Original Broadcaster Captioning (Enhanced). Treat it as a searchable index of what was broadcast, not a quotation record.
00:00:00THROUGH OUR NATION'S HISTORY.
00:00:00SPECIAL AMERICA 250 SECTION
00:00:04HIGHLIGHTING THE COUNTRY'S FOUNDING AND THE 250TH ANNIVERSARY OF THE U.S.
00:00:11BRINGING AMERICAN HISTORY HOME WITH AMERICAN HISTORY TIMELINE POSTER.
00:00:16SCAN THE CODE OR VISIT C-SPANSHOP.ORG.
00:00:21>> THE FEDERAL RESERVE HAS RAISED INTEREST RATES BY A
00:00:23QUARTER POINT, THE FIRST HIKE IN
00:00:27THREE YEARS. FED CHAIR KEVIN WARSH SPOKE TO REPORTERS ABOUT THE DECISION AND WHAT IT MEANS FOR THE ECONOMY.
00:01:07OOD DAY. J JUS
00:01:09O OAIAINTAI COMS CONTINUINGALRG
00:01:24RVRVESANANKING
00:01:26RELEASUSUST EYESHOILE AG
00:01:30ECONOMCTIVITIS EDINGATAT EF.F.
00:01:34UNRTAINTYAI
00:01:37G G TITING
00:01:40AND CAPITAL INVES R
00:01:48ROST.
00:01:49UNEMHAHASHAHANGED REMNS ELETED.
00:01:59P POLICY TIONILL
00:02:00PPOR T T TO THETHTHIS COMTTEE W
00:02:06PR
00:02:10I WILL GET INTO SOME FURTHER DETAIL.
00:02:14OUR DECISION COMES AT A TIME WHEN THE AMERICAN ECONOMY APPEARS TO BE STRENGTHENING.
00:02:19NEW HIRING, PRIVATE SECTOR EARNINGS, BUSINESS CAPITAL
00:02:23INVESTMENT, EACH OF THESE
00:02:24MARKERS HAS IMPROVED IN RECENT
00:02:28MONTHS AND IS POINTING IN A GOOD DIRECTION.
00:02:30CREDIT FLOWS HAVE BEEN ROBUST. PARTICULARLY FOR BUSINESSES.
00:02:34AND AS I SAT AT THE POLICY SYMPOSIUM AT JACKSON HOLE, I
00:02:38WOULD BE HARD-PRESSED TO DESCRIBE BROAD FINANCIAL
00:02:42CONDITIONS AS RESTRICTIVE.
00:02:45THIS VIEW WAS WIDELY SHARED BY THE COMMITTEE.
00:02:49SO WE REMOVED A DOSE OF ACCOMMODATION. CONSIDER THE GEOPOLITICAL
00:02:52LANDSCAPE OF SHOCKS AND
00:02:56UNCERTAINTY, AND YOU BEGIN TO APPRECIATE THE RESILIENCE OF THE
00:03:00U.S. ECONOMY.
00:03:03GIVEN THAT RESILIENCE AND THE POTENTIAL FOR EVEN GREATER
00:03:07PERFORMANCE, AN ATTITUDE OF OPTIMISM IS EXACTLY WHAT I HEARD
00:03:11INSIDE THE FOMC THESE LAST TWO DAYS.
00:03:14ONE BASIC SIGN OF STRENGTH IS THE STATE OF AMERICA'S LABOR MARKETS.
00:03:21THE JOBLESS RATE REMAINS LOW AT AROUND 4.1%.
00:03:25IN BOTH JOB OPENINGS AND WEEKLY HOURS HAVE BEEN INCREASING.
00:03:28UNEMPLOYMENT CLAIMS ON A FOUR
00:03:32WEEK MOVING AVERAGE, RUNNING AT LEVELS CONSISTENT WITH FULL EMPLOYMENT.
00:03:37THE LABOR SIDE OF THE FED'S CONGRESSIONAL AGREEMENT IS IN GOOD SHAPE.
00:03:41YET FOR MORE THAN FIVE YEARS, INFLATION HAS BEEN RUNNING ABOVE
00:03:45TARGET.
00:03:47SO OUR PREDOMINANT FOCUS IS ON THE PRICE STABILITY SIDE OF OUR
00:03:50MANDATE.
00:03:53THE PLAIN FACT IS INFLATION IS TOO HIGH, AND HAS BEEN FOR TOO LONG.
00:04:01THIS SUMMER'S INFLATION READINGS DO NOT TELL ME THAT UNDERLYING TRENDS HAVE MEANINGFULLY
00:04:05IMPROVED.
00:04:07BASED ON THE MOST RECENT CPI AND
00:04:09PPI DATA, THE 12 MONTH CHANGE IN
00:04:12TOTAL PCE PRICES LIKELY WAS AROUND 3.6% IN AUGUST.
00:04:18CORE PCE AND CPI PRICES RUNNING
00:04:19AT ABOUT THREE .2 AND 3.4%,
00:04:24RESPECTIVELY. TOO MANY CATEGORIES ARE STILL
00:04:28POSTING INCREASES ABOVE 3% ON BOTH THE SIX AND 12 MONTH BASIS.
00:04:35I NOTED IN JACKSON HOLE THAT OVERALL COMMODITY PRICES ALSO BEAR WATCHING.
00:04:39AND OVER THE INTER-MEETING
00:04:40PERIOD, THE PRICES OF THESE KEY INPUTS HAVE RISEN.
