were more confident uh that Inflation was moving sustainably at at 2% we didn't get our confidence in that Didn't increase in the first quarter and In fact what really happened was uh uh We came to the view that it will take Longer to get that confidence and I Think there are it you know I think it's U the economy has been very hard for Forecasters broadly to predict to Predict its path but there are paths to To not cutting and there are paths to
Cutting it's really going to depend on The data in terms of the the um Employment mandate to your point um if You go back a couple of years U our our Our sort of framework document says that When uh you look at the two mandate Goals and if one of them is further away From from goal than the other then you Focus on that one it actually it's it's The time to get back there times the uh You know times how far it is from the Goal and that was clearly inflation so Our Focus was very much on inflation as As and this is what we referred to in The in the statement as um we as Inflation has come down now to below 3% On a on a on a 12- month basis um it's Become we be we're now focusing the the Other goal that the employment goal now Comes back in for to focus and so we are Focusing on it um and and that's that's How we think about That CLA Jones F Financial Times thanks A lot for the opportunity to ask the Questions just to go back to the answer Before um the previous one um it seem to Suggest that you think the likeliest Path of inflation is one that's going to Allow you to have a situation where Rates are lower at the end of the year Than they are right now it' be good if You could just confirm whether or not That's a correct reading um and the key1 GDP R print has um led to some some to
Start mentioning the term stagflation With respect to the US economy do you or Anyone else on the fomc think this is Now a risk thank you yeah I I'm I'm not Um dealing really in likelihoods I think There are there are paths that the Economy can take that would that would Involve Cuts in their paths that Wouldn't and I I don't have great Confidence in which of those paths I Think my I would say my personal Forecast is that we will begin to see Further progress on inflation this year I don't know that it will be enough Sufficient I don't know that it won't I Think we're we're going to have to let The data uh lead us on that in terms of Your question your second question was Stagflation I um I guess I would say I I Was around for stagflation and it was um You know 10% uh 10% unemployment it was High single digits infl Right now we have and and and and very Slow growth so um right now we have 3% Growth which is you know pretty solid Growth I would say by any measure and we Have inflation running under 3% so uh I Don't I don't really understand where That's coming from and and uh uh in Addition I would say you know most Forecasters including our our Forecasting was that uh that last year's Level of growth was very high 3.4% in I Guess the fourth quarter you know and
Probably not going to be sustained and Would come down but that would be that Would be our forecast that wouldn't be Stagflation that would still be to a Very healthy level of growth and of Course with inflation you know our we Will return inflation to 2% and that won't be so I don't see the Stag or the inflation Actually Michael mck from Bloomberg Radio and television the vice chair of The fomc said recently that he's willing To consider the idea that potential Growth has moved up and of course he's Mr potential growth our star do you Share that view and would that imply That maybe policy isn't tight Enough i s so I think I would take that Question this way um we saw a year of Very high productivity growth in 2023 and we saw a year of I think Negative productivity activity growth in 2022 so I think it's hard to draw from The data uh I mean the question is will Productivity run there are two questions One is Will productivity run you know Persistently above its longer run Trend I don't think we know that in terms of Potential output though if that's a Separate question we we've had a what Amounts to a uh uh a significant Increase in the potential output of the Economy that's not about productivity Was about having more labor frankly both
Through in in 2023 both through Participation Al also through Immigration so we're very much like Other forecasters and economists getting Our arms around what that means for Potential output this year and next year And and last year for that matter too so I think in that case I think you really Do have a significant increase in Potential output but you've also got you So you got more Supply but those people Also come in they are they work they Have jobs they spend so you've also got Demand so it it may there may be it may Be that you get more Supply than you get Demand at the beginning but ultimately It should be neither inflationary nor Disinflationary over over a longer Period Well you uh said earlier that um At this point you're not really Considering rate increases if uh growth Is higher but you're not considering Rate increases does that imply that You're more worried about causing the Economy to slow too much than you are About inflation taking off again no I I Think we we we believe our our policy Stance is in a good place and and is Appropriate to the current situation um We believe it's restrictive and you know We our evidence for that I went over Earlier you you see in the labor market You see an inflation sensitive spending Where demand has clearly come down a lot
