Hello Hello everybody, let me know if you can hear me. Okay, um I I Hope my audio works right. We're going to start in about five minutes. the stream.

This is just kind of me hanging out with you before we start and let me know if you can hear me or if this thing is absolutely muted then I'm talking to myself in the case I Would like to know that please thank you Cameron Thank you so much Marcio for letting me know Uh, thank you so much uh for for the kind words Cameron Tom The Goat Nash I Don't know if I'm the God but thank you so much. Um, thank you John and thank you thank you so much I Appreciate it So we're just getting ready to start the the stream in a second. I'm just going to post on my Community Feed and everyone one second. Okay, so I think that should be okay and we're gonna start in a minute.

Hang on! Uh, thank you so much for letting me know. Great to see you too! Mr K I Appreciate it. Good afternoon Alvarado hey what's up Lee What's up buddy and one moment? okay, we should be good to go. Okay I think that's good enough? Um so while we wait for Powell to take the stage in about five minutes and I'm gonna do some Q a so feel free to put your question in the chat.

just make sure you put a big cue next to your question. so I know it's a question and Yoshi Rhoden is asking. do you think they'll actually realize what's going on on either whole the raise? steady or lower? Well, they've already announced the rate is going to be in steady so there's no rate hike. it's been announced, so maybe I should put it in the in the scrolling ticker below so the announcement already came out.

There's no rate hike. So now the question is what Pal has to say: what language is it going to use and how it's going to rationalize that and that I think is going to drive a lot of the market, his semantics, choice of awards, and how he's going to answer certain questions like the question. and will they consider rate reductions in 2023 or not? Um, so that's I think the what you're looking for but the actual thing is already is announced. Yeah, there's no rain hikes.

Um, wait a second. where is my thing What? Okay, so I'm gonna add this to the banner so that okay so that it's it's clear so everybody can see that what the decision is. So thank you for that question. You'll see I appreciate it and I'll take a few more questions.

We have four more minutes until Politics the stage and and Marcia is asking who thinks the market will rally after the speech. And that's the thing with power speeches. You never know what you're going to get Apollo Speech is like a court of law. You know how you get in, you don't know how you get out.

So Apollo Speech might send the market up or it might the market crashing down and shout out to Romania my friend Adrian from Romania what are the expectations for the CPI I I I We just had it. it's four percent so it's it's better than expected and any genomic stocks I Have a small position in a company called Bngo so yes, it's a small position. Um US dollar will always be the world's Reserve currency and always in high demand and everything else you hear about it is complete nonsense. There's no contenders.

A question from lines are I hope I'm pronouncing your name correctly. What's my opinion on the US dollar? How it Spike Like hell I just answered this: yeah, um how many times will we hear the word sticky? That's a great question Alex I would say I'll go over three and over three for me Luft is asking what did hit the fan just now Palantir Tesla Minus two and a half instantly a planet is correcting. Palantir had a massive hype bubble Spike which I warned about I said this is too fast too soon and it's just unjustified and it's correcting and it as it should. it's completely normal.

Uh, will rate drop after the next quarter I I will talk about it after the speech I Have my own theory about what happens with rate hikes uh towards the end of the year and but I'll I'll explain that after the speeches, we have about one minute left. But in general my idea is very simple with CPI better than expected and PPI better than expected and the banking system in dire need of lower interest rates for multitude of reasons. I Think the FED will have to reduce rates towards the end of the 2023 fiscal year. And a question here, do you think CPI will stay decreasing with the rates paused? It will depend mainly on energy I don't know if you noticed, but the main thing that's driving the CPI decline is energy.

So Energy prices I think are not really correlated to interest at all. So in fact I don't know if interest rates do anything to this inflation because the only thing that came down is the one category that isn't really correlated to interest levels which is a price of gas. Um, okay, uh, one one minute before we start if a few important things, uh as Greg is saying right now, first of all, subscribe to get Greg's Channel and I just highlighted him. He has one of the best technical trading channels uh on the internet.

uh smash the like. come on and let's show the algorithm we can handle business and I believe the the thing should start Let me refresh my my YouTube page um not yet, it hasn't yet started. I'm also checking CNBC so if CNBC goes first before, uh before YouTube goes first I'm gonna show you that on CNBC Um and it's the type of Journey that should be fun the life you always wanted time to make it true cause you deserve it and Brad is the one for you. Has the best thing since online banking and why is it laggy? Jimmy Dean morning combos.

They're bite size I'm kind of tickled to say that you can hear nothing. Hold up second I can't hear Jack one second. Okay, this should be better. Okay I have audio.

In my end, my computer was glitching but we fixed it. Um okay. the guys pay attention. Most importantly.

like I'm gonna make the window bigger so we can actually see the press conference in full. Uh, pay attention. Um, by the way, I'm gonna take off this Banner here so it just doesn't get too annoying and pay attention to what Powell says and how Powell says it and what he doesn't say. The few things I'm going to focus in today's speech is number one.

If you what he says about the pause if like I people would like to understand if it's pausing in order to re resume Interstate hikes toward the end of the year or they're stopping and unless they see anything gets worse, they won't hike again. So that's one important thing. the other one. Watch what he says about future rate decreases.

That's the one thing I'm going to focus now. Let's listen to this guy. Good afternoon. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices.

