Original Broadcaster Captioning (Enhanced). Treat it as a searchable index of what was broadcast, not a quotation record.
00:00:03I WOULD SAY THE ECONOMY
00:00:05FOR A THEY'RE DISASSEMBLING OUR
00:00:12GOVERNMENT AND IT'S NOT GUILTY
00:00:14WORKING POUR THE PEOPLE IWORKS
00:00:18FOR THE WEALTHY.
00:00:21AND I SAW RECENTLY JOAQUIN JEFFERSON WAS MEETING WITH
00:00:25DONALD TRUMP'S SON IN HE WAS AND I THINK IT'S AN EXAMPLE HOW THEY
00:00:28KIND OF SCHEME TO MAKE MONEY FOR
00:00:32THEMSELVES AND THEY DON'T CARE ABOUT THE PEOPLE. >> HAKEEM JEFFERSON THE
00:00:35DEMOCRATIC LEADER IN THE HOUSE FROM NEW YORK.
00:00:38PAUL IN BOSTON AN INDEPENDENT. PAUL.
00:00:41HOW WOULD YOU RATE THE
00:00:46CHEMISTRY? >> I WOULD SAY THE CAMPI FOR MYSELF PERSONALLY IS A 7.
00:00:48THINGS ARE A LITTLE BIT MORE
00:00:54EXPENSIVE BUT I THINK THAT'S BECAUSE OF THE PRIME MINISTER OF
00:00:56CANADA BEING A NATIONAL BANKER
00:01:00AND USING HIS LUGGAGE WITH THE UP COME COMING MID-TERMS AND.
00:01:04CALLER: PAUL LEAVE IT THERE.
00:01:07WE'LL GO DOUGH JACKSON HALL
00:01:12WYOMING. THE FEDERAL RESERVE CHAIR CAN HE
00:01:14HAVE WARSH SPEAKING THERE.
00:01:16>> MY LAST TOUR OF SERVICE AND
00:01:19FROM MY FIRST HUNDRED DAYS, WHICH IS JUST THIS WEEKEND.
00:01:23I'VE BEEN LOOKING FORWARD TO THIS WEEKEND.
00:01:26AND BEFORE I GO FURTHER I WANT
00:01:31TO THANK JEFF SCHMIDT AND HIS
00:01:39TEAM. THANKS TO YOU AND YOUR TEAM.
00:01:41HE AND OTHER PLANNERS HAVE
00:01:49RECREATION OPTIONS.
00:03:52>>> I SAY TASK FORCES GO ABOUT
00:07:42THEIR WORK. AS YOU MIGHT KNOW I'M NOT
00:07:46WAITING TO INTRODUCE INNOVATION
00:07:47TO SAY IT'S FED TO HELP MAKE US
00:07:52FIT FOR PURPOSE. TO HIGHLIGHT AN SKELETAL I SET
00:07:54OUT TO CHANGE THE FORM AND FUNCTION OF THE FED CHAIRMAN
00:07:58SO-CALLED FORWARD GUIDANCE. YOU MIGHT KNOW ABOUT MY
00:08:02LONG-TIME DISCOMFORT WITH EARLY
00:08:06PRONOUNCEMENTS OF FUTURE POLICY DECISIONS.
00:08:08MUCH PREFER ANOTHER PATH THAT
00:08:10WILL MAKE THE CASE FOR IT.
00:08:14TRANSPARENCY AND COMMUNICATIONS ABOUT FUTURE POLICY DECISIONS IS
00:08:18NOT AN END TO ITSELF.
00:08:25COMMUNICATIONS MUST BE IN SERVICE TO PARAMOUNT RESPONSIBILITY AND THAT IS
00:08:28GETTING POLICY RIGHT. FORWARD GUIDANCE AS A REGULAR
00:08:32PRACTICE WAS ADOPTED WHEN I
00:08:35COLLEAGUES AND ME DURING THE GLOBAL FINANCE CRISIS, ESSENTIAL
00:08:39AT THE TIME.
00:08:40'S WE INTRODUCED IT WITH MUCH FANFARE.
00:08:43AS WITH OTHER LEGACIES OF CRISIS
00:08:46PASSED, I BELIEVE THE PRACTICE
00:08:48AS OUT STAYED ITS WELCOME.
00:08:50IN NORMAL TIMES, ROLL OF FORWARD
00:08:53GUIDANCE SHOULD BE LIMITED AND CIRCUMSCRIBED.
00:08:56OTHERWISE, IT RISKS CREATING
00:08:59AMBIGUITY IN THE NAME OF CLARITY.
