Hey, everyone, welcome back! Oh wow. Okay, we got the Federal Reserve uh decision for 25 BP hike Widely expected coming out within the next three minutes. Uh, keep in mind that the biggest things that we're going to be looking for going into this press conference which airs in about 33 minutes. The biggest thing we're looking for from Drum Powell which we might get some hints from the statement in three minutes as well.

Biggest thing is, what is their read on whether or not we're getting this recession or not? Where is this crazy, elusive recession because this? GDP uh, you know, the GDP numbers when we actually look at consumption aren't that bad? Sure, we've got uh, inventories that have built up which are leading to a little bit less growth year over year, leading to that lower GDP read on the headline. When we look into the details, the economy still seems to be firing or as Starbucks literally said this in their earnings call. Okay, I'm not making it up. The economy is brewing on all cylinders.

Anyway, it the jobs numbers we got this morning. The ADP report reiterate this inflation is trending down. Quits are down. Yeah, we've got the insulated blanket of the jolts going down.

It's gone down three reports in a row, but that's the point. Jerome Powell has said for like a year he wants the Joltz report to get back in line I Remember a year ago I'm sitting in Canada I think it was the mayor June meeting we're in May already a year ago I'm sitting and and uh, listening to Jerome Powell and I'm talking about how Jerome Powell says oh, uh, we got to get to a one-to-one ratio for uh, the the job openings level to be in a more balanced economy. We're still not even close to that, which is insulative now. I Know some people say oh, but those job openings are all low wage jobs Really? Did you read the ADP report because you're still getting hiring in in finance and information and these other segments to the point where where we're not seeing these massive job losses that aligned with all of the layoffs that we're seeing now again, maybe lagging information totally fair, but the trend seems to be in the opposite direction.

so I'm curious to see what the FED sees. If The Fed sees a strong economy. Uh, buckle up because they're really gonna talk dirty to us. They're going to talk hawkish to us.

Uh, and we don't really want them to Hawk to us because it's just gonna make stonks go down. Uh, you know we. we want them to be soft and pleasant. like yeah, yeah, Maybe we could even start getting some hints that maybe they're gonna cut soon.

I Highly doubt that. Don't don't place bets on them talking about cutting anytime soon. Highly, highly doubt that. So uh, do keep in mind we got about 30 seconds to go.

uh I Want you to know that uh uh, this Banner right here. How to make more money and get sh9t done faster is a free expansion to the Elite Hustlers course for all existing members of that Uh, if you want to get in before we actually raise the price for the AI segment. So that way, uh, because we're adding so much value, make sure you get in by Friday Cinco de Mayo 11 59 pm. and then we're gonna do a big price increase because we're adding all these AI productivity segments and they're great.

Here we go. Fed Decision is 25 BP As expected. Uh, everything in line as expected with the 25 BP we got the 25. Now we're waiting for the statement and then we're going to get Jerome Powell So uh, statement is not out yet.

but we'll be out within the next seconds here waiting for that after that 25 basis point height. Widely expected. Highly highly publicized. And remember, the FED isn't trying to shock anyone here.

they're trying to clearly, uh, signal what's going on. Okay, here come the comments. So the comments say: uh, Fed omits prior language that signaled more hikes ahead. There you go omitting language that more Heights hikes are coming.

The extent at which more firming is needed hinges on the economy. Uh, the Federal Funds rate has now, at long last returned to the level it was before the global Financial crisis. Still waiting for. Uh, there it is.

Okay, The PDF is out. Just got it. I'm already reading some of the notes. Here Key takeaways.

Fomc raises 25 base points. Some additional policy firming may be warranted that does signal the potential pause at the next meeting. We widely anticipated that. Remember, if you have not yet marked on your calendar, you want to mark on your calendar.

Uh, the next CPI releases which are in one week from today May 10th and then you're going to have a jobs data coming out May 5th, uh, 5, 30 A.m I'll be live streaming for both of those. and then of course June 13th is your next CPI set which is right before we get the Fed and the next summary of economic projections. We're not getting an SCP today. no summary of economic projections today, but we will be getting Jerome Powell's press conference.

Quantitative typing will continue on. Pace Also, as expected, stocks now edging higher. Liking the headline about omitting language signaling more rate hikes ahead. Oh duh uh.

All right, let's see economic activity expanded at a modest Pace in the first quarter. Job gains have been robust in recent months. Uh, no doubt that's remember, that's your insulation of this economy. It doesn't matter how many people get fired, as long as they have another job to go to.

The vote was unanimous Ah That's interesting. We were actually expecting Goolsby uh to descent. so we had a unanimous vote here. Inflation remains elevated.

In other words, the job. their work remains to be done. This is all consistent with hire for longer U.S Banking Sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity hiring inflation.

However, the extent of those remains unknown. The committee remains highly attentive to inflation risks. The Committee 620 achieve maximum employment and inflation a rate of two percent over the long term. We know this: They raised rates 25 BP in determining the extent to which additional firming may be appropriate to return to two percent over time.

The committee will take into account cumulative tightening, the lags at which monetary policy affects the economy and financial developments. Uh, okay. In addition, the committee will reduce its Holdings as scheduled. This is actually a pretty short note here.

Let me see if I can get the Uh: It looks like I'm looking for the strikethrough version I'll have that up in a moment here. But uh, while we wait for the strikethrough version specifically, the line, yeah, strikethrough version is available yet. Uh, the additional policy firming line is gone. Uh, that is the prior.

That's the line that a lot of people have been looking at. Uh, and that Fom Fomc statement is gone. which is good. Uh, it is basically a way of saying, hey, maybe we don't need to, uh, hike anymore.

Maybe we are done and let's see. Oh there we go. It's almost as if right on cue of me complaining about where the strikethrough is, the strikethrough came through I'll pull that up on screen in just a moment as it loads Here, everything loads a little slower on this. Okay, there we go.

