WEBVTT X-TIMESTAMP-MAP=LOCAL:00:00:00.000,MPEGTS:0 00:00.166 --> 00:01.766 align:middle Transcript of Chair Powell's Press Conference September 22, 00:01.766 --> 00:02.996 align:middle 2021 CHAIR POWELL. 00:02.996 --> 00:03.296 align:middle Good afternoon. 00:03.416 --> 00:05.636 align:middle At the Federal Reserve, we are strongly committed 00:05.636 --> 00:07.696 align:middle to achieving the monetary policy goals 00:07.696 --> 00:08.946 align:middle that Congress has given us: 00:09.386 --> 00:11.236 align:middle maximum employment and price stability. 00:12.606 --> 00:15.486 align:middle Today, the Federal Open Market Committee kept interest rates 00:15.486 --> 00:19.336 align:middle near zero and maintained our current pace of asset purchases. 00:20.656 --> 00:22.936 align:middle These measures, along with our strong guidance 00:23.016 --> 00:25.206 align:middle on interest rates and on our balance sheet, 00:25.806 --> 00:28.126 align:middle will ensure that monetary policy will continue 00:28.126 --> 00:30.766 align:middle to support the economy until the recovery is complete. 00:31.976 --> 00:33.766 align:middle Progress on vaccinations 00:33.806 --> 00:37.096 align:middle and unprecedented fiscal policy actions are also providing 00:37.096 --> 00:38.656 align:middle strong support to the recovery. 00:40.476 --> 00:42.096 align:middle Indicators of economic activity 00:42.096 --> 00:43.946 align:middle and employment have continued to strengthen. 00:44.816 --> 00:49.386 align:middle Real GDP rose at a robust 6.4 percent pace in the first half 00:49.386 --> 00:52.526 align:middle of the year, and growth is widely expected to continue 00:52.526 --> 00:54.426 align:middle at a strong pace in the second half. 00:55.306 --> 00:58.116 align:middle The sectors most adversely affected 00:58.116 --> 01:01.456 align:middle by the pandemic have improved in recent months, but the rise 01:01.456 --> 01:04.326 align:middle in COVID-19 cases has slowed their recovery. 01:05.316 --> 01:08.056 align:middle Household spending rose at an especially rapid pace 01:08.056 --> 01:11.326 align:middle over the first half of the year but flattened out in July 01:11.326 --> 01:15.046 align:middle and August as spending softened in COVID-sensitive sectors, 01:15.376 --> 01:16.976 align:middle such as travel and restaurants. 01:18.056 --> 01:19.736 align:middle Additionally, in some industries, 01:20.116 --> 01:22.886 align:middle near-term supply constraints are restraining activity. 01:23.846 --> 01:25.896 align:middle These constraints are particularly acute 01:25.896 --> 01:29.376 align:middle in the motor vehicle industry, where the worldwide shortage 01:29.376 --> 01:32.236 align:middle of semiconductors has sharply curtailed production. 01:33.516 --> 01:35.426 align:middle Partly reflecting the effects of the virus 01:35.426 --> 01:39.246 align:middle and supply constraints, forecasts from FOMC participants 01:39.246 --> 01:42.226 align:middle for economic growth this year have been revised somewhat lower 01:42.486 --> 01:44.996 align:middle since our June Summary of Economic Projections, 01:45.696 --> 01:49.046 align:middle but participants still foresee rapid growth. 01:50.156 --> 01:52.276 align:middle As with overall economic activity, 01:52.386 --> 01:54.916 align:middle conditions in the labor market have continued to improve. 01:55.776 --> 01:57.596 align:middle Demand for labor is very strong, 01:58.136 --> 02:01.366 align:middle and job gains averaged 750,000 per month 02:01.366 --> 02:02.666 align:middle over the past three months. 02:03.906 --> 02:06.706 align:middle In August, however, job gains slowed markedly, 02:07.326 --> 02:10.486 align:middle with the slowdown concentrated in sectors most sensitive 02:10.486 --> 02:13.476 align:middle to the pandemic, including leisure and hospitality. 02:15.296 --> 02:18.446 align:middle The unemployment rate was 5.2 percent in August, 02:18.776 --> 02:21.226 align:middle and this figure understates the shortfall in employment, 02:21.616 --> 02:25.076 align:middle particularly as participation in the labor market has not moved 02:25.076 --> 02:26.806 align:middle up from the low rates that have prevailed 02:26.866 --> 02:28.136 align:middle for most of the past year. 02:29.436 --> 02:33.146 align:middle Factors related to the pandemic, such as caregiving needs 02:33.146 --> 02:34.886 align:middle and ongoing fears of the virus, 02:35.586 --> 02:37.506 align:middle appear to be weighing on employment growth. 02:38.546 --> 02:40.506 align:middle These factors should diminish with progress 02:40.506 --> 02:42.506 align:middle on containing the virus, leading 02:42.506 --> 02:44.296 align:middle to more rapid gains in employment. 02:46.036 --> 02:49.056 align:middle Looking ahead, FOMC participants project the labor market 02:49.056 --> 02:51.706 align:middle to continue to improve, with the median projection 02:51.746 --> 02:54.606 align:middle for the unemployment rate standing at 4.8 percent 02:54.606 --> 03:00.116 align:middle at the end of this year and 3.5 percent in 2023 and '24. 03:00.616 --> 03:04.986 align:middle The economic downturn has not fallen equally on all Americans, 03:05.196 --> 03:07.606 align:middle and those least able to shoulder the burden have been 03:07.606 --> 03:08.306 align:middle hardest hit. 03:08.876 --> 03:12.426 align:middle In particular, despite progress, joblessness continues 03:12.426 --> 03:15.106 align:middle to fall disproportionately on lower-wage workers 03:15.106 --> 03:18.386 align:middle in the service sector and on African Americans and Hispanics. 03:20.136 --> 03:22.486 align:middle Inflation is elevated and will likely remain 03:22.486 --> 03:24.426 align:middle so in coming months before moderating. 03:25.576 --> 03:28.786 align:middle As the economy continues to reopen and spending rebounds, 03:29.246 --> 03:31.936 align:middle we are seeing upward pressure on prices, particularly 03:31.936 --> 03:33.266 align:middle because supply bottlenecks 03:33.266 --> 03:36.676 align:middle in some sectors have limited how quickly production can respond 03:37.116 --> 03:37.946 align:middle in the near term. 03:39.106 --> 03:42.016 align:middle These bottleneck effects have been larger and longer lasting 03:42.016 --> 03:44.646 align:middle than anticipated, leading to upward revisions 03:44.646 --> 03:47.326 align:middle to participants' inflation projections for this year. 03:48.696 --> 03:51.006 align:middle While these supply effects are prominent for now, 03:51.006 --> 03:54.396 align:middle they will abate, and as they do, inflation is expected 03:54.396 --> 03:56.506 align:middle to drop back toward our longer-run goal. 03:57.606 --> 04:01.106 align:middle The median inflation projection from FOMC participants falls 04:01.106 --> 04:05.466 align:middle from 4.2 percent this year to 2.2 percent next year. 04:05.996 --> 04:10.036 align:middle The process of reopening the economy is unprecedented, 04:10.436 --> 04:12.826 align:middle as was the shutdown at the onset of the pandemic. 04:13.796 --> 04:16.016 align:middle As the reopening continues, bottlenecks, 04:16.016 --> 04:19.356 align:middle hiring difficulties, and other constraints could again prove 04:19.356 --> 04:21.646 align:middle to be greater and longer lasting than anticipated, 04:22.166 --> 04:24.036 align:middle posing upside risks to inflation. 04:25.206 --> 04:28.336 align:middle Our framework for monetary policy emphasizes the importance 04:28.336 --> 04:30.686 align:middle of having well-anchored inflation expectations, 04:31.216 --> 04:34.326 align:middle both to foster price stability and to enhance our ability 04:34.326 --> 04:35.786 align:middle to promote our broad-based 04:35.896 --> 04:37.796 align:middle and inclusive maximum-employment goal. 04:39.226 --> 04:42.046 align:middle Indicators of longer-term inflation expectations appear 04:42.046 --> 04:44.776 align:middle broadly consistent with our longer-run inflation goal 04:44.776 --> 04:45.576 align:middle of 2 percent. 04:46.786 --> 04:48.416 align:middle If sustained higher inflation were 04:48.416 --> 04:51.586 align:middle to become a serious concern, we would certainly respond 04:51.656 --> 04:54.706 align:middle and use our tools to assure that inflation runs at levels 04:54.706 --> 04:56.106 align:middle that are consistent with our goal. 04:56.636 --> 04:59.976 align:middle The path of the economy continues to depend 04:59.976 --> 05:01.216 align:middle on the course of the virus, 05:01.776 --> 05:04.116 align:middle and risks to the economic outlook remain. 05:05.116 --> 05:07.836 align:middle The Delta variant has led to significant increases 05:07.916 --> 05:12.176 align:middle in COVID-19 cases, resulting in significant hardship and loss 05:12.706 --> 05:14.416 align:middle and slowing the economic recovery. 05:15.756 --> 05:16.936 align:middle Continued progress 05:16.936 --> 05:19.116 align:middle on vaccinations would help contain the virus 05:19.446 --> 05:22.496 align:middle and support a return to more normal economic conditions. 05:23.776 --> 05:26.686 align:middle The Fed's policy actions have been guided by our mandate 05:26.686 --> 05:29.116 align:middle to promote maximum employment and stable prices 05:29.116 --> 05:31.836 align:middle for the American people, along with our responsibilities 05:31.836 --> 05:34.006 align:middle to promote the stability of the financial system. 05:35.046 --> 05:37.306 align:middle Our asset purchases have been a critical tool. 05:37.976 --> 05:39.916 align:middle They helped preserve financial stability 05:39.916 --> 05:41.866 align:middle and market functioning early in the pandemic 05:42.476 --> 05:44.896 align:middle and since then have helped foster accommodative financial 05:44.896 --> 05:46.446 align:middle conditions to support the economy. 05:47.506 --> 05:49.816 align:middle At our meeting that concluded earlier today, 05:50.436 --> 05:51.416 align:middle the Committee continued 05:51.416 --> 05:53.806 align:middle to discuss the progress made toward our goals 05:53.806 --> 05:56.386 align:middle since the Committee adopted its asset purchase guidance 05:56.496 --> 05:57.916 align:middle last December. 05:58.776 --> 06:02.006 align:middle Since then, the economy has made progress toward these goals. 06:02.866 --> 06:05.976 align:middle If progress continues broadly as expected, the Committee judges 06:05.976 --> 06:07.306 align:middle that a moderation in the pace 06:07.306 --> 06:09.356 align:middle of asset purchases may soon be warranted. 06:10.506 --> 06:12.396 align:middle We also discussed the appropriate pace 06:12.446 --> 06:16.326 align:middle of tapering asset purchases once economic conditions satisfy the 06:16.326 --> 06:18.506 align:middle criterion laid out in the Committee's guidance. 06:19.566 --> 06:20.756 align:middle While no decisions were made, 06:21.096 --> 06:22.736 align:middle participants generally view that, 06:22.846 --> 06:25.396 align:middle so long as the recovery remains on track, 06:25.896 --> 06:29.156 align:middle a gradual tapering process that concludes around the middle 06:29.156 --> 06:31.196 align:middle of next year is likely to be appropriate. 06:32.736 --> 06:35.346 align:middle Even after our balance sheet stops expanding, 06:35.486 --> 06:36.516 align:middle our elevated holdings 06:36.516 --> 06:38.446 align:middle of longer-term securities will continue 06:38.446 --> 06:40.646 align:middle to support accommodative financial conditions. 