00:09:02OVER SHARING POLICY DELIBERATIONS AND OVER
00:09:05COMMITTING TO FUTURE DECISIONS.
00:09:08CAN LEAVE MARKETS BUSINESSES AND HOUSE HOUSEHOLDS ASTRAY.
00:09:12AND I BELIEVE WHEN POLICY MAKERS
00:09:15MAKE QUASI COMMITMENTS ON INTEREST RATES THROUGHOUT THE
00:09:19CYCLE, WE INHIBIT OUR OWN
00:09:22FREEDOM TO MAKE THE RIGHT CALLS WHEN THE TIME TO DECIDE.
00:09:25TO GET POLICY RIGHT WE ALSO NEED
00:09:28TO GET THE RELATIONSHIP RIGHT BETWEEN THE CENTRAL BANK AND
00:09:32FINANCIAL MARKETS.
00:09:33THE MARKETS -- EXCUSE ME THE FED
00:09:37NEEDS CLEAR MARKET SIGNALS AS UNFILTERED AS POSSIBLE FOR
00:09:40MARKET INTERNALS, FROM THE
00:09:44LEVEL'S CHANGE IN ASSET PRICES
00:09:46ACROSS SECTORS THE PRICES AND
00:09:51TRADING VOLUMES OF TREASURY SECURITIES FOR AN EXCHANGED
00:09:54VALUE OF THE DOLLAR, COST OF AVAILABILITY OF CREDIT, BROAD
00:09:58SET OF COMMODITY PRICES.
00:10:00THESE AND OTHER INDICATORERS
00:10:03SHOULD INFORM THE FEDS NEAR TERM
00:10:06OUT LOOK ON ECONOMIC ACTIVITY
00:10:09AND INFLATION THROUGHOUT THE BUSINESS CYCLE.
00:10:11THEY SHOULD REVEAL THE STATE OF
00:10:13BROADER FINANCIAL CONDITIONS.
00:10:16AND THE RISKS AND UNCERTAINTIES
00:10:21OF THE FINANCIAL CYCLE. AT THE SAME TIME, MARKET
00:10:24PARTICIPANTS THEMSELVES SHOULD BE TRACKING REAL INFORMATION
00:10:27ABOUT THE REAL CHEMISTRY.
00:10:29THEY SHOULD DRAW THEIR OWN
00:10:33CONCLUSIONS FORM THEIR EXPECTATIONS OF THINGS LIKE
00:10:35OUTPUT AND EMPLOYMENT AND INFLATION.
00:10:39AND THEY TOO SHOULD STAY SHARPLY
00:10:40ATTUNED FOR RISKS.
00:10:43IN MY VIEW THE FEDS SHOULD BE
00:10:46HUMBLE AND NEVER NAIVE, THE FEDS
00:10:50PLAY AN ESSENTIAL ROLL IN
00:10:53CHEMISTRY AND MARKS.
00:10:56TOOLS ARE POWERFUL WE DETERMINE SHORT TERM INTEREST RATES AND MARKET PARTICIPANTS WILL ALWAYS
00:11:00TRY TO ANTICIPATE WHAT WE WILL
00:11:03DO NEXT. BUT WE SHOULD NOT INDULGE A
00:11:06REGIME IN WHICH MARKET
00:11:08PARTICIPANTS ARE LOOKING
00:11:11PRIMARILY TO THE FED FOR THEIR NEXT TRADE.
00:11:14THE ECONOMIC LITERATURE IS LONG DESCRIBEDS DISTORTING OF FACTS
00:11:18WHAT IT CALLED THE HALL OF
00:11:21MIRRORS PROBLEM. IF MARKETS RELY MATERIALLY ON
00:11:24THE FEDS GUIDANCE AND THE FED
00:11:27RELIES ON MARKET PRICES WE'RE
00:11:29MORE LIKELY TO BE BLINDED TO NEW
00:11:33DEVELOPMENTS. MORE LIKELY TO BE CAUGHT
00:11:36UNPREPARED AND MORE LIKELY TO
00:11:38COMMIT ERRORS IN POLICY MAKING.
00:11:44PRE REVERSELY MARKET PARTICIPANTS ARE UNLIKELY TO BEAR THE BIGGEST COST TO THE
00:11:48HALL OF MIRRORS PROBLEM. MOST SERIOUS HARM IS LIKELY TO
00:11:52BEFALL THOSE WITHOUT ANY
00:11:54FINANCIAL ASSETS IF THE FEDS GET
00:11:57INFLATION WRONG, AND JUDGES ECONOMY WRONG WHO GETS THE WORST
00:12:00OF IT? NOT THE FINANCIAL HIGH FLIERS.