Over the past few years and that's That's more from monetary policy whereas The supply side things that are Happening are more on the supply side so Um that that's how I would think about It Ed thank you Mr chairman Edward Lawrence Uh from Fox Business so GDP growth is About 2% inflation employment is about 4% it feels a lot like a steady state And we have 3% inflation so if the data Remains the Same that you're seeing um And I know you said you don't see a rate Hike but it stands to reason that you Would need a rate hike to get from three To 2% inflation so was there any Discussion about a rate hike in today's Meeting uh and you know are you Satisfied with 3% inflation for the rest Of the Year Well I of course we're not Satisfied with 3% inflation um 3% can't Be in a sentence with Satisfied um so we will return inflation To 2% over time but over time and we Think our policy stance is is Appropriate to do that so if we were to Conclude that policy is not sufficiently Restrictive to bring uh inflation Sustainably on 2% then that's that would Be what it would take for us to want to Increase rates we don't see that we Don't see evidence for that uh so that's Where we are the discussion was there a
Discussion about a rate heke at all so The the policy Focus has been on has Really been on what to do about about um Uh holding the current uh the current Level of restriction that that's really That's part of the policy that's where The policy discussion was in the meeting I wanted to follow on the three % is There a time frame of persistent Inflation that would trigger a rate hike There there isn't any rule you can't Look to a rule you know these are these Are going to be judgment calls uh I you Know clearly restrictive monetary policy Needs more time to do its job that that That is pretty clear based on what what We're seeing how long that will take and How patient we should be it's going to Depend on the totality of the data how The Outlook Evolves Victoria hi Victoria we with Politico um You've talked about your commitment to Being a political and nonpartisan and I Was just wondering given that it's an Election year is the bar for rate Changes higher uh close to an election And uh similarly is there a significant Economic difference between you know Starting to cut in SE say September Versus December so we're we're always going to Do what we think the right thing for the Economy is when we come to that
Consensus view that it's the right thing To do for the economy that's our record That's what we do we're not looking at Anything else you know it's it's hard Enough to get the economics right here These are difficult things and if we're If if we were to take on a whole another Set of factors and and use that as a new Filter it would reduce the likelihood We'd actually get the economics right so That's how we think about it around here And you know we're at peace over it we We know that we'll do what we think is The right thing when we think it's the Right thing and we'll all do that and That that's that's how everybody around Here thinks so I I I can't say it enough That we just don't we just don't go down That road if you go down that road where Do you stop and and we're so we're not On that road we're on the road where We're serving all the American people And making our decisions based on the Data and how those data affect the Outlook and the balance of Risks and then is there a significant Difference between uh you know whether You start in say September versus December there there's a significant Difference between an institution that Takes into account count all sorts of Political events and one that doesn't That's where the significant difference Is and and you know we're we just don't
Do that I mean you can you can go back And read the transcripts for every this Is My fourth election fourth presidential Election here read all the transcripts And see if anybody mentions in any way The pending election it just isn't part Of our thinking it's not what we're Hired to do if we start down that road I Again I don't know I don't know how you Stop so Uh thank you chair Powell question about The labor market you've mentioned a few Times that the labor market is Normalizing certainly today's jolts data Suggested that things are kind of Getting back to pre-pandemic levels one Thing that hasn't normalized is wage Growth which is still quite a bit Stronger than before the pandemic I Wonder if you can share your analysis of Of why that's happening is it a lagging Indicator or something else going on so I think if you if you go back to where Wage is peaked wage increases peaked a Couple three years ago essentially all Wage measures have come down Substantially to that but they are not Not down to where they were before the Pandemic they're still roughly a Percentage Point higher and we've seen Pretty consistent progress but not Uniformly and you'll note the the ECI Reading from Tuesday was it was expected
To be to have come down and essentially It was flat year-over-year uh you know I Think roughly so yeah I mean it's that Part of it is Bumpy and uh again we Don't Target wage increases but but it You know in in the longer run if you Have in if you have um wage increases Running higher than productivity would Warrant and uh then you know there it There will be inflationary pressures uh Employers will raise prices over time if That's the case so we've seen progress It has been in you know inconsistent but We have seen a substantial decline Overall but we have ways to go on That Sction consumers and consumers are Feeling the weight of interest rates Right now mortgage rates are up as our Rates for car loans credit cards people Look looking to borrow are very Discouraged that's reflected in their Views on the economy what would you say To Them well um the thing that hurts Everybody and particularly um people in The lower income brackets is inflation If you're a person who's living paycheck To paycheck and suddenly all the things You buy the the fundamentals of Life go Up in price you you are in trouble right Away and so with those people in mind in Particular what we're doing is we're Using using our tools to bring down