00:04:46SINCE MY FIRST FOMC MEETING AS CHAIRMAN IN JUNE, MY COLLEAGUES
00:04:50AND I HAVE BEEN UNEQUIVOCAL IN
00:04:52OUR COMMITMENT TO PRICE STABILITY.
00:04:55AND TO OUR 2% SEAT -- PCE INFLATION OBJECTIVE.
00:04:59AT OUR JULY MEETING, WE AGREED INFLATION REMAINED TOO HIGH.
00:05:04AND WE EXPRESSED OUR JOINT READINESS TO ACT AS CIRCUMSTANCES MIGHT REQUIRE.
00:05:11A GOOD MAJORITY OF MY COLLEAGUES AND I THOUGHT THE WISER COURSE
00:05:14WOULD BE TO AWAIT NEW INFORMATION.
00:05:18LAST MONTH IN WYOMING, I
00:05:21EXPRESSED MY COMMITMENT TO A MONETARY POLICY DISCIPLINE, NOT TO A DECISION.
00:05:27I DEFINED THE STANDARD FOR ACTION. WE MUST BE CONFIDENT THAT
00:05:31UNDERLYING INFLATION IS MOVING TO OUR OBJECTIVE.
00:05:38CLEARLY AND AT SUFFICIENT SPEED.
00:05:41TODAY, THE FOMC DECIDED THIS STANDARD HAS NOT BEEN SATISFIED.
00:05:45ON THE COMMITTEE'S UNANIMOUS
00:05:47VOTE SHOWS OUR RESOLVE TO ACHIEVE PRICE STABILITY ON A TIMELY BASIS.
00:05:51WE AIM TO ENSURE THAT CREDIT FINANCIAL CONDITIONS ARE
00:05:55CONSISTENT OVER TIME WITH OUR MANDATE.
00:06:00THAT RELATIVE PRICE CHANGES IN SOME SECTORS OF THE ECONOMY DO NOT BROADEN.
00:06:06THAT INFLATION OF COMPENSATION IN MARKETPLACES STAYS LOW.
00:06:10AND THAT INFLATION EXPECTATIONS REMAIN WELL ANCHORED.
00:06:15THIS AFTERNOON, YOU RECEIVED THE SUMMARY OF ECONOMIC PROJECTIONS. HE REFLECTS THE VIEWS OF MY
00:06:19COLLEAGUES ON THE COMMITTEE.
00:06:22AS IN JUNE I HAVE NOT OFFERED A PROJECTION OF MY OWN.
00:06:24LIKE IN JUNE, I SAID I WOULD FAITHFULLY DISCHARGE THE SUMMARY
00:06:28OF THEIR PROJECTIONS.
00:06:31IN THE SUMMARY'S MEDIUM PROJECTIONS, REAL GDP RISES AT 2.3% THIS YEAR.
00:06:372.4% NEXT YEAR.
00:06:40TOTAL PCE INFLATION RUNS AT 3.7% AND FALLS TO 2.3% NEXT YEAR.
00:06:45THE UNEMPLOYMENT RATE HOLDS STEADY AT ABOUT 4.1%.
00:06:52THE MEDIAN PARTICIPANT JUDGES THE APPROPRIATE FEDERAL FUNDS
00:06:55RATE TO BE 4.1 PERCENT AT THE
00:06:56END OF THIS YEAR AND TO REMAIN
00:07:00THERE NEXT YEAR. INFLATION RISKS ARE TO THE
00:07:03UPSIDE WHILE LABOR RISKS ARE ROUGHLY BALANCED.
00:07:09IN MY MEETINGS THESE LAST FEW WEEKS IN JACKSON HOLE, IN
00:07:12ASHEVILLE AT THE G MEETING WHICH
00:07:13THE U.S. HOSTED, AND IN A
00:07:17CENTRAL BANK CONFERENCE, IT WAS
00:07:20EVIDENT MOST ADVANCED ECONOMIES
00:07:22ARE FACING PRICE PRESSURES. THEIR CENTRAL BANKS ARE MAKING
00:07:26THEIR OWN JUDGMENTS CONSISTENT WITH THEIR OWN AGREEMENTS.
00:07:31OUR DECISION REFLECTS OUR BEST JUDGMENT IN SERVICE TO OUR AGREEMENT.
00:07:37THE FED HAS A ROLE IN SUSTAINING ECONOMIC PROGRESS HAPPENING IN AMERICA RIGHT NOW.
00:07:43AND THE RISING OPPORTUNITIES THAT COME WITH IT.
00:07:46THOSE WHO ARE LEAST WELL OFF
00:07:47HAVE THE MOST TO GAIN FROM THE
00:07:52DURABLE EXPANSION, SOLID LABOR MARKET, AND STABLE PRICES.
00:07:57WE AT THE FED ARE UNWAVERING IN OUR VITAL AND STRAIGHTFORWARD
00:08:01PURPOSE, FULL EMPLOYMENT AND PRICE STABILITY.
00:08:04AND A THRIVING AMERICAN ECONOMY THAT SETS THE STANDARD FOR THE
00:08:09WORLD. WITH THAT I WILL TAKE A FEW QUESTIONS.
00:08:16THANK YOU. >> CHAIR, THANK YOU FOR DOING THIS.
00:08:22LET ME NAVIGATE OVER MY QUESTIONS.
00:08:25COURT APPOINT RATE HIKE DOES NOT REOPEN THE STRAIT OF HORMUZ.
00:08:29I WAS WONDERING HOW YOU THINK THE SMALLER RATE HIKES WILL BE
00:08:33EFFECTIVE WHEN IT CANNOT NECESSARILY ADDRESS THE ENERGY SUPPLY SIDE OF INFLATIONARY PRESSURES?