00:12:04HARD WORKING AMERICANS ARE THE ONES LEFT TO DEAL WITH INFLATION
00:12:07THAT'S TOO HIGH.
00:12:10OR JOBS THAT SUDDENLY APPEAR
00:12:14LESS SECURE. SO IF FORWARD GUIDANCES ARE
00:12:17SUITED TO NORMAL TIMES HOW ABOUT
00:12:18THE NEW FED CHIEF COMMITS AT A
00:12:22MEETING JUST LIKE THIS TO SOME EXPLICIT REACTION FUNCTION.
00:12:26SURELY HE COULD TELL US HIS INTEREST RATE PATH.
00:12:28SAY THE DATA WERE TO COME IN HOT OR COLD.
00:12:32WELL, I WISH OUR UNDERSTANDING
00:12:36OF THE CHEMISTRY WERE SO
00:12:40PRECISE. AS TO PROVIDE A MCCANN TRIED AND TRUE ANSWER.
00:12:44THAT SOME SIMPLE FUNCTION LIKE A
00:12:46TAYLOR RULE COULD BE RIGOROUSLY APPLIED UPON BUT OUR KNOWLEDGE
00:12:49DOES NOT EXTEND THAT FAR, AT LEAST NOT YET.
00:12:53IN OTHER FACTORS MOST RELEVANT
00:12:56TO THE PROPER CONDUCT OF
00:12:58MONETARY POLICY THEY CHANGE OVER TIME.
00:13:01PROVIDING FORECASTS TO STRUT THE
00:13:04FED'S REACTION FUNCTION WORKS BETTER IN THEORY THAN PRACTICE.
00:13:07BETTER IN THE LAB , THAN IN THE
00:13:11FIELD.
00:13:13I AM NOT ALONE IN NOTICING THAT
00:13:17FORWARD GUIDANCE 2020 TO CITE AN
00:13:19EXAMPLE MIGHT WELL HAVE SLOWED
00:13:22THE POLICY RESPONSE TO HIGH INFLATION.
00:13:25IF AND I TERM AS CHAIRMAN COLLEAGUES AND I WILL ENDEAVOR
00:13:28TO CONSTRUCT MORE RELIABLE MODELS, ROBUST RULES AND WILL DO
00:13:32THIS KNOWING THAT ACCURACY IN
00:13:36FORECASTING IS STILL JUST AN
00:13:38ASPIRATION WITH SO MUCH CHANGING
00:13:41SO FAST IN OUR GO POLITICS,
00:13:44GLOBAL SUPPLY CHAINS TECHNOLOGY
00:13:46IT'S WISE TO BE MODEST ABOUT
00:13:49WHAT WE CAN AND WERE NOT KNOW AS WE SIT HERE TODAY. SAME SPIRIT, WE SHOULD RECEIVE
00:13:53THE FULL RANGE OF IDEAS ON
00:13:56MATTERS THAT MAY INFORM THE FEDS
00:13:59MONETARY POLICY DISCUSSIONS.
00:14:00IF THE AIM IS OPTIMAL DECISION
00:14:03MAKING, AND IT SHOULD BE, WE
00:14:05SHOULD NOT CROWD OUT VIEWS ON THE ECONOMY.
00:14:09HOW THEN TO CHART A BETTER PATH
00:14:14TO POLICY? IN THE BALANCE OF MY REMARKS I
00:14:17WILL SHARE WITH YOU KEY PRINCIPLES THAT GUIDE MY
00:14:20THINKING ON THE APPROPRIATE CONDUCT AND MONETARY POLICY AND
00:14:24OFFER MY PROMISED ASSESSMENT OF THE ECONOMY.
00:14:28SO LET'S TURN FIRST TO
00:14:30PRINCIPLES.
00:14:33FIRST, I'VE NOTICED IN THIS LINE OF WORK YESTERDAY'S NEWS HAS A
00:14:36WAY OF GETTING MISTAKEN FOR WHAT'S HAPPENING NOW.
00:14:40THE CHALLENGE IS TO KNOW AT THE DIFFERENCE.
00:14:44IN OTHER WORDS WE MUST INTEGRATE
00:14:48REALITY. MAKE SURE WE'RE NOT SETTING
00:14:50FORWARD LOOKING POLICY BASED ON STALE OR INACCURATE DATA.
00:14:54NOR SHOULD WE RELY ON ISOLATED
00:14:58DATA POINTS. TRENDS MATTER MOST.