06:42.496 --> 06:44.806 align:middle The timing and pace of the coming reduction 06:44.806 --> 06:47.156 align:middle in asset purchases will not be intended 06:47.156 --> 06:49.916 align:middle to carry a direct signal regarding the timing 06:49.986 --> 06:51.196 align:middle of interest rate liftoff, 06:51.656 --> 06:53.626 align:middle for which we have articulated a different 06:53.626 --> 06:55.336 align:middle and substantially more stringent test. 06:56.326 --> 06:58.296 align:middle We continue to expect that it will be appropriate 06:58.296 --> 07:01.446 align:middle to maintain the current 0 to ΒΌ percent target range 07:01.446 --> 07:02.516 align:middle for the federal funds rate 07:03.156 --> 07:05.686 align:middle until labor market conditions have reached levels consistent 07:05.686 --> 07:07.706 align:middle with the Committee's assessment of maximum employment 07:08.576 --> 07:11.156 align:middle and inflation has risen to 2 percent and is on track 07:11.156 --> 07:13.536 align:middle to moderately exceed 2 percent for some time. 07:14.576 --> 07:16.636 align:middle Half of FOMC participants forecast 07:16.636 --> 07:19.616 align:middle that these favorable economic conditions will be fulfilled 07:19.616 --> 07:23.236 align:middle by the end of next year; as a result, the median projection 07:23.236 --> 07:26.376 align:middle for the appropriate level of the federal funds rate lies slightly 07:26.376 --> 07:29.626 align:middle above the effective lower bound in 2022. 07:30.506 --> 07:34.046 align:middle Participants generally expect a gradual pace of policy firming 07:34.046 --> 07:35.406 align:middle that would leave the level 07:35.406 --> 07:37.206 align:middle of the federal funds rate below estimates 07:37.206 --> 07:39.846 align:middle of its longer-run level through 2024. 07:40.856 --> 07:43.146 align:middle Of course, these projections do not represent a Committee 07:43.146 --> 07:46.036 align:middle decision or plan, and no one knows with any certainty 07:46.036 --> 07:49.106 align:middle where the economy will be a year or more from now. 07:49.606 --> 07:51.616 align:middle More important than any forecast is the fact 07:51.616 --> 07:53.356 align:middle that policy will remain accommodative 07:53.776 --> 07:56.406 align:middle until we have achieved our maximum-employment 07:56.406 --> 07:57.686 align:middle and price-stability goals. 07:58.566 --> 08:02.126 align:middle To conclude, we understand that our actions affect communities, 08:02.166 --> 08:04.006 align:middle families, and businesses across the country. 08:04.866 --> 08:07.446 align:middle Everything we do is in service to our public mission. 08:08.296 --> 08:10.946 align:middle We at the Fed will do everything we can to support the economy 08:10.946 --> 08:12.916 align:middle for as long as it takes to complete the recovery. 08:13.486 --> 08:15.456 align:middle Thank you, and I look forward to your questions. 08:15.766 --> 08:16.066 align:middle MICHELLE SMITH. 08:18.586 --> 08:19.116 align:middle Thank you. 08:19.116 --> 08:20.686 align:middle We'll go first to Rachel Siegel. 08:20.686 --> 08:21.286 align:middle RACHEL SIEGEL. 08:21.286 --> 08:22.776 align:middle Thank you, Michelle. 08:22.776 --> 08:25.276 align:middle And thank you, Chair Powell, for taking our questions. 08:25.766 --> 08:28.356 align:middle When it comes to the taper and, eventually, 08:28.356 --> 08:31.906 align:middle to any rate increases, I'm wondering if you can walk us 08:32.006 --> 08:35.056 align:middle through what "substantial further progress" looks like, 08:35.056 --> 08:36.896 align:middle given the latest batch of projections 08:36.896 --> 08:39.806 align:middle that have PCE inflation coming in a little higher 08:39.806 --> 08:41.046 align:middle than the June projection, 08:41.296 --> 08:43.556 align:middle the unemployment rate also being higher than June, 08:43.556 --> 08:46.936 align:middle as well as the change to GDP lower than June. 08:46.936 --> 08:49.476 align:middle If you could help us make sense of all those things as you sort 08:50.006 --> 08:52.136 align:middle through what "substantial further progress" looks like, 08:52.356 --> 08:52.926 align:middle that would be great. 08:52.926 --> 08:53.526 align:middle CHAIR POWELL. 08:53.586 --> 08:57.306 align:middle Sure. So the test for beginning our taper is 08:57.306 --> 08:59.966 align:middle that we've achieved substantial further progress toward our 08:59.966 --> 09:01.976 align:middle goals of [2 percent] inflation and maximum employment. 09:02.616 --> 09:07.426 align:middle And for inflation, we appear to have achieved more 09:07.426 --> 09:10.016 align:middle than significant progress-substantial 09:10.016 --> 09:10.606 align:middle further progress. 09:10.606 --> 09:14.266 align:middle So that part of the test is achieved, in my view 09:14.266 --> 09:15.736 align:middle and in the view of many others. 09:16.296 --> 09:18.846 align:middle So the question is really on the maximum-employment test. 09:19.406 --> 09:21.936 align:middle So if you look at a good number of indicators, 09:22.686 --> 09:25.226 align:middle you will see that, since last December, 09:25.226 --> 09:28.176 align:middle when we articulated the test, and the readings today, 09:28.796 --> 09:32.086 align:middle in many cases more than half of the distance, for example, 09:32.086 --> 09:37.756 align:middle between the unemployment rate in December of 2020 09:37.906 --> 09:41.806 align:middle and typical estimates of the natural rate-50 or 60 percent 09:41.806 --> 09:43.806 align:middle of that road has been traveled. 09:43.806 --> 09:47.316 align:middle So that could be substantial further progress. 09:47.316 --> 09:48.986 align:middle Many on the Committee feel that the 09:48.986 --> 09:51.756 align:middle "substantial further progress" test 09:51.896 --> 09:53.666 align:middle for employment has been met. 09:54.206 --> 09:57.376 align:middle Others feel that it's close, but they want 09:57.376 --> 09:58.526 align:middle to see a little more progress. 09:58.526 --> 09:59.926 align:middle There's a range of perspectives. 10:00.156 --> 10:02.176 align:middle I guess my own view would be that the test-the 10:02.176 --> 10:03.766 align:middle "substantial further progress" test 10:03.766 --> 10:05.566 align:middle for employment is all but met. 10:06.246 --> 10:09.136 align:middle And so, once we've met those two tests, 10:09.136 --> 10:10.906 align:middle once the Committee decides that they've met [them]-and 10:10.906 --> 10:14.356 align:middle that could come as soon as the next meeting; that's the purpose 10:14.356 --> 10:17.426 align:middle of that language, is to put notice out that that could come 10:17.426 --> 10:18.606 align:middle as soon as the next meeting. 10:19.236 --> 10:22.196 align:middle The Committee will consider that test, and we'll also look 10:22.196 --> 10:23.956 align:middle at the broader environment at that time 10:23.956 --> 10:26.116 align:middle and make a decision whether to taper. 10:26.116 --> 10:26.746 align:middle MICHELLE SMITH. 10:29.756 --> 10:30.396 align:middle Thank you. 10:30.396 --> 10:31.636 align:middle We'll go to Howard Schneider. 10:32.786 --> 10:33.586 align:middle HOWARD SCHNEIDER. 10:33.586 --> 10:34.616 align:middle Thanks, Chair Powell. 10:34.616 --> 10:35.216 align:middle Thanks, Michelle. 10:35.216 --> 10:38.576 align:middle So, looking at the SEPs, we got now basically four years 10:38.576 --> 10:40.246 align:middle of inflation above target, 10:40.246 --> 10:42.706 align:middle and policy never gets to the long-run rate. 10:43.226 --> 10:45.136 align:middle I'm wondering if you could address 10:45.206 --> 10:50.236 align:middle that from two perspectives: one, within the new framework 10:50.236 --> 10:53.476 align:middle that the Fed adopted last year and, second, 10:53.476 --> 10:54.886 align:middle from the perspective 10:54.996 --> 10:58.436 align:middle of the average household that's now being asked 10:58.436 --> 11:01.866 align:middle to pay higher prices and increasingly higher prices 11:01.866 --> 11:05.706 align:middle for four years running when, for some this year, 11:05.906 --> 11:09.016 align:middle real wages have actually gone down. 11:09.176 --> 11:09.686 align:middle CHAIR POWELL. 11:09.686 --> 11:13.936 align:middle Sure. So, as you can see, the inflation forecasts have moved 11:13.936 --> 11:15.686 align:middle up a bit in the outyears. 11:16.346 --> 11:20.256 align:middle And that's really, I think, a reflection of-and they've moved 11:20.256 --> 11:21.576 align:middle up significantly for this year. 11:21.996 --> 11:26.276 align:middle And that's, I think, a reflection of the fact 11:26.316 --> 11:28.346 align:middle that the bottlenecks and shortages 11:28.346 --> 11:29.656 align:middle that are being-that we're seeing 11:29.656 --> 11:32.286 align:middle in the economy have really not begun to abate 11:32.286 --> 11:33.386 align:middle in a meaningful way yet. 11:33.386 --> 11:37.336 align:middle So those seem to be going to be with us at least 11:37.336 --> 11:39.706 align:middle for a few more months and perhaps into next year. 11:39.706 --> 11:41.666 align:middle So that suggests that inflation's going 11:41.666 --> 11:42.676 align:middle to be higher this year, 11:42.676 --> 11:48.706 align:middle and a number-I guess the inflation rates for next year 11:48.706 --> 11:53.796 align:middle and 2023 were also marked up, but just by a couple of tenths. 11:53.796 --> 11:56.106 align:middle Why-those are very modest overshoots. 11:56.106 --> 11:59.376 align:middle You're looking at 2.2 and 2.1, you know, 11:59.816 --> 12:01.686 align:middle two years and three years out. 12:01.686 --> 12:03.366 align:middle These are very, very-I don't think 12:03.856 --> 12:07.466 align:middle that households are going to, you know, notice a couple 12:07.466 --> 12:08.636 align:middle of tenths of an overshoot. 12:09.066 --> 12:11.256 align:middle That just happens to be people's forecasts. 12:11.556 --> 12:15.236 align:middle You know, we want to foster a strong labor market, 12:15.236 --> 12:18.166 align:middle and we want to foster inflation averaging 2 percent over time, 12:18.786 --> 12:21.096 align:middle and I think we're very much on track to achieve those things. 12:22.106 --> 12:23.116 align:middle In terms of the framework, 12:23.116 --> 12:25.026 align:middle I see this as very consistent with the framework. 12:25.776 --> 12:28.806 align:middle We want inflation expectations 12:28.806 --> 12:31.646 align:middle to be anchored at around 2 percent. 12:32.346 --> 12:36.666 align:middle We want, we're-that's really the ultimate test 12:36.666 --> 12:39.936 align:middle of whether we're getting this done under the framework. 12:39.936 --> 12:42.576 align:middle And, you know, we do want inflation 12:42.576 --> 12:44.576 align:middle to run moderately above 2 percent. 12:45.386 --> 12:51.396 align:middle I wouldn't put too much on a couple of tenths over 2 percent 12:51.396 --> 12:55.196 align:middle in 2023 and '24-one-tenth in '24. 12:55.196 --> 12:57.226 align:middle But you're right, those are the numbers. 12:58.216 --> 12:59.016 align:middle MICHELLE SMITH. 13:00.986 --> 13:01.366 align:middle Thank you. 13:01.366 --> 13:02.246 align:middle Let's go to Colby Smith. 13:02.246 --> 13:04.356 align:middle COLBY SMITH. 13:04.356 --> 13:06.386 align:middle Chair Powell-thank you, Michelle. 13:06.676 --> 13:09.006 align:middle Chair Powell, you mentioned ongoing discussions 13:09.006 --> 13:11.986 align:middle about the tapering timeline, and I'm wondering what the contours 13:11.986 --> 13:13.466 align:middle of that debate have been. 13:13.466 --> 13:16.416 align:middle For those that want to move a bit more quickly, 13:16.416 --> 13:18.506 align:middle is it about maintaining optionality 13:18.506 --> 13:21.036 align:middle for a 2022 interest rate increase? 13:21.036 --> 13:23.986 align:middle Or is it about financial stability risks? 13:24.066 --> 13:27.506 align:middle Or concerns about the efficacy of asset purchases at a time 13:27.616 --> 13:29.096 align:middle when we have supply constraints? 13:29.096 --> 13:29.866 align:middle Thank you. 13:29.866 --> 13:30.166 align:middle CHAIR POWELL. 13:30.496 --> 13:34.096 align:middle So let me say that there's very broad support on the Committee 13:34.196 --> 13:36.946 align:middle for this plan, both as to the timing and as 13:36.946 --> 13:38.356 align:middle to the pace of the taper. 13:38.966 --> 13:40.666 align:middle So this was a unanimous vote today, 13:40.666 --> 13:43.876 align:middle and I'd say quite broad support for this approach. 