Federal Reserve Chair Powell News Conference

Federal Reserve Chair Jerome Powell held his first news conference as chair following the March 2018 board meeting. Mr. Powell announced an interest rate hike of 0.25 percent, which would bring the federal funds rate to a range of 1.5 percent to 1.75 percent. The Federal Reserve chair said that the rate hikes were consistent with the central bank’s strategy of gradual interest rate increases over the past two years and would serve their goal of a two percent inflation rate.

Summary

During Jay Powell’s first press conference as Fed Chair he announced a rate hike of 25bps and fielded questions about forecasts, overall economic health, and political influences on the economy. The general tenor of the press conference was very matter of fact.

During the course of the question and answer period Powell revealed himself to be like his predecessor in a couple notable ways:

  1. He was joyful when discussing the health of the economy relative to where it has been at any point in the last decade.
  2. He suggested caution about reading too much into long run projections as part of the SEP.
  3. He avoided answering questions about trade policy or hiking rates during an election year, instead choosing to reiterate the Fed’s mandate and desire to refrain from politics.

However, during the course of the question and answer period Powell also revealed himself to be unlike his predecessor in a couple notable ways:

  1. He did not care for making remarks about the employment side of the dual mandate.
  2. He diminished the role of staff forecasting and reports, instead focusing only on the members of the Committee.
  3. He avoided making comments about regulatory issues, though this may have been due to pointed questions about pending legislation rather than general regulations.

These similarities indicate that Powell fits the mold of a Fed Chair and has elected to communicate much like his Chair Yellen. However, Powell’s expressions while discussing the employment side of the dual mandate suggest he will be less focused on the labor market than Yellen was, and his remarks diminishing the role of staff significantly depart from both Yellen and Bernanke.

Most Salient Remarks

Notable Moments

    Full Timeline

    All emotional peaks for the main speaker, Jerome Powell. Click a point to see the corresponding point in the video, below.