00:15:00THE FEDS A DECISION-MAKING
00:15:04AGENCY. WE MAKE CHOICES AMID UNCERTAINTY
00:15:07AND THE DATA UPON WHICH WE DRAW
00:15:10MUST BE RELEVANT,
00:15:14CONTEMPORANEOUS, ACCURATE AND AS ACTIONABLE AS POSSIBLE.
00:15:17SECOND PRINCIPAL, THE FEDS ACTIONS ARE INTENDED TO INSURE
00:15:21THAT THE AGGREGATE DEMAND SIDE
00:15:23OF THE ECONOMY IS BROADLY
00:15:26CONSISTENT WITH AGGREGATE SUPPLY.
00:15:29HOWEVER ALL WE OBSERVED DIRECTLY IS ACTIVITY.
00:15:31WE NEVER SEE AND CAN ONLY INFER
00:15:41WHAT'S REALLY HAPPENING ON THE
00:15:42SUPPLY SIDE.
00:15:55THIRD PRINCIPLE, SHOULD BE NO MISUNDERSTANDING THE OBJECTIVE
00:15:57OF 2% AS MEASURED BY THE PC EP
00:16:00PRICE INDEX IS A FIRM FIXED TARGET.
00:16:02LET ME BE EQUALLY CLEAR ABOUT
00:16:05ANOTHER ASPECT OF THIS
00:16:12OBJECTIVE.
00:16:13PRICE STABILITY IS NOT SELF
00:16:16EXECUTING. IT'S THE FED'S JOB TO DELIVER
00:16:20STABLE PRICE, TO EXCUSES.
00:16:23FOURTH PRINCIPLE. THE NEED ALSO BEARS RESPONSIBLE
00:16:26FOR MAXIMUM EMPLOYMENT. ACHIEVING BOTH SIDES OF OUR
00:16:29MANDATE OVER THE MEDIUM TERM IS
00:16:32NOT AN EITHER OR PROPOSITION.
00:16:34I DO NOT BELIEVE THE FEDS DUAL
00:16:37MANDATE WORKS AT CROSS PURPOSES.
00:16:42AFTER ALL, HIGH INFLATION ITSELF IS VERY HARM.
00:16:44TO ECONOMIC PROSPERITY.
00:16:47FIFTH PRINCIPLE. SHORT TERM INTEREST RATES ARE
00:16:51THE PROMINENT TOOL TO ACHIEVE
00:16:53THE DUAL MANDATE.
00:16:56UNCONVENTIONAL POLICIES TO SPUR
00:16:59ECONOMIC ACTIVITY MAY SUIT GENUINE CRISIS SEES OF WHICH WE
00:17:02ALL HAVE MUCH EXPERIENCE BUT
00:17:04THEY SHOULD OTHERWISE BE USED
00:17:12SPARINGLY IF AT ALL. SIX MONEY MATTERS. I KNOW IT'S NOT FASHIONABLE
00:17:15THESE DAYS BUT MY VIEW IS MONEY
00:17:18HAS SOMETHING IMPORTANT TO DO WITH MONETARY POLICY.
00:17:21WE SHOULD PAY ATTENTION TO MONEY
00:17:24CREATED BY THE CENTRAL BANK AND
00:17:26MONEY THAT COMES FROM THE BANK
00:17:31AND FINANCIAL SYSTEM. IT'S TRUE THAT FINANCIAL
00:17:34INNOVATIONS THE SUBJECT OF THIS CONFERENCE AND OTHER FACTORS
00:17:38ALTER THE MECHANICS THAT LINK
00:17:41THE MONEY BASE, VELOCITY OF MONEY AND BROADER ECONOMY.
00:17:44BUT THAT IS SCARCELY A REASON TO
00:17:48IGNORE THE ULTIMATE EFFECTS OF
00:17:50MONEY AND FINANCIAL CONDITIONS
00:17:52AND PRICES.
00:17:55FINALLY, A QUIETER FED, A MORE
00:17:58PURPOSEFUL FED IN ITS
00:18:01COMMUNICATIONS IS BETTER ABLE TO MEET OBJECTIVES.
00:18:03AND WE CAN BE HELD ACCOUNTABLE
00:18:06FOR DELIVERING ON OUR REMET.
00:18:08THE ONLY TRUE TEST OF OUR CREDIBILITY.
00:18:12TO BORROW A LINE FROM GENERAL
00:18:13CHUCK YEAGER AT THE MOMENT OF
00:18:21TRUTH, THEY'RE EITHER REASONS OR RESULT.