For the American people, we understand the hardship that high inflation is causing and we remain strongly committed to Bringing inflation back down to our two percent goal. Price stability is the responsibility of the Federal Reserve Without price stability, the economy doesn't work for anyone in particular. Without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. Since early last year, the Fomc has significantly tightened The Stance of monetary policy.

We have raised our policy interest rate by five percentage points, and we've continued to reduce our Securities Holdings at a Brisk pace. We've covered a lot of ground and the full effects of our tightening have yet to be felt in light of how far we've come in tightening policy, the uncertain lags with which monetary policy affects the economy, and potential headwinds from credit tightening. Today, we decided to leave our policy interest rate unchanged and to continue to reduce our Securities Holdings. Looking ahead, nearly all committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to two percent over time.

and I will have more to say about monetary policy. After briefly reviewing economic developments, the U.S economy slowed significantly last year, and recent indicators suggest that economic activity has continued to expand at a modest pace, Although growth in consumer spending has picked up this year, activity in the housing sector remains weak, largely reflecting higher mortgage rates, higher interest rates, and slower output growth also appear to be weighing on business fixed Investment Committee participants generally expect to subdued growth to continue. In our summary of economic projections, the median projection has real GDP growth at 1.0 percent this year and 1.1 percent next year, well below the median estimate of the longer run normal growth rate. The labor market remains very tight.

Over the past three months, payroll job gains averaged a robust 283 000 jobs per month. The unemployment rate moved up, but remained low in May at 3.7 percent. There are some signs that supply and demand in the labor market are coming into better balance. The labor force participation rate has moved up in recent months, particularly for individuals aged 25 to 54 years.

Nominal wage growth has shown signs of easing and job vacancies have declined so far. This year, While the jobs to workers Gap has declined, labor demand still substantially exceeds the supply of available workers. Fomc participants expect supply and demand conditions in the labor market to come into better balance over time, easing upward pressures on inflation. The median unemployment rate projection in the SCP Rises to 4.1 percent at the end of this year and 4.5 percent at the end of next year.

Inflation remains well above our longer run two percent goal over the 12 months ending in April. Total Pce process Prices rose 4.4 percent excluding the volatile food and energy categories. Core Piece: core Pce prices Rose 4.7 percent in May The 12-month change in the Consumer Price Index came in at four percent, and the change in the core core CPI was 5.3 percent. Inflation has moderated somewhat since the middle of last year.

Nonetheless, inflation pressures continue to run High and the process of getting inflation back down to two percent has a long way to go. The median projection in the SCP for total Pce inflation is 3.2 percent this year, 2.5 percent next year, and 2.1 percent in 2025.. core Pce inflation, which excludes volatile and food and energy prices, is projected to run higher than total inflation, and the median projection has been revised in the SCP up to 3.9 percent this year. Despite elevated inflation, longer term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets.

The Fed's monetary policy actions are: Guided By our mandate to promote maximum employment and price and stable prices. For the American people, my colleagues and I are acutely aware that high inflation imposes hardship as it erodes purchasing power, especially for those least able to meet the higher costs of Essentials like food, housing, and transportation. We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our two percent objective. As I noted earlier, since early last year, we have raised our policy rate by five percentage points.

We have been seeing the effects of our policy tightening on demand in the most interest rate sensitive sectors of the economy, especially housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation. The economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain in light of how far we've come in tightening policy, the uncertain lags with which monetary policy affects the economy, and potential headwinds from credit tightening.

The committee decided at today's meeting to maintain the target range for the Federal funds rate at five to five and a quarter percent, and to continue the process of significantly reducing our Securities Holdings. As I noted earlier, nearly nearly all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year, but at this meeting, considering how far and how fast we've moved, we judged it prudent to hold the target range steady to allow the committee to assess additional information and its implications for monetary policy in determining the extent of additional policy firming that may be appropriate to return inflation to two percent over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments in our SCP participants wrote down their individual assessments of an appropriate path for the Federal Funds rate based on what each participant judges to be the most likely scenario going forward. If the economy evolves as projected, the median participant projects at the appropriate level of the Federal Funds rate will be 5.6 percent at the end of this year, 4, 4.6 percent at the end of 2024, and 3.4 percent at the end of 2025.. for the end of this year, the median projection is a half percentage Point higher than in our March projections I Hasten to add as always that these projections are not a committed decision or plan.

If the economy does not evolve as projected, the path for policy will adjust as appropriate to Foster our maximum employment and Price Stability goals. We will continue to make our decisions, meeting by meeting. Based on the totality of incoming data and their implications for the outlook for economic activity and inflation as well as the balance of risks we remain committed to Bringing Inflation, bringing inflation back down to our two percent goal and to keeping longer-term inflation expectations well anchored. Reducing inflation is likely to require a period of below Trend growth and some softening of labor market conditions.

Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do at the FED is in service to our public mission. We will do everything we can to achieve our maximum employment and price stability goals.

Thank you and I look forward to your questions. This is the important part guys. Pay attention. This is where it with the way it gets interesting.

Financial Times I'm At a time when the monthly pace of core inflation is still so elevated interest rate sensitive sectors like housing. While they felt the drag of the past Fed actions have started to recover in some regions and financial conditions, you know, most recently we're easing. So I guess I would I guess I would go back to the beginning of this tightening cycle to address that. So as we started our rate hikes early last year, we said there were three issues that would need to be addressed kind of in sequence and that of the speed of tightening, the level to which rates would need to go and then the period of time over which we'd need to keep policy restrictive.