00:08:39>> IT IS A GOOD QUESTION. WE CANNOT AFFECT ANY INDIVIDUAL
00:08:42PRICE, WHETHER IT BE OIL PRICES,
00:08:46FOODSTUFF AT THE GROCERY STORE. WHAT WE CAN AND WILL DO IS
00:08:50ENSURE THAT ANY CHANGE IN
00:08:53RELATIVE PRICES DOESN'T BROADEN OUT, DON'T HAVE SECOND AND THIRD
00:08:56ORDER EFFECTS IN THE ECONOMY. THAT IS WHAT WE ARE TASKED TO DO AND WHAT WE WILL DO.
00:09:05>> THANK YOU, KOBY SMITH FROM THE NEW YORK TIMES. WHEN THE FED STARTS RAISING
00:09:09RATES, IT FOLLOWS THE SEQUENCE OF HIKES.
00:09:12IS THERE ANYTHING DIFFERENT IN TODAY'S ASSESSMENT OF THE
00:09:16ECONOMIC CONDITIONS THAT WOULD SUGGEST THE TYPICAL PATTERN DOES NOT APPLY?
00:09:21SECOND TO THAT, WHAT IMPACT DO YOU EXPECT HIGHER RATES TO HAVE AT THIS JUNCTURE IF THE BULK OF
00:09:24WHAT IS KEEPING INFLATION ELEVATED IS STEMMING FROM SUPPLY SHOCKS?
00:09:28>> WE ARE TRYING TO GET TO MORE PEOPLE. I GET TO CHERRY PICK MY
00:09:32PREFERRED QUESTION FROM YOU. THIS WILL NOT SURPRISE YOU. I'M NOT IN THE FORWARD GUIDANCE BUSINESS.
00:09:37THE DECISION WE MADE TODAY WAS A SOBER DECISION, SERIOUS
00:09:41DECISION, RESPONSIBLE DECISION, ONE WE HAVE BEEN PREPARING FOR
00:09:45AND THINKING ABOUT IN MY 110 OR 120 DAYS.
00:09:49YOU'VE HEARD FROM OTHER PEOPLE IN THE DOTS WHAT THEIR FORECASTS ARE.
00:09:55I'M NOT GOING TO PREJUDGE ANY FUTURE DECISIONS WE MAKE.
00:09:58YOU MIGHT HAVE HEARD ME SAYING JACKSON HOLE, I COMMITTED TO A
00:10:01DISCIPLINE INSTEAD OF PRINCIPLES, I COMMITTED TO LOOK
00:10:05OUTSIDE THE WINDOW AND SEE WHAT I CAN OBSERVE.
00:10:08THAT IS WHAT I DID IN JACKSON, THAT IS WHAT WE DID TODAY.
00:10:15>> EDWARD LAWRENCE FROM FOXBUSINESS.
00:10:19THE MARKET PRICED IN A 90% CHANCE OF A RATE HIKE.
00:10:22YOU DON'T WANT THE FED TO LEAD THE MARKETS, WHICH IS A MARKET LED RATE HIKE.
00:10:27THE BOND YIELDS ARE GOING UP, THAT IS ONE OF THE INDICATORS.
00:10:31IS THAT PART OF THAT ISSUE?
00:10:34>> I HAVE SAID THIS BEFORE, I WILL REPEAT IT.
00:10:37THE FED HAS AN ENORMOUS AMOUNT OF POWER.
00:10:41THESE ARE DECISIONS WE MAKE. BUT GETTING THE UNDERSTANDING
00:10:46RIGHT BETWEEN FINANCIAL MARKETS
00:10:46AND THE FED IS A BALANCE I LONG
00:10:50THOUGHT WOULD BE BETTER STRUCK. WE MADE THIS DECISION BASED ON
00:10:53OUR ASSESSMENT OF THE SITUATION,
00:10:56BASED ON OUR ASSESSMENT FOR THE TRAJECTORY OF EMPLOYMENT BASED ON OUR JUDGMENT OF THE STRENGTH
00:11:00OF THE ECONOMY.
00:11:05SOMETIMES THE MARKET TRIES TO PREJUDGE OUR OUTCOMES.
00:11:09I WILL OBSERVE MARKET PRICES AND SEE WHAT THEY HAVE TO SAY. BUT TODAY WAS OUR DECISION.
00:11:16>> STEVE THOMPSON, WASHINGTON POST.
00:11:23-- ELIZABETH.
00:11:27>> ELIZABETH SHELTI WITH ABC NEWS.
00:11:30I WONDER IF YOU CAN TELL US WHAT THIS MOVE WILL DO FOR AMERICAN CONSUMERS.
00:11:36WHAT IS YOUR MESSAGE TO PRESIDENT TRUMP WHO HAS REPEATEDLY CALLED TO CUT
00:11:39INTEREST RATES, NOT RAISE THEM?
00:11:42>> I'VE GOT NOTHING FOR YOU ON A DISCUSSION WITH THE PRESIDENT.
00:11:49ON THE AMERICAN PEOPLE, AS I
00:11:53SAID IN MY PREPARED REMARKS, THE LEAST WELL-OFF ARE THE ONES WHO
00:11:56HAVE THE MOST TO GAIN FROM STABLE PRICES.
00:12:00THE DECISION WE MADE TODAY WAS THE RIGHT DECISION TO DELIVER ON
00:12:03THE REMIT CONGRESS GAVE US TO ENSURE STABLE PRICES.