    00:06:56
    Unidentified Speaker

    GOOD AFTERNOON. I HAVE A BRIEF STATEMENT THAT I WILL RESPOND TO YOUR QUESTIONS. THE MARKET REMAINS STRONG IN THE ECONOMY CONTINUES TO EXPAND, INFLATION TOWARD THE 2% LONG WHEN GO ALL. AS YOU ALREADY KNOW WE DECIDED TODAY TO RAISE THE TARGET FED FUND RATE BY ONE QUARTER OF A PERCENTAGE POINT BRINGING IT AT 1.75%. THIS IS ANOTHER STEP IN THE ONGOING PROCESS TO TAKE BACK TO A POLICY ACCOMMODATION PROCESS UNDERWAY FOR SEVERAL YEARS. AVERAGING 240,000 PER 40000 PER MONTH OVER THE NEXT THREE MONTH WELL ABOVE THE PACE NEEDED TO OBSERVE THE NEW ENTRANCE INTO THE LABOR FORCE. THE UNEMPLOYMENT REMAINS LOW WHILE THE LABOR RATE ENTIRE IT HAS REMAINED ROUGHLY UNCHANGED THAT IS A SIGN FOR THEM TO PUT DOWNWARD BUT THE GAINS IN THE FOURTH QUARTER WERE STRONG IN THE FUNDAMENTAL -- FUNDAMENTAL UNDERPINNINGS REMAINS STRONG SEVERAL FACTORS SUPPORT THE OUTLOOK WITH ONGOING JOB THE FOREIGN GROWTH IS ON A DIRECTORY AND THE PROJECTIONS REMAIN ACCOMMODATIVE. AGAINST THE BACKDROP WITH THE 2% LONGER ON OBJECTIVE OVERALL CONSUMER PRICES AS THE PERSONAL CONSUMPTION EXPENDITURE INCREASE IN THE 12 MONTHS ENDING JANUARY THAT EXCLUDE THE PRICES OF FOOD IS A BETTER INDICATOR OF FUTURE PATIENT ROSE 1.5% OF. HOWEVER AS WE HAVE NOTED A SHORTFALL FROM 2% REFLECT PARTLY ON SOME UNUSUAL PRICE DECLINE THAT OCCURRED NEARLY ONE YEAR AGO AND AS A DROP OUT OF THE CALCULATION COULD BE ABOVE OR BELOW AND WE ARE SYMMETRIC THAT WE TRY TO PREVENT THE SIX -- SYSTEMATIC DEVIATIONS IN EITHER DIRECTION. BUT NEEDED FOR THIS MEETING 2.7% THIS YEAR ADJUSTED FOR SOME -- INFLATION OF GDP SLIGHTLY ABOVE THE ESTIMATED LONG-TERM RATE. THE MEDIAN PROJECTION FOR THE UNEMPLOYED RATE STARTS AT 3.8% AND WITH THE MEDIA SUBMIT. AND 2% IN 2020. COMPARED WITH THE PROJECTIONS IN DECEMBER REAL GDP GROWTH IS STRONGER IN THE UNEMPLOYMENT RATE LOWER AND INFLATION IS SLIGHTLY HIGHER. IT WAS THE DECISION TO RAISE THE FED FUND RATE IS ANOTHER STEP IN THE PROCESS INTO SCALED-BACK MONETARY POLICY AS THE ECONOMIC ENGINE CONTINUES. THIS HAS BEEN UNDERWAY MORE THAN TWO YEARS AND SHOULD CONTINUE TO SERVE THE ECONOMY WELL. AND THEN WE CONTINUE TO AIM FOR INFLATION OF 2% WHILE SUSTAINING STRONG LABOR MARKET. IN THE COMMITTEE'S VIEW GRADUAL INCREASES OF THE FED FUND RATE WILL BEST PROMOTE THESE GOALS BY CONTRAST RAISING RATES TO SLOWLY RAISE THE RATE MONETARY POLICY WOULD BE DOWN THE ROAD TO JEOPARDIZE THE ECONOMIC EXPANSION AT THE SAME TIME WITH INFLATION RUNNING PERSISTENTLY BELOW THAT COULD BE THE WITHIN ECONOMIC DOWNTURN IN THE FUTURE. PARTICIPANTS PROJECTIONS WITH THE APPROPRIATE PATH OF THE FED FUNDS RATE SHOW A GRADUAL APPROACH MEDIAN PROJECTION IS 2.1% AT THE END OF THE YEAR 2.9% AT AND BY 2020 THE FED FUNDS RATE IS ABOVE THE ESTIMATED LONG-TERM TREND REVISED PROJECTIONS IN DECEMBER ALTHOUGH THE PROJECTION FOR THIS YEAR DID NOT CHANGE THE MEETING 2019 AND 2020 ARE SOMEWHAT HIGHER THAN THIS SUMMER OF COURSE WE WILL WATCH HOW THE ECONOMY EVOLVES IN THE MONTH AND YEARS AHEAD WITH PRICE STABILITY OBJECTIVE OF THE OUTLOOK CHANGES WILL ADJUST APPROPRIATELY. FINALLY I WILL NOTE THE PROGRAM FOR REDUCING THE BALANCE THAT BEGAN IN TOBER IS PROCEEDING WITH THE WITH A VERY SIGNIFICANT AND UNEXPECTED WEAKENING THE OUTLOOK WE DO NOT EXPECT TOOLS OF THE PROGRAM CHANGING THE TARGET RANGE FOR THE FED FIVE RATE IS THE PRIMARY MEANS TO ADJUST HER MONETARY POLICY HAS ALWAYS WE ARE PREPARED TO USE THE FULL RANGE OF TOOLS FOR MORE ACCOMMODATIVE MONETARY POLICY COULD BE ACHIEVED IN SOLELY REDUCING THE FED FUNDS RATE THANK YOU I WILL BE HAPPY TO TAKE YOUR QUESTIONS. >> MAKE MR. CHAIRMAN, AND WELCOME, INTERESTING CHANGES IN THE FORECAST. A HIGHER GROWTH FORECAST ONE FULL POINT ABOVE THE RUN LOWER UNEMPLOYMENT 710 BELOW BUT YET VERY LITTLE CHANGE IN INFLATION. WHAT DOES THAT SAY ABOUT WHAT YOU BELIEVE ABOUT THE INFLATION DYNAMICS? AND HOW WAS IT IN THAT CONTEXT YOU JUSTIFY THREE RATE LIKE THIS YEAR AND NEXT YEAR BUT A FULL 600 BILLION ANNUAL RATE DEFINED ON THE BALANCE? WHAT IS YOUR BIGGEST CONCERN? OVERKILL OR UNDERGO? TO MAKE YOU ARE RIGHT THE OUTLOOK DID IMPROVE AS I MENTIONED THE COMMITTEE'S ESTIMATES OF GROWTH WENT UP AND UNEMPLOYMENT WENT DOWN WITH A SLIGHT INCREASE OF INFLATION. THAT REFLECT ESSENTIALLY IF YOU THINK BACK TO THE ERA AFTER THE CRISIS IT WAS 10% YOU ONLY SAW VERY GRADUAL UPWARD PRESSURES ON INFLATION AND REGION DESPITE THE VERY LARGE INCREASE THAT SUGGESTS THAT RELATIONSHIP IS NOT SO TIGHT BUT IT HAS DIMINISHED BUT IT IS STILL THERE. SO WHEN YOU SEE THOSE SMALL CHANGES IN UNEMPLOYMENT IT REFLECTS THE FLATNESS OF THE PHILLIPS REMAKE YOUR BIGGEST CONCERN?...