Uh, but this is actually important for you to see. Okay, strike through and in five seconds, we will be live with strikethrough. boom. Recent indicators point Two have been removed.

Instead, they changed it to economic activity expanded at a modest Pace Uh, at a growth growth. Recent indicators point to modest growth is what they previously had. Now, they're saying economic activity expanded at a modest Pace Okay, modest growth Modest Pace That's roughly the same spending in production that's gone. Maybe because production isn't growing as well.

Job gains have been robust. Okay, fine. Recent developments are likely to result in tighter credit conditions. Tighter credit conditions are likely to weigh on.

Oh, so they've That's interesting. And the second line they've basically moved from. we're probably going to see tighter credit conditions to we see tighter credit conditions. That's an interesting adjustment.

Okay, I Like that. That's good to know. Uh, uh. In determining the extent there it is, here, it is to which additional policy firming may be appropriate.

here. This is the part they got rid of. In order to attain a stance that is sufficiently restrictive. that's a good line to get rid of.

In other words, they are sufficiently restrictive. That is fantastic. That is a fantastic delete right here. because they're basically saying, hey, we think this, uh, five point, you know, one two five which is the mid-range Remember when you hear what the rate is that the FED has, it's a range.

The range we are at now is five to five and a quarter percent which actually means you're effective fed funds rate is actually about five and an eighth which looks like five point, One two five. anyway. Uh, in order to attain so we we've attained now sufficiently restrictive. That's good in determining the extent of future increases that's also been removed.

so no no comment about future increases, That's good, We're at sufficiently restrictive. This is a very reasonable level to pause. So uh, now the expectation is that uh Jerome Powell is going to talk to us. Generally what happens with stocks with the FED day is stocks run into the FED meeting, uh or the FED release.

Then we get the statement and you get like a little bit of volatility and then we usually get this weird like you where like stocks fall up to when Jerome Powell talks they go up uh and then you get some volatility once he starts talking and then you get digestion mode. Digestion mode is like 70 of the time positive. So 70 chance we're going to end the day positive. Uh, but but thirty percent of the time it ends up being negative.

What it is what it ends up being totally depends on how Jerome Powell acts. Is he going to say hey, look, employment's still strong, Core inflation isn't rolling over yet. Uh, for services we're just gonna. You know we're gonna stay here for two years.

I Guarantee you if if he gives us any kind of indication that that we're going to stay at five and a quarter. you know, five to five and a quarter for a year or two years, the Market's gonna freak because the market right now is still pricing in Cuts Now we're 23 minutes away from Jerome Powell's testimony. But uh, these cuts that are being priced in right now are just nutty. Uh, actually, the the world interest rate probability chart looks nutty right now.

My God I'll show you this chart in just a moment here. Uh, I'm gonna get some dust on me. We were working some more on the uh AI segment for that new course this morning. It's going to be really good.

Like, if you want to know all about the productivity tools that I use like they are, they're mind-blowing productivity tools. And it's not just like. here's a list of tools. It's like, how does Kevin actually use it? You know who was it? Um, Sequoia Capital Had a really great quote this morning.

They said you should not be afraid of AI taking your job. You should be afraid of a human using AI taking your job. That was such a great line and this is why. like we are going to be doing a huge productivity segment in that uh, revamp course.

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Link down below. Okay, so what do we got here? So this is the World Interest Rate Probability chart and basically what this chart here says is we're done with hikes, right? We already know that the implied policy path is is basically created by the Bond Market's anticipation of what is going to happen uh with rates. And if we take a little arrow here, uh, we could see, uh, what the market kind of assumes. So let's take this little arrow here.

This is approximately where we sit now around here and the expectation is there are no more uh, hikes, no no more rate increases. So what you have here are anticipation or is in anticipation that the market is already pricing in I Would call this roughly stability over here, possibly a cut, but roughly stability in July We have a June meeting here, so let's call the left Arrow where we are now, uh, the second Arrow here. June this is July So The First Cut is being priced for July Uh, And then we're looking at as much as a uh, somewhere around potentially three and a half cuts, bringing us all the way down to about four and a quarter percent by January 31st. Typically, people refer to the end of the year when it comes to the FED as January.

so if that seems confusing, that's why. Now some of the comments here are: How long does inflation need to be below two percent? Uh, to to convince Jerome Powell You know the question so much isn't how long do we need to be below two percent? The question is, we want to average two percent, right? So the first decade you know, 2010 to 2020, if we're sitting at 1.7 on average, maybe we sit up 2.3 for the next decade on average. But that's going to really take inflation dropping quite a bit here to actually get that average. Unless of course, you want to go out and use a 15-year average on each side, or a 20-year average on each side.

But see, that's another trick that Jerome Powell has on his tool belt. Like everybody keeps talking about this idea that, oh, the Fed's not at two percent. Maybe they should just raise the inflation Target to three percent. The inflation Target may as well be three percent.

It doesn't really matter, because if you say well, we want an average of two percent, or we want three percent, that could basically be the same thing. So that flexibility Uh is is indoctrinated in a policy known as flexible Average Inflation Targeting. It's a 2019 right before the Pandemic Uh policy that the Federal Reserve Institute one of the reasons they actually instituted the policy was because inflation was running so low. Uh, inflation was basically running so low that they're like, well, should we reduce the policy like the projected inflation rate should we say, instead of targeting two percent, should we target 1.75 And they said, you know what? let's just leave it at two percent and call it an average of two percent? Yeah, so now now we're dealing with basically the flip side of that, right? Inflation that's higher now.

I Don't think that as long as we have progress in inflation, the FED needs to rush this down as long as there's a trend of inflation going down and expectations are not breaking loose, right? That's probably the most critical part. Let's look at the five-year Break Even Uh, we should start getting an update here on the five-year Break Even pricing actually in about three minutes. But going into this data release, uh, The Five-Year Break Even is is at the Uh almost the lowest point it's been in the last year, which is really good. It's sitting at a 2.19 This is fantastic.