00:12:08MOREOVER, I WOULD SAY BECAUSE OF THE UNDERLYING STRENGTH OF THE
00:12:13ECONOMY, BECAUSE WE ARE LARGELY ACTING CONSISTENT WITH FULL
00:12:16EMPLOYMENT, WE CAN BE FOCUSED ON STABLE PRICES.
00:12:20SOME MONTHS AGO I SAID WE WOULD DELIVER STABLE PRICES, TODAY'S ACTION IS CONSISTENT WITH THAT.
00:12:31>> CAN YOU TELL US MORE ABOUT
00:12:33WHAT CHANGED FROM THE JULY MEETING WHEN THE FED DID STAND
00:12:37UNTIL TODAY.
00:12:40AS PART OF THAT, CAN YOU GIVE US
00:12:41A SENSE WHETHER OR NOT THINGS LIKE THE RETAIL SALES REPORT
00:12:45SUGGESTED DEMAND IS HEATING UP
00:12:48AND POSSIBLY THREATENING HIGHER PRICES AS WELL?
00:12:52>> AS YOU MIGHT KNOW, I'M NOT A DATA POINT DEPENDENT GUY.
00:12:56SO I WILL NOT REACT ONE WAY OR ANOTHER TO DATA THAT SHOWS UP ON
00:13:00OUR DOORSTEP. BUT IN YOUR FIRST QUESTION, I
00:13:03THINK THE MOST IMPORTANT ONE, WHAT TRANSPIRED IN THE SEVEN
00:13:07WEEKS SINCE WE LAST MET.
00:13:09A GOOD MAJORITY OF MY COLLEAGUES THOUGHT SEVEN WEEKS IS A GOOD
00:13:15INVESTMENT, A WAY TO BUY TIME TO MAKE A WISE DECISION. I WILL HIGHLIGHT THREE THINGS THAT HAPPENED.
00:13:21ONE IS I MADE OUT A JUDGMENT SEVEN WEEKS AGO ABOUT THE
00:13:25STRENGTH OF THE ECONOMY. THERE HAS BEEN A PRETTY
00:13:29WIDE-RANGING SET OF DATA, INCLUDING THE LABOR MARKETS THE
00:13:33ECONOMY HAS STRENGTHENED. YOU MAY HAVE HEARD ME SAY ABOUT
00:13:34JACKSON HOLE, IT IS A JUDGMENT I
00:13:38HAVE IN THE COMMITTEE HAS. SECOND, INFLATION TRENDS.
00:13:43IN JACKSON HOLE, TRENDS MATTER.
00:13:46WE NEED TO LOOK OUTSIDE THE WINDOW AND INTERROGATE REALITY.
00:13:51MY JUDGMENT SOME WEEKS AGO WAS
00:13:53THE INFLATION SUMMER TRENDS WERE NOT PASSING THE TRUST.
00:13:56I HAVE SEEN LITTLE INFORMATION
00:14:00SINCE -- THAT WOULD MAKE ME REVERSE THAT DECISION.
00:14:02THE THIRD THING OUR GEOPOLITICS.
00:14:05THERE IS NO HIDING FROM HOTSPOTS AROUND THE WORLD.
00:14:10AND OUR JUDGMENT ABOUT THE MOST LIKELY RELEASE OF THE
00:14:13GEOPOLITICAL SITUATION HAS CHANGED.
00:14:18ALL THREE OF THOSE THINGS LEND THEMSELVES TO A FIRM UNANIMOUS DECISION TODAY.
00:14:29>> YOU SAID TODAY'S DECISION
00:14:31REMOVES A DOSE OF ACCOMMODATION
00:14:33IN YOUR VIEW, PERHAPS IF YOU CAN SHARE VIEWS AROUND THE TABLE.
00:14:40OUR INTEREST RATES NOW AT A LEVEL YOU WOULD DESCRIBE AS RESTRICTIVE OR NOT?
00:14:49>> I DESCRIBED PREVIOUSLY FOUND IT DIFFICULT TO DESCRIBE FINANCIAL CONDITIONS AS RESTRICTIVE.
00:14:55I SAID I WAS HARD-PRESSED.
00:14:56WHAT I HEARD AROUND THE TABLE IS
00:14:59MY COLLEAGUES WERE HARD-PRESSED TO DESCRIBE IT THAT WAY.
00:15:03WE WERE MOVED A DOSE OF
00:15:07ACCOMMODATION SO FINANCIAL AND CREDIT CONDITIONS WOULD BE MORE
00:15:10CONSISTENT WITH OUR ULTIMATE OBJECTIVES. THAT WAS OUR JUDGMENT.
00:15:15WE WILL CONTINUE TO EVALUATE THAT PERSPECTIVE.
00:15:23>> THANK YOU, MR. CHAIRMAN. I WANT TO FOLLOW UP ON THAT QUESTION.
00:15:28PREVIOUSLY, MOST FED OFFICIALS
00:15:31HAD DESCRIBED THE RATE AS MODESTLY RESTRICTIVE.
00:15:33IF YOU REMOVE THE COMBINATION,
00:15:37GIVE US YOUR SENSE ON WHERE THE FED FUNDS RATE IS RELATIVE TO
00:15:41NEUTRAL, AND SOME DETAIL ON YOUR
00:15:44SENSE OF IS THERE A SHORT-TERM NEUTRAL RATE YOU ARE AIMING FOR AND A LONGER TERM?
00:15:49>> IN A WORD, NO. IN A FEW WORDS, I WOULD SAY THIS.