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    00:08:28
    Unidentified Speaker

    I THINK WE ARE TRYING TO TAKE THE MIDDLE GROUND. ON THE ONE HAND THE RISK IS THAT WE WAIT LONG TO RAISE RATES QUICKLY AND THAT SHORTEN THE EXPANSION AND WE DON'T WANT TO DO THAT BUT ON THE OTHER SIDE WE RAISE RATES TO QUICKLY THAN THAT DOESN'T GET UP AT 2% AND THAT WILL HURT US BECAUSE WE NEED TO MAKE SURE INFLATION EXPECTATIONS ARE ANCHORED AT 2% SO THE COMMITTEE CONTINUES TO TAKE THAT MIDDLE GROUND WITH THAT GRADUAL INCREASE OF THE FED FUNDS RATE....

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    00:09:19
    Unidentified Speaker

    I WANT TO ASK ABOUT THIS TARGET WHAT YOU OUTLINED IN YOUR REMARK AND I WANT TO UNDERSTAND WHAT YOU MEAN WITH THE CONTEXT OF INFLATION TO RUN ABOVE THE 2% TARGET NOW THAT IS PART OF THE PROJECTION FOR NEXT YEAR. HOW DO YOU DEFINE THE METRIC RELATIVE THE PAST FIVE YEARS? SO TO ACCEPT THAT OVERSHOOT OF THE TARGET AND HOW HIGH ABOVE 2% IS TOO HIGH TO MAINTAIN A METRIC? TWO AND A HALF? AND FOR HOW LONG?...

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    00:09:58
    Unidentified Speaker

    AS YOU NOTED WHAT WE SAID WITH METRIC POLICY STRATEGIES WE WOULD BE CONCERNED WITH SUSTAINED DEVIATION ABOVE OR BELOW AND WE ALSO SAID IN THE MINUTES AND IN SPEECHES THAT IS ASYMMETRIC OBJECTIVE. THAT IS HOW WE CAN GIVE IT. I WOULDN'T CHARACTERIZE WHAT WE HAVE DONE AS TOLERATING ISSUE IS WE ARE ALWAYS PUSHING TO PREVENT AND THAT IS HOW WE LOOK AT IT. I CANNOT GIVE YOU AN EXACT NUMBER WE HAVE NOT AGREED ON THAT IT IS JUST THAT WE WILL ALWAYS SEEK TO% INFLATION AND IN DOING THAT WE WILL CONSIDER THE OTHER SIDE OF THE MANDATE WE HAVE TO BALANCE THAT AGAINST DEVIATION FROM UNEMPLOYMENT AND ALSO THE DURATION....

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    00:10:55
    Unidentified Speaker

    I'M WITH THE L.A. TIMES EVEN WITH THE EXTRA STIMULUS OF THE TAX CUT YOUR PROJECTION IS JUST AT 2.7% THIS YEAR DROPS BACK DOWN AT 2020 SO IS THE TALK IN WASHINGTON BRINGING THE CAP TALK OVERSELLING THE POTENTIAL PACK? PAYMENT LET ME SAY WAS THAT REALLY IS. FOR A SUMMARY OF ECONOMIC PROJECTION IS A COMPILATION OF THE INDIVIDUAL RATE FORECAST THE COMMITTEE REALLY MADE ONE DECISION TO RAISE FED FUNDS RATE BY 25 BASIS POINT WITH THE PROJECTION OF THE INDIVIDUAL FORECASTS COMPILED YOU HAVE IDENTIFIED THAT MEDIAN AND THAT IS INTERESTING ALSO TO SAY THAT THE WHOLE RANGE IS INTERESTING FOR YOU HAVE A RANGE OF VIEWS AROUND THE TABLE ONE OF THE GREAT BENEFITS WE DO HAVE RESERVE FAITH IN GOVERNORS WITH DIFFERENT VIEWS THAT WE DISCUSSED ANYTHING. SO IF WE VOTE DON'T AGREE WE HAVE A RANGE OF VIEWS 2.7 IS JUST THE MEDIA BUT IT DOESN'T SAY WHAT WE THINK....

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    00:12:20
    Unidentified Speaker

    WOULD SAY IT IS HARD TO SAY THAT THAT IS ABOVE ALMOST ALL ESTIMATES CURRENTLY WITH POTENTIAL LONG-TERM GROWTH WITH ACTIVITY AND LABOR FORCE THE PATIENT TO GET THE AND WITH BIRDS NEWS IF YOU NEED TO SEE JOB BEING AND INFLATION RISING SLIGHTLY WITH MODERATE WAGE INCREASES YOU ACTUALLY OVER SHOOTING?...