Very anchored inflation expectations. Uh, for the Bond market. So the bond Market's not seeing any kind of runaway inflation. You could see that on screen now.

Uh, the problem is you have the consumer sentiment survey which is indicating some potential pickup inflation in inflation. But I'll tell you one thing. that sort of offsets the pain of this consumer expectation of inflation that we're seeing is uh, and I'm not trying to Pat myself on the back I've just been saying it for months. this whole like oh, oil is going to go to a hundred dollar Barrel thing again.

Total Bull sh19 Like Total Bull. Okay, but not only is a total bull I mean Zoom it, look at what the oil is doing today. Look at this folks. Brent you're International blood and I get this question all the time.

So sorry if it sounds redundant Brent is your International blend of oil. It's a little bit more expensive than the WTI blend which is the left one on CNBC Uh, both of these are down three and a half to four percent right now. Brent's at 72.50 72.50 I'm pretty sure that's lower than uh, before the OPEC hike. Yeah, it is.

Look at this. go to the last six months. So OPEC cut production over here. It was right around the end of the month, right? We got this big boost.

We were at like 82 bucks or something like that. Even before that, we were down to 72 97, shot all the way up to 87 7 and now we're at 72.56 I Mean oil is plummeting. This is fantastic by the way. Uh, the the downside.

I Will say there is a downside here. So this right here. this whole segment will get cut into thirds. Now that's really important because when they do the CPI read They're going to divide the entire month of April into thirds and then they're going to evaluate okay, how much how much basically uh, did energy contribute to inflation and I Hate to say it, but most of this this third over here.

like if this is one third, one-third would be roughly about here to the left. that's obviously way higher. this would be about the next third. That's pretty high.

and unfortunately you didn't really get the full plummet until you were already in May. So this this uh April report on Headline could still have one last like headline like bump in terms of CPI project outcomes for headline at least non-core but it's gonna plummet in May especially if oil keeps falling in may like it is now. In fact, what we should do is let's look at the CPI projections going forward because CPI is going to be next week. very important.

Uh I also want you? Oh yeah, here we go. Okay, so CPI CPI So the projection right now for headline month over month is 0.4 That compares to a prior of 0.1 A lot of that is going to be because of energy I just showed you core however, will go down as the projection from point four to point three. That's good. Year over year will actually be flat at five percent and core will go from 5.6 to 5.4 That's the projection, right? So you're going to still have a little bit of a sticky sort of lukewarm.

Inflation report here for April coming out one week from today. Uh, and then of course one day before the FED meeting in June will get the next CPI report. Very interesting. Uh, deeps here says uh, oil is hitting resistance today Uh, and yet gas prices have been rising ironically, but that could be a temporary sort of uh, a production.

uh issue I I Think they will come down in time, but uh yeah, you're right about that with oil and resistance. And so we'll see. I mean if we break through this, it would be pretty bearish for oil, but bullish for inflation. You have to remember, everybody keeps talking about how oh well they extract inflation from core Services It's total bull sh19 Because think about it.

if your Uber driver has to spend more money on gas, they have to get compensated more. Same thing for your lawyers, your accountants, your real estate agents, everyone, the people cutting your hair. everyone who uses energy ends up charging you more or less based on their costs because they have to. Otherwise, it doesn't make sense to open the doors.

So this idea that we can somehow strip energy costs from inflation is nonsense. Uh, so yeah, if you're looking for a bundle code or coupon code to make sure you could get in this AI group I See your comment here Red Bill. Just go. Uh.

send an email to Kevin meet Kevin.com and just uh, ask McKay to help you out. he's standing by. He'll help you out. We've been getting a ton of emails.

We've been getting blown up with people buying this because it actually we're really excited about. the productivity that we're going to be able to teach you about is insane in this. and the cool thing about this is is we will grow it as AI grows So which I'm very excited to buy because obviously you know in two months from now there's going to be a bunch of new stuff and we're going to incorporate that in this. And this is not like some technical crap where I'm going to teach you about like neural.

Nets Okay, I'm not an engineer. This is all about I'm a business dude. How can this crap make you more money? Bottom line: That's that's what this is about. Bottom line: How can you use AI to make you more money? That's it.

It's simple. so um, okay so we looked at the CPI Remember that the jobs data that's coming out uh, is the current estimates actually 182? I Thought it was 186 this morning. Maybe it adjusted down a little bit, but uh, non-farm payroll is expected to be 182. if we get something like the ADP report this morning, I Think the economy the stock market could actually do very well.

Because remember what the stock market is concerned about Now the stock market seems convinced that we're going to see inflation come down. But the problem is, are we going to see it without a recession? What's Elizabeth Warren Saying hold on a second here. Problems we have that have been driving prices higher are not all problems that you can fix by raising interest rates. You know we have a warn you.

Crane That messes up supply chain and energy costs and food costs. We've had a lot of price gouging that giant corporations still want to talk about, but families are sure feeling it. And you can raise interest rates. but it's not going to affect those.

You've got other tools you have to work. We've had supplies. It is true. It's a blunt knife is what it's described as right.

It's like, hey, we raise interest rates. How does that affect lower income people? It doesn't You know their credit card rates going up a little bit doesn't make a difference. It affects people with assets. Um now.

I I Want to say regarding the meet Kevin Report: Okay, important update here. Um, this is an idea. I've been evaluating this Uh, I'm not sure I'm going to do this, but just to be transparent I Have an idea. Rather than doing like these: long like one to two hour meet Kevin reports in the morning, I'm considering doing like a condensed 20 minute meet.

Kevin report and then that information will be unique. Uh, you know I won't be reposting it later in the day and then we might. then we'll go into what I'm thinking will be a little bit of an earlier course member live stream and then we'll go deep on fundamentals like we do every day in the course member live streams. every course member gets access to uh and and then we'll you know, maybe have like a single topic video I might try that I'm not sure uh, but that's something that I'm thinking about.