00:15:55I HAVE ALWAYS BEEN INTERESTED IN
00:15:58NEUTRAL RATE AS AN ACADEMIC MATTER.
00:16:01WHEN I LEARNED ECONOMICS, WE WOULD THINK ABOUT AS THE REAL
00:16:05EQUILIBRIUM RATE.
00:16:07IT'S USEFUL ACADEMICALLY, AND
00:16:11DISCUSSION TO HELP US THINK ABOUT POLICY. DO I THINK IT HAS ANY
00:16:14OPERATIONAL EFFECT ON DECISIONS WE MAKE TODAY?
00:16:18NO I DON'T.
00:16:22>> VICTORIA. >> VICTORIA GUIDO WITH POLITICO.
00:16:28YOU'VE TALKED ABOUT HOW YOU DON'T LIKE DATA DEPENDENCE, BUT
00:16:30HEADING INTO THIS MEETING, THERE
00:16:34IS A TON OF FOCUS ON THE OBVIOUS CPI.
00:16:38I WONDER IF YOU THINK THAT WAS APPROPRIATE ON THE PART OF
00:16:42MARKETS, OR IF YOU LEARNED ANYTHING ABOUT HOW YOU MIGHT APPROACH COMMUNICATIONS GOING FORWARD?
00:16:48>> MARKET PARTICIPANTS AND REPORTERS, GENERALLY OVER THE
00:16:51COURSE OF THE LAST DECADE OR SO,
00:16:54HAVE GROWN ACCUSTOMED TO WAITING
00:16:58SOMEWHAT BREATHLESSLY ON A DATA POINT. THAT IS NOT MY VIEW.
00:17:04I WAS NOT WAITING BREATHLESSLY ON WHAT ANY PARTICULAR DATA WAS,
00:17:06WHETHER IT WAS A RETAIL SALES OR A CPI PRINT LAST WEEK.
00:17:13I WILL REITERATE, TRENDS MATTER. DATA POINTS ARE NOISY.
00:17:19DATA POINT DEPENDENCE IS A DANGEROUS PREOCCUPATION.
00:17:22IT IS NOT SOMETHING THAT CONCERNS ME.
00:17:25MARKETS OVER TIME WILL COME TO UNDERSTAND HOW THIS FED MAKES
00:17:29ITS DECISIONS, WHAT IS RELEVANT AND NOT. I WOULD NOT WANT TO EDITORIALIZE IT BEYOND THEM.
00:17:37>> THANK YOU FOR DOING THIS, MR. CHAIRMAN.
00:17:39A COUPLE OF WEEKS AGO, THE
00:17:42PRESIDENT SENT OUT A MESSAGE ESSENTIALLY THREATENING TO CUT TRADE TO CERTAIN COUNTRIES
00:17:46UNLESS RATES WERE LOWERED. WHAT WOULD YOU SAY TO INVESTORS
00:17:50WHO BELIEVE IT IS ANOTHER TEST
00:17:53OF THE FED'S INDEPENDENCE, AND
00:17:55WHEN WAS THE LAST TIME YOU SPOKE
00:17:59, DO YOU -- THE DECISION MEETING? >> YOU GAVE ME A LONG MENU FROM
00:18:01WHICH TO CHOOSE, THEY ARE ALL
00:18:05VERY TEMPTING. I DON'T HAVE ANYTHING FOR YOU ON
00:18:07DISCUSSIONS WITH THE PRESIDENT,
00:18:11AND I'M NOT A WALL STREET NEWSLETTER.
00:18:14PART OF THE INDEPENDENCE OF THE FEDERAL RESERVE IS WE STAY IN OUR LANE.
00:18:19INDEPENDENCE IS A TWO-WAY STREET. WE HAVE PEOPLE WHO TRADE POLICY
00:18:23AND FISCAL POLICY STAY IN THEIR LANE. THAT IS HOW WE CAN STAND UP HERE
00:18:27AND CALL THEM THE WAY WE SEE THEM.
00:18:34>> JUST WONDERING IF YOU COULD
00:18:34EXPLAIN WHO IS THE LEAST FLOW,
00:18:39AND WHAT A RATE HIKE DOES PINCHED BY HIGHER MORTGAGE RATES, HIGHER GAS, HIGHER
00:18:43GROCERY PRICES, AND BROUGHT HIGHER RATES? >> IT IS A FAIR QUESTION.
00:18:50IN THE MACRO ECONOMICS, WE LOOK AT AGGREGATES.
00:18:52AGGREGATE GDP, OVERALL LABOR
00:18:55MARKET TRENDS, THE STATE OF INFLATION.
00:18:58A LOT OF PEOPLE IN WASHINGTON SPEND A LOT OF TIME ON DISTRIBUTIONAL CONSEQUENCES.
00:19:02THAT IS THEIR JOB AND THEIR BUSINESS.
00:19:05WHAT I WAS REFERRING TO IS PEOPLE THAT DON'T OWN FINANCIAL ASSETS.
00:19:09CALL IT A BIT LESS THEN 50% OF THE COUNTRY.
00:19:13THEY DON'T HAVE EQUITY ON THEIR HOME, IN A 401(K) PLAN.
00:19:19SO THEY ARE LIVING OFF OF THEIR PAYCHECK THAT COMES EVERY COUPLE OF WEEKS.
00:19:22THE THING WE CAN DO CONSISTENT
00:19:23WITH OUR MANDATE IS TWO THINGS,
00:19:26ASK OURSELVES IS THE COUNTRY RUNNING MORE OR LESS AT FULL EMPLOYMENT, AND WE HAVE DONE THAT.