So at the outset going back 15 months, the key issue was how fast the move rates up and we moved very quickly by historical standards. Then last December after four consecutive 75 basis point hikes, we moderated to a pace of 50 of a 50 basis point hike and then this year to three 25 basis point hikes at sequential meetings. So it seemed to us to make obvious sense to moderate our rate hikes as we got closer to our destination. So the decision to consider not hiking at every meeting and ultimately to hold rates steady at this meeting I would just say it's a continuation of of that process.

The main issue that we're focused on now is determining the extent of additional policy firming that may be appropriate to return inflation to two percent over time. So the pace of the increases and the ultimate level of increases are separate variables. Given how far it it we have come, it may make sense for rates to move higher, but at a more moderate pace I Want to stress one more thing and that is that The committee decision made today was only about this meeting. We didn't make any decision about going forward, including what would happen at the next meeting, including we did not decide or really discuss anything about going to in every other meeting kind of an approach or really any other approach.

We really were focused on what to do at this meeting, so there was no kind of initial debate about the possibility of July any sense of the initial support at this stage for that move. So again, we didn't We didn't make a decision about July I Mean of course it came up in the in the Uh in the meeting from time to time. but really the focus was on what to do today. I would say about about July two things one decision hasn't been made to.

I Do expect that it will be a live meeting. Whatever. Uh, thanks. Howard Schneider with Reuters I Was just wondering if you could help us understand the narrative here because it feels like there's been a level shift in the in the dots.

Um, stronger? GDP Uh, less of a hits unemployment, slower progress on inflation, and I'm wondering in this sort of, where's the disinflation coming from the labor? Market's going to be stronger. It looks like it's not coming from there. Demand is not coming down all that fast. According to GDP, you've doubled your your estimate of GDP.

So what's the what's the narrative Here it seems like it's getting more Immaculate rather than more messy. So you're right that the data came in I would say uh, consistent with but on the high side of expectations. So and if you go back to the old the former SCP um, the last SCP in March you will see that growth moved up. These are not huge moves, but growth estimates moved up a bit.

Unemployment estimates moved down a bit, inflation estimates moved up a bit and you know the all three of those kind of point in the same direction. Which is you know that perhaps more restraint will be necessary than we had thought at the last meeting. So although the level, frankly is is pretty, the level of 5.6 is pretty consistent if you think about it. where the Federal Funds rate was Trading before the bank incidents of early March So but so we've kind of gone back to that.

So your question is where is the where's the disinflation going to come from And you know I Don't think the story has really changed. We the committee has consistently said and believed that the process of getting inflation down is going to be a gradual one. It's going to take some time and uh, I think you go back to the to the three-part framework for core Pce inflation which is we think of as good an indicators you can have for where inflation is going forward. You start with Goods with Goods we need to see continued healing and Supply conditions, supply side conditions.

They've definitely improved a substantial amount, but if you talk to people in business they will say it's not back to where it was. So that's that's one thing and that should enable Goods prices to continue Good because inflation to continue to come down over time In terms of Housing Services inflation. that's another big piece. And and you are seeing there that new rents, new, new leases are are coming in at low levels and it's really a matter of time as that goes through the pipeline.

In fact, I Think any forecast that people are making right now about inflation coming down this year will will contain a big dose of this year. and next year we'll contain a good amount of of uh, disinflation from that source. and and that's again, probably going to come slower than we would affect. That leaves, you know, the big sector, which is a little more than half.

Pardon me of the core. PC Inflation. That's non-housing services and you know we see only the earliest signs of disinflation there. It's a sector.

It's a very Broad and diverse sector. I Would say in a number of the parts of that sector the largest cost would be wage costs. It's the service sector, so it's it's heavily labor intensive. and I Think many analysts would say that the key to getting inflation down there is to have a continuing loosening in labor market conditions, which we have seen.

We have actually seen. you know I go through a number of indicators suggesting there's been some losing in labor market conditions. We need to see that continue. I Would almost say that the the conditions that we need to see in place to get inflation down are are coming into place and that would be growing growth meaningfully below.

Trend It would be a labor market that's loosening. It would be good pipelines getting healthier and healthier and that kind of thing they're they're the things are in place that we need to see. but the process of that actually working on inflation is going to take some time. Nick Tamara for the Wall Street Journal chair pal, What's the value in pausing and signaling future hikes versus uh, just hiking now? I Mean not to be flippant, but I Don't lose weight just by buying a gym membership I Have to actually go to the gym.

16 of your colleagues put down a higher year-end 23 rate today. A majority of you think you're going to have to go up by 50 basis points this year. so why not just rip off the Band-Aid and raise rates today? So the first I would say that the the question of speed is a separate question from the question from the from from that of level. Okay, so um, and I think if you look at the SCP that is our estimate our individual.

it's really accumulation of our individual estimates of how far to go. I I mentioned how how we got to those numbers in terms of speed I Think you're right. That's what I said at the beginning which is speed was very important last year as we get closer and closer to the destination and according to the SCP, we're not so far away from the destination in most people's accounting. Uh, it's it's reasonable.

It's common sense to go a little slower, just as it was reasonable to go from 75 basis points to 50 to 25 at every meeting. and so uh, the committee thought overall that it was appropriate to moderate the pace if only slightly and their benefits to that. so that gives us more information to make decisions. We may try to make better decisions.