So I I Love the meet Kevin report. Don't get me wrong, and it's it's top of mind for me and I'm trying to figure out the best thing to do with it. but um, the uh. the performance wasn't ideal.

uh, the way it was working last time around. But anyway, let's continue listening here for a moment. Straight, lower interest rates? I mean basically. so they look at the world through that lens, but look at the effect of price gouging for example, and the data depending on who you want to read and what you want to look at.

but at least 40 of the increase in prices attributed to price gouging. that is, look at Industries where there's greater concentration I Actually highly doubt that this is price gouging at the 40 of it. I Mean, don't get me wrong, corporations are raising prices and they're doing it because they can. But they're doing it to preserve their margins.

But that's what a corporation is supposed to do. Otherwise, they go bankrupt. you know? So I don't know if that's gouging and what's your definition of gouging even they should have done. And to to squeeze out what what inflation remains, you would look at What legislation to address price.

legislation could be part of it, but the FTC is part of it. The Attorney General We have laws in place that give us some I think she just made that up I'd like to see us do more. that would be the legislation part. States Also have any price gouging laws and they can bring those to bear.

Um, partly. You can use Jawbone on it too. The the Chairman of the Fed, the President of the United States can talk about these industries with specificity about who's in there pushing prices up more than is justified by an increase. All right, Warren whatever.

So let me just read off some of the other updates we got here: Uh U.S Macro strategist um statement Rhymes Back to 2006. They never flat out said they're done, but this was as close as they could have come. Nobody wants to compare to 2006. nobody because 2006 is uh, is uh, you know, two years basically before the the real bottom of the pain.

Okay, uh okay. Somebody wants me to run a poll while we wait for Jerome Powell In eight minutes. Jerome Powell will be live I'll run the poll uh for meet Kevin report What do you prefer? Um, uh long? mkr um short mkr uh no. Meet Kevin report no mkr uh yeah.

this is a little skewed because obviously y'all are here on a live stream. Uh, but anyway, did the terminal rate increase? Hmm, let me see. I will tell you. uh.

projections for terminal rate? Let's see. Okay, that poll is live now by the way, if you wanted to look at that poll projections for terminal right? I Thought it was voted by after the law uh, 5.08 So the Market's pricing of the terminal rate is actually lower than we are right now. but it's basically saying we're at Peak uh, which which seems appropriate. Five-year Break Even Uh, pretty stable at about 2.2 which is good.

We're looking at another key economic moment this week. It comes with the Fed's labor Report on Friday Remember I'll be covering that live that's on Cinco de Mayo we'll be covering the jobs report Live 5 30 a.m So come for that live stream a Harvard Economist and former NEC chairperson Jason Furman says forward guidance is over. Uh well. it'll be interesting to see how he handles the press conference.

I agree because that's what we're all looking for right now in this press conference that starts in for six minutes here. Um, let's see. Yeah, well, this press conference will be fascinating because again, so let's let's write down some things that we're going to look at. Okay I think that's a good idea.

So what are we looking for? So um, what we need to know? I Really need to get my keyboard for this? Whatever. So what do we want to know? Let's write down some ideas here and Shout out some ideas in the chat as well. Uh, what you think? So what? What do we need to know for the Miss Well, what we want to know is um, you know any kind of GDP growth? Uh, you know, are we closer or further to a soft? Landing Uh from soft Landing Uh, probably a big thing would be response to um response to inflation expectations Rising per U of M per U of M that's a big one. I Don't know if we'll actually get a response on that.

Uh, there's been some stability in housing. Does that suggest? uh in housing. In some cases, prices have been going up. Does that suggest higher rates? Could you know higher rates in future like mid 90s when they paused and then hiked again? So a reference to the mid 90s would be worth knowing.

although that would be sort of Contra to what we've seen in the 70s which is where they had that start stop mentality. Uh, they don't want to do that. Uh, so interesting. Yeah, the poll does not help at all.

Out of 1700 votes I'll let people keep voting worthless. Um, okay, that is a funny result. Okay, so what else do we want we want? Um, uh, what about like how how like any kind of Fate obviously flexible average inflation targeting but also how long will they be patient right? Like what's what's the rush? Uh, obviously. Uh, which I doubt we're gonna get obviously hints for cuts or talk of cuts I Doubt we're gonna get that.

uh, that we'll see. So uh, you've got about 75 BP priced in Cuts price for December and about a hundred BP price for Jan Uh, obviously you know some banking crisis nonsense. We'll maybe get a little bit of that. Uh, so you know the AI segment will only be in the How to Make More Money and Get Sh9t course right? Now That's that's it.

Uh, but that's a free upgrade for all of those existing members I Want to give back uh, to those those existing course members and that. And that's also a really phenomenal course. It's different from the investing ones like real estate investing or otherwise. Okay, so perhaps a little bit of a surprise is the language on the job market didn't change.

We thought some tweak was in order. Job gains have been robust. well. Why? I Mean that's accurate I don't think a tweet was a tweak was necessary then.

So okay. good. so we are now through two minutes away from Jerome Powell Let's listen in here for a moment this very afternoon instead of holding a press conference. Jerome Powell should be tightening down those regulations at the FED where they have the discretion to do that and then part three.

Oh, come on. Elizabeth Warren OH Jerome Powell shouldn't be holding his press conference. You know all I hear is this. It's just like a manipulate you stable.

Let's talk a little bit about a topic that we touched on the last time you and I were together and that is uh, stock Holdings and Investments of members of Congress Yes, what progress if any has been made on that front. And I note that you personally do not have individual uh stockholders. You have funds and mutual funds. That's so what's happened and what's left to do? a lot.

You want to talk about something that's hard you know, trying to get members of Congress who will all say in general that they think there's well, I shouldn't even say they all say it. Some will say there's a problem with stock trading, but look. um. I've been in.