00:19:31THAT DOES NOT MEAN INDIVIDUALS AREN'T SEARCHING FOR A JOB, BUT
00:19:35IN AGGREGATE. RUNNING MORE OR LESS AT FULL EMPLOYMENT.
00:19:38IF SO, WE CAN LOOK AT THE OTHER SIDE OF THE MANDATE AND LET THAT BE OUR FOCUS.
00:19:44SABLE PRICES, AN ENVIRONMENT WHERE INFLATION IS RUNNING
00:19:47CONSISTENT WITH OUR 2% OBJECTIVE, OFFERS GOOD NEWS
00:19:51BECAUSE WHEN THEY GET THEIR WAGES, THEY CAN PUT THEIR HEAD
00:19:53ABOVE WATER AND DELIVER REAL TAKE-HOME PAY INCREASES.
00:19:58WE DON'T HAVE TOTAL RESPONSIBILITY FOR IT.
00:20:01WE DO HAVE RESPONSIBILITY FOR STABLE PRICES.
00:20:03INFLATION IS A CHOICE, AND TODAY
00:20:07WE TOOK A STEP OF DELIVERING IT.
00:20:12>> SORRY.
00:20:15-- FROM AFP. ARE YOU LOOKING AT THE OTHER CENTRAL BANKS?
00:20:19WHAT DO YOU THINK ABOUT THE
00:20:23EUROPEAN CENTRAL BANK MOVE, THEY HIKED TWICE, BUT NOT IN A ROW.
00:20:30CHAIR WARSH: WELL, I DON'T ASK THEM TO PREJUDGE DECISION THAT WE'RE GOING TO MAKE, SO I WON'T BE JUDGED DECISIONS THAT THEY
00:20:33MAKE.
00:20:36BUT I WILL SAY THIS. I'VE SPENT SOME TIME WITH FOREIGN CENTRAL BANK COUNTERPARTS, NOT JUST IN THE
00:20:40LAST 20 YEARS, BUT OVER THE COURSE OF THE LAST SEVERAL
00:20:41WEEKS, AS I MENTIONED, JACKSON
00:20:46HOLE. AT THE G20 MEETING WE HOSTED IN NORTH CAROLINA, AND AT A CENTRAL
00:20:49BANK MEETING IN BASEL.
00:20:53WHAT I HEARD FROM MOST OF THE ADVANCED ECONOMIES IS THEY ARE SUFFERING FROM PRICE PRESSURES
00:20:57TOO. THEY'RE MAKING THEIR OFTEN CHOICES CONSISTENT WITH THEIR
00:21:02REMIT.
00:21:05IT TELLS ME A COUPLE OF THINGS. WHEN THE FEDERAL RESERVE MAKES A
00:21:08POLICY CHOICE, IT MATTERS NOT JUST TO THE U.S. ECONOMY, BUT IT SPILLS OVER TO THE REST OF THE
00:21:12WORLD.
00:21:15TO A LESSER EXTENT, THAT IS TRUE FOR THEM TOO.
00:21:19WHEN FOREIGN CENTRAL BANKS MAKE DECISIONS WHERE THEY ARE CONFRONTED WITH HIGHER PRICES
00:21:22AND THEY CHOOSE CONSISTENT WITH THEIR REMIT TO RAISE RATES, THEN
00:21:24THEY'RE HELPING TO QUASH
00:21:29IN THEIR COUNTRIES AND THERE IS SPILLOVER AND SPILL BACK IN BOTH
00:21:33DIRECTIONS. BEYOND THAT, I WON'T OPINE ABOUT WITH CENTRAL BANKS MAY CHOOSE TO
00:21:39DO THIS WEEK OR BEYOND THAT. REPORTER: TIM FROM THE WALL STREET JOURNAL.
00:21:44LAST FALL, YOU EXPRESSED CONCERN THAT THE FED WAS ABOUT TO MAKE
00:21:46ITS, "SIXTH OR SEVENTH BIG MISTAKE" BY DECIDING THE ECONOMY
00:21:49WAS TOO STRONG TO JUSTIFY LOWER
00:21:53RATES. TODAY, YOU RAISED RATES. CAN YOU GIVE SOME SENSE AS TO
00:21:56WHAT CHANGED YOUR OWN ASSESSMENT OF THE U.S. ECONOMY BETWEEN THEN
00:21:58AND NOW?
00:22:01CHAIR WARSH: I DON'T REMEMBER THE FULL CONTEXT, BUT I CAN TELL
00:22:05YOU, NICK, ABOUT THE STATE OF
00:22:07GROWTH NOW. MY SUSPICION 120 DAYS AGO WHEN I
00:22:12SHOWED UP WAS THAT THE U.S.
00:22:14ECONOMY WAS STRENGTHENING. EVEN OVER THE LAST SEVERAL
00:22:17WEEKS, I THINK WE NOW HAVE DATA
00:22:20BROADLY DEFINED THAT SAYS THE
00:22:23ECONOMY HAS INDEED STRENGTHENED.
00:22:28UNDERLYING GROWTH IS HIGHER. INFLATION IS THE PROBLEM.
00:22:32STABLE PRICES HAVE BEEN THE PROBLEM FOR NOW MORE THAN FIVE AND A HALF YEARS.
00:22:36SO WHAT THE COMMITTEE DECIDED TO DO TODAY WAS TAKE AN ACTION TO
00:22:41ENSURE A TIMELIER RETURN TO OUR PRICE STABILITY OBJECTIVE.