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    00:13:06
    Unidentified Speaker

    I GUESS I WOULD START BY SAYING THAT NATURAL RATE OF UNEMPLOYMENT IS SOMETHING WE CAN OBSERVE WITH A WIDE RANGE OF INDICATORS AT LEAST 15 OR 20 AND WHAT WE UNDERSTAND IT IS ROUNDED BY WIDE UNCERTAINTY ABOUT THE ACTUAL COMPLAINT RIGHT DECLINE AT THE ESTIMATE IT IS ALSO DEFINED BY A FULL PERCENTAGE POINT SO PEOPLE ARE MORE GENERALLY INFLUENCED BY DATA AS THEY SEE IT GOING OVER A LOOK AT A VARIETY OF ASPECTS PUTTING WAGE AND PATIENT. WE ARE MINDFUL OF THE UNCERTAINTY WE ARE LOOKING AT THAT SO IF UNEMPLOYMENT DOES CONTINUE TO GO DOWN HE WILL DO THAT AND AS I MENTIONED EARLIER, THERE IS NO SENSE IN THE DATA ON THE CUSP OF CELEBRATION WE HAVE SEEN MODERATE INCREASES AND WE ARE ALERTED TO THAT SO IF YOU GET BELOW THE SUSTAINABLE RATE OF UNEMPLOYMENT FORCES. YOU WILL SEE THE ACCELERATION OF INFLATION AND WE ARE VERY ALERT TO THAT EVENT THAT POLICYMAKERS TALK ABOUT THE HEADWIND TURNING INTO RETAIL RECENTLY THAT IMPLIED THAT YOU THINK THE NEUTRAL RATE OF INTEREST? HOW DO YOU ASSESS THE IMPLICATIONS? OBVIOUSLY THIS IS YOUR FIRST PRESS CONFERENCE BUT WHEN YOU DO THIS MORE OFTEN?...

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    00:15:06
    Unidentified Speaker

    LONGER RUN VALUES LIKE THE NEUTRAL RATE OF INTEREST NATURAL RATE OF UNEMPLOYMENT WITH THE ECONOMY GO UP AND DOWN BY FLOW FORCES OVER TIME. THEY DON'T MOVE AROUND VERY MUCH SO I WOULDN'T EXPECT THE PROJECTIONS ARE ESTIMATE OF THOSE VALUES QUICKLY. THEY MOVED SO IS IT POSSIBLE THE NEW RATE OF INTEREST COULD FROM GREATER FISCAL EXPANSION? THERE IS LITERATURE THAT SAYS THAT THERE ARE REASONS THAT COULD BE DECAYED OR COULD PICK UP 110 AS YOU KNOW BUT GENERALLY SPEAKING THE COMMITTEE SEES A STRONGER INTEREST AND DOESN'T SEE THAT AS HAVING DEBT BUT OPEN TO THE POSSIBILITY THAT. SO, THAT IS SOMETHING I WILL BE CAREFULLY CONSIDERING. I HAVE NOT METED VISION MY COLLEAGUE AND I ARE COMMITTED TO COMMUNICATING IS. POSSIBLE I WOULD WANT TO THINK VERY CAREFULLY ABOUT THAT TO MAKE SURE NO ONE WOULD TAKE MORE FREQUENT PRESS CONFERENCES AS POLICY THAT IS SOMETHING I WILL THINK ABOUT....

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    00:16:45
    Unidentified Speaker

    YOU BROUGHT UP FISCAL STIMULUS AND I AM CURIOUS HOW IS THE CHANGE OF THE BUDGET DEFICIT AND ALSO ALLOWING THE GOAL OFF THE WHAT WOULD THE SAID CONSIDER JUST THE BALANCE SHEET ROLLED OFF EVEN HOW MUCH THEY HAVE TO BURN GOING FORWARD? BEYOND YOUR CONTROL THE PRESENT IS CONNECTED TO AGAINST CHINA AS THEY DISCUSSED THE POTENTIAL IMPACT WITH INFLATION DO YOU HAVE AN IDEA HOW YOU TO THAT?...

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    00:17:24
    Unidentified Speaker