I Think it allows the economy a little more time to adapt as we as we make our decisions going forward. and we'll get to see uh, you know we haven't Really, Really, We don't know the full extent of of the consequences of the banking should be turmoil that we've seen. We it would be early to see those, but we don't know what the extent is. We'll have some more time to see that unfold.

I Mean it's just the idea that we're trying to get this right and uh, this is. if you think of the two things as separate variables then I think I think that the the skip I shouldn't call it a skip. The the decision um uh makes sense I Know you said July is live with only one uh June employment uh with only the June employment and the CPI report for June Uh, due to be released before the July meeting, you get the ECI after you get the senior loan officer survey after you get some Bank earnings at the end of next month. What incremental information will the committee be using to inform their judgment on whether this is in fact a skip or a longer pause? Well, I think you're adding that to the the data that we've seen since the last meeting too.

You know we since we chose to maintain rates at this meeting is it'll really be a three-month period of data that we can look at I think that's a full quarter and I think you can. You can draw more conclusions from that than you come from any six. Any six week period, we'll look at those things. We'll also look at the evolving risk picture.

We'll look at what's happening in the financial sector. We'll look at all the data. the evolving Outlook The fact that he said skips it's a very important Freudian slip. He's getting crucified for saying skip you sort of path for growth, Mark down the path for unemployment marked up the path for inflation pretty notably.

I Wonder you know since March What has changed to make you think that the economy is a lot more resilient and inflation is going to be a lot more stubborn? And given that, you know, why Do you feel confident that this is as high as you're going to have to revise the Federal funds rate? Or do you think it's possible we could have even a higher than 5.6 terminal by the end of this this cycle, you know I I mean on the first part I Just think we're following the data and also the Outlook The economy is the labor market I Think has surprised many, if not all analysts over the last couple of years with its extraordinary resilience. really. And um, it's it's just remarkable. And that's really.

If you think about it, that's what's driving it's it's job creation. It's it's uh, wages moving up. It's it's supporting spending, which in turn is supporting hiring. And it's it's really the engine it seems that is that is driving the economy.

So it's it's really the the data. Uh, in terms of you know, we we always write down at these meetings what we think the appropriate terminal rate will be at the end of this year. That's that's how we do it. Um, it's based on, uh, our our own individual assessments of what the most likely path of the economy is it can be.

It can actually in reality wind up being lower or higher and you know there's really no way to know. But it's it's it is. it's It's what people think as of today and as the as the data come in it, it can move around during the intermediate period It could wind up back in the same place, but it really will be data driven I Can't I can't tell you that that I Ever have a lot of confidence that we can see where the where the Federal funds rate will be that far in advance? Mr Chairman Thanks because nobody's buying this back at the end of May that you thought risks were getting closer to being into balance. Is that still the case? Or has your mind changed about the balance of risks out there? And also could you give us an idea of what would be a sufficiently restrictive funds rate is the obviously the current rate according to the committee is not sufficiently restrictive.

Is it five? six? Is it six words or sufficiently restrictive? Thank you. Um, you know I I Would say again that I think people listening the balance of risks as we've moved from very you know from interest rates at effectively zero now to five percentage points with with an SCP calling for additional hikes I think we've moved much closer to our destination. which is that sufficiently restrictive rate? uh and I think that means by almost by definition that the the risks of of sort of overdoing it and under underdoing it are are getting closer to being in Balance I Still think and my my colleagues agree that that the risks to inflation are to the upside. Still, so we don't We don't think we're there with inflation yet because we're just looking at the data.

and if you look at the uh, um, at the full range of of inflation data, particularly the core data, you just you just aren't seeing a lot of progress over the last year. Headline: Of course, inflation has come down materially, but as you know, we look at Core as a better indicator of where inflation overall is going officially. So I Think you know what? What we'd like to see is credible evidence that inflation is topping out and then beginning to come down? That's that's what we want to see. Of course, that's what we want to see.

And um I I think it's also we understand that there are lags, but remember that it's it's more than a year since Financial conditions began tightening I think it's I think the reason we're we're comfortable pausing is that we are still much of the tightening took place over last summer and later into the year and I think it's It's reasonable to think that some of that may come into effect. so we're you know I think stretching out the into a more moderate pace is appropriate to to allow you to make that Judgment of sufficiency. you know more with more data over time. hi chair Powell Rachel Siegel from The Washington Post Thanks for taking our questions I Wanted to ask further on the lag effects when you're considering when you would hike again throughout the course of the year.

Are there things that you would expect to kick in as those lag effects come come into effect that would inform your decisions. Have you learned things over the past year that give you some sense of timeline for when to expect those lags to come into? Everybody's wanting to know the timeline. So it's a it's a challenging he's not going to answer that straightforward in economics, it's it's sort of standard thinking that monetary policy affects economic activity with long and variable legs. Of course, these days.

Financial conditions begin to tighten well in advance of actual rate hikes. so if you look back when we were lifting off, we started talking about lifting off. By the time we had lifted off, the two-year which is a pretty good estimate of where policy is going, had gone from 20 basis points to 200 basis points. So in that sense, tightening happens much sooner than it used to.

In a world where where news was in newspapers and not you know, not on on The Wire So that's that's different. But it's still the case that what you see is intra-sensitive spending is affected very, very quickly. So housing and durable goods and things like that, but broader demand and spending and and asset values and things like that. They just take longer and you can pretty much find research to support whatever answer you would like on that.