13:44.706 --> 13:47.776 align:middle You're correct that there are some who would prefer 13:47.776 --> 13:51.476 align:middle to have gone sooner, and they've made their arguments publicly. 13:51.476 --> 13:53.726 align:middle For some of them, it's a financial stability concern. 13:53.726 --> 13:57.206 align:middle And for others, it's other concerns. 13:57.206 --> 13:59.406 align:middle They can make their own arguments. 13:59.786 --> 14:02.896 align:middle This is an approach that the Committee will broadly support, 14:03.136 --> 14:06.586 align:middle and it will put us having completed our taper sometime 14:06.586 --> 14:10.066 align:middle around the middle of next year, which seems appropriate. 14:10.706 --> 14:14.536 align:middle You know, the asset purchases, as I mentioned, were very, 14:14.536 --> 14:17.866 align:middle very important at the-in the early stages of the crisis. 14:17.896 --> 14:21.256 align:middle They were essential in restoring market function 14:21.256 --> 14:22.796 align:middle in the Treasury and other markets. 14:23.186 --> 14:25.496 align:middle Then, as the recovery got going, 14:25.746 --> 14:29.016 align:middle they supported aggregate demand, as they will do. 14:29.436 --> 14:33.966 align:middle And now we're in a situation where they still have a use, 14:34.016 --> 14:36.166 align:middle but it's time for us to begin to taper them. 14:36.166 --> 14:39.796 align:middle Their usefulness is much less as a tool than it was 14:39.796 --> 14:40.586 align:middle at the very beginning. 14:41.256 --> 14:42.906 align:middle And, of course, this leaves the whole question 14:42.906 --> 14:44.706 align:middle of rate increases ahead, which is really 14:44.706 --> 14:47.376 align:middle where the framework-the framework is all 14:47.376 --> 14:49.656 align:middle about how we deal with rate increases 14:49.656 --> 14:50.766 align:middle and that sort of thing. 14:50.766 --> 14:53.146 align:middle So we think this is the appropriate way to go. 14:53.146 --> 14:54.576 align:middle And, again, broad support on the Committee. 14:54.576 --> 14:55.206 align:middle MICHELLE SMITH. 14:57.316 --> 14:57.976 align:middle Thank you. 14:57.976 --> 14:59.026 align:middle We'll go to Nick Timiraos. 14:59.026 --> 15:03.076 align:middle NICK TIMIRAOS. 15:03.076 --> 15:05.076 align:middle Hi, Nick Timiraos of the Wall Street Journal. 15:05.756 --> 15:08.056 align:middle Chair Powell, you have said the test 15:08.056 --> 15:11.186 align:middle for liftoff is more stringent than the test for tapering. 15:11.706 --> 15:14.566 align:middle But if the near-term projections today are credible, 15:14.826 --> 15:19.346 align:middle more of your colleagues seem to think that rate liftoff, 15:19.346 --> 15:22.146 align:middle and not just a taper, may be closer at hand. 15:22.656 --> 15:25.676 align:middle Does the Committee have a different opinion than you do 15:25.676 --> 15:28.806 align:middle about the threshold for liftoff that you've articulated? 15:29.216 --> 15:30.996 align:middle Or do they believe that either inflation 15:30.996 --> 15:33.576 align:middle or economic growth will necessitate a rate increase 15:33.846 --> 15:34.826 align:middle sooner than you do? 15:34.826 --> 15:36.166 align:middle CHAIR POWELL. 15:36.166 --> 15:39.256 align:middle Well, so, again, substantial further progress toward our 15:39.256 --> 15:43.526 align:middle goals is the test for beginning the taper. 15:43.526 --> 15:45.906 align:middle And the taper takes some months in everyone's figuring. 15:45.906 --> 15:51.296 align:middle So you're going to be well away from satisfying the liftoff test 15:51.846 --> 15:53.566 align:middle when we begin the taper. 15:53.666 --> 15:56.726 align:middle So in terms of the liftoff test, though, you know, 15:56.726 --> 15:59.546 align:middle it's what we adopted last September. 16:00.366 --> 16:02.596 align:middle It's labor market conditions consistent 16:02.596 --> 16:03.716 align:middle with maximum employment. 16:04.166 --> 16:08.516 align:middle And while we have interesting signs that, in many ways, 16:08.516 --> 16:11.526 align:middle the labor market's very tight, we also have lots of slack 16:11.526 --> 16:12.656 align:middle in the labor market, and we think 16:13.166 --> 16:15.046 align:middle that those imbalances will sort themself out. 16:16.046 --> 16:19.446 align:middle Inflation at 2 percent and on track to achieve it, 16:19.446 --> 16:22.326 align:middle moderately higher inflation over 2 percent-you know, 16:22.326 --> 16:24.206 align:middle that really depends on the path of inflation. 16:24.206 --> 16:30.606 align:middle If inflation remains higher during the course of 2022, 16:30.606 --> 16:32.236 align:middle then we may already have met that test 16:32.236 --> 16:33.556 align:middle by the time we reach liftoff. 16:33.556 --> 16:36.626 align:middle So I just think, if you look at what people are writing 16:36.626 --> 16:40.616 align:middle down for year-end 2022 numbers, some people are writing 16:40.616 --> 16:42.466 align:middle down very low unemployment rates. 16:42.736 --> 16:44.026 align:middle And that's only one indicator, 16:44.026 --> 16:46.326 align:middle but it suggests a very strong labor market. 16:46.586 --> 16:47.586 align:middle And I think they're writing 16:47.586 --> 16:50.436 align:middle down in good faith what they see as meeting the test. 16:51.026 --> 16:54.176 align:middle There's a range of perspectives about where the economy will be, 16:54.176 --> 16:58.926 align:middle but-by the way, all but one participants have us lifting off 16:58.926 --> 17:00.426 align:middle during 2023. 17:00.856 --> 17:05.866 align:middle So it's not really an unusually wide array of views about this. 17:06.006 --> 17:06.476 align:middle NICK TIMIRAOS. 17:08.486 --> 17:08.906 align:middle Thank you. 17:08.906 --> 17:14.386 align:middle MICHELLE SMITH. 17:14.386 --> 17:15.046 align:middle We'll go to Jeanna Smialek. 17:15.046 --> 17:15.616 align:middle JEANNA SMIALEK. 17:15.616 --> 17:22.916 align:middle Hey, Chair Powell-thank you for taking our questions. 17:23.016 --> 17:26.746 align:middle Prior to recent media reports, were you aware of the kind 17:26.746 --> 17:29.796 align:middle of security buying and selling that Presidents Kaplan 17:29.796 --> 17:32.876 align:middle and Rosengren were participating in last year? 17:32.876 --> 17:37.516 align:middle And I wonder if you thought those were appropriate. 17:37.656 --> 17:38.186 align:middle CHAIR POWELL. 17:38.906 --> 17:40.986 align:middle So, no, I was not aware of the specifics 17:41.156 --> 17:42.136 align:middle of what they were doing. 17:42.236 --> 17:45.526 align:middle So let me just say a couple things about this subject. 17:46.766 --> 17:49.956 align:middle We understand very well that the trust 17:49.956 --> 17:52.526 align:middle of the American people is essential for us 17:52.526 --> 17:54.296 align:middle to effectively carry out our mission. 17:54.976 --> 17:57.286 align:middle And that's why I directed the Fed 17:57.286 --> 18:00.176 align:middle to begin a comprehensive review of the ethics rules 18:00.176 --> 18:01.716 align:middle around permissible financial holdings 18:01.716 --> 18:03.766 align:middle and activity by Fed officials. 18:04.366 --> 18:07.826 align:middle So those rules are, in many respects, the same as those 18:07.826 --> 18:11.086 align:middle for government agencies, plus a number of things 18:11.086 --> 18:13.416 align:middle that apply specifically to us because of our business. 18:13.836 --> 18:16.486 align:middle One of those is-sort of, three things I would point to in terms 18:16.486 --> 18:18.456 align:middle of specific restrictures. 18:18.456 --> 18:21.896 align:middle One is, ownership of certain assets is not allowed, 18:21.896 --> 18:23.896 align:middle and that's bank securities and other things. 18:24.276 --> 18:27.216 align:middle Secondly, there are times when we're not allowed to trade 18:27.216 --> 18:30.256 align:middle at all or to, you know, buy and sell financial assets. 18:30.256 --> 18:31.966 align:middle And that's the period immediately before 18:31.966 --> 18:33.086 align:middle and during an FOMC meeting. 18:33.366 --> 18:34.986 align:middle And, third, there's regular disclosure. 18:34.986 --> 18:38.346 align:middle So all of these-everyone's, you know, ownership 18:38.346 --> 18:42.486 align:middle and activities are all disclosed on an annual basis. 18:42.816 --> 18:45.076 align:middle So, you know, I would have had to go back 18:45.076 --> 18:47.146 align:middle and read people's financial disclosures 18:47.146 --> 18:49.196 align:middle to know what their activities have been. 18:49.196 --> 18:52.076 align:middle This has been our framework for a long time, 18:52.396 --> 18:54.356 align:middle and I guess you'd say it's served us well. 18:54.506 --> 18:58.806 align:middle The other thing you would say-that it is now clearly seen 18:58.806 --> 19:01.206 align:middle as not adequate to the task 19:02.286 --> 19:06.316 align:middle of really sustaining the public's trust in us. 19:06.316 --> 19:07.876 align:middle We need to make changes, and we're going to do 19:07.876 --> 19:09.136 align:middle that as a consequence of this. 19:09.136 --> 19:14.026 align:middle This will be a thoroughgoing and comprehensive review. 19:14.026 --> 19:18.566 align:middle We're going to gather all the facts and look at ways 19:18.566 --> 19:21.296 align:middle to further tighten our rules and standards. 19:21.586 --> 19:21.906 align:middle MICHELLE SMITH. 19:27.356 --> 19:27.796 align:middle Great. Thank you. 19:27.796 --> 19:28.676 align:middle We'll go to Steve Liesman. 19:28.676 --> 19:29.536 align:middle STEVE LIESMAN. 19:32.596 --> 19:33.066 align:middle Thank you. 19:33.066 --> 19:34.146 align:middle Thank you, Mr. Chairman. 19:34.146 --> 19:39.766 align:middle I want to follow up on Jeanna's question, the issue of ownership 19:39.766 --> 19:41.416 align:middle of these stocks and trades. 19:41.896 --> 19:44.936 align:middle Do you think it's appropriate for Federal Reserve officials 19:44.936 --> 19:46.696 align:middle to be owning the same assets 19:46.696 --> 19:48.496 align:middle that the Federal Reserve is buying? 19:48.496 --> 19:51.406 align:middle Is that one of the modifications that you're looking at? 19:51.406 --> 19:53.726 align:middle And in that these-you said yourself, 19:53.726 --> 19:55.416 align:middle they're clearly not seen as appropriate. 19:55.726 --> 19:56.716 align:middle In that the Fed's code 19:56.716 --> 19:59.416 align:middle of conduct says Fed officials should avoid even the appearance 19:59.416 --> 20:02.836 align:middle of the, of conflict, do those trades, 20:02.836 --> 20:05.946 align:middle in fact-and holdings-violate the Fed's code of conduct? 20:06.126 --> 20:07.616 align:middle Finally, do you have a timeline as to 20:07.616 --> 20:08.986 align:middle when you might get-be done with your review? 20:08.986 --> 20:09.456 align:middle Thank you, sir. 20:10.596 --> 20:10.866 align:middle CHAIR POWELL. 20:10.866 --> 20:13.366 align:middle Don't have a timeline yet; we can start with that. 20:14.466 --> 20:18.716 align:middle So, well, let me address the muni question, 20:18.716 --> 20:22.106 align:middle since that's in there. 20:23.616 --> 20:27.436 align:middle You know, I personally owned municipal securities for many, 20:27.436 --> 20:31.176 align:middle many years, and in 2019, I froze that. 20:31.176 --> 20:34.116 align:middle Meaning I-they're no-I'm holding all those securities, 20:34.116 --> 20:35.906 align:middle my wife and I, to maturity. 20:36.826 --> 20:41.056 align:middle And munis were always thought to be a pretty safe place 20:41.056 --> 20:44.106 align:middle for a Fed person to invest because, as you know, 20:44.696 --> 20:47.526 align:middle the lore was that the Fed would never buy municipal securities. 20:47.686 --> 20:48.996 align:middle So it was not an uncommon thing. 