00:18:25HAVING HEARD ABOUT AI AND GENERAL PURPOSE TECHNOLOGIES AND THE NEXT POLICY CONJENNING
00:18:29CHERRY, LITTLE BIT ON PRINCIPLES LET'S TURN TO THE ECONOMY TODAY.
00:18:33GIVEN THOSE PRINCIPLES, HOW DO I READ THE ECONOMY?
00:18:37LET'S REALLY GOING ON OUTSIDE THE WINDOW?
00:18:39IT'S A LITTLE IRONIC THERE ARE
00:18:43NO WINDOWS IN THIS ROOM, BUT THERE ARE BIG ONES AT THE
00:18:47FEDERAL RESERVE. AND RECEIVE BEEN USING THOSE IN MY FIRST HUNDRED DAYS AND I
00:18:51EXPECT WE'LL CONTINUE TO USE
00:18:53THOSE IN THE PERIOD RIGHT AHEAD OF US.
00:18:56YOU MAY HAVE READ IN THE JULY
00:18:58MINUTES THE UNANIMOUS VIEW OF
00:19:00THE FOMC.
00:19:03LABOR MARKETS WERE STABLE, OUTPUT SOLID.
00:19:06BUT INFLATION REMAINED TOO HIGH. GOOD MAJORITY OF MY COLLEAGUES
00:19:11AND I THOUGHT THE WISER COURSE
00:19:16WAS TO WAIT NEW INFORMATION IN INNER MEETING PERIOD, ESPECIALLY
00:19:19GIVEN POSSIBLE DEVELOPMENTS IN SUPPLY CHAINS, INVESTMENT FLOWS
00:19:22AND GEO POLITICS BEFORE DECIDING
00:19:24WHETHER CHANGE IN INTEREST RATE
00:19:27POLICY WAS ADVISABLE.
00:19:29AND WE EXPRESSED OUR JOINT
00:19:34READINESS TO ACT AS CIRCUMSTANCES REQUIRE.
00:19:36FOR MY PART TODAY, AS WE SIT
00:19:40HERE, I'M IMPRESSED BY THE OVERALL PERFORMANCE OF THE
00:19:44ECONOMY. WHICH APPEARS TO HAVE STRENGTH HE CAN ENDED.
00:19:47ONE INDICATOR IS HOW AN ECONOMY
00:19:49HOLDS UP UNDER STRESS, HOW WELL
00:19:51IT HOLDS UP UNDER SHOCKS.
00:19:55AND THAT SCORE, BOTH MAINSTREAM
00:19:58WALL STREET HAVE BEEN REMARKABLY RESILIENT.
00:20:01SEVERAL OTHER OBSERVATIONS.
00:20:05BUSINESS CAP X IS RISING RAPIDLY.
00:20:08FOUR QUARTER CHANGE IN INTANGIBLES BEEN AROUND 9%
00:20:12HIGHEST GROWTH RATE SINCE 2021.
00:20:14AND MORE THAN HALF OF THE CAP X
00:20:16GROWTH CAN LIKELY BE ASCRIBED TO
00:20:20THE BUILD-OUT RELATED TO AI.
00:20:23WHAT ABOUT PROFITS? FOR THE FIRMS IN THE S & P
00:20:27PROFITS GROWN MORE THAN 20% PAST YEAR ALONE.
00:20:31PROFIT MARGINS ARE QUITE ELEVATED.
00:20:34THE HISTORY, OVERALL EQUITY AND MARKET VOLATILITY QUITE LOW.
00:20:38WE'RE STAYING KEENLY FOCUSED ON
00:20:42MARKET INTERNALS. WATCHING PERFORMANCE ACROSS
00:20:46SECTORS. EXPECTATIONS FOR BOTH GROWTH AND CAP X IN CORPORATE EARNINGS ARE
00:20:49RUNNING QUITE HIGH. I CONTINUE TO WATCH THE CHANGE
00:20:52IN THE GROWTH RATES. SECOND DERIVATIVE.
00:20:56THE EFFECTS ON ASSET PRICES BUSINESS CONFIDENCE, CONSUMER
00:21:00INCOMES SPENDING ARE EQUALLY
00:21:03IMPORTANT TO GAGE.
00:21:05CREDIT SPREADS ON CORPORATE
00:21:08BONDS AND LEVERAGE LOANS ARE
00:21:10NEAR LOW ENDS OF HISTORICAL AVERAGES.
00:21:13ISSUE VOLUMES THIS YEAR, QUITE STRONG.
00:21:16LOOKING BEYOND FIXED INCOME
00:21:18MARKETS TO THE BANKING BUSINESS.