So this is not going to answer that question. an agreement in the profession on how long it takes, so you know you gotta do better to crop them. So we're We're losing my calendar. We're looking at what's happening in the economy.

We're having to make these judgments. Again, It's one of the main reasons why it makes sense to go at a slightly more moderate Pace Now as we seek that that uh, ultimate? yeah I can't point to um, that ultimate Thank you Rich appreciate it, point to a specific data point I Think we'll see it when we see inflation. you know, really, really flattening out reliably and then starting to soften I Think we'll know that we're yeah, it's too early still to to try to assess the full extent of what that might mean. Uh, and you know that's something we're going to be watching of course.

and you know, if we were to see, um, what what we would view as significant tightening beyond what would normally be expected because of of this channel, then you know we would factor that into account on on, uh in making raid decisions. So that's um, that's how we think about it. Uh, thanks Chris Gaber and Associated Press Uh, you mentioned that many of the trends are in place that you want to see uh, core Services X Housing has come in pretty low in the past couple of months, and as you noted, a significant portion of core inflation is now housing prices. And then we've had some quirks in used car prices.

So given that these Trends are in place I guess I'm sort of asking the flip side of Nick's question. why uh, signal additional rate hikes? Aren't things headed in the direction you need? Why not simply give it even more time? Or I mean it's surprising to see so much hawkishness in the dots. Given what we're seeing recently, that's a great question. We remember we've um, we're That's how you travel a half years into this or two and a quarter years into this, And forecasters, including Fed forecasters have consistently thought that inflation was about to turn down and uh, you know, traditional, not, you know, typically forecasted that it would and been wrong.

So I think if you've heard these four, Cuts there's Mr Powell core pieces I'm dying to know who called this transitory for a whole year. Look at it over the last six months. You know, over four and a half percent far above our our Target And not really. You know, moving down, we want to see it moving down decisively.

That's all we're You know, of course we are going to get inflation down to two percent over time. we don't want to do. We want to do that with the minimum damage we can to the economy of course. but we have to get inflation out of two percent And we will.

And we just don't see that yet. So hence, you see today's policy decision: both to write down for the rate hikes by the end of this year, but also to, you know, to take, uh, to moderate somewhat, the pace with which we're moving. Specific problems: A quick follow-up I mean the last press conference you mentioned you didn't see wages driving inflation and you know there was some research from the San Francisco Feds suggesting wages aren't necessarily key driver, but you've talked about the labor market today and the need for softening. Can you give us a little more specifically of how you see the tight labor market driving inflation at this point? Thank you! All right So um I'm not going to comment on on any particular I would say that's good I Think the overall picture is that at the beginning in you know early 2021 inflation was really be coming from very strong demand for largely for goods.

People were still at home. Uh, they had money in the bank and they wanted to spend. They spent a lot on goods and of course at the same time and because of that high demand to some extent Supply Chains got all snarled up so prices went way up. Inflation went way up.

That was the in the origin and it wasn't really. That is. ladies and gentlemen, revisionist history. That is not what happened.

but as you what happened is you flooded the market with Monday 21 to 22 and now in 23. I Think many many analysts believe that it will be important. Uh, an important part of getting inflation down, especially in the non-housing services sector. Uh, getting wage inflation back to a level that is sustainable that is consistent with two percent inflation.

We actually have seen wages broadly moved down, but just at a quite gradual pace. So, and that's you know, that's a little bit of the uh, the finding of the Bernanke paper with Uh Blanchard of a few weeks ago, which is very consistent with Um with what I I would think Michael McKee from Bloomberg Radio and uh, television. you've said in the past that you don't like to surprise markets. It's kind of been The Fed's View Market should have an idea of what you're going to do before you go in.

You also said a number of times that it would take a while to bring inflation down. You reiterated that again today, and that we would get to a point where inflation could be sticky. So I'm wondering as we go into the next meetings how Wall Street or others should look at them or the action function, what will you be reacting to time or data? In other words, if nothing much changes. If we're looking at the same sort of Labor Market the same sort of inflation levels in July or in September uh or November will you move because you've said you feel you need to is it time that's going to require additional movement or would it be reversal in inflation? So I I don't want to deal with with hypotheticals about different ways data might move out.

so we you know we, of course we're not. We don't go out of our way to Surprise Markets or the public at the same time. our main focus has to be on getting the policy right. And that's that's what we're doing here and that's what we'll do for the upcoming meetings.

I Will say the July meeting will be live and uh, we'll just have to see I Think you'll you'll see the data, you'll hear fed people talking about it, and markets will have to make a make a judgment. Well, do you think inflation is likely to continue coming down based on the lags and based on your threat of additional movement? Or are we going to be in a period where we're not going to know what's happening? You know I think if you look at, uh, if you, if you just look at, I'll just point you to the forecast. So inflation is running core pieces. Yes, we are just running it.

That's a great comment. and a half a little higher than four and a half percent and the median Fomc participant thinks it'll go down to 3.9 on a 12 month basis. This is by the end of this year, so that's expecting pretty substantial progress. That's that's that's a pretty significant decline for half a year.

So that that's that, that's the forecast. Um, you know we'll We do try to be transparent in our reaction function. We're we're committed to getting inflation down and uh, that's the number one thing. so that's how I think about it.