20:49.666 --> 20:54.216 align:middle And so then comes the, you know, the COVID crisis, and I reversed 20:54.216 --> 20:57.226 align:middle that policy, and I did it without hesitating. 20:57.356 --> 21:00.546 align:middle And the reason was that the financial markets, 21:00.546 --> 21:03.086 align:middle including the municipal financial market, were very much 21:03.086 --> 21:04.226 align:middle on the verge of collapse. 21:04.766 --> 21:07.276 align:middle And it was time to go, and we did. 21:07.986 --> 21:09.476 align:middle But we also checked with the Office 21:09.476 --> 21:11.736 align:middle of Government Ethics and-who looked carefully at it and said 21:11.736 --> 21:12.756 align:middle that I didn't have a conflict. 21:12.856 --> 21:16.226 align:middle So that's one answer that I wanted to share with you. 21:16.286 --> 21:19.606 align:middle Secondly, you're right, though, as-we're going 21:19.606 --> 21:20.606 align:middle to be looking at all those things. 21:20.666 --> 21:25.356 align:middle I don't want to get ahead of the process here and speculate 21:25.356 --> 21:26.516 align:middle about particular outcomes. 21:26.516 --> 21:28.456 align:middle But this, again, comprehensive 21:28.456 --> 21:30.816 align:middle and deliberate process-we're going to make changes. 21:31.086 --> 21:35.176 align:middle I want to be able to look back on this years from now and know 21:35.176 --> 21:36.826 align:middle that we rose to meet this challenge 21:36.826 --> 21:39.886 align:middle and handled the situation well, and that what we did made a lot 21:39.886 --> 21:42.856 align:middle of sense and protected the public's interest 21:42.856 --> 21:45.156 align:middle and the institution that we're all a part of. 21:45.726 --> 21:46.206 align:middle STEVE LIESMAN. 21:46.206 --> 21:48.156 align:middle I'm sorry, Chair Powell-I just want to follow up. 21:48.156 --> 21:49.116 align:middle You said I was right. 21:49.116 --> 21:49.986 align:middle When you said "right," 21:49.986 --> 21:53.076 align:middle about that the Feds should not own-Federal Reserve officials 21:53.076 --> 21:54.666 align:middle should not own the same assets they're buying? 21:54.666 --> 21:55.436 align:middle Is that- CHAIR POWELL. 21:55.436 --> 21:56.696 align:middle I think that's a reasonable thing. 21:56.696 --> 21:58.746 align:middle Yeah, and, of course, for the most part, we don't. 21:58.746 --> 22:00.296 align:middle I mean, it was a real coincidence; 22:00.296 --> 22:01.906 align:middle I happened to pre-own these munis. 22:01.906 --> 22:03.936 align:middle They were bought many years ago, actually. 22:04.266 --> 22:06.496 align:middle And so we started buying munis as part 22:06.496 --> 22:08.296 align:middle of the Municipal Liquidity Facility. 22:08.296 --> 22:11.566 align:middle So it was really not a-it just was an unforeseen event. 22:11.566 --> 22:13.796 align:middle And I couldn't sell them, so what I did was, 22:14.116 --> 22:15.096 align:middle I just held them, checked 22:15.096 --> 22:16.666 align:middle with the ethics people, and went ahead. 22:16.746 --> 22:19.636 align:middle So, but as a general principle, yeah, that makes a lot of sense. 22:19.636 --> 22:20.036 align:middle STEVE LIESMAN. 22:20.386 --> 22:20.606 align:middle Thank you. 22:20.656 --> 22:21.176 align:middle MICHELLE SMITH. 22:23.036 --> 22:23.386 align:middle Thank you. 22:23.386 --> 22:24.606 align:middle We'll go to Chris Rugaber. 22:27.116 --> 22:27.836 align:middle CHRIS RUGABER. 22:27.926 --> 22:28.966 align:middle Thank you. 22:28.966 --> 22:29.536 align:middle Thank you. 22:29.536 --> 22:30.896 align:middle Thank you, Chair Powell. 22:31.676 --> 22:35.086 align:middle Wider question about jobs 22:35.276 --> 22:40.096 align:middle and the Fed's schedule-the Fed's policy framework 22:40.096 --> 22:41.066 align:middle that you laid out here. 22:41.116 --> 22:44.506 align:middle You and other Fed officials have often talked 22:44.506 --> 22:47.676 align:middle about expecting a job market pickup in September 22:47.676 --> 22:50.986 align:middle as more children return to school, freeing up more parents 22:50.986 --> 22:53.346 align:middle to work, COVID abating. 22:53.756 --> 22:56.756 align:middle You mentioned in the past the extra unemployment 22:56.756 --> 22:57.906 align:middle benefits expiring. 22:58.546 --> 23:00.956 align:middle There's some real-time data suggesting 23:01.866 --> 23:05.116 align:middle that we may not be seeing much of a return of labor supply. 23:05.216 --> 23:07.726 align:middle So do you still expect to see 23:07.726 --> 23:11.246 align:middle that in the next couple of jobs reports? 23:11.246 --> 23:13.636 align:middle And how would a relatively weak jobs report 23:13.636 --> 23:16.106 align:middle in September affect your plans? 23:16.106 --> 23:16.646 align:middle Thank you. 23:16.956 --> 23:18.796 align:middle CHAIR POWELL. 23:19.146 --> 23:21.126 align:middle So, you're right, we have a-really, 23:21.126 --> 23:24.196 align:middle I'll call it a unique situation where, by many measures, 23:24.196 --> 23:25.336 align:middle the labor market is tight. 23:25.606 --> 23:30.616 align:middle And 11 million job openings, very widespread reports 23:30.616 --> 23:33.366 align:middle from employers all over the economy saying it's quite 23:33.366 --> 23:36.956 align:middle difficult to hire people, wages moving up, and that kind-so, 23:36.956 --> 23:40.176 align:middle quite a tight labor market. 23:40.176 --> 23:44.526 align:middle So our view, I think-widespread view a few months ago was 23:44.526 --> 23:46.696 align:middle that several things were coming together in the fall, 23:47.116 --> 23:49.536 align:middle including kids back to school, which would, you know, 23:49.536 --> 23:53.136 align:middle which would lighten caregiving duties, including the expiration 23:53.136 --> 23:56.796 align:middle of unemployment-extra unemployment benefits, 23:57.346 --> 24:02.186 align:middle and other things would come together to provide an increase 24:02.186 --> 24:05.286 align:middle in labor supply, and so we'd get out of this strange world 24:05.286 --> 24:07.186 align:middle where there're lots of unemployed people 24:07.396 --> 24:10.296 align:middle and a high unemployment rate but a labor shortage. 24:10.346 --> 24:13.056 align:middle And so what happened was, Delta happened. 24:13.306 --> 24:18.276 align:middle And you had this very sharp spike in Delta cases. 24:18.276 --> 24:20.876 align:middle And I think, so that affects-for example, 24:21.936 --> 24:24.136 align:middle when schools are open 60 percent of the time 24:24.136 --> 24:26.326 align:middle or when they're always at a threat of being closed 24:26.326 --> 24:29.376 align:middle because of Delta, the Delta variant, you know, 24:29.376 --> 24:30.426 align:middle you might want to wait. 24:30.426 --> 24:32.286 align:middle Rather than going ahead and taking a job 24:32.286 --> 24:34.856 align:middle and starting work only to have to quit it three weeks later, 24:34.856 --> 24:36.606 align:middle you're going to wait until you're confident of that. 24:36.606 --> 24:38.916 align:middle So some of that may not have happened. 24:38.916 --> 24:43.006 align:middle Also, people didn't, you know-as you know, hiring and spending 24:43.006 --> 24:47.486 align:middle in these face-to-face service industries, travel and leisure, 24:47.796 --> 24:51.246 align:middle it just kind of stopped during those months. 24:51.246 --> 24:54.526 align:middle So we-so that-really, the big shortfall in labor, in jobs, 24:54.526 --> 24:56.256 align:middle was largely in travel and leisure, 24:56.256 --> 24:58.326 align:middle and that's because of-clearly because of Delta. 24:58.326 --> 24:59.756 align:middle So that all happened. 24:59.756 --> 25:02.076 align:middle And so what we-we know things that didn't happen. 25:02.496 --> 25:05.106 align:middle I think there's still-it may just be 25:05.106 --> 25:06.546 align:middle that it's going to take more time. 25:07.206 --> 25:09.816 align:middle But it still seems that, inexorably, 25:10.316 --> 25:11.466 align:middle people will-these are people 25:11.466 --> 25:14.106 align:middle who were largely working back in February of 2020. 25:14.106 --> 25:16.806 align:middle They'll get back to work when it's time to do that. 25:17.076 --> 25:18.406 align:middle It just may take a longer time. 25:18.406 --> 25:21.966 align:middle You're right, though-it didn't happen with any force 25:21.966 --> 25:24.686 align:middle in September, and a lot of that was Delta. 25:25.566 --> 25:30.616 align:middle In terms of the-you asked also about the test for November. 25:30.906 --> 25:36.676 align:middle I think if the economy continues to progress broadly in line 25:36.676 --> 25:37.796 align:middle with expectations, 25:38.826 --> 25:46.486 align:middle then I think-and also the overall situation is appropriate 25:46.486 --> 25:49.146 align:middle for this, then I think we could easily move ahead 25:49.146 --> 25:50.396 align:middle at the next meeting. 25:50.836 --> 25:53.716 align:middle Or not, depending on whether we feel 25:53.826 --> 25:55.086 align:middle like that, those tests are met. 25:55.086 --> 25:55.726 align:middle CHRIS RUGABER. 25:57.246 --> 26:00.016 align:middle Well, just a quick-if I could just quickly follow up, I mean, 26:00.016 --> 26:02.316 align:middle what, how much of that will depend on what kind 26:02.316 --> 26:03.866 align:middle of jobs report we get for September? 26:03.866 --> 26:06.236 align:middle And, I mean, is it, you know, 26:06.236 --> 26:08.366 align:middle are you in a data-dependent phase here where you need 26:08.366 --> 26:10.546 align:middle to see certain numbers going ahead? 26:10.546 --> 26:11.446 align:middle Or are we at a point 26:11.446 --> 26:14.236 align:middle where you've accumulated enough progress that- CHAIR POWELL. 26:14.236 --> 26:16.636 align:middle So it is, it's accumulated progress. 26:16.706 --> 26:20.626 align:middle So, you know, for me, it wouldn't take a knockout, great, 26:20.926 --> 26:22.396 align:middle super strong employment report. 26:22.396 --> 26:25.826 align:middle It would take a reasonably good employment report for me to feel 26:25.826 --> 26:26.926 align:middle like that test is met. 26:27.726 --> 26:30.536 align:middle And others on the Committee-many on the Committee feel 26:30.536 --> 26:31.706 align:middle that the test is already met. 26:32.146 --> 26:34.186 align:middle Others want to see more progress. 26:34.186 --> 26:37.806 align:middle And, you know, we'll work it out as we go. 26:37.806 --> 26:40.036 align:middle But I would say that, in my own thinking, 26:40.036 --> 26:41.396 align:middle the test is all but met. 26:41.516 --> 26:43.056 align:middle So I don't personally need 26:43.056 --> 26:45.296 align:middle to see a very strong employment report, 26:45.296 --> 26:47.716 align:middle but I'd like to see a good-a decent employment report. 26:48.256 --> 26:52.386 align:middle I mean, it's not, it's, again, it's not to be confused 26:52.686 --> 26:55.386 align:middle with the test for liftoff, which is so much higher. 26:55.816 --> 26:56.586 align:middle CHRIS RUGABER. 26:58.286 --> 26:58.866 align:middle Great. Thank you. 26:58.866 --> 27:00.056 align:middle MICHELLE SMITH. 27:00.056 --> 27:00.326 align:middle Okay. Thank you. 27:00.326 --> 27:01.646 align:middle We'll go to Victoria Guida. 27:01.646 --> 27:06.236 align:middle VICTORIA GUIDA. 27:06.236 --> 27:07.086 align:middle Hi, Chair Powell. 27:07.086 --> 27:09.516 align:middle So I wanted to ask about the Vice Chair 27:09.516 --> 27:12.006 align:middle of Supervision position and just-I was wondering 27:12.006 --> 27:14.636 align:middle if you could speak about how you view that role and the extent 27:14.636 --> 27:17.786 align:middle to which you defer to that person on regulatory policy. 