This is boring. Okay, listen. we are uh, 60 seconds away from Jerome Powell Uh, we'll be listening in. Obviously live here.

Uh, no changes yet in the expectations for the future course of Uh rates. We're on standby to see how markets react to every waking word. Jay Powell says we'll be listening very closely if there's something that I think is urgent, obviously we'll point it out. Um, what? what? but not.

I Don't know that we need any of these real buttons, you know? So uh, uh, what buttons are these again? sell, sell, Sell. So we got a gym. One Betrayal: Ah That's a good one. Betrayal Anyway, 20 seconds from Jay Pal's meeting here.

Uh and um, uh, we've got uh right now the Dow sitting at up 14 basis points s p at Point 43 so 43 base points you're at 83 on NASDAQ uh Russell moving the most at about 1.5 What's she yelling about or not do? Would you raise? Deposit Insurance Payroll account. Look, right now we have unlimited Deposit Insurance Come on, the big Banks and the big depositors that are taking advantage of it are a fan of Penny for it. We need to raise it and make sure people who take advantage of it. this is all hurting small Banks more than anything.

Absolutely. Because they're now going to have to pay into these then. Because yes, if you have existing courses, just send an email to Uh McKay Just send it to Kevin.com and we'll get you bundled up. They want the insurance rates.

They say that's how you level the playing field. We can compete with the big guys. If you'll raise that cap for us, would you do that? Absolutely. There he is, there is, we're here.

Uh, and there is. Thank you so much to gain the lead, Turn your mic on before discussing today's meeting. Uh, let me comment briefly on recent developments in the banking sector. Conditions in that sector have broadly improved since early March and the U.S banking system is sound and resilient.

We will continue to monitor conditions in the sector. We're committed to learning the right lessons from this episode and will work to prevent events like these from happening again. As a first step in that process. Last week we released Vice Chair for Supervision Bars review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank.

The review's findings underscore the need to address our rules and supervisory practices to make for a stronger and more resilient banking system, and I'm confident that we will do so from the perspective of monetary policy. Our Focus remains squarely on our dual mandate to promote maximum employment and stable prices. For the American people, my colleagues and I 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 does not work for anyone in particular. Without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all today. You see raised its policy interest rate by a quarter percentage point. Since early last year, we've raised interest rates by a total of five percentage points.

In order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to two percent over time, we are also continuing to reduce our Securities Holdings Looking ahead, we'll take a data dependent approach in determining the extent to which additional policy firming may be appropriate. I will have more to say about today's monetary policy actions. After briefly reviewing economic developments, the U.S economy slowed significantly last year, with real GDP rising at a below Trend pace of 0.9 percent. Pace of economic growth in the first quarter of this year continued to be modest at 1.1 percent.

Despite a pickup in consumer spending, activity in the housing sector remains weak, largely reflecting higher mortgage mortgage rates. Higher interest rates and slower output growth also appear to be weighing on business fixed investment. The labor market remains very tight over the first three months of the year. Job gains averaged 345 000 jobs per month.

Unemployment rate remained very low in March at 3.5 percent. Even so, there are some signs that supply and demand in the labor market are coming back into better balance. Labor force participation rate has moved up in recent months, particularly for individuals aged 25 to 54 years. Nominal wage growth has shown some signs of easing and job vacancies have declined so far this year, but overall labor demand still substantially exceeds the supply of available workers.

Inflation remains well above our our longer run goal of two percent over the 12 months ending in March Total Pce Prices rose 4.2 percent excluding the Volvo food and energy categories. Core Pce prices Rose 4.6 percent. Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run.

High In the process of getting inflation back down to two percent has a long way to go. 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 really, as well as measures from financial markets. Okay, the Fed's monetary policy actions are Guided By by our mandate to promote maximum employment and stable prices For the American people, my colleagues and I are acutely aware that high inflation imposes significant 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.

At today's meeting, the committee raised the target range for the Federal funds rate by a quarter percentage Point bringing the target range to five to five and a quarter percent, and we're continuing to the process of significantly reducing our Securities Holdings With today's action, we have raised interest rates by five percentage points. In a little more than a year, we are seeing the effects of our policy tightening on demand in the most interest rate sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full full effects of monetary restraint to be realized, especially on inflation foreign. In addition, the economy is likely to face further headwinds from tighter credit conditions.

Credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic Outlook, But the strains that emerge in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses. In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. in light of these uncertain headwinds.

Along with monetary policy restraint we've put in place, our future policy actions will depend on how events unfold, in determining the extent to which additional policy firming 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. We will make that determination meeting by meeting based on the totality of incoming data and their implications for the outlook for economic activity and inflation, and we are prepared to do more. If greater monetary policy restraint is warranted, we remain committed to Bringing inflation back down to our two percent gold and to keep our longer term inflation expectations well anchored.

Reducing inflation is likely to require a period of low 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 is in service to our public mission.

We at the FED will do everything we can to achieve our maximum employment and price stability goals. Thank you I Look forward to your questions. Okay, neutral to me, that's fine. Totally fine.

I Was surprised by the Um thanks for taking our questions I Wonder if you could tell us whether we should read the statement today as a suggestion that the committee is prepared to pause. Interest rate increases in June I mean that's obvious and I also wonderful forecast for a mild recession from the March minutes and if so, what a recession like what they're envisioning would look and feel like when it comes to for example, the unemployment rate. Good questions, good question. So uh, taking your question of course, today our decision was to raise the Federal Funds rate by 25 basis points.

Uh, a decision on a pause was not made today. Uh, you will have noticed that uh in the in the statement from March we had a sentence, The committee anticipates that some additional policy firming may be appropriate. That sentence is is not in in the statement anymore. We took that out instead.

We're saying that in determining the extent to which additional policy firming may be appropriate to return inflation two percent over time, the committee will take into account certain factors. So we that's a that's a meaningful change that we're no longer saying that we anticipate. And uh, so we'll be driven by incoming data, meeting by meeting, and uh, you know we'll approach that question at the June meeting. Uh there.