    IN TERMS OF THE BALANCE CAREFULLY DEVELOPED THIS PLAN IN A SERIES OF MEETINGS LAST YEAR WE SAID WE WOULD MUSTER WASN'T SIGNIFICANT DOWNTURN OF MEANINGFUL INTEREST I HAVE NO INFORMATION TO REVISIT THAT BUT ON THE SECOND? HERE, THE NUMBER OF PARTICIPANT U.S. BUT TO SUMMARIZE WHAT COMES OUT OF THAT THERE IS NO SPOT THAT CHANGES IN TRADE POLICY SHOULD HAVE ANY EFFECT ON THE CURRENT OUTLOOK IN SECOND, NUMBER OF PARTICIPANT REPORTED IN THEIR CONVERSATION REPORTED THAT TRADE POLICY HAD BECOME A CONCERN GOING FORWARD FOR THAT GROUP IN THE ASSOCIATED PRESS. YOU TALK ABOUT THE FACT THAT SUMMARY OF ECONOMIC PROJECTION IS BASED ON THE OUTLOOK OF ALL MEMBERS OF THE FOMC BUT CAN YOU TELL US ABOUT THE STAFF FORECAST AND HOW THAT WAS IMPACTED BY A $1.5 TRILLION CUT OR INCREASED GOVERNMENT SPENDING? ARE THOSE REFLECTED HOW THEY IMPACTED BY THAT? BUT BY THE WAY THOSE THAT HAVE THEIR OWN VIEWS WE LOOK AT THOSE AS INFORMING THE DECISIONS OF THE POLICYMAKERS WITH THE STAFF FORECAST UNDER THOSE RULES AND CIRCUMSTANCES AS THEY TAKE OUT AS INPUT TO CREATE THAT POLICY....

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    00:19:47
    Unidentified Speaker

    BUT NO IMPACT SO FISCAL STIMULUS IS A MEANINGFUL BUT IN THAT CHANGES OVER THE COURSE OF LAST YEAR AND THIS YEAR THOSE INDIVIDUAL POLICYMAKERS WENT THROUGH WITH THEIR STAFF A RANGE OF ESTIMATES AND LITERATURE TO COME UP WITH THEIR OWN ESTIMATE WITH ECONOMIC PROJECTION. THOSE ARE OUR PROJECTION....

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    00:20:35
    Unidentified Speaker

    WASHINGTON POST. HOW LONG DOES IT TAKE TO GET THE FULL RATE HIKE? I KNOW WHY IT IS APPROPRIATE THAT CLEARLY FROM THE FOMC MEMBERS WITH POTENTIAL TRADE? THAT PEOPLE WANT TO WITH THOSE ECONOMIC PROJECTION? PAYMENT WE MADE ONE DECISION AT THIS MEETING TO RAMP UP BY 25 BASIS POINTS. THE PROJECTIONS ARE JUST INDIVIDUAL PROJECTIONS COMPILED AND YOU WERE MENTIONING THE MEETING AS BEING CLOSE BUT I THINK WITH ANY FORECAST THAT WILL CHANGE OVER TIME DEPENDING OUTLOOK SO THAT IS ALL I CAN FOR NOW THESE ARE THE BEST FORECASTS WE COULD MAKE AND IF THE ECONOMY IS STRONGER OR WEAKER THAN IT COULD BE LESS GRADUAL OR GRADUAL GRADUAL....

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    00:22:10
    Unidentified Speaker

    MR. CHAIRMAN, JUST TO FOLLOW UP ON THAT WRITTEN QUESTION ON TRADE WHAT WOULD HAVE TO HAPPEN IN POLICY WITH RETALIATION FROM COUNTRIES AROUND THE WORLD FOR THE OUTLOOK? AND THEN YOU MENTIONED PRODUCTIVITY AND WITH POLICY CHANGES?...

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    00:22:41
    Unidentified Speaker