00:21:21IN THE JULY SO-CALLED SLEW SURVEY, BANKS TELL US STANDARDS
00:21:24FOR CAND I LOANS ON THE EASIER
00:21:27END OF THE HISTORICAL RANGES.
00:21:29HELPS EXPLAIN THEIR GROWTH WE'VE SEEN THIS YEAR IN THESE LOANS.
00:21:33IN MY VIEW, CREDIT AND LOAN
00:21:35MARKETS ARE SHOWING FEW SIGNS OF
00:21:38POLICY RESTRAINT.
00:21:39CERTAIN SECTORS LIKE HOUSING AND
00:21:43AGRICULTURAL ARE SHOWING STRAINS. BUT UNBALANCED.
00:21:47I WOULD BE HARD PRESSED TO DESCRIBE BROAD FINANCIAL
00:21:51CONDITIONS AS RESTRICTIVE.
00:21:54REAL CONSUMER SPEND HAS BEEN HEALTHY DESPITE THE SHOCKS.
00:21:57INCREASING MORE THAN 2% PAST FOUR QUARTERS.
00:22:00IF YOU COMBINE CONSUMPTION WITH A BRISK INVESTMENT WE TALKED
00:22:04ABOUT EARLIER, PRIVATE DOMESTIC
00:22:06FINANCIAL PURCHASES HAVE ALSO RISEN.
00:22:09THESE PURCHASES HAVE INCREASED IN A PACE OF NEARLY 3% OR SO SO
00:22:13FAR THIS YEAR. THAT'S A MUSH THAT TYPICALLY
00:22:16CARRIES MORE SIGNAL THAN G DP.
00:22:19THE TREND HERE TOO POSITIVE. SO ON THE EMPLOYMENT SIDE OF THE
00:22:23FEDS DUAL MANDATE, COUNTRY IS
00:22:25DOING WELL. LABOR MARKETS ARE QUITE STABLE.
00:22:29THE JOBLESS RATE AT 4.1% REMAINS LOW BY HISTORICAL STANDARDS.
00:22:34AND HASN'T CHANGED MUCH IN A
00:22:38COUPLE OF YEARS. UNEMPLOYMENT CLAIMS ON A
00:22:41FOUR-WEEK MOVING AVERAGE AN
00:22:42EMPIRICALLY ROBUST REAL-TIME
00:22:45INDICATOR ARE AT THE LOWEST LEVEL IN DECADES. IN MY VIEW.
00:22:48THE RELATIVELY LOW TURNOVER IN
00:22:50TODAY'S LABOR MARKET IS PARTLY A
00:22:53RESULT OF THE SIGNIFICANT
00:22:55REMATCHING BETWEEN EMPLOYERS AND
00:22:57EMPLOYEES THAT HAPPENED AFTER
00:23:00THE IN THE POST PANDEMIC ENVIRONMENT.
00:23:03WHEN LABOR SUPPLIES BARELY
00:23:05GROWING-MONTHLY JOB GAINS ARE
00:23:11NATURALLY GOING TO RUN LOW.
00:23:12THERE'S AREAS OF CONCERNS IN THE
00:23:16LABOR MARKET. FEDERAL COURT AMONG RECENT
00:23:18GRADUATES PEOPLE WANT TO WORK BY
00:23:21AND LARGE ARE HOLD ORGANIZE FINDING JOBS.
00:23:23MIGHT WELL BE CONCERNED ABOUT FUTURE LABOR DISRUPTIONS AS OF
00:23:27NOW, I BELIEVE THE LABOR MARKETS
00:23:30ARE BROADLY CONSISTENT WITH FULL EMPLOYMENT. BUT ON THE PRICE STABILITY SIDE
00:23:34OF OUR MANDATE, THE NUMBERS ARE
00:23:37MORE CONCERNING. THE FEDS PREFER MEASURE OF INFLATION THE ONE I TALKED ABOUT
00:23:41EARLIER THE 12-MONTH CHANGE IN
00:23:44THE PC PRICE INDEX STANDS AT 3.7%.
00:23:48THE SIX-MONTH CHANGE A LITTLE ABOVE 4.
00:23:52THE COMPARABLE MEASURES FROM THE CBI INDEX ARE ALSO ELEVATED AS
00:23:57OUR CORE MEASURES BOTH OF PC AND CPI INFLATION.
00:24:01NONE OF THESE MEASURES ARE PERFECT.