00:22:45PRICE STABILITY IS FOUNDATIONAL TO ECONOMIC GROWTH, AND I THINK
00:22:47WE TOOK AN IMPORTANT STEP TODAY TO DELIVER IT.
00:22:50WE DID IN PART BY REMOVING THE DOSE OF ACCOMMODATION THAT I
00:22:53MENTIONED BEFORE.
00:22:57>> NEIL IRWIN.
00:23:02REPORTER: LONGER-TERM BOND YIELDS ARE UP QUITE A BIT OVER
00:23:04THE LAST FEW MONTHS, ESPECIALLY THE LAST FEW WEEKS.
00:23:08WHAT DO YOU BELIEVE THE BOND MARKET IS TELLING YOU ABOUT
00:23:10THE GROWTH OUTLOOK, RATES, AND THE GROWTH OUTLOOK, AND WHAT ARE
00:23:14THE IMPLICATIONS FOR MONETARY POLICY?
00:23:17CHAIR WARSH: LET ME SPEAK TO THE HISTORY, WHAT BOND MARKET PRICES
00:23:19DO PROSPECTIVELY, I WANT TO LET
00:23:23THEM TELL ME ANY STORY THEY WISH TO. I WANT TO TRY TO INTERROGATE
00:23:28THAT. BUT WHY DID YIELDS RISE SINCE
00:23:30THE LAST FOMC MEETING TO THIS?
00:23:32I'LL GIVE YOU THREE REASONS, BUT
00:23:34I WOULD SAY THESE THINGS TEND TO BE OVERDETERMINED.
00:23:38THIS IS A COMPLICATED SET OF
00:23:41THINGS THAT ARE AFFECTING THE MOST IMPORTANT ASSET ANYWHERE IN
00:23:43THE WORLD, THE 10-YEAR TREASURY IT'S THE RISK-FREE ASSET UPON .
00:23:47IT'S THE RISK-FREE ASSET UPON WHICH EVERY PRICE OF VIRTUALLY
00:23:50ASSET IN THE WORLD IS RELATED TO.
00:23:53SO I'LL SAY THREE THINGS. FIRST IS ECONOMIC STRENGTH. PART OF THE REASON WHY WE'VE SEEN OVER
00:23:57THE COURSE OF 2026 LONG-TERM YIELDS GO UP IS THE ECONOMY HAS
00:24:01STRENGTHENED. SECOND REASON, COMPETITION FOR
00:24:05CAPITAL. THE SURGE IN CAPITAL
00:24:11EXPENDITURES WHICH I REFERENCED
00:24:13, IN MY REMARKS, IS REAL.
00:24:16AND THE SO-CALLED HYPER SCALARS ARE OUT IN THE MARKET RAISING FUNDING SO THE COMPETITION FOR
00:24:19CAPITAL IS REAL AND I THINK IT
00:24:20PARTLY EXPLAINS THE INCREASE IN
00:24:24YIELDS. THE THIRD IS GEOPOLITICS.
00:24:29THE SITUATION HOTSPOTS AROUND THE WORLD ARE DRIVING LONG-TERM YIELDS.
00:24:33IT IS NOT SIMPLY SPOT PRICES OF ENERGY OR SPOT PRICES FOR CORN
00:24:35OR SOYBEANS OR WHEAT, IT IS THE
00:24:39DIFFERENCE BETWEEN SPOT PRICES
00:24:42AND SO-CALLED CRACK SPREADS.
00:24:45WHAT THAT MEANS FOR PRODUCTS TO FIND THEIR WAY INTO A STORE ACROSS THE COUNTRY.
00:24:49THOSE ARE THE THREE LEADING EXPLANATIONS BUT NOT AN
00:24:53EXCLUSIVE LIST. REPORTER: MICHAEL MCKEE FROM
00:24:59BLOOMBERG RADIO AND TELEVISION.
00:25:02YOU SAID IN JACKSON THAT YOU WANT TO SEE INFLATION COME DOWN CLEARLY AND AT SUFFICIENT SPEED,
00:25:06WHICH IS A STANDARD WITHOUT NECESSARILY A MEASURABLE THRESHOLD.
00:25:10THE REASON I ASK IS BECAUSE YOU
00:25:13SAY TODAY'S POLICY ACTION WILL
00:25:15SUPPORT A TIMELIER RETURN TO THE
00:25:20COMMITTEE'S 2% TARGET.
00:25:21AND YET, IN THE SUMMARY OF ECONOMIC PROJECTIONS, THE MEDIAN
00:25:25PUSHES THE 2% TARGET OUT TO 229, ANOTHER TWO YEARS.
00:25:28I'M WONDERING HOW YOU CAN SQUARE THOSE TWO THINGS.
00:25:31CHAIR WARSH: ONE EASY WAY TO SQUARE THAT IS THOSE AREN'T MY
00:25:35FORECASTS. [LAUGHTER] THOSE ARE THE FORECASTS OF MY 18
00:25:38COLLEAGUES. I TRY TO REPRESENT THEM
00:25:40DUTIFULLY TO YOU.
00:25:45MY BUSINESS IS NOT TO GIVE
00:25:49FORWARD GUIDANCE BUT MY COMMITMENT IN JUNE WAS TO REAFFIRM TO THE AMERICAN PEOPLE,
00:25:52TO ANYONE LISTENING, THAT WE WILL DELIVER PRICE STABILITY.