27:18.146 --> 27:20.856 align:middle And then, just sort of a related question: As you know, 27:20.856 --> 27:23.596 align:middle Randy Quarles's vice chairmanship ends next month, 27:23.596 --> 27:25.036 align:middle and I was wondering if he's going 27:25.036 --> 27:26.916 align:middle to retain the supervisory portfolio 27:26.916 --> 27:28.356 align:middle until he's replaced in that role. 27:29.496 --> 27:29.756 align:middle CHAIR POWELL. 27:29.756 --> 27:32.776 align:middle Sure. So Dodd-Frank created this position, 27:32.776 --> 27:34.436 align:middle Vice Chair for Supervision, and it's, 27:34.486 --> 27:37.486 align:middle there's actually a specific assignment 27:37.646 --> 27:40.206 align:middle in the Dodd-Frank language, as I'm sure you know. 27:40.206 --> 27:42.266 align:middle And, effectively, what it means is that the Vice Chair 27:42.266 --> 27:47.526 align:middle for Supervision is charged with setting the regulatory agenda. 27:48.266 --> 27:50.806 align:middle And, you know, it's a specific grant of authority. 27:50.806 --> 27:55.006 align:middle And in the 10 years, almost, that I've been at the Fed, 27:55.066 --> 27:56.636 align:middle that person has really done that. 27:57.086 --> 27:59.046 align:middle Dan Tarullo certainly did it, 27:59.046 --> 28:01.336 align:middle and Vice Chair Quarles did it as well. 28:01.836 --> 28:05.746 align:middle And I would, I think-I respect that authority. 28:05.746 --> 28:07.056 align:middle I respect that that's the person 28:07.056 --> 28:11.126 align:middle who will set the regulatory agenda going forward, 28:11.126 --> 28:12.396 align:middle and I would accept that. 28:12.396 --> 28:15.226 align:middle And, furthermore, you know, it's fully appropriate 28:15.916 --> 28:19.746 align:middle to look at-for a new person to come in and look 28:19.746 --> 28:22.606 align:middle at the current state of regulation and supervision 28:22.606 --> 28:27.256 align:middle and suggest appropriate changes, and I welcome that. 28:27.256 --> 28:30.446 align:middle In terms of Vice Chair Quarles's term, we're not currently 28:30.446 --> 28:32.866 align:middle in that situation, and I actually don't have any updates 28:32.866 --> 28:33.736 align:middle for you on that today. 28:34.616 --> 28:35.566 align:middle We'll keep you posted on that. 28:35.736 --> 28:36.186 align:middle MICHELLE SMITH. 28:38.106 --> 28:38.666 align:middle Thank you. 28:38.666 --> 28:40.506 align:middle We'll go to Steve Matthews at Bloomberg. 28:42.996 --> 28:43.616 align:middle STEVE MATTHEWS. 28:43.616 --> 28:44.916 align:middle Thank you. 28:44.916 --> 28:47.606 align:middle Chair Powell, I wanted to ask 28:47.606 --> 28:50.806 align:middle about the inclusive monetary policy framework. 28:51.426 --> 28:55.376 align:middle In particular, Bloomberg surveyed economists, 28:55.376 --> 28:59.546 align:middle and we found that they predict liftoff will happen 28:59.576 --> 29:03.136 align:middle when the U.S. unemployment rate is 3.8 percent 29:03.136 --> 29:07.786 align:middle but the Black unemployment rate is 6.1 percent. 29:07.906 --> 29:11.476 align:middle And I'm wondering if a 6.1 percent unemployment rate 29:11.476 --> 29:15.796 align:middle for African Americans is consistent with full employment 29:15.796 --> 29:18.996 align:middle or whether it would need to be lower as part 29:18.996 --> 29:21.676 align:middle of your inclusive growth strategy. 29:21.676 --> 29:22.816 align:middle CHAIR POWELL. 29:22.816 --> 29:27.006 align:middle Right, so the point of the broad and inclusive goal was not 29:27.006 --> 29:30.696 align:middle to target a particular unemployment rate 29:30.696 --> 29:33.026 align:middle for any particular group. 29:33.366 --> 29:39.666 align:middle Really, we look at a broad range of-a very broad range of metrics 29:39.666 --> 29:41.756 align:middle when we think about what maximum employment is. 29:41.756 --> 29:44.736 align:middle And one of the things we look at is unemployment rates 29:44.736 --> 29:47.996 align:middle and participation rates and wages for different demographic 29:47.996 --> 29:49.316 align:middle and age groups and that kind of thing. 29:49.316 --> 29:51.096 align:middle So we will do all of that. 29:51.436 --> 29:55.766 align:middle So I think if you look back, what were we really thinking? 29:56.256 --> 29:59.186 align:middle So we all saw the benefits of a strong labor market. 29:59.336 --> 30:01.816 align:middle If you look at the last two or three years of, 30:01.916 --> 30:05.106 align:middle before the pandemic hit, you saw-after a lot 30:05.106 --> 30:08.186 align:middle of long progress, you saw a really strong labor market. 30:08.186 --> 30:11.376 align:middle And you saw wages at the low end moving up faster 30:11.376 --> 30:13.696 align:middle than everywhere else-something that's great to see. 30:13.926 --> 30:17.846 align:middle We also saw the lowest unemployment rates 30:18.026 --> 30:21.966 align:middle for minorities of various, you know, for African Americans, 30:21.966 --> 30:25.686 align:middle for example, and also participation rates. 30:25.686 --> 30:28.206 align:middle We saw a really, really healthy set of dynamics. 30:28.246 --> 30:30.686 align:middle And, by the way, we also-there was no reason why it 30:30.686 --> 30:31.386 align:middle couldn't continue. 30:31.806 --> 30:33.586 align:middle There were no imbalances in the economy, 30:33.586 --> 30:36.006 align:middle and then along came the pandemic. 30:36.256 --> 30:39.086 align:middle We were not-there was nothing in the economy that looked 30:39.086 --> 30:43.476 align:middle like a buildup of imbalances that could cause a recession. 30:43.476 --> 30:46.776 align:middle So I was very much thinking that the country would really benefit 30:46.776 --> 30:48.686 align:middle from a few more years of this. 30:48.686 --> 30:53.876 align:middle It would have been-so we're all quite eager to get back to that. 30:53.936 --> 30:57.736 align:middle We also said we wouldn't raise rates just in response 30:57.736 --> 31:00.996 align:middle to very low unemployment, in the absence of inflation. 31:01.476 --> 31:03.576 align:middle So that was another aspect of it, because we saw 31:03.576 --> 31:08.826 align:middle that that really benefited labor market participants 31:08.826 --> 31:09.846 align:middle in a broad and inclusive way. 31:09.876 --> 31:12.056 align:middle That's, of course, not the current situation. 31:12.056 --> 31:15.656 align:middle We have significant slack in the economy and inflation well 31:15.656 --> 31:17.306 align:middle above target, not moderately above target. 31:17.796 --> 31:19.636 align:middle So that's, really, how we think about it. 31:19.636 --> 31:22.426 align:middle It isn't really just targeting the headline numbers, 31:22.476 --> 31:24.736 align:middle but it's about taking all of those things into account 31:24.736 --> 31:28.366 align:middle in your thinking about what constitutes maximum employment. 31:29.556 --> 31:29.956 align:middle STEVE MATTHEWS. 31:29.956 --> 31:36.456 align:middle Just to follow up, should there be a significant gap 31:36.456 --> 31:40.506 align:middle between Black unemployment and overall unemployment 31:40.506 --> 31:44.196 align:middle for structural reasons that are outside of the control 31:44.196 --> 31:47.566 align:middle of the Fed that other people should be doing something about? 31:47.876 --> 31:51.486 align:middle Or should that be-should the gap be narrowed, 31:51.486 --> 31:53.096 align:middle if not down to zero? 31:53.496 --> 31:54.256 align:middle CHAIR POWELL. 31:54.256 --> 31:57.946 align:middle Well, you really-I mean, first of all, ideally, 31:57.946 --> 31:59.416 align:middle there wouldn't be any gap, of course. 31:59.536 --> 32:01.936 align:middle We would all love to see no such gap. 32:01.936 --> 32:05.206 align:middle This is a persistent gap, and it's very hard 32:05.206 --> 32:08.666 align:middle to explain based on typical metrics. 32:08.666 --> 32:12.526 align:middle It's just, it's quite troubling, but it really is-you know, 32:12.526 --> 32:17.886 align:middle we have, you know, famously broad and blunt tools. 32:18.456 --> 32:23.376 align:middle I think eliminating inequality and racial discrimination 32:23.376 --> 32:24.686 align:middle and racial disparities and that kind 32:24.686 --> 32:27.556 align:middle of thing is really something that fiscal policy 32:27.556 --> 32:30.686 align:middle and other policies-frankly, education policies and that kind 32:31.276 --> 32:33.016 align:middle of thing-are better at focusing on. 32:33.016 --> 32:35.726 align:middle I think we've identified the part that we can do, 32:36.236 --> 32:37.356 align:middle and we'll do that part. 32:37.416 --> 32:40.106 align:middle But I've always been clear that it's going 32:40.106 --> 32:43.226 align:middle to take policies broadly across society 32:43.676 --> 32:44.636 align:middle to work on these problems. 32:44.636 --> 32:45.336 align:middle STEVE MATTHEWS. 32:47.006 --> 32:48.066 align:middle Thanks. MICHELLE SMITH. 32:48.066 --> 32:48.436 align:middle Thank you. 32:48.436 --> 32:49.316 align:middle Let's go to Michael McKee. 32:49.316 --> 32:49.706 align:middle MICHAEL MCKEE. 32:55.766 --> 32:58.836 align:middle -a plan for dealing with a debt default 32:59.586 --> 33:02.896 align:middle that included prioritization, that included changes 33:02.896 --> 33:07.946 align:middle in bank regulations and possibly selling defaulted-or, 33:07.946 --> 33:11.396 align:middle nondefaulted Treasuries and buying those who are-that are. 33:11.746 --> 33:14.746 align:middle Are any or all of those still on the table? 33:14.746 --> 33:17.266 align:middle Do you think any of those would work? 33:17.526 --> 33:20.886 align:middle And what would happen to the economy, in your view, 33:21.286 --> 33:22.846 align:middle should the debt ceiling not be raised? 33:22.846 --> 33:24.106 align:middle CHAIR POWELL. 33:24.106 --> 33:25.296 align:middle So, I missed the first few words, 33:25.296 --> 33:26.936 align:middle but I think I got your question. 33:27.526 --> 33:31.696 align:middle So it's just very important that the debt ceiling be raised 33:31.696 --> 33:34.846 align:middle in a timely fashion so that the United States can pay its bills 33:35.396 --> 33:36.416 align:middle when and as they come due. 33:36.696 --> 33:40.046 align:middle That's a critically important thing. 33:40.276 --> 33:45.186 align:middle The failure to do that is something that could result 33:45.186 --> 33:49.366 align:middle in severe reactions, severe damage to the economy 33:49.366 --> 33:50.396 align:middle and to the financial markets. 33:50.396 --> 33:52.536 align:middle And it's just not something that we could contemplate, 33:52.836 --> 33:53.786 align:middle that we should contemplate. 33:54.606 --> 33:56.476 align:middle I'm not going to comment 33:56.476 --> 33:58.696 align:middle on particular tactics or things like that. 33:58.696 --> 34:01.036 align:middle I'm just going to say that I think we can all agree 34:01.036 --> 34:03.806 align:middle that the United States shouldn't default on any 34:03.806 --> 34:06.376 align:middle of its obligations-should pay them when and as due. 34:06.756 --> 34:10.846 align:middle And that, you know, no one should assume that the Fed 34:10.846 --> 34:14.396 align:middle or anyone else can protect the markets or the economy 34:14.476 --> 34:17.026 align:middle in the event of a failure-fully protect in the event 34:17.026 --> 34:19.976 align:middle of a failure to, you know, to make sure 34:19.976 --> 34:23.056 align:middle that we do pay those debts when they're due. 34:23.056 --> 34:23.406 align:middle MICHAEL MCKEE. 34:24.116 --> 34:26.936 align:middle Good. If I could follow up, have you discussed options 34:26.936 --> 34:29.106 align:middle with members of Congress? 34:29.106 --> 34:29.326 align:middle CHAIR POWELL. 34:29.326 --> 34:32.126 align:middle You know, I don't generally ever talk 34:32.126 --> 34:34.326 align:middle about the conversations I have with elected officials 34:34.326 --> 34:35.576 align:middle or other appointed officials. 