    PORTRAYED WHAT I MENTIONED IS THE FOMC PARTICIPANTS REPORTED CONCERNS WHICH WERE RELATIVELY NEW ABOUT FUTURE TRADE ACTION AND WE SEE THAT AS A RISK TO THE OUTLOOK IN WHAT PEOPLE ARE TALKING ABOUT WOULD BE MORE WIDESPREAD RETALIATION INTERACTION BACK AND FORTH KIND OF THING. BUT IN TERMS OF PRODUCTIVITY, AS I'M SURE YOU KNOW IT HAS BEEN VERY WEAK AS THE FINANCIAL CRISIS ONLY .25% PER YEAR. SO THAT IS WELL BELOW LONGER AVERAGES AND CERTAINLY SEE THAT GO UP A LITTLE BIT BUT NOT DECISIVELY. U.S. FISCAL POLICY WITH THE CONNECTION TO PRODUCTIVITY I THINK TECH WILL THERE ARE WITH A TAX-CUT BILL THAT ALLOWS ENCOURAGE PRODUCTIVITY IN THEORY AND INDIVIDUAL TAX BILL SHOULD ENCOURAGE MORE LABOR PARTICIPATION. I DO THINK IT IS VERY IMPORTANT TO HAVE PRODUCTIVITY IN THE COUNTRY THAT THERE WILL BE SOME EFFECT SO THOSE ESTIMATES ARE ALL OVER THE PLACE IN SO I WILL ASK ANOTHER QUESTION SO 2022 THEY EXPECT THAT POLICY TO GET UP AT 3.5% WHICH IS QUITE A WAY ABOVE THE NEUTRAL RATE DOES NOT INCREASE THE OF A RECESSION OR DECREASE THE RISK OF A THOUGHT? ARE IN THE WAY FISCAL POLICY AND AS A FOLLOW-UP IS THAT FISCAL DUSTING LEADING TO QUESTIONS AROUND THE AREA OF THE ECONOMY WITH A LOW RATE ENVIRONMENT? YOU REMEMBER THE FORECASTS IS THREE YEARS OUT. 2020 IS 3.4% IS THE MEETING -- MEDIUM WHICH IS 40 BASIS POINTS ABOVE THE THAT SHOWS MODEST RESTRICTIVE AND TIGHTENING IN THREE YEARS IN THE FUTURE HIGHLY IN CERTAIN WE DON'T HAVE THE ABILITY TO SEE THAT BAR WOULD NOT PUT A LOT INTO THAT YOU CAN IMAGINE BUT I WOULDN'T PUT TOO MUCH ON WHAT YOUR SECOND QUESTION? HE HAVE BEEN THROUGH MANY YEARS OF GROWTH AROUND 2% I HAVE GIVEN A NUMBER OF PUBLIC REMARKS WERE WE CALL ON THE COUNTRY TO FOCUS ON POTENTIAL GROWTH AND PRODUCTIVITY WHICH DRIVE SO I THINK IT IS IMPORTANT THAT WE DO WHAT WE CAN FOR THE POTENTIAL GROWTH RATE. IN THE BILL THAT PASSED THE TAX CUT JOBS THAT WERE RELEVANT TO ENCOURAGE INVESTMENT IN PARTICIPATION WE DON'T KNOW THE TIMING BUT IF YOU LOOK AT THE TABLE THERE IS A WIDE RANGE OF VIEWS BUT ALL AGREE MIKE I HAVE A QUESTION ABOUT THE MECHANICS OF MONETARY POLICY FAVORS STICKING WITH THE SYSTEM THAT LEADS TO CONTROLLED INTEREST RATE FOR GOING BACK TO THE OLD WAY OF DOING THINGS WITH THAT SAID MARKET AND ARE YOU CONCERNED IF YOU STICK WITH THE CURRENT SYSTEM THAT YOU COULD THE ISSUES THAT ARE CRITICIZED FOR PAYING WHATEVER LARGER AMOUNT THAT IS RECEIVED AS A SUBSIDY? UNDER THE CURRENT FRAMEWORK FOR MONETARY POLICY IS WORKING VERY WELL WE HAVE EXCELLENT CONTROLLED OVERWEIGHT AND IT IS WORKING. YOU DESCRIBE THAT ACCURATELY. WE HAVE NOT MADE A DECISION THAT WITH HER OWN FRAMEWORK WE HAVE NOT ADDRESSED THAT QUESTION WE HAVE AGREED IT IS WORKING WELL BUT IT ISN'T SOMETHING THAT WE NEED TO URGENTLY ADDRESS WE ARE LEARNING ABOUT THIS FRAMEWORK FOR EXAMPLE THE SIZE OF THE BALANCE SHEET AND THE PUBLIC DEMAND FOR LIABILITY SO WE DON'T KNOW THE MAN FOR HIS AND YOU HAVE REGULATION THAT WILL HOLD A. SO IF WE ARE LOOKING AT RESOLVING THAT IN THE NEAR TERM IT IS A LITTLE BIT OF A MISNOMER TO THINK THERE IS A SUBSTITUTE WE PAYING INTEREST ON EXCESS RESERVES WE CANNOT PAY IF THEY ARE ABOVE THE GENERAL LEVEL SO WE PAY RATE THAT BANKS CAN GET FROM OTHER INTEREST RATE FROM ANY OTHER INVESTMENT IN THE SHORT-TERM MARKET AND IN ADDITION REMEMBER THAT LIABILITY BUT THE ASSETS ARE ON THE OTHER SIDE OF THE MORTGAGE-BACKED SECURITIES ARE MUCH HIGHER SO IT ISN'T A HE OR COST TO BE MET MARKET WATCH. SEVERAL COLLEAGUE SEEM TO EXPRESS ABOUT THE FINANCIAL INVOLVEMENT SO CAN YOU EXPRESS YOUR VIEW ON THE ASSET MARKET? DO YOU HAVE THE TOOLS THAT YOU NEED TO COVER THOSE? SINCE THE FINANCIAL CRISIS WE HAVE BEEN MONITORING FINANCIAL STABILITY ISSUES VERY CAREFULLY THE FOMC RECEIVES REGULAR BRIEFING ABOUT THE STAFF FRAMEWORK MEASURING DIFFERENT ASPECTS OF FINANCIAL STABILITY AND THE CURRENT VIEW OF THE COMMITTEE AND FINANCIAL STABILITY VULNERABILITY IS MODERATE. SO IF YOU BOOK PARTICULAR THE HIGHER CAPITAL HIGHER LIQUIDITY AND MORE AWARE OF THEIR RISK AND IF SOMETHING DOES GO WRONG YOU HAVE A BETTER ABILITY TO DEAL WITH THOSE IN SITUATION YOU DON'T SEE THE HIGH LEVERAGE OR ACCESS TAKING GREAT QUANTITIES IF YOU LOOK AT THE HOUSEHOLD BALANCE SHEET FOR NINE FINANCIAL CORPORATION WITH THE ELEVATED LEVEL OF BORROWING THAT NOTHING JUST SERIOUS RISKS IN THE FAULT LEASE ARE VERY LOW. SO THOSE READINGS LOOK OKAY AND I SHOULD MENTION FOR A LARGE FINANCIAL SHOULD NO LONGER FUNDED BY TORTURE LENDING THAT CAN DISAPPEAR QUICKLY SO ALTHOUGH ASPECTS LOW LEVELS VULNERABILITY YOU IDENTIFIED ONE AREA WHERE SOME AREAS ASSET PRICES ARE ELEVATED RELATIVE TO THEIR HISTORICAL NORMS YOU CAN THINK OF EQUITY PRICES OR COMMERCIAL REAL ESTATE MARKET BUT HOUSING WHICH IS KEY SO IF YOU PUT ALL OF THAT INTO A PIE YOU HAVE MODERATE VULNERABILITY SO WE HAVE THE TOOLS AND WE DO HAVE SOME TOOLS AND CERTAINLY THINK THE STRESS TEST IS IMPORTANT TO ALL THAT WE HAVE FOR THE LARGER INSTITUTION IN THE SMALLER ONE --DASH WITH THOSE SMALLER INSTITUTION....