So the the Um, let me say start by saying that that's not my own most likely uh case. Which is really that that the economy will continue to grow at a modest rate this year. and I think that's uh, so different people in the committee have different forecasts. That's that's my own assessment of the most likely path.

Staff produces its own forecast and it's independent of the forecasts of of the participants which include the governors and The Reserve Bank presidents of course. And we think this is a healthy thing that the staff is writing down what they really think they're not specially influenced by what the governors think and vice versa. Oh my. God The governors are not taking what the staff says and just writing that down.

So it's actually good that the staff and individual participants uh, can have different perspectives, Um, so broadly. The forecast was for a mild recession, and by that I would characterize as one in which the rise in unemployment is smaller than is has been typical in modern era. Uh, recessions. Um I I Wouldn't want to characterize the the staff's uh, uh forecast for this meeting.

We'll we'll leave that to the minutes, but broadly broadly similar to that. Okay, four, six, one percent rise in unemployment Thank you Chairperson Michael Siegel from The Washington Post Thanks for taking our questions. I'm wondering if you can talk about the account of possible effects of a debt limit standoff. You've said repeatedly that the ceiling must be raised, but do you see any economic effects of even getting close to a default and what type of situation would that look like? Um, so I wouldn't want to speculate specifically, but I will say this: Um, these are fiscal policy matters for starters.

and they're uh, they're for Congress and the administration for the elected parts of the government to deal with and and leave it to the post to waste consigned to them. From our standpoint, I Would just say this: it's essential that that the debt ceiling be raised in a timely way so that the US government can pay all of its bills when they're due. Failure to do that would be unprecedented. Uh, we'd be in Uncharted Territory and the consequences to the U.S economy would be highly uncertain and good could be quite diverse.

So all right, nice. I'll just leave it there. We um, we don't give advice to either side. Um, we just would point out that it that it's very important that this be done and that the other point I'll make about that though is that no one should assume that the FED can protect the economy from the potential you know, short and long-term effects of a failure to pay our bills on time.

We uh, it would be so uncertain that it's just as important that that this we never get to a place where we're actually talking about or even having a situation where the US government's not paying its bills and just to follow up was discussion around the uncertainty of a possible standoff. Did that affect today's monetary policy decision? No. I wouldn't say that it did. it was.

of course it's something that came up. We talk a lot about risks uh to the to the Outlook and that that will that come up. A number of people did raise it as a risk like I. wouldn't say that it was important in today's uh, monetary policy decision duh sorry sorry stupid question piss me off.

Oh thank you Steve released from CNBC he's good. Tell us what the Federal Reserve board did in the wake of that February presentation where you informed that Silicon Valley, Bank and other Banks were experiencing interest rate risks and can you tell me what supervised reactions you've done in the wake of the recent bank failures to make sure that banks are currently appropriately managing interest rate risk and kind of part three. But it's all the same question here. Do you still think this separation principle that monetary policy and supervision can be handled with different tools? Thank you Sure! So the February 14th presentation I didn't remember it very well and now of course I've gone back and looked at it very carefully.

I did remember it and what it was was a general presentation. It was an informational briefing of the whole board, the entire board I think all members were there and it was about interest rate risk in the banks and and um, lots of data. and there was one page on Silicon Valley Bank which talked about. you know the amount of losses they are marked to Market losses they had in their portfolio.

There was nothing in it about uh, that I recall Anyway, about um about the risk of a bank run. so it was I think the takeaway was they were going away to do a an assessment a vertical, uh, sorry, a horizontal assessment of of banks. It wasn't Um, it wasn't presented as an urgent or alarming situation. it was presented as a as an informational, non-decisional kind of a thing and I thought it was a good presentation and and as I said, did remember it.

um in terms of what we're doing of course. uh I think banks themselves are or many, many, banks are now, uh, are attending to liquidity and uh, taking opportunity Now Really? since uh, since the events of early March to to build liquidity and um, you asked about the separation principle I You know, like so many things, it it's very useful. Um, but you know, ultimately it has its limits. I mean I Think in this particular case, we have found that uh, Monetary policy tools and the Financial Stability tools are not in Conflict they're both.

They're working well together. We've used our Our Financial Stability Tools to support Banks through our lending facilities and at the same time, we've been able to use our monetary policy tools to Foster maximum employment and price stability all right. Next, by the way, the K's getting inundated. I Don't mean to be argumentative, but the the staff report said Svb has significant interest rate risk.

It said interest rate risk measurements failed at Svb and it said banks with large, unrealized losses face significant safety and soundness risk. Why was that not alarming? Well, I mean I didn't say it wasn't alarming. it was. They're pointing out something that they're working on and that they're on the case that you know that uh, I'm not sure whether they mentioned um I think they did.

Actually, they mentioned um, that they had taken regulatory action matter or supervisor reaction in the form of matters requiring attention. So I think that was also in the presentation I think it was to say yes, this is a bank and there are many other banks that are experiencing this these things and and we're on the case. He's talking about a report the FED released basically pointing out yeah, there were failures. it's a review report I'll pull it up hi chair pal Uh I Wanted to ask you.

Obviously, with the recent bank turmoil, we've seen multiple banks by other Banks and I was just curious whether you think that further consolidation in the banking sector would increase or decrease Financial stability and whether you have any concerns about the biggest bank in the U.S uh getting even larger. So I you know we certainly don't and I don't have an agenda to further consolidate. Uh Banks There's been consolidation has been a factor in the U.S Bank industry really since uh Interstate Banking and before that even it goes back more than 30 years you when I was in the government a while back I think there were 14 000 Banks Now there are four thousand and change so that's that's going on. I Personally have long felt that having small, medium, and large size Banks is a great part of our banking system.