A great comment by Ireland Um Victoria Guido with Politico could talk about the balance sheet and how you're thinking about it. Um, what would what are you looking for To judge whether we're approaching Reserve scarcity and his treasury issue? It's going to affect that. Um. Also, are you considering lowering the RRP rate in order to take some pressure off? Banks So let me say first of all, on the treasury part of it.

if I can talk about that and then go back to the balance sheet, So on that, um, of course we've been very focused on that for a couple of months. as everyone has, treasury has laid out its boring borrowing plans publicly. Uh, I think we all saw I Saw the secretary's comments yesterday to the effect that Treasury has consulted widely with Market participants about how to avoid Market disruption and that they're going to watch carefully for that. So that's that's from the Treasury which actually sets the you know the the borrowings at the FED We'll be monitoring market conditions carefully as the treasury refills the TGA.

The adjustment process is very likely to involve both the reduction in the RRP facility and also in reserves. It's really hard to say at the at the beginning of this which will be which will be greater, we are starting at a very high level of reserves and still elevated over RRP to take up for that matter, so we don't think reserves are likely to become scarce in the near term or even over the course of the year. Um, so that's that's that's the that's the the treasury part of the answer. We will, of course, continue to monitor Um conditions in money markets and we're prepared to make adjustments to make sure that that monetary policy transmission shout out to Eh for becoming a YouTube channel member.

Thank you so much. Yeah, what? Um, are you considering lowering the RRP rate to help take some pressure off? Banks So we have a number of I Would say the RRP doesn't look like it's it's pulling money out of out of the banking system. It's actually been shrinking here lately. Uh, so I Don't think, uh, that's not something something we've we've thought about a lot over time.

It doesn't really look like that's that's something that we would do. I think it's I Think it's a tool that we have. If we want to use it, we can. There are other tools we can we can use to address money market issues, but I wouldn't say that.

That's something that's likely that we would do in the near term. Foreign with: Bloomberg Um, have you seen sufficient Cooling in the housing market to bring inflation down? For example, how does the recent rebounds affect your forecast and how does it factor into monetary policy? So certainly housing? Very interest sensitive and it's the first place really or one of the first places that's either helped by low rates or or that is held back by by higher rates. and we certainly saw that over the course of the last year. We now see housing putting in a bottom and maybe even moving up a little bit.

Um, you know we're watching that situation carefully. I Do think uh, we we will see rents, rents, and and house prices filtering into Housing Services inflation and uh, I don't see them coming up quickly I do see them coming kind of wandering around at a relatively low level now and uh, that's appropriate. Do you think you'll have to Target that with further rate increases? Well, I think we look at everything. We don't just look at housing.

so I think you know the way it works is individual participants sit in their offices all over the country and they write down their their forecast and including their most likely forecast including their right forecast and then they send it in on Friday afternoon and we accumulate it and then we publish it for you. So that's how that's how they do that. Well I Don't know that housing is is itself going to be driving the rates picture, but it's part of it. Thank you for taking the question.

um Mr Chairman Edward Lawrence with Fox Business So I Want to go back to comments you made about Um in the past about unsustainable. It's a terrific comment. The CBO projects the federal deficit to be 2.8 trillion. Uh, in 10 years.

The CBO also says that federal debt will be 52 trillion by 2033.. at what point do you talk more firmly with lawmakers about fiscal responsibility because I'm assuming monetary policy cannot handle a loan. the inflation or keep that inflation in check with the higher level spending? I Don't do that. That's really not my job.

We we we hope and expect that other policy makers will respect our independence on on monetary policy and we don't see ourselves as uh as you know, the judges of appropriate fiscal policy. I will say and many of my predecessors have said that we are on an unsustainable fiscal path and that needs to be addressed over time. but I think trying to get into Uh into that with with lawmakers would be would be kind of uh, inappropriate given our independence and our need to stick to our knitting. The conversation then about the Federal Reserve financing some of that debt that we're seeing coming down the pike.

No, under no circumstances, thanks for taking our questions, uh chair Powell Um, so looking at the SCP it looks like uh GDP for this year was raised significantly your forecast for GDP this year. Uh, the unemployment rate meanwhile was pulled downward and so should we. take that as a sign that the committee is more confident about the prospects of a soft landing at least more. Uh, at least as it relates to what you were expecting in in March you know I I Would just say it this way: I Continue to think and this really hasn't changed that there is a path to Uh getting inflation back down to two percent without having to see the kind of sharp downturn and large losses of employment that we've seen in so many past instances.

It's it's possible A in a way, a strong labor market Uh is uh that that gradually cools? Could it could Aid that along it could Aid that along. but I I guess I Want to come back to the the main thing which is though simply this: we we see the committee. As you can see from the SCP the committee is completely unified in the need to get inflation down to two percent and we'll do whatever it takes to get it down to two percent over time. That is our plan and uh, you know we.

We understand that allowing inflation to get entrenched into the in the US economy is the thing that we cannot cannot allow to happen for the benefit of today's workers and families and businesses, but also for the future. Getting price stability back and and restored will benefit generations of people as long as it's sustained and it really is the Bedrock of the economy. And and you should understand that that is our top priority. Just a quick follow-up on that I'm just a little confused because you said the committee will do whatever it takes to get inflation down over time.

But when I look at the SCP inflation is still projected to be elevated next year, but the FED funds rate is lower than where it is now. Can you help me understand that? Sure. So um, you know if you look two and three years out with the forecast. first of all, I wouldn't I wouldn't put too much weight on forecasts even one year out because they're so highly uncertain.