00:24:04BUT THEY TELL A SIMILAR STORY
00:24:06INFLATION IS RUNNING ABOVE THE
00:24:102% TARGET. SO THE FEDS PROMINENT FOCUS
00:24:13RIGHT FOR YOU SHOULD BE ON
00:24:20PRICES.
00:24:23SO WHAT'S OUR JOB? CAPTURE UNDERLYING INFLATION,
00:24:27EASIER SAID THAN DONE'S WE BEGAN THE DID GAIN WHETHER IT'S
00:24:31RISING, FALLING OR STUCK IN PLACE. WE ALSO WANT TO UNDERSTAND NOT
00:24:35JUST THE DIRECTION OF TRAVEL, BUT THE SPEED.
00:24:39EACH OF THESE BROAD INFLATION MEASURES HAVE FALLEN
00:24:41SIGNIFICANTLY FROM THEIR HIGHS OF A FEW YEARS AGO.
00:24:45PROGRESS OF THE LAST COUPLE OF
00:24:47YEARS HAS BEEN MORE MODEST. WHILE THIS SUMMER POLK COUNTY
00:24:51AND CPI READINGS WERE BETTER THAN EXPECTED.
00:24:54THEY DO NOT TELL ME THAT
00:24:57UNDERLYING TRENDS HAVE MEANINGFULLY IMPROVED.
00:25:00DATE ALSO SHOWS MODERATE WAGE GROWTH BUT IN MY VIEW, WHEN
00:25:04TRACKING UNDERLYING INFLATION,
00:25:06WAGE GROWTH HAS NOT PROVEN A
00:25:08RELIABLE INDICATOR OF FUTURE
00:25:17INFLATION FOR A VERY LONG TIME. I WANT TO TELL YOU ABOUT THINGS
00:25:21I'VE LOOKED TO. I FIND IT STRUCKTIVE TO DIS
00:25:25AGGREGATE THE 199 INDIVIDUAL
00:25:29COMPONENTS OF THE PC PRICE MEASURE.
00:25:31LAST 24 MONTHS, 54% OF GOODS AND SERVICES IN THIS BASKET SHOWED
00:25:35PRICE INCREASES ABOVE 3%.
00:25:38THIS IS WELL BELOW THE POST
00:25:40PANDEMIC HIGHS OF ABOUT 77% BUT
00:25:44REMAINS WELL ABOVE THE LEVEL OF 3.2 IN A COUPLE OF DECADES THAT
00:25:47PRECEDED THE PANDEMIC. LOOKING OVER JUST THE LAST SIX
00:25:51MONTHS, THE CONCLUSION IS SIMILAR.
00:25:5349% OF GOODS AND SERVICES IN THE
00:25:57PC BASKET SHOWED PRICE INCREASES ABOVE 3%.
00:26:00AGAIN, THIS IS WELL BELOW THE
00:26:03POST PANDEMIC HIGHS BUT STILL ELEVATED.
00:26:06QUITE ELEVATED. RECENT RISE IN OVERALL COMMODITY
00:26:10PRICES ALSO BEARS WATCHING.
00:26:18WHAT WE NEED TO JUDGE WHETHER
00:26:23TRENDS INFLATION RISK. IT MATTERS WHETHER INFLATION
00:26:27READINGS SEEPED INTO EXPECTATIONS GOOD NEWS IS
00:26:30MEASURES OF INFLATION
00:26:32EXPECTATIONS IN MEDIUM TERM BY
00:26:36AND LARGE LOOK STABLE. INFLATION COMPENSATION MEASURES
00:26:40FROM THE SWAPS MARKET SEND A
00:26:46STRONG AND SIMILAR MESSAGE. ESPECIALLY IN LIGHT OF RECENT
00:26:50GUILTIES CREDIT TO THE FEDS OF AS AN INSTITUTION, CONSISTENT
00:26:52WITH THE BEST OF THE FEDS
00:26:54TRADITIONS THAT MARKET PRICES
00:26:57SHOW CONFIDENCE THAT WE WILL
00:26:59DELIVER RICE STABILITY.
00:27:02AND I CAN ASSURE YOU THEY'RE RIGHT.
00:27:05THING ABOUT MARKET MEASURES EXPECTATIONS IN ECONOMIC HISTORY
00:27:09I KNOW SOME ECONOMIC HISTORIANS
00:27:10IN THE AUDIENCE, THEY TEND TO
00:27:14LOOK STRONG AND DURABLE UNTIL THEY DON'T.
00:27:17THESE EXPECTATIONS ARE NOT
00:27:21PUSHED AROUND EASILY AND NOW
00:27:24THEY'RE WELL ANCHORED BUT MUST'S CLOSELY MINDED AND IT'S THE
00:27:28FED'S JOB TO MAKE SURE INFLATION
00:27:30EXPECTATIONS DO FOR THE GET UNANCHORED.