Uh, you know the the Community Banks serve particular customers very well. Regional Banks serve very important Uh purposes and the various kinds of G-sibs do as well. So I think it's healthy to have a you know, an arrange a range of different, globally systemically important um I think that's a positive thing. Um, is it a financial? So I would just say in terms of JP Morgan uh buying uh First Republic Um, the FDIC really runs the process of closing and selling a closed Bank completely that that is their role.

So I really don't have a comment on on that process. As you know, there's an exception to the deposit cap for failing bank. so it was legitimate. and I think the FDIC I believe is bound by law to take the bid that is the least cost bid.

So I would assume that's what they did the fact that they're they're getting larger in general. So I I think it's probably good policy that we we don't want the largest banks doing big acquisitions. That is the policy. and uh, this is an exception for a failing bank.

and I I think it's true. there was an exception made illegally. It also wouldn't would have been a good a good outcome for the banking system at one of the regional Banks bought bought this company and that could have been the outcome. But Ultimately, we have to follow the law in our agencies and the law as it goes to the uh, the the least cost bid.

Yeah, thanks thank you. Uh Colby Smith with the financial times, Uh, at the March meeting you mentioned that uh, tightening of credit conditions Um, from the recent bank stress could be equal to one or more rate increases. Uh, so given development since then, how has your estimate changed? Yeah, I think I think I Followed that up by saying it's um, it's uh, quite impossible to have a precise estimate of the words to that effect. Um, but in principle, that's the idea.

You know when we we've been raising interest rates and that raises the price of credit in that, in a sense, restricts Credit in the economy working through the price mechanism and you know when Banks raise their credit standards that can also make credit tightener in a kind of broadly similar way. Um, it isn't. It isn't possible to make a kind of clean translation between one and the other, although firms are trying that and you know we're trying it. but ultimately, we have to be.

We have to be honest and humble about our ability to make a precise assessment, so it does complicate the task of achieving. you know, a sufficiently restrictive stance. But I think. conceptually though we think that it, you know interest rates will.

In principle, we won't have to raise rates quite as high as we would have had this not happened. The extent of that is so hard to predict because we don't know how persistent these, uh, these effects will be. We don't know how large as they'll be and how long they'll take to be transmitted, but that's that's what we'll be watching carefully to find out just to quickly follow up. What does it suggest about the scope for the committee uh to pause rate increases perhaps as early as next month? Uh, even if the data remains strong, then if if it's having some kind of substitute effect, it's that.

this is just something that we have to factor in as we as we want to find ourselves. So I guess I would say it this way: find ourselves the assessment of uh of the extent to which additional policy firming may be appropriate is going to be an ongoing one. Meeting by meeting, and we're going to be looking at the factors that I mentioned that they're listed in in the statement. The obvious factors.

That's that's the way we're going to be thinking about it. Um, and uh, that's really all we can do As I say. it does complicate we we have. You know, a broad understanding of monetary policy.

Credit tightening is a different thing. There's a lot of literature on that, but translating it into into rate uh Ike's is is uncertain as we're uncertain what's happening with credit conditions. What's happening with lending We get there's a lot of data on that and you know we'll We'll factor that into our decision making. Our Cyrus Reuters thank you.

Um, so noting that the statement dropped the reference to uh sufficiently restricted restrictive I was wondering: uh, given your Baseline Outlook whether you feel this current rate of five to five and a quarter percent is in fact sufficiently restrictive. So that's going to be an ongoing assessment, We're going to need data to accumulate on that um, uh, not an assessment that we've made as that that would mean we think we've reached that point and I just think it's uh, it's not possible to say that with confidence now. Um, but nonetheless you you you will know that the summer of economic projections from the March meeting showed that in at that point in time that the median participant thought that this was this was the appropriate level of the of the ultimate, uh, high level of rates, We don't know that we'll we'll revisit that at the June meeting. Um, and that's you know, we're just going to have to before we really declare that I think we're going to have to see Uh data accumulating and uh, um, and you know, make that as I mentioned, it's an ongoing assessment and a follow-up on credit If I could, Could you give us a sense of what the sluice survey uh indicated Senior Loan Officer survey I think 40 45 of banks were tightening credit as of the Uh the last survey uh, what did this one show and how did that way into your deliberations? So we're gonna release the results of this loose on May 8th in line with our usual time frame and I I Would just say that this loose is broadly consistent when you see it.

With how we and others have been thinking about the situation and what we're seeing from other sources, you will have seen the Beige Book and listen to the various earnings calls that indicate that mid-sized banks have. some of them have been tightening their lending standards Um, banking data will show that lending has continued to grow, but the pace has been slowing really since the second half of last year. Nick Temerose of Wall Street Journal Uh chair Powell The argument around the end of last year and the beginning of this year to slow down the pace of increases was to give yourself time to study the effects after the bank failures in March As you've discussed, the FED staff projected a recession starting later this year. So my question is why it was necessary to raise interest rates today or put put differently.

If the whole point of slowing down the pace was to see the effects of your moves. and now you've for the last two meetings been seeing the effects of those moves. Why did the committee feel it was necessary to keep moving? Well, We um, the reason is that we again with our monetary policy we're trying. we're trying to reach and then and then stay at a Uh for an extended period, a level of of policy, a policy stance that's sufficiently restrictive to bring inflation down two percent over time, And you know that's what we're trying to do with our with our tool.

Um, I think slowing down was the right move. I I think Um, it's enabled us to see more data and it will continue to do so. Uh, so I I You know we we really. Um, you know we have to balance.

We always have to balance the risk of not doing enough and and not getting inflation under control against the risk of maybe slowing down economic activity too much. And we thought that this rate hike com along with the meaningful change in in Uh, our policy statement was the right way to balance that. and just to follow up. you know what you said In response to Howard's question: you'll need data to accumulate to determine if this is a sufficiently restrictive stance.