34:36.366 --> 34:41.596 align:middle But, look, you can see that this is a major focus among those 34:41.596 --> 34:45.116 align:middle who have responsibility for it, and-including elected people. 34:45.116 --> 34:45.496 align:middle MICHELLE SMITH. 34:45.496 --> 34:45.796 align:middle Thank you. 34:45.796 --> 34:50.026 align:middle Let's go to Hannah Lang. 34:50.026 --> 34:50.546 align:middle HANNAH LANG. 34:54.516 --> 34:55.526 align:middle Hi-thanks so much. 34:55.526 --> 34:58.876 align:middle Senator Warren sent you a letter last week urging the Fed 34:58.876 --> 35:01.906 align:middle to break up Wells Fargo, citing what she called 35:01.906 --> 35:03.996 align:middle "ungovernable behavior" from the bank. 35:04.286 --> 35:07.146 align:middle I'm just curious, under what circumstances would the Fed 35:07.146 --> 35:09.736 align:middle actually consider revoking a financial holding 35:09.736 --> 35:10.946 align:middle company's license? 35:10.946 --> 35:14.656 align:middle And if the indiscretions at Wells Fargo, in your opinion, 35:14.726 --> 35:16.146 align:middle warrant such an action? 35:16.796 --> 35:17.116 align:middle CHAIR POWELL. 35:17.116 --> 35:19.766 align:middle So we're, of course, 35:19.766 --> 35:22.676 align:middle very closely monitoring Wells Fargo's efforts 35:22.676 --> 35:24.896 align:middle to fix its widespread and pervasive problems. 35:25.556 --> 35:27.396 align:middle They represent a serious matter to us, 35:27.396 --> 35:30.376 align:middle and the firm is required to remediate them. 35:31.156 --> 35:33.776 align:middle And we will take appropriate supervisory action 35:33.776 --> 35:35.726 align:middle if the firm fails to meet our expectation. 35:36.166 --> 35:38.476 align:middle We continue to hold the firm accountable for its deficiencies 35:38.476 --> 35:41.506 align:middle with an unprecedented asset cap that will stay in place 35:41.506 --> 35:43.766 align:middle until the firm has comprehensively fixed 35:43.766 --> 35:44.456 align:middle its problems. 35:45.226 --> 35:48.726 align:middle And we're not going to remove 35:48.726 --> 35:50.806 align:middle that asset cap until that's done. 35:51.086 --> 35:56.316 align:middle So bottom line is, we'll take strong supervisory action 35:56.316 --> 35:57.686 align:middle if a firm is engaging in unsafe 35:57.686 --> 35:59.566 align:middle and unsound practices or violating laws. 35:59.566 --> 36:00.636 align:middle But I can't speak 36:00.636 --> 36:03.996 align:middle to our confidential supervisory assessments 36:03.996 --> 36:05.026 align:middle of any individual bank. 36:05.026 --> 36:05.566 align:middle MICHELLE SMITH. 36:08.466 --> 36:09.146 align:middle Thank you. 36:09.146 --> 36:10.386 align:middle Now we'll go to Michael Derby. 36:10.386 --> 36:11.206 align:middle MICHAEL DERBY. 36:13.916 --> 36:15.776 align:middle Thank you for taking my question. 36:15.776 --> 36:18.096 align:middle You noted earlier in the press conference 36:18.096 --> 36:21.006 align:middle that you weren't aware of the trading activity of the Boston 36:21.006 --> 36:22.996 align:middle and Dallas Fed Bank presidents. 36:23.376 --> 36:24.546 align:middle As you know, those, 36:24.546 --> 36:26.866 align:middle all 12 regional Fed Bank presidents just went 36:26.866 --> 36:29.246 align:middle through the renomination process earlier this year. 36:29.246 --> 36:31.186 align:middle And Governor Brainard described it 36:31.186 --> 36:33.126 align:middle as a rigorous process at the time. 36:33.126 --> 36:36.206 align:middle So I want to know, did anybody know-did anybody 36:36.206 --> 36:38.976 align:middle at the Board level know about the stock trading activity? 36:38.976 --> 36:44.136 align:middle And, going forward, do you still have confidence in the Dallas 36:44.136 --> 36:46.796 align:middle and Boston Fed Bank presidents to do their job? 36:47.246 --> 36:48.076 align:middle CHAIR POWELL. 36:48.266 --> 36:52.266 align:middle So these, I don't need to tell you, we file, 36:52.266 --> 36:54.506 align:middle people file these reports annually. 36:54.506 --> 36:57.716 align:middle And I think they were just quite recently filed for 2020. 36:58.266 --> 37:00.026 align:middle So I don't have any reason to think people 37:00.026 --> 37:00.986 align:middle at the Board would have known 37:00.986 --> 37:03.876 align:middle about particular trading that's going on. 37:03.976 --> 37:08.556 align:middle They will see that-there are people at the Fed who see the, 37:08.556 --> 37:11.446 align:middle you know, see the trading reports when they're, you know, 37:11.586 --> 37:15.046 align:middle when they're annually filed. 37:15.336 --> 37:20.116 align:middle You know, in terms of having confidence and that sort 37:20.116 --> 37:22.406 align:middle of thing, I think no one is happy, 37:22.996 --> 37:27.396 align:middle no one on the FOMC is happy to be in this situation, 37:27.456 --> 37:29.216 align:middle to be having these questions raised. 37:29.686 --> 37:32.906 align:middle It's something we take very, very seriously. 37:32.906 --> 37:36.126 align:middle This is an important moment for the Fed, and I'm determined 37:36.126 --> 37:39.336 align:middle that we will rise to the moment and handle it in ways 37:39.456 --> 37:41.396 align:middle that will stand up over time. 37:41.796 --> 37:45.156 align:middle I'm very reluctant to get ahead of the process and speculate, 37:45.156 --> 37:47.306 align:middle though, about different things. 37:47.306 --> 37:50.406 align:middle And, you know, when we have things to announce, 37:50.406 --> 37:51.856 align:middle we'll go ahead and do that, 37:51.856 --> 37:53.126 align:middle but that's really what I have for today. 37:53.126 --> 37:53.456 align:middle MICHAEL DERBY. 37:54.456 --> 37:55.506 align:middle One small follow-up. 37:55.506 --> 37:58.046 align:middle I mean, I know that you didn't have the 2020 forms in hand, 37:58.046 --> 38:00.056 align:middle but you would have had past-year forms in hand. 38:00.056 --> 38:01.536 align:middle And at least in the case of, like, 38:01.536 --> 38:03.186 align:middle the Dallas disclosure forms, 38:03.576 --> 38:05.856 align:middle similar trading activity was shown in years past. 38:05.856 --> 38:08.796 align:middle So that, in theory, could have been something that came 38:08.796 --> 38:10.526 align:middle up in the renomination process. 38:11.346 --> 38:11.696 align:middle CHAIR POWELL. 38:11.696 --> 38:13.476 align:middle So that's, yeah, that's a good question. 38:13.476 --> 38:17.396 align:middle So, you know, the five-year review that we do 38:17.866 --> 38:20.176 align:middle under this unusual provision of law where all 38:20.176 --> 38:23.406 align:middle of the Reserve Bank presidents are reviewed for reappointment 38:24.026 --> 38:25.916 align:middle at the same time every five years, 38:26.556 --> 38:30.336 align:middle that is really a broad review about their leadership 38:30.336 --> 38:32.046 align:middle of the institution, their performance 38:32.136 --> 38:34.886 align:middle on the FOMC, all of those things. 38:34.996 --> 38:38.466 align:middle And if there were a concern-a public concern 38:38.466 --> 38:40.796 align:middle or a private concern-about something that someone had done, 38:40.796 --> 38:42.026 align:middle we wouldn't wait for the five-year. 38:42.256 --> 38:45.086 align:middle We wouldn't wait that day if there were concerns. 38:45.566 --> 38:48.316 align:middle You're right, though, these-as I mentioned, 38:48.316 --> 38:51.336 align:middle we have had a framework for a long time, and it's similar 38:51.336 --> 38:52.626 align:middle to what other government agencies have, 38:52.626 --> 38:54.006 align:middle only it's a little stricter. 38:54.526 --> 38:57.846 align:middle And it is that you can trade financial instruments, 38:57.906 --> 39:00.886 align:middle but not specific ones like bank debt. 39:01.166 --> 39:04.426 align:middle You can't trade during the FOMC period 39:04.426 --> 39:06.256 align:middle and during the meeting-the blackout period 39:06.256 --> 39:07.036 align:middle and then during the meeting. 39:07.036 --> 39:08.506 align:middle And then you disclose all this, 39:08.506 --> 39:10.146 align:middle and we have disclosed it for years. 39:10.146 --> 39:12.506 align:middle So all of these things have been going-to the extent they've been 39:12.506 --> 39:13.996 align:middle going on, they've been a matter of public record. 39:14.796 --> 39:18.146 align:middle And, you know-but, nonetheless-so that-you know, 39:18.146 --> 39:20.246 align:middle it was seeming to work just okay. 39:20.246 --> 39:22.986 align:middle And now you look at it, and you see this, and you think, 39:23.576 --> 39:24.716 align:middle "We need to do better." 39:24.716 --> 39:25.256 align:middle And we will. 39:25.806 --> 39:28.826 align:middle But you're right, but it has not been part of the process. 39:28.826 --> 39:30.806 align:middle And, appropriately, I don't think it should have been. 39:30.806 --> 39:33.986 align:middle I mean, I wouldn't blame the people who conduct that review. 39:33.986 --> 39:37.346 align:middle I really think, if someone had raised concerns 39:37.346 --> 39:40.106 align:middle or if we'd had concerns, then it would have been, 39:40.106 --> 39:41.356 align:middle but it wouldn't have been part of that process. 39:41.356 --> 39:42.806 align:middle It would have been raised instantly, 39:42.806 --> 39:44.426 align:middle rather than once every five years. 39:44.426 --> 39:44.996 align:middle MICHAEL DERBY. 39:46.776 --> 39:47.176 align:middle Thank you. 39:49.816 --> 39:50.406 align:middle MICHELLE SMITH. 39:50.406 --> 39:50.706 align:middle Thank you. 39:56.376 --> 39:56.906 align:middle Let's go to Jean Yung. 39:56.906 --> 39:57.246 align:middle JEAN YUNG. 39:57.646 --> 39:58.366 align:middle Thank you, Michelle. 39:58.696 --> 40:00.086 align:middle Chair Powell, I wanted to ask 40:00.086 --> 40:02.686 align:middle about how the Fed would balance the two parts 40:02.686 --> 40:07.076 align:middle of its dual mandate if inflation stays elevated 40:07.136 --> 40:09.916 align:middle but we still have a labor shortage 40:10.186 --> 40:13.326 align:middle and participation remains lower than ideal. 40:13.806 --> 40:15.596 align:middle Would you hold off on raising rates? 40:15.596 --> 40:16.676 align:middle Or how would you think about that? 40:16.676 --> 40:17.646 align:middle Thank you. 40:17.646 --> 40:17.986 align:middle CHAIR POWELL. 40:18.656 --> 40:20.136 align:middle Well, let me say one thing. 40:20.136 --> 40:25.566 align:middle You're looking for conditions consistent 40:25.566 --> 40:27.496 align:middle with maximum employment to lift off, 40:27.526 --> 40:30.446 align:middle and those conditions can change over time. 40:30.666 --> 40:33.146 align:middle So you're not necessarily bound by a particular level 40:33.566 --> 40:37.396 align:middle of the unemployment rate or the participation rate 40:37.396 --> 40:39.916 align:middle or anything else like that, which can change over time. 40:40.046 --> 40:43.136 align:middle But more to your point, really, we actually have a paragraph 40:43.136 --> 40:44.696 align:middle in our framework, and something 40:44.696 --> 40:46.746 align:middle like this has been there for a long time. 40:46.746 --> 40:48.186 align:middle It's, I think it's paragraph six. 40:48.996 --> 40:51.046 align:middle And you're talking about a situation 40:51.046 --> 40:53.236 align:middle in which the two goals are not complementary; 40:53.236 --> 40:54.316 align:middle they're somehow in tension. 40:55.106 --> 40:57.506 align:middle And if we judge that's effect-that is the case, 40:58.116 --> 40:59.686 align:middle what it says is, we take 40:59.686 --> 41:01.436 align:middle into account the employment shortfalls 41:01.436 --> 41:03.986 align:middle and inflation deviations and the potentially different time 41:03.986 --> 41:06.476 align:middle horizons over which employment and inflation are projected 41:06.476 --> 41:09.526 align:middle to return to levels judged consistent with the mandate. 