But what they're showing is that as inflation comes down in the in the forecast, if you don't lower interest rates, then real rates are actually going up right? So it just to maintain a real rate. the nominal rate at that point two years out, let's say should come down just to maintain real rates. And if and actually, you know, since we we're we're probably gonna, we're We're having real rates that are going to have to be meaningfully positive and significantly So for us to get inflation down, that probably means that that certainly means that that it will be appropriate to cut rates at such time as inflation is coming down really significantly. And again, we're talking about a couple years out.

I Think As anyone can see, not a single person on the committee wrote down a rate cut this year, nor do I think it is, uh, at all likely to be appropriate if you think about it, Inflation has not really moved down it is. It is not So far reacted much to our to our existing rate hikes and so we're gonna have to keep at it. Julie Um, sorry thank you Hijab World Julie Chaminas AFP News Agency The major reports showed a rebound in May in the Black rockers and unemployment. Is it consistent with the Fed's maximum Employment mandate? Are you worried about that about this rebound? So we are, of course worried about uh, there.

There are long-standing difference differences in racial and ethnic groups across across our labor market. That's a factor that we don't we can't really address with our tools, but we do consider that when we're thinking about what constitutes maximum employment, shout out to Greg abroad YouTube memberships He just gave out. Um, and so we do watch that. But remember, all unemployment including black unemployment has been bouncing around right near historic lows, historic modern lows here.

So we're still talking about I mean what is as strong a labor market as we've seen in you know, a half century here in the United States So overall unemployment of 3.7 percent is is three tenths higher than it was a measured to be at the last uh, a month ago. But still, it's extraordinarily low and so it's a very, very tight labor market. Thank you I Want to follow up for us a little bit just on the rent question on housing? We heard Governor Waller talk about how I'll back up. We haven't quite seen the slowdown in rent show up in CPI yet and we did hear Governor Waller talk about how an uptick in housing might mean that there's not going to be as much relief coming or a shorter bit of relief than we thought.

Can you talk about how you're thinking about that and how that played into today's outcome? I Wouldn't say so, that's you know, as a factual matter. that's correct. We do need to see. you know rents bottom out here or at least stay quite low in terms of their increases because we want we want the um, you know, we want inflation to come down and Rental uh is is a very large part of the CPI about a third and it's about half of that for the Pce.

So it's important and so we're something that we're watching very carefully. It's part of the overall picture. I Wouldn't say it's the decisive part, but take a step back. What you see is, look at.

look at core inflation. over the past six months year. You're just not seeing a lot of progress, not the kind of progress we want to see and that that's it's. hard to avoid that, and you know the committee people in the committee.

The median went up significantly so that the median participant now thinks that core Pce inflation on a 12-month basis will be 3.9 percent this year. So once again, every year for the past three years, it's gone up over the course of the year. and that's doing that again. So we see that, and we see that inflation forecasts are coming in low again, and we see that.

that. That tells us that we need to do more. And so we're That's why you see the SCP with where it is. Could you also talk briefly about your outlook for wages and given the recent slowdown and core Services excluding housing, how far you think wages might need to fall in order to to get them? I Agree more.

So wages will continue to increase. So we, you know what we're talking about is having wage increases still at a very strong level, but at a level that's consistent with two percent inflation over time. And so I think we've seen some progress. All of the major measures of wages have have moved down from extreme highly elevated levels a year or so ago.

And they're they're moving back down, but but quite gradually. And and you know we want to see that that process continue gradually. With course, it's great to see wage increases, particularly for people at the lower end of the income. Spectrum but we want that as part of the process of getting inflation back down to two percent, which benefits everyone.

I Mean inflation hurts those same people more than anyone else. People on a fixed income are hurt the worst and the fastest by high inflation. Thank you so much chairpower. Greg Robb from MarketWatch I Just wondered if the committee has talked at all about the labor market.

and and there's strikes now in Hollywood and now the United Auto Workers are talking about a possible strike I mean aren't workers? They we have some workers have power now and are going to be seeking higher wages. Does that come up in your discussions? Thanks! So the topic of wages in the labor market and Dynamics in the labor market could is about as Central a topic to our discussions. As as anything I mean it's it's very labor economics, you know, and the labor market are utterly Central You know it's half of our mandate, so we spend a lot of time talking about that. I Think um, you know we there are structural issues that are really not for the Fed and so we don't spend a lot of time although we take notice of of what's going on.

but we're not. You know we're not involved in discussions or debates over over strikes and things like that. but we you know we, we look and we see what's going on and you know we're making judgments about what it will take to get inflation down to two percent in the Aggregate And as I said, don't think that was about I Didn't most folks would say now it wasn't really about that about wages at the beginning and it's becoming more about that as we as we get into really service sector inflation which is the part of the economy where we have seen the least progress. Ive Mark for the last question, thank you Mr Chairman Mark Hamrick with Bankrate wondering what your thoughts are now about systemic risk now that we're about three months past the failure of Silicon Valley Bank and also specifically, what are the risks associated with commercial real estate as well as non-bank financials.

And could you further: Elevate those risks with higher still rates possibly for longer. So guys, make sure you show Greg some love for gifting the 10 memberships go to subscribe to his channel. He has a terrific channel for technical analysis. I'll start with commercial real estate.