Does that data need to accumulate or could it accumulate over a longer period than a six-week intermediate cycle? I Yeah, I mean I As I mentioned. I I would just say that this assessment will be an ongoing one. Uh, you? you know you can't With with economic data you you can't. You've seen, take, take inflation from it.

Look, look back. We've seen inflation come down, move back up two or three times since March of 2021, We've seen inflation have a few months of coming down and then come right back up. So I think you're going to want to see that? Uh, you know that a few months of data will will persuade you that you've that you've got this right. Kind of.

Through CPI reports we we have the luxury. We've raised 500 basis points I Think that policy is tight I Think real rates are probably that you can calculate them many different ways, but one way is to look at the nominal rate and then subtract a reasonable estimate of of, let's say, one year inflation, which might be three percent. So you've got two percent real rates that's meaningfully above what most people would many people anyway would would assess as uh, you know the neutral rate. So policy is tight and you see that in interest, intersensitive, um activities and you also begin to see it more and more in in other activities.

And if you, if you put the Um, you put the credit finding on top of that and the QT that's ongoing I think I think I think you feel like you know we're we may not be far off or possibly even at that level. That was a good line. He went off the rant right there. That was a good one.

That's good that that was the pause. uh, chair pal Edward Lawrence with Fox Business Um, So if the Federal Reserve gets down to the three percent inflation as a projection show at the end of this year or close to it, would it be okay for you for a prolonged period of three percent inflation? Uh, and hoping for some outside event to move down to two percent? Target I Look I Think we're always going to have two percent as our our Target We're always going to be focusing on getting there. But would you be okay with with a prolonged three percent? You know what? it's Uh, let me just say that's not what we're looking for. We're looking for inflation going down to two percent over time I Mean we? uh, that's that's not a question that's in front of us and it would depend on so many other things.

But ultimately we're not looking to get to three percent and then drop our tools. We have a a goal of getting to two percent. We think it's going to take some time. We don't think it'll be a smooth process.

Uh, and you know I think we're gonna. We're gonna need to stay at this for a while. How does the other side of the Mandate the job side? Once you get to three percent going from three to two, how does the other side of the mandate, you know they will both matter equally at that point. Right right now, you have a labor market that's still extraordinarily tight.

You've still got 1.6 job openings, even with the lower job openings number for every unemployed person. Uh, we do see some evidence of softening and labor market conditions, but overall you're near a 50-year low in Unemployment uh wages you all will have seen the the wage number from uh, late last week and it's whenever it was and uh, you know it's It's a couple percentage points above what would be what would be consistent with two percent inflation over time. So we do see some softening. We see new labor Supply coming in.

These are very positive developments, but um, the labor market is very, very strong whereas inflation, you know, running High well above our well above our problems. and right now we need to be focusing on bringing inflation down. Fortunately, we've been able to do that so far without unemployment going up. Yeah, quick note: McKay sent me a message.

he's getting blown up with emails, so send him an email account number. So many analysts noted at the time of the March FMC meeting that at least half of Fed officials projections did. Dude, that's like the guy who got banned from that uh, Congress in their Baseline forecast as well. given the strong, uh, first quarter GDP tracking estimates.

Um, and so I'm just wondering if you could kind of elaborate on you know why You're optimistic that a recession can be avoided given that that's the FED stats forecast. possibly also the broader committee's forecast as well. And and also, of course, uh, most private sector forecasters. Yeah, I don't think you know I know what's printed in the summer of Economic projections and all that.

I don't think you can deduce exactly what you said about what participants think because you don't know what they were thinking for first quarter. GDP At that point, they could have been thinking about a fairly low number. Anyway, in any case, I'll just say I I Continue to think that it's it's possible. Uh, that this time is really different and the reason is there's just so much, um, excess demand really in the labor market? It's It's interesting because you know we've raised rates by five percentage points in 14 months and the unemployment rate is three and a half percent pretty much where it was even lower than where it was when we started.

So job openings are still very, very high. We see by surveys and much much evidence that that think conditions are cooling gradually, but it's it really is different. It wasn't supposed to be possible for job openings to decline by as much of the as they've declined without unemployment going up. Well, that's what we've seen.

so we I There are no promises in this, but it just seems that to me that it's possible that we can continue to have a cooling in the labor market without having the big increases in unemployment bullish that have gone away. you know, prior episodes now that would be against history. I I Fully appreciate that that would be against the pattern. but I do think that it that this that the situation in the labor market with so much excess.

Demand Yet you know uh, wages are actually wages have been moving down, wage increases have been moving down uh and that's a good sign down to more sustainable levels. So I think that I think it's still possible I You know I Think you know the the case of Um of avoiding a recession is in my view, more likely than that of having having a recession. It's not that the case of having ourselves I Don't rule that out either, it's it's possible that we will have what I hope would be a mild recession. The committee also noted in March that wage growth was still well above Um consistent with two percent inflation.

Do you see that as well And could you kind of explain you know how you come back? Sure. So we we look at a range of wage um, wage measures and then you know that's a nominal and then so you assume wages should be equal to productivity increases plus inflation and so you can. You can look at you know the employment Compensation Index average hourly earnings, the Atlanta wage tracker compensation per hour basically those four and many others and you can. You can look at at what the what they would have to run at over a long period of time for that to be consistent with two percent they can deviate.

You know more corporate margins can go up and down and there is a feature of long expansions where they do go down where labor gets a bigger share toward later later in a recession. um, sorry later in expansion. So yeah, the the you know when we calculate those and you have to take the Precision with a degree of uh, a degree of salt. But um I would say uh, that.

What they will show is that you know if if the Um if wages are running at five percent, three percent is closer to where they need to be wage increases and closer to three percent roughly is what it would take to get to be consistent with inflation over a longer period of time. Oh okay, we're close, then that's actually close. By the way, I Don't wanna I Do not think that wages are the principal driver of inflation. You're asking me a very specific question.

I Think there are many things I Think wages and prices tend to move togethe