41:09.526 --> 41:13.816 align:middle So, we used to call that the balanced-approach paragraph 41:13.816 --> 41:14.866 align:middle because it had those words. 41:15.316 --> 41:19.096 align:middle So it's a very difficult situation for any central bank 41:19.096 --> 41:21.686 align:middle to be-pardon me-to be in a situation 41:21.686 --> 41:23.546 align:middle where the two goals are in tension. 41:24.086 --> 41:26.046 align:middle And that paragraph tries to address it 41:26.046 --> 41:28.586 align:middle by saying we would sort of weigh the equities between the two. 41:28.586 --> 41:30.496 align:middle How long will it take, and how big are the gaps, 41:30.496 --> 41:31.166 align:middle and that kind of thing. 41:31.706 --> 41:35.466 align:middle We don't really think we're in that-we're sort of in 41:35.466 --> 41:37.466 align:middle that situation, I'd say, in a short-term way. 41:38.086 --> 41:43.196 align:middle But we think, we do expect that this is sort of-because 41:43.196 --> 41:45.586 align:middle of the COVID shock and the reopening and all that, 41:45.586 --> 41:48.086 align:middle you're seeing this temporarily. 41:48.606 --> 41:52.866 align:middle MICHELLE SMITH. 41:52.866 --> 41:53.326 align:middle Great. Thank you. 41:53.326 --> 41:54.666 align:middle We'll go to Edward Lawrence. 41:54.666 --> 41:55.416 align:middle EDWARD LAWRENCE. 41:56.186 --> 41:57.496 align:middle Thank you, Michelle. 41:57.496 --> 41:59.396 align:middle Thank you, Mr. Chairman, for taking the question. 41:59.396 --> 42:02.576 align:middle So on corporate debt, what happened with Evergrande 42:02.576 --> 42:05.266 align:middle that we've been watching, could that be-is that a preview 42:05.556 --> 42:06.786 align:middle of what could happen with the amount 42:06.786 --> 42:07.816 align:middle of corporate debt that's out there? 42:07.816 --> 42:09.616 align:middle In the past you've said you're watching the level 42:09.946 --> 42:10.736 align:middle of corporate debt. 42:10.736 --> 42:13.496 align:middle So is, what's your level of concern right now? 42:13.926 --> 42:17.076 align:middle And would you consider the Evergrande Group issue sort 42:17.076 --> 42:18.016 align:middle of a warning signal? 42:18.446 --> 42:19.106 align:middle CHAIR POWELL. 42:19.106 --> 42:20.556 align:middle About the United States, no. 42:20.836 --> 42:25.406 align:middle Corporate defaults are very low in the United States right now. 42:25.986 --> 42:29.986 align:middle Corporate leverage built up over the course of the long expansion 42:29.986 --> 42:31.166 align:middle that ended with the pandemic. 42:31.866 --> 42:35.496 align:middle We were very concerned in the last year or so. 42:35.496 --> 42:37.076 align:middle We were concerned in the last year or so, 42:37.076 --> 42:38.846 align:middle and then I'd say very concerned at the beginning 42:38.846 --> 42:41.926 align:middle of the pandemic that, if you've got a highly leveraged company 42:41.926 --> 42:45.546 align:middle and your revenue stops for an uncertain period, 42:45.546 --> 42:47.426 align:middle as things happened at the beginning of the crisis, 42:48.016 --> 42:49.186 align:middle we were very concerned 42:49.186 --> 42:50.786 align:middle that there would be a wave of defaults. 42:50.786 --> 42:53.806 align:middle It didn't happen, potentially-I mean, to a significant extent 42:53.806 --> 42:56.646 align:middle because of the CARES Act and the response 42:56.646 --> 42:57.946 align:middle that we undertook and all that. 42:57.946 --> 42:58.916 align:middle It was a, you know, 42:59.576 --> 43:01.666 align:middle a much stronger response than we've ever had. 43:01.666 --> 43:04.026 align:middle And I think for whatever reason now, you have very, 43:04.026 --> 43:08.316 align:middle very low default rates now among corporate debt. 43:08.316 --> 43:13.536 align:middle You know, the Evergrande situation seems very particular 43:13.536 --> 43:18.146 align:middle to China, which has very high debt 43:18.636 --> 43:21.516 align:middle for an emerging market economy, really the highest 43:21.676 --> 43:24.326 align:middle that any emerging market economy has had. 43:24.516 --> 43:26.316 align:middle And the government has been working 43:26.316 --> 43:27.446 align:middle to get that under control. 43:27.866 --> 43:29.066 align:middle This is part of that effort. 43:29.126 --> 43:32.276 align:middle The government put new strictures in place 43:32.346 --> 43:33.726 align:middle for highly leveraged companies. 43:33.726 --> 43:37.676 align:middle And Evergrande is dealing with those strictures, 43:37.676 --> 43:38.766 align:middle and it's something they're managing. 43:39.476 --> 43:42.666 align:middle In terms of the implications for us, there isn't, 43:42.666 --> 43:44.936 align:middle there's not a lot of direct United States exposure. 43:44.936 --> 43:47.916 align:middle The big Chinese banks are not tremendously exposed. 43:48.936 --> 43:50.506 align:middle But, you know, you would worry 43:50.506 --> 43:52.936 align:middle that it would affect global financial conditions 43:52.936 --> 43:54.786 align:middle through confidence channels and that kind of thing. 43:55.566 --> 43:56.776 align:middle But I wouldn't draw a parallel 43:56.776 --> 43:58.516 align:middle to the United States corporate sector. 43:58.516 --> 43:59.166 align:middle MICHELLE SMITH. 44:02.606 --> 44:03.176 align:middle Thank you. 44:03.176 --> 44:03.876 align:middle We'll go to Brian Cheung. 44:03.876 --> 44:04.276 align:middle BRIAN CHEUNG. 44:05.286 --> 44:06.336 align:middle Hi, Chairman Powell. 44:06.336 --> 44:08.506 align:middle Just wondering if you could give us an update on whether 44:08.506 --> 44:10.716 align:middle or not you've had conversations with the White House 44:10.716 --> 44:12.256 align:middle about a possible reappointment. 44:12.256 --> 44:14.896 align:middle And then whether or not you would like to be reappointed 44:14.896 --> 44:16.266 align:middle as this chatter kind of builds up. 44:16.266 --> 44:17.406 align:middle Thanks. CHAIR POWELL. 44:17.406 --> 44:20.866 align:middle I think the phrase goes: "I have nothing for you on that today." 44:20.986 --> 44:24.786 align:middle Sorry. I'm focused on doing my job- MICHELLE SMITH. 44:24.786 --> 44:25.406 align:middle Let's go to Greg Robb. 44:25.406 --> 44:25.726 align:middle CHAIR POWELL. 44:25.926 --> 44:27.996 align:middle -I'm focused on doing my job every day 44:27.996 --> 44:28.946 align:middle for the American people, 44:28.946 --> 44:30.686 align:middle and I don't have any comment on that, Brian. 44:30.686 --> 44:31.326 align:middle MICHELLE SMITH. 44:33.246 --> 44:33.826 align:middle Sorry about that. 44:33.826 --> 44:34.666 align:middle Let's go to Greg Robb. 44:35.056 --> 44:38.126 align:middle GREG ROBB. 44:38.126 --> 44:40.906 align:middle Thanks. Thanks for taking my question, Chair Powell. 44:41.206 --> 44:42.846 align:middle I was wondering if, in your discussion 44:42.846 --> 44:45.036 align:middle about the tapering that-you said 44:45.036 --> 44:47.136 align:middle that officials think it's appropriate to end 44:47.136 --> 44:50.316 align:middle around the middle of the year-if there was any discussion 44:50.316 --> 44:53.576 align:middle about what happens to the balance sheet then. 44:53.576 --> 44:55.116 align:middle I've heard some Fed officials say 44:55.116 --> 44:58.386 align:middle that they wouldn't shrink the balance sheet. 44:58.456 --> 44:59.726 align:middle Was that discussed? 44:59.726 --> 45:02.846 align:middle And what's your stance on shrinking the balance sheet? 45:02.846 --> 45:04.176 align:middle Thanks. CHAIR POWELL. 45:04.176 --> 45:07.116 align:middle So my thinking on this has been: 45:07.116 --> 45:08.736 align:middle Let's get through the taper decision, 45:09.406 --> 45:11.146 align:middle and then let's turn to those issues. 45:11.306 --> 45:16.936 align:middle There are a number of related issues that-you mentioned one, 45:16.936 --> 45:21.156 align:middle Greg, but, you know, and-which you need to start 45:21.156 --> 45:22.376 align:middle to think about, and we'll do that. 45:22.376 --> 45:25.116 align:middle But I want to get, we want to get through this taper decision, 45:25.116 --> 45:29.346 align:middle and then turn to those issues, rather than start, you know, 45:30.376 --> 45:32.746 align:middle thinking about them now and having the minutes discuss them 45:32.746 --> 45:34.976 align:middle and get people thinking that we are, you know, 45:34.976 --> 45:37.176 align:middle focused on those issues, because we're really not. 45:37.176 --> 45:39.166 align:middle And, you know, we do have the experience 45:39.166 --> 45:40.286 align:middle of what we did last time. 45:40.286 --> 45:42.836 align:middle We've watched other countries and what they've done. 45:42.836 --> 45:45.276 align:middle So I think we'll be able to get 45:45.276 --> 45:48.616 align:middle to sensible decisions fairly expeditiously when it's time. 45:48.616 --> 45:50.556 align:middle But it's just not time yet, in my thinking. 45:50.556 --> 45:51.196 align:middle GREG ROBB. 45:52.416 --> 45:52.806 align:middle Thank you. 45:52.806 --> 45:53.376 align:middle MICHELLE SMITH. 45:54.856 --> 45:55.486 align:middle Thank you. 45:55.486 --> 45:56.946 align:middle Let's go to Scott Horsley. 45:59.526 --> 45:59.926 align:middle SCOTT HORSLEY. 45:59.926 --> 46:00.886 align:middle Thank you, Mr. Chairman. 46:00.886 --> 46:03.436 align:middle You talked a little bit about inflation expectations. 46:03.436 --> 46:06.666 align:middle And there does seem to be something of a divide 46:06.666 --> 46:10.376 align:middle between market expectations and the views 46:10.376 --> 46:12.376 align:middle of professional economists-which are pretty much in line 46:12.376 --> 46:16.566 align:middle with the FOMC members-and laypeople's expectations, 46:16.566 --> 46:20.586 align:middle at least as reflected in the recent New York Fed survey. 46:21.296 --> 46:26.456 align:middle How much weight do you put on laypeople's expectations? 46:26.456 --> 46:28.406 align:middle And what do you think accounts for that divide? 46:28.556 --> 46:29.786 align:middle CHAIR POWELL. 46:30.066 --> 46:34.976 align:middle So within-let's just take the household surveys generally. 46:35.506 --> 46:39.086 align:middle The New York Fed survey, let me talk about that specifically, 46:39.086 --> 46:40.536 align:middle and this is from the New York Fed. 46:40.536 --> 46:45.026 align:middle It's only an eight-year-old survey, and it does seem 46:45.236 --> 46:48.666 align:middle as though the, they're looking three years out. 46:48.666 --> 46:50.466 align:middle And it seems like there's a high correlation 46:50.466 --> 46:51.856 align:middle between three-year and one-year. 46:52.476 --> 46:55.796 align:middle For the most part, surveys are showing 46:56.256 --> 47:00.876 align:middle that households expect higher inflation in the near term 47:00.876 --> 47:02.346 align:middle but not in the longer term. 47:02.886 --> 47:04.876 align:middle And that's also what expectations are showing. 47:04.876 --> 47:06.236 align:middle So there are many, 47:06.236 --> 47:07.936 align:middle many different inflation measures, of course. 47:07.936 --> 47:11.606 align:middle And that's why we have this thing called the CIE, 47:12.876 --> 47:17.226 align:middle which is the, it's an index of-it's market-based measures, 47:17.586 --> 47:20.956 align:middle it's professional forecasters, and it's household surveys. 47:21.396 --> 47:22.956 align:middle And you just put them all-it's not, you know, 47:22.956 --> 47:24.576 align:middle it doesn't have a lot of grand theory about it. 47:24.576 --> 47:27.526 align:middle You put them all in, and you measure the change. 