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    00:32:31
    Unidentified Speaker

    ON THE REGULATORY SIDE STILL BE GETTING MORE POWER TO DECIDE WHICH VICTOR REGULATION TO APPLY? WHY HAVE A COUPLE OF QUESTIONS ABOUT THAT. SO WITH THE STRESS THAT IS BASED ON THE PENALTY OF THE STOCK BUYBACK IS THERE ANY TYPE OF CHALLENGE THAT COULD BE? IS IT POSSIBLE NOT TO HAVE THAT ON AN ANNUAL BASIS? YOU TALK A LOT ABOUT THAT IS THE ONLY THING THAT GIVES SPECIFIC RISK BUT WHAT OTHER FACTORS WOULD CAUSE A BANK TO HAVE A SYSTEM WITH? TO MAKE THIS IS A MATTER THAT IS UP FOR CONSIDERATION CONGRESS IS CONSIDERING RAISING THE THRESHOLD FROM 50 MILLION OF AT 250 MILLION LEADING US THE ABILITY TO REACH BELOW 250 MILLION WERE WE THINK IT IS APPROPRIATE WE HAVE NOT BEEN SHY TO DO THAT BECAUSE OF COURSE IT IS BELOW 250 ALREADY SO WE ARE FULLY PREPARED TO DO THAT BUT THIS IS A DECISION IN THE HANDS OF CONGRESS. THOUGH THE VERSION OF THE BILL THAT PASSED THE SENATE DID GIVE US THE ABILITY TO DO THE SUPERVISORY STRESS TEST PERIODICALLY AS OPPOSED TO ANNUALLY. WE HAVE NOT MADE A DECISION ABOUT THAT WE DO WANT TO THINK VERY CAREFULLY ABOUT THAT AND WHATEVER WE DO DECIDE TO DO WE PUT THAT OUT FOR COMMENT BUT IS THAT LOGISTICALLY POSSIBLE I THINK IT WOULD BE NOTHING WE WE HAVE DECIDED TO DO. YOUR SECOND QUESTION?...

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    00:34:41
    Unidentified Speaker

    I GUESS THE NEXT THING ON THE LIST REGULAR COMMERCIAL BANKS THAT DO DEPOSIT TAKING AND ENDING WITH NO SPECULATING , THAT IS ONE BUSINESS MODEL AND ANOTHER MIGHT BE LIKE IF YOU THINK OF A HEDGE FUND THAT IS WHAT THEY DO THEY SPECULATE ON THE MARKET SO THERE ARE BUSINESS MODELS WITH DIFFERENT LEVELS OF RISK THAT WOULD BE THE NEXT ON THE THERE COULD BE A RANGE OF BUT MAINLY THOSE FEEDBACK....

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    00:35:32
    Unidentified Speaker

    SO WITH THAT ADDITIONAL GROWTH AND HOW MUCH COMES FROM THE SUPPLY SIDE IN DEMAND YOU USE WORDS LIKE MIGHT AND SHOULD OR WHAT THE RESULT THAT SHOULD COME FROM BUT AROUND THE TABLE DID ANY GOVERNORS IS SOMETHING THAT IS GOING TO HAPPEN? WILL THERE BE A LIFE-SIZE EFFECT OR ARE YOU JUST GUESSING?...