00:27:34THERE'S A SIGNAL NOBODY CAN
00:27:38MISS, RESPONSIBILITY FOR 65 MONTHS OF SUSTAINED ELEVATED
00:27:41INFLATION SITS SQUARELY WITH THE
00:27:43CENTRAL BANK AND THAT'S WHERE IT BELONGS.
00:27:46SO HERE IS MY STANDARD.
00:27:48WE MUST BE CONFIDENT THAT
00:27:51UNDERLYING INFLATION IS MOVING
00:27:53TO OUR OBJECTIVE.
00:28:00CLEARLY AND AT SUFFICIENT SPEED.
00:28:03S OTHERWISE WE HAVE WORK TO DO.
00:28:08I'VE COVERED QUITE A BIT OF GROUND.
00:28:11LET ME SEE IF I CAN CONCLUDE
00:28:13THIS WAY.
00:28:18I STAND HERE TODAY COMMITTED TO A DISCIPLINE NOT DECISION MY FED
00:28:21COLLEAGUES AND I ARE HARDLY THE
00:28:23FIRST TO HOLD THESE POSITIONS IN A TIME OF GREAT CONSEQUENCE.
00:28:27WE'RE DETERMINED TO REDEEM THE
00:28:33TIME BY DOING OUR VERY BEST WORK. THOSE OF YOU THAT THOUGH US
00:28:36YOU'LL KNOW THE FOLLOWING IS
00:28:43TRUE. WE TAKE OUR RESPONSIBILITY SERIOUSLY WITH HUMANITY AND RESOLVE.
00:28:46WE KNOW SO MUCH DEPENDS ON THE CHOICES WE MAKE.
00:28:49SOUND MONETARY POLICY HELP
00:28:52HOUSEHOLDS AND BUSINESSES TO PROSPER.
00:28:54WHEN CARRIED OUT EFFECTIVELY IT
00:28:57BROADENS AND DEEPENS THE
00:28:59MOMENTUM OF OUR CHEMISTRY AND
00:29:02HELPS TO SECURE AMERICA'S LEADERSHIP IN THE WORLD.
00:29:04AND I KNOW THAT OUR COUNTRY
00:29:06NEEDS US TO THINK CAREFULLY AND
00:29:12ACT WISELY. PERHAPS NOW MORE THAN EVER. TREMENDOUS HONOR TO SERVE AT THE
00:29:16FEDERAL RESERVE. I'M TRULY GRATEFUL FOR THE
00:29:20ENCOURAGEMENT, GOOD COUNSEL AND WARM RECEPTION I'VE RECEIVED IN
00:29:22MY FIRST HUNDRED DAYS FROM MY COLLEAGUES.
00:29:24I'M ALSO HONORED AND GRATEFUL FOR THE VIEWS I'VE GOTTEN
00:29:28SOLICITED UNSOLICITED FROM SO
00:29:31MANY OF YOU IN THIS ROOM.
00:29:33FOR THAT AND FOR YOUR KIND
00:29:37ATTENTION THIS MORNING, I SAY
00:29:38THANK YOU LET'S GET ON WITH THE
00:29:47REST OF THE PROGRAM.
00:29:51>> FED CARE KEVIN WARSH WE TAKE
00:29:55YOU TO THE NATION'S CAPITOL WHERE ACTIVISTS AND LAWMAKERS
00:29:57ARE DELIVERING REMARKS ON THE
00:30:00RALLY OF THE 63RD ANNIVERSARY OF
00:30:02THE MARCH ON WASHINGTON JUST
00:30:07UNDERWAY. >> LET US REMEMBER EMMITT TILL
00:30:10AND RENEW MARTIN LUTHER KING DREAM SO ALL 14-YEAR-OLDS BLACK,
00:30:13WHITE OTHERWISE CAN LIVE OUT THEIR DREAMS.
00:30:17LET'S TURN MARTIN LUTHER KING
00:30:19DREAM INTO A REALITY.
00:30:26THANK YOU FOLKS
00:30:28[CHEERS AND APPLAUSE]
00:30:37>> WE WOULD LIKE TO THANK SOME
00:30:39PARTNERS WHEN YOU HEAR YOUR
00:30:47NAME, MAKE SOME NOISE. >> MARCH ON WASHINGTON 2026
00:30:49PROUDLY PARTNERS WITH THE VOTING
00:30:57ACCESS AND PARTICIPATION