We of course were watching that situation very carefully. There's a substantial amount of commercial real estate in the banking system. A large part of it is in smaller Banks It's well distributed to the extent it's well distributed Then then the system could could take losses. We do expect that there will be losses, but there'll be.

There'll be banks that have concentrations and those banks will experience larger losses. So we're well aware of that. We're monitoring it carefully. Um, you know it feels like it feels like something that will be around for some time.

Uh, as opposed to uh, you know something that will suddenly hit and and you know, work its way into systemic risk. in terms of non-bank financials financial sector. Um, there's been a ton of work and you know clearly in the Um in the pandemic, it really was uh, it was the non-bank financial sector where where issues really arose and you know there's a lot of work going on in with the administration uh in particular leading that to try to address issues in the treasury market and and uh in all kinds of areas of non-bank financial market. And but you know our jurisdiction at the FED is over Banks if actually Bank holding companies and some banks.

So that's that's really our main focus. Um, you know, in terms of um, the events of March as I mentioned earlier, we will be carefully monitoring that situation. You know our our job generally involves worrying about a lot of things. Uh, that may go wrong that would include the banks.

It might be hard for me to identify something, but we don't worry about. Rather than that, we do worry about so we're watching those things very carefully and as we see things unfold as we see what's happening with credit conditions and and also all the individual banks that are out there you know will be able to take to the extent it's appropriate we can take. uh, if they're macroeconomic implications, we can take that into account in our rate setting. and uh, so I guess that's what I would say.

Do you risk further exacerbating those issues if you get up to another 50 basis points? So that's and I was I guess I meant to address that by saying as we as we watch we'll see what's happening and if we if we're seeing the kind of um, tightening of conditions that that you could be referring to then we can factor that because really we use our our rate tool is is you know is it really has macroeconomic purposes so we'll take that into account. Of course we have responsibility for financial stability as well and that also is a factor that we're always going to be considering. Thank you very much. He can't wait to get the out of there bro.

He's like I'm getting the out of Dodge like oh man. Okay so let's chat about um what happened. Okay, so enough with pal I'm gonna take it, take him off the screen and I want to see if there's any interesting analysis coming out from? Anyways, let's just move on. Move forward.

Okay, uh, few important topics to cover and then we'll get through what what just happened and I'll share my thoughts, my analysis Etc and all that good stuff for you guys. Shout out to Alex Carr for being here. Thank you Alex I Really appreciate it I assume you're not the real Alex Carp, but thank you for that for being here nevertheless. Um, okay so first things first.

uh, quick comments recap and then I'll tell you my opinion about what just happened and where, where it's taking us before we do. Huge huge shout out to my community manager Greg his channel is called investory He just gifted you guys 10 Channel memberships for free so make sure you enable gifts on your profile if if you haven't enabled gifts so you can't get it. so there's still a few to be given out. out of those 10, not all of them were claimed.

so just enable gifts on your profile and then you'll be able to get the free membership and join our Discord So shout out to Greg if you want to show Greg some love for doing that which I Think you should go to his channel, subscribe and let's get him to a thousand subscribers. So that's number one number two. before we continue a few important things: Number Two On the corner of the screen on the right hand side it says Payton.com Tom Nash If you guys want to join our 4200 Community this is how it looks like. This is the Patreon page right here you join here.

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Now let's talk about what we saw with Pal and everything. I'm going to stop the banner and let's talk about what happened. So a quick summary Paul comes out right. The first thing he says is that Mantra you know how YouTubers sometimes they repeat that kind of uh, that catchphrase in the beginning of a stream.

Same thing happens with Pal comes out says Hey with no inflation this hard, our goal is two percent. it's MPS so no surprise there. But right away right away the first second, he threw a curveball. Right after that when you were basically thinking that this is just you know.

another thing of basically him being um, of being like playing vanilla again, he throws out a massive curveball. He said immediately, hey, further rape increases are expected in 2023 if you remember. in the previous meeting on two meetings ago, some lady journalists asked him If the Fed expects rate hikes in 2023 only then an hour into the conversation he or half an hour he answered yes we do expect that but he never volunteered that information until it was asked. So in this meeting the main thing in Ireland can tell you and Greg can tell you we did the Discord hangout voice Discord hangout today and I said that I am going to be looking out for Pal's comments about future raid hikes I thought honestly it's going to calm down to a question because I didn't think he's going to want to go into that during the speech.

But the first thing he said the first thing he said is like yo, we're increasing rates this year now If you've ever been to a fight right? If a person screams really hard, I'm gonna kick your ass I'm gonna kick your ass. Usually that person can't fight and so when I see Jerome Powell come out and absolutely like right out of the gate we're gonna race like we're gonna rate, we're going to raise exercise, we're gonna race. It tells me he's buffing, it tells me he's full of I mean why would you volunteer that information right away like that So I feel like it was it. It was really like to me it's a huge deal.

like when somebody's screaming something that's obviously he's bluffing. So number one, it's a huge Bluff in my opinion and the market agrees with me. If you look at the market, nobody in the market believed John Paul Yeah, of course. Then he said, you know, four percent high, four percent interest rate is too high.

We cannot accept the four percent. We will not accept the four percent interest at the four percent inflation as normal is the new normal. And of course that also a bunch of because look at the market. The market is essentially pricing in the opposite of what Paul said.

If you look at the market and you listen to the speech, they don't match Ireland Basically commented on this and they said hey, based on what Paul's saying, j