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    00:36:04
    Unidentified Speaker

    ARE THERE ARE 15 FOMC PARTICIPANTS IN EACH OF HER FORECAST THERE ARE A LOT OF ALTERNATE VIEWS BUT IF I COULD TRY TO SUMMARIZE, IT WOULD BE THAT I THINK PROBABLY WILL BE THERE WILL BE INCREASES IN DEMAND FROM SCHOOL POLICY FOR THE NEXT BUT SAY THREE YEARS. I THINK THERE IS A GENERAL VIEW AS WELL SUPPLY SIDE ISSUES THERE COULD BE AS WELL THAT WOULD BE THROUGH HIGHER INVESTMENT WITH LOWER CORPORATE TAX RATE FROM INVESTMENT THEN THERE IS MORE ATTRACTIVE FOR COMPANIES BUT IT IS UNCERTAIN I HAVE WORK COMPANY DISCUSSING THE COST OF CAPITALISM IS ONE OF THE MANY FACTORS TO CONSIDER BUT THAT SHOULD RESULT IN MORE INVESTMENT AND PRODUCTIVITY. AT THE SAME TIME WITH THE LABOR SUPPLY YOU SHOULD SEE LABOR SUPPLY OVER TIME CHANGE FROM THE TAX RATE THAT TICKLY THE SUPPLY-SIDE EFFECT SHOULD TAKE LONGER TO APPEAR AND WOULD BE LESS CERTAIN SO REALLY THAT IS AS GOOD WE HAVE LOOKED AT THE LITERATURE DISCUSS IT WITH YOU BUT I WOULD SAY THAT A ABOUT WHERE THE VIEWS ARE....

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    00:37:51
    Unidentified Speaker

    WITH CNN JUST TO GO BACK TO TRADE POLICY GENERALLY TODAY FEEL THAT IS THE CURRENT ECONOMIC OUTLOOK IF THERE ARE FEARS ABOUT STATIONARY EFFECT OF THE V TRADE BARRIERS IMPOSED? WE CURRENTLY ON THE VERGE OF A TRADE WAR WITH CHINA AND WONDERING WHAT YOUR THOUGHTS ARE WITH THE ECONOMIC OUTLOOK GOING....

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    00:38:31
    Unidentified Speaker

    THAT THIS IS A NEW WITH AS A RISK TO THE OUTLOOK WHETHER INFLATION OR GROWTH SO THAT ISN'T SOMETHING THAT COULD COME UP. AND THAT IS CHINA.

    00:39:03
    Unidentified Speaker

    BACK IN THE EVENT THEY ARE IN A TRADE FOR TO PROPOSE ELSEWHERE FOR THE GLOBAL ECONOMIC OUTLOOK WHAT ARE YOU WORRIED ABOUT?

    00:39:24
    Unidentified Speaker

    WE DON'T DO TRADE POLICY HERE. FROM ANY PARTICULAR SITUATION.

    00:39:42
    Unidentified Speaker

    DO YOU THINK AMERICANS ARE BEING PAID ENOUGH WITH THE RAGE GROWTH RIGHT NOW? THAT UNEMPLOYMENT DECLINE PEAKING AT 10% NOW WE SEE ONLY MODEST INCREASES THAT WAGES IN THEORY SHOULD REPRESENT INFLATION PLUS PRODUCTIVITY INCREASES SHOULD BE PAID FOR YOUR PRODUCTIVITY PLUS INFLATION PATIENT HAS BEEN LOW SO IT DOES MAKE SENSE. AND WITH THOSE LABOR SHORTAGES IN THE UNEMPLOYMENT RATE IS GOING DOWN TO SEE THOSE HIGH WAGES AND I HAVE BEEN SURPRISED. HERE IS THE RIGHT LEVEL OF WAGES THAT WE WILL KNOW THE LABOR MARKET IS GETTING TIGHT SEE A MORE MEANINGFUL WORD WAGES. [INAUDIBLE] AND HISTORICALLY RAISING RATES BUT A LOT OF THAT WAS JUST A SITUATION WITH THE INFLATION WAS ALLOWED TO GET OUT OF CONTROL THAT THE ECONOMY INTO A RECESSION THAT IS NOT WHERE WE ARE NOW. BUT ANY HIGHER THAN THEY NORMALLY ARE. BUT THERE ARE SOME GOOD QUESTIONS WHAT IT DOES IT IS HARD TO FIND WITH THE RESEARCH DATA AND TO BE WATCHING CAREFULLY. THANK YOU VERY MUCH BE FIVE B5...

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    00:44:02
    Unidentified Speaker