47:27.966 --> 47:30.146 align:middle So you should be-and, also, you measure things 47:30.146 --> 47:33.686 align:middle like the dispersion and that sort of thing, 47:33.686 --> 47:34.796 align:middle so you can look at all that. 47:34.796 --> 47:35.996 align:middle And, you know, it tells a story 47:35.996 --> 47:38.546 align:middle of inflation expectations moving up. 47:38.636 --> 47:42.036 align:middle Many of the different measures will also show inflation 47:42.036 --> 47:46.576 align:middle expectations moving back up to where they were in, say, 2013, 47:47.296 --> 47:50.316 align:middle which was before the really-the drop 47:50.316 --> 47:52.246 align:middle in inflation expectations broadly happened 47:52.246 --> 47:53.946 align:middle in '14 and '15-around then. 47:54.476 --> 47:56.806 align:middle So that's not a troubling thing. 47:56.806 --> 47:58.606 align:middle But, you know, inflation expectations are 47:58.606 --> 47:59.566 align:middle terribly important. 47:59.566 --> 48:01.436 align:middle We spend a lot of time watching them. 48:02.066 --> 48:04.936 align:middle And if we did see them moving up in a troubling way 48:05.486 --> 48:07.266 align:middle and running persistently above levels 48:07.266 --> 48:09.526 align:middle that are really consistent with our mandate, then, you know, 48:09.526 --> 48:10.746 align:middle we would certainly react to that. 48:10.746 --> 48:12.286 align:middle But we don't really see that now. 48:12.286 --> 48:15.376 align:middle We see more of a moderate increase 48:15.376 --> 48:17.726 align:middle that is-the first part of which is welcome. 48:18.416 --> 48:22.126 align:middle And because, you know, inflation expectations had drifted down, 48:22.126 --> 48:25.096 align:middle and it was good to see them get back up a bit. 48:25.176 --> 48:27.406 align:middle But, again, we watch carefully. 48:27.406 --> 48:28.026 align:middle MICHELLE SMITH. 48:32.976 --> 48:33.526 align:middle Thank you. 48:33.526 --> 48:39.946 align:middle Let's go to Heather Scott. 48:39.946 --> 48:40.806 align:middle HEATHER SCOTT. 48:40.806 --> 48:43.086 align:middle Hi. Sorry, you caught me off guard. 48:44.856 --> 48:46.326 align:middle Thank you, Chair Powell, for taking my question. 48:46.326 --> 48:48.416 align:middle I really appreciate it. 48:48.806 --> 48:50.956 align:middle Again, on the taper timing. 48:50.956 --> 48:54.436 align:middle You say it's going to last to the middle of next year. 48:54.436 --> 48:57.666 align:middle But with your concerns about the potential for upside risks 48:57.666 --> 49:00.246 align:middle to inflation, would you think you might need 49:00.246 --> 49:03.836 align:middle to have liftoff happen before you finish the tapering? 49:05.336 --> 49:05.866 align:middle CHAIR POWELL. 49:05.866 --> 49:07.166 align:middle That's not my expectation. 49:07.246 --> 49:12.456 align:middle Of course, we can always-we haven't decided to taper yet, 49:12.456 --> 49:13.866 align:middle and we haven't decided the pace yet. 49:14.446 --> 49:19.486 align:middle So, you know, it's not my expectation 49:19.996 --> 49:23.046 align:middle that we would have to. 49:23.226 --> 49:25.856 align:middle We can certainly speed up or slow down the taper 49:25.886 --> 49:27.496 align:middle if we-if it becomes appropriate, though. 49:27.746 --> 49:28.316 align:middle Absolutely. 49:28.316 --> 49:30.146 align:middle In fact, back in '13, when we tapered, 49:30.146 --> 49:32.446 align:middle we always said we weren't on a preset course. 49:32.986 --> 49:34.546 align:middle I think this will be a shorter period. 49:34.546 --> 49:36.516 align:middle The economy's much farther along than it was 49:36.516 --> 49:39.296 align:middle when we tapered in 2013. 49:39.636 --> 49:42.336 align:middle So it makes sense to allow the runoff to happen. 49:42.336 --> 49:43.956 align:middle It's a very gradual taper. 49:43.986 --> 49:46.656 align:middle It will be when we agree on it. 49:46.656 --> 49:50.626 align:middle And, but we certainly have the freedom to either speed it up 49:50.626 --> 49:52.326 align:middle or slow it down if that becomes appropriate. 49:52.366 --> 49:53.626 align:middle HEATHER SCOTT. 49:53.626 --> 49:55.786 align:middle But you wouldn't expect rate liftoff to happen 49:55.786 --> 49:57.496 align:middle until you're finished with that process? 49:57.496 --> 49:58.216 align:middle CHAIR POWELL. 49:58.216 --> 50:00.536 align:middle You wouldn't, no, because, you know, when you're-as long 50:00.536 --> 50:03.296 align:middle as you're buying assets, you're adding accommodation, 50:03.296 --> 50:07.006 align:middle and it wouldn't make any sense to, you know, then lift off. 50:07.006 --> 50:09.066 align:middle I mean, what you would do is, you'd speed up the taper, 50:09.066 --> 50:10.816 align:middle I think, if that were the situation you're in. 50:10.816 --> 50:12.746 align:middle Not-we don't expect to be in that situation, 50:13.246 --> 50:18.036 align:middle but I do think it would be wiser at that point to go ahead 50:18.036 --> 50:21.456 align:middle and speed up the taper, just because the two are then working 50:21.496 --> 50:22.386 align:middle in the same direction. 50:23.076 --> 50:23.716 align:middle HEATHER SCOTT. 50:23.716 --> 50:24.376 align:middle All right, thank you. 50:24.376 --> 50:24.656 align:middle CHAIR POWELL. 50:24.656 --> 50:25.176 align:middle Thank you. 50:25.176 --> 50:26.966 align:middle MICHELLE SMITH. 50:26.966 --> 50:28.966 align:middle Okay, for the last question, we'll go to Jeff Cox. 50:29.016 --> 50:34.026 align:middle JEFF COX. Thank you, Mr. Chairman, 50:34.026 --> 50:35.576 align:middle for taking the question. 50:35.576 --> 50:38.726 align:middle I just wanted to check in with you to see if you have an update 50:38.726 --> 50:40.746 align:middle at all on the efforts from the Fed 50:40.746 --> 50:42.966 align:middle to develop a central bank digital currency. 50:43.236 --> 50:46.716 align:middle I believe that the report was supposed to come this summer, 50:46.716 --> 50:49.076 align:middle and indications that it's going to come this month. 50:49.476 --> 50:52.166 align:middle But the drumbeat seems to be kind of getting louder to see 50:52.166 --> 50:54.026 align:middle where the Fed's heading on this, and just wondering 50:54.026 --> 50:56.196 align:middle if you can provide some update there. 50:56.826 --> 50:57.326 align:middle CHAIR POWELL. 50:57.406 --> 50:58.446 align:middle Sure, I'd be glad to. 50:58.606 --> 51:01.506 align:middle So we think it's really important 51:01.506 --> 51:03.586 align:middle that the central bank maintain a stable currency 51:03.586 --> 51:05.266 align:middle and payment system for the public's benefit. 51:05.266 --> 51:06.316 align:middle That's one of our jobs. 51:06.986 --> 51:09.816 align:middle We also live in a time of transformational innovation 51:09.876 --> 51:12.696 align:middle around digital payments, and we need to make sure 51:12.696 --> 51:14.626 align:middle that the Fed is able to continue to deliver 51:14.626 --> 51:15.776 align:middle to the public a stable 51:15.776 --> 51:17.766 align:middle and trustworthy currency and payment system. 51:18.616 --> 51:20.936 align:middle So there's extensive private innovation, 51:21.126 --> 51:22.946 align:middle a lot of which is taking place outside the 51:22.946 --> 51:24.166 align:middle regulatory perimeter. 51:24.166 --> 51:26.466 align:middle And innovation is fantastic. 51:26.466 --> 51:27.876 align:middle Our economy runs on innovation. 51:27.876 --> 51:30.656 align:middle But where the public's money is concerned, we need to make sure 51:30.656 --> 51:33.026 align:middle that appropriate regulatory protections are in place, 51:33.376 --> 51:35.746 align:middle and today they really are not in some cases. 51:36.076 --> 51:38.416 align:middle So with that in mind and with the creation 51:38.416 --> 51:42.006 align:middle of myriad private currencies and currency-like products, 51:42.406 --> 51:44.846 align:middle we're working proactively to evaluate whether 51:44.846 --> 51:47.706 align:middle to issue a CBDC and, if so, in what form. 51:48.366 --> 51:49.676 align:middle We have two broad workstreams, 51:49.676 --> 51:52.956 align:middle one of which is really technology, both at the Board 51:52.956 --> 51:55.096 align:middle and in the Federal Reserve Bank of Boston's work 51:55.096 --> 52:00.446 align:middle with MIT-the other of which is to identify, scope out, 52:00.446 --> 52:03.666 align:middle deal with, analyze the various public policy issues. 52:03.666 --> 52:05.516 align:middle As you mentioned, we do intend 52:05.516 --> 52:08.446 align:middle to publish a discussion paper soon that will be the basis 52:08.446 --> 52:11.196 align:middle for a period of public engagement-engagement 52:11.196 --> 52:12.426 align:middle with many different groups, 52:12.426 --> 52:14.476 align:middle including elected officials, around these issues. 52:14.836 --> 52:17.676 align:middle We think it's our obligation to do the work, both on technology 52:17.676 --> 52:19.846 align:middle and public policy, to form a basis 52:19.846 --> 52:21.266 align:middle for making an informed decision. 52:21.926 --> 52:24.266 align:middle The ultimate test we'll apply 52:24.266 --> 52:26.586 align:middle when assessing a central bank digital currency 52:26.586 --> 52:29.316 align:middle and other digital innovations is: Are there clear 52:29.316 --> 52:33.516 align:middle and tangible benefits that outweigh any costs and risks? 52:33.816 --> 52:36.456 align:middle We're also, as you know, investing heavily right now 52:36.456 --> 52:38.766 align:middle in building a new settlement system for instant payments 52:38.766 --> 52:41.416 align:middle in the U.S. It'll be the first such major expansion 52:41.676 --> 52:44.606 align:middle of our core payment system since the 1970s. 52:44.606 --> 52:48.326 align:middle We found the case for this quite compelling-for consumers, 52:48.326 --> 52:50.216 align:middle businesses, and just ensuring 52:50.216 --> 52:52.216 align:middle that all financial institutions have access 52:52.216 --> 52:52.946 align:middle to that payment system. 52:53.316 --> 52:56.786 align:middle So, bottom line, we haven't made a decision about the CBDC, 52:56.786 --> 53:01.876 align:middle but we will be issuing a discussion paper soon in order 53:02.466 --> 53:06.576 align:middle to form the basis of this public interaction that we'll have. 53:07.566 --> 53:08.646 align:middle Thank you very much. 53:08.796 --> 53:13.276 align:middle JEFF COX. If I could have a quick-could I get a quick follow 53:13.416 --> 53:14.256 align:middle on that? 53:16.596 --> 53:16.996 align:middle Thank you. 53:16.996 --> 53:21.176 align:middle I was just wondering if-okay-are you concerned at all with kind 53:21.176 --> 53:24.746 align:middle of falling behind in the global race for digital currencies? 53:25.916 --> 53:26.126 align:middle CHAIR POWELL. 53:26.126 --> 53:31.306 align:middle I think it's important that we get to a place 53:31.306 --> 53:34.716 align:middle where we can make an informed decision about this 53:35.356 --> 53:36.676 align:middle and do so expeditiously. 53:36.776 --> 53:37.886 align:middle I don't think we're behind. 53:38.096 --> 53:40.056 align:middle I think it's more important 53:40.056 --> 53:41.866 align:middle to do this right than to do it fast. 53:42.156 --> 53:43.606 align:middle We are the world's reserve currency. 53:44.376 --> 53:50.236 align:middle And I think we're in a good place to make that analysis 53:50.236 --> 53:51.656 align:middle and make that decision-by the way, 53:51.656 --> 53:54.666 align:middle which will be a governmentwide decision. 53:54.666 --> 54:00.056 align:middle We would do this, we would have to have a meeting of the minds 54:00.056 --> 54:04.516 align:middle with the Administration and also probably with Congress. 54:04.516 --> 54:07.496 align:middle We would really like to have broad support for this. 54:07.496 --> 54:09.286 align:middle It's a very important innovation. 54:09.286 --> 54:10.956 align:middle And I think we would need that to go ahead, 54:10.956 --> 54:13.376 align:middle and that's the process we're engaged in. 54:13.686 --> 54:14.406 align:middle Thanks very much. 54:14.406 --> 54:15.346 align:middle MICHELLE SMITH. 54:17.056 --> 54:17.496 align:middle Thank you.