Inflation it will take some time but we Will succeed and we will bring inflation Back down to 2% and then people won't Have to worry about it again that's what We're doing and we know that it's Painful and inconvenient but the Dividends will be paid in the in the Will be very large and and everyone will Share in those dividends and we've made Quite a lot of progress if you if you Can think about it I think core I think Uh headline core PC peaked At at 5.8 now it's at anyway headline Peaked at 7.1 now it's at 2.7 don't want To get that wrong well you don't uh Quick followup are current interest Rates really doing that much though to Fight inflation right now for those Consumers yes I mean I I think I think That restrictive monetary policy is Doing what it's supposed to do and it's But it's also in this case unusually Working alongside and with the healing Of the supply side this this that was Different this time was that a big part Of the of the source of the inflation And the reason why we're having this Conversation is that we had this supply Side kind of collapse with with Shortages and and bottlenecks and all That kind of thing and and so and this Was to do with the shutting down and Reopening of the economy and other Things that that um that really raised
Demand So Many Factors did that so I Think now you see those two things Working together the reversal of those Supply and demand distortions from from The pandemic and the response to it Along with with uh restrictive monetary Policy those two things are working to Bring down inflation and we've made a Lot of progress let's remember how far We've come we and we have a ways to go We've got work left to do but we're not Looking at the very high inflation rates That we were seeing two years Ago Courtney uh Courtney Brown from maxios Uh thanks for taking our questions chair Powell um I wanted to follow up on Something you mentioned earlier on um Housing inflation there's kind of been This long awaited disinflation and Shelter that still hasn't arrived so I Guess two questions how do you explain The substantial lags between some of the Private sector data we're seeing and um The government data and how confident Are you that rents will be helpful on The inflation front in the coming Months so essentially that there Are there are a number of places in the Economy where there's a where there just Lag structures built into the inflation Process and housing is one of them so When you have um when you when when Someone um goes to a new person goes to
Rent an apartment that's called Market Rent and you can see Market rents are Barely going up at all they the Inflation in those has been very low um But it takes before that they were Incredibly high they sort of led the the The high part so what happens is those Market rents Take Years actually to get All the way into Um rents for uh turn tenants who are Rolling over their leases landlords Don't tend to charge as much of an Increase to a rollover tenant for Whatever reason and what that does is it Builds up a sort of an unrealized Portion of increases when there have Been big increases and what happens is You know it's it's complicated but the Story is it just takes some time for That to get in now I'm I am confident That as long as Market rents remain low This is going to show up in measured Inflation Assuming that that market rents do Remain low how what will be the exact Timing of it I think I think we've Learned that the lags are longer we now Think significantly longer than we Thought at the beginning um and so Confident that it will come but not so Confident in the timing of it but yes I Expected that that this will happen Thanks thank you chair pal for taking The questions this is Nicholas jinsky
From Baron's magazine um it seems that Over the past three or four years Economies and central banks in developed Markets at lease have been on more or Less the same trajectory easing during The pandemic fighting inflation with Restrictive policy on the way out um Feels like that may be ending in 2024 Based on some of the economic data from Europe and the US and Japan and Statements from those central banks as Well so my question is what what Considerations or risks does a period of More Divergent global economic Trajectories and Central Bank policies Present for the Fomc so um that you're right I think That that may happen and I you know you Know that we all serve domestic mandates Right so I think the difference between The United States and and other Countries that are now considering uh Rate Cuts is that they're just not Having the kind of growth we're having Uh they they have their inflation is Performing about like ours or maybe a Little better but they're not Experiencing the kind of growth we're Experiencing so we actually have the Luxury of having strong growth in a Strong labor market very low Unemployment High job creation and all Of that and we can be patient and we and We will will be careful and cautious as
We approach the decision to cut rates Whereas I think other other Jurisdictions may go before that in Terms of the implications I you know I Think Um obviously markets see it coming it's Priced in now and so I I think the Econom markets and economies can adapt To it uh and I think you know we haven't Seen in addition for the emerging market Economies we haven't seen the kind of Turmoil that was more frequent 20 years Ago 30 years ago and that's I think Partly because Emerging Market countries Many of them have much better monetary Policy Frameworks much more credibility On inflation and so they're navigating This pretty well this Time Jennifer thank you chair pal Jennifer Sha Berger with Yahoo finance you sort Of backed away from the notion that the Economy would need to encounter pain for Inflation to to come back down but given Sticky inflation data in the first Quarter can disinflation still happen Along relatively painless path for the Economy or is some softening in the Labor market and the economy likely Needed to bring inflation back down so You're right we I think we thought and And U most people thought there would Have to be uh probably significant um Dislocations somewhere in the economy
Perhaps the labor market to get Inflation all the way down from the very High levels it was at at the beginning Of this episode that didn't happen That's a tremendous result we're very of Course gratified and pleased that hasn't Happened and if you look at the Dynamics That enabled that it really was this and The that that so much of the gain was From the unwinding of of things that Weren't to do with monetary policy but The unwinding of the distortions to the Economy you know Supply problems supply Side problems and also some some demand Issues as well the unwinding of those Really help inflation come down now as I've said I I'm not giving up on that so I think I think it is possible that that That those forces will still work to Help us bring inflation down we can't we Can't be guaranteed that that's true Though and so you know we're we're we're Trying to use our Tools in a way that Keeps the the labor market strong and And the economy strong but also helps Bring inflation back down to 2% Sustainably we will bring inflation down To 2% sustainably we hope we can do it Without um you know without uh Uh significant dislocations in the labor Market or elsewhere and speaking of Dislocations in the labor market um in Terms of cutting you said if there were Weakness in the job market that could be
A reason to cut rates so if the Unemployment rate were to tick above 4% But inflation not back down to your 2% Target how would you look at that would The unemployment rate popping back above 4% catch your attention you know I I Said an unexpected weakening is what I What the way I characterize it so you Know and I'm not going to try to Define Exactly what I mean by that but you know It would be it had to be meaningful and And get our attention and and lead us to Think that the labor market was really Significantly weakening for us to want To react to it you know a couple of Tents in the unemployment rate would be Would would probably not do that but a Broader would be a broader thing that Would that would suggest that uh that it Would be appropriate to consider uh Cutting and I I think whether you decide To cut will depend on all the facts and Circumstances not just that one Hi chair Paul thanks for taking the Question Kyle Campbell with American Banker uh you've said that Broad and Material changes are needed for the Bosel 3 endgame proposal and you've Mentioned that a repr proposal is Something that's on the table as you've Had more time to sort of sit with the Public commentary process that and Understand the options available to you You have a better sense of whether a
Repr proposal will be necessary um and Do you have a timeline in mind for when Um you know some sort of movement will Be made on that front either a repr Proposal or a move to Finalize so let me let me start by Saying that the FED is committed to you Know completing this process and and Carrying out bosel 3 endgame in a way That's faithful to bosel and also Comparable to what the other other large Comparable jurisdictions are doing um we Haven't made any decisions on on policy Or on on process at all nothing nothing No decisions have been made I'll say Again though if we conclude that that Repr proposal is appropriate we won't Hesitate to insist on that and then do You need to resolve issues with the Capital proposal in order to advance Other parts of the regulatory agenda or Do you expect to continue to make Progress on those other uh agenda items You know there's no mechanical rule in Place there but I would say that the you Know the Basel 3 it process is by far The most important thing and really is I Think occupying us at this at this time In terms of what's what's what we're Moving ahead With go to mark for the last Question thank you Mark hamri with bank Rate uh Mr chairman uh what can you tell Us about your the approach that you take
Uh with your role in the sense of trying To achieve consensus what you recently Identified as a priority uh while Allowing for a range of views or even Dissent uh we don't see many descending Votes in the official statements even When more spirited discussions are noted In the minutes after the fact how do you Avoid group think uh and avoid a higher Risk of a policy mistake thank you so I I think if you listen to and you all do Listen to my my 18 colleagues on the on The fomc you'll see that we do not lack For a diversity of voices and Perspectives we really don't and it's One of the great aspects of the Federal Reserve System we have 12 reserve banks Around the country where they have their Own economic staff not the people who Work here at the board they're different People and you know and and so each each Reserve Bank has its own culture around Monetary policy and its own approach and That kind of thing it guarantees you a Diversity of perspectives so I I think That the perspectives are very diverse But uh and in terms of in terms of Descents you know I I we have Descents and and you know a thoughtful Descent uh is is a good thing you know If someone really makes you think that Kind of thing but um all I can say for My standpoint is I try I listen Carefully to people I try to incorporate
Their thinking or do everything I can to Incorporate their thinking into what We're doing and I think many people if They they feel that's happening you know That for most people most of the time That'll be enough and but I'm I'm not um I mean it's it's not you know frowned Upon or or illegal or against the rules Or anything like that it just is the way Things come out and uh I mean I think we Have a very diverse group or brand the People frankly more diverse than it used To be in many dimensions more diverse But from the obvious you know gender and Demographic ways but also we have we Have um more people who are not PhD Economists so we have people from Business and and law and academ and Things like that uh so I think you Actually do have quite a quite a good Diverse perspective the I I think all of Us read these stories about a lack of Diversity and we look around the room And say I don't I really don't Understand what they're talking about so But I get the question though thank you Very much