00:25:57MY COMMITMENT IN JULY WAS TO SAY WE WANT TO BUY A LITTLE BIT OF
00:26:02TIME. WE WANT TO EVALUATE WHAT IS HAPPENING ACROSS A RANGE OF
00:26:06DIMENSIONS. AND WHAT I SAID IN JACKSON HOLE IN AUGUST IS, WE ARE COMMITTED
00:26:08TO A DISCIPLINE, NOT A DECISION. TODAY'S ACTION STARTS TO SHOW
00:26:12THEY ARE SERIOUS ABOUT THIS.
00:26:14WE WILL DELIVER ON THE PRICE
00:26:18STABILITY OBJECTIVE. AND AS THE STATEMENT SAID, WE'LL
00:26:21DO IT ON A TIMELIER BASIS. THAT'S OUR DECISION.
00:26:26WHEN WE CONTINUE OUR DISCUSSIONS OVER THE COURSE OF THE NEXT
00:26:29SEVERAL WEEKS AND MONTHS, WE'LL HAVE MORE TO SAY ABOUT IT, BUT
00:26:32I'M ILL PREPARED TO PREJUDGE THOSE FUTURE ACTIONS.
00:26:35>> MATT FROM CNN.
00:26:40REPORTER: THANKS, CHAIRMAN WARSH.
00:26:45YOU'VE SPOKEN IN THE PAST ABOUT THE POSITIVES THAT COULD COME FROM WIDESPREAD ADOPTION OF
00:26:48ARTIFICIAL INTELLIGENCE. HOW CONCERNED ARE YOU IF AT ALL
00:26:51ABOUT THESE INCREASINGLY ALARMING WARNINGS WE HAVE HEARD
00:26:54FROM AI LEADERS ABOUT LOSING
00:26:57CONTROL OF THIS POWERFUL
00:26:58TECHNOLOGY AND DOING REAL DAMAGE
00:27:01THAT WOULD PRESUMABLY IMPACT THE
00:27:03REAL ECONOMY?
00:27:06CHAIR WARSH: I SPENT A LOT OF
00:27:10TIME THINKING ABOUT AI.
00:27:13BEFORE I MADE MY WAY TO THIS
00:27:17POST I SPENT A LOT OF TIME , TALKING ABOUT IT PUBLICLY. INDEPENDENCE OF THE FEDERAL RESERVE IS ABOUT STAYING IN OUR LANE.
00:27:20WE CARE VERY MUCH ABOUT WHAT'S HAPPENING IN ARTIFICIAL INTELLIGENCE.
00:27:26WE CARE MUCH ABOUT THE IMPLICATIONS ON THE DEMAND SIDE OF THE ECONOMY AND ULTIMATELY THE SUPPLY SIDE OF THE ECONOMY.
00:27:30I CARE SO MUCH AND I THINK IT IS
00:27:33SO IMPORTANT THAT WE ESTABLISHED A TASK FORCE THAT SHOULD REPORT BY THE END OF THE YEAR TO HELP
00:27:37US THINK ABOUT THE IMPLICATIONS OF A FUTURE POLICY CONJUNCTURE,
00:27:40BUT THE POLICY DECISIONS THAT
00:27:43ARE MADE ABOUT THE RISKS AND
00:27:47REWARDS, THE CHALLENGES AND OPPORTUNITIES, THOSE ARE
00:27:51DECISIONS MADE BY OTHER PARTS OF THE GOVERNMENT.
00:27:54I WILL LEAVE IT TO THEM TO MAKE THOSE POLITICAL DECISIONS, POLICY DECISIONS. THE IMPLICATIONS OBVIOUSLY HAVE
00:27:58SOME BEARING ON OUR DAY DRIVE AND THAT'S WHERE WE WILL BE
00:28:00FOCUSED. >> THE LAST QUESTION WILL GO TO
00:28:04JENNIFER. REPORTER: THANK YOU, MR.
00:28:08CHAIRMAN.
00:28:14INFLATION HAS RUN UP MOSTLY FROM
00:28:15HIGHER ENERGY PRICES AND TARIFFS
00:28:18WHICH SOME SAY ARE SUPPLY SHOCKS THAT RATE HIKES CANNOT FIX AND SHOULD FADE ON THEIR OWN SO LONG
00:28:22AS INFLATION STAYS ANCHORED. NOW THAT YOU HAVE HIKED RATES,
00:28:24DO YOU NEED TO PUSH GROWTH LOW
00:28:27-- BELOW POTENTIAL, UNINTENTIONALLY PUSHING WEAKNESS
00:28:30ON THE JOB MARKET TO BRING
00:28:34INFLATION DOWN, AND HOW DO THOSE
00:28:35PLAY OUT GIVEN THE FORCEFULNESS
00:28:39WITH WHICH AI IS DRIVING THE ECONOMY RIGHT NOW? CHAIR WARSH: THERE IS A LOT
00:28:42THERE. LET ME SEE IF I CAN DO JUST A LITTLE BIT OF IT.
00:28:46FIRST, WE BELIEVE THE UNEMPLOYMENT RATE IS RUNNING
00:28:50CONSISTENT WITH FULL EMPLOYMENT.
00:28:54I DON'T BELIEVE WE NEED TO DO HARM TO THE LABOR MARKETS TO
00:28:56ACHIEVE OUR OBJECTIVE.
00:28:58I DON'T BELIEVE THE TWO PARTS OF
00:29:00OUR MANDATE, PRICE STABILITY AND FULL EMPLOYMENT, ARE WORKING AT
00:29:04CROSS PURPOSES OVER THE MEDIUM-TERM.
00:29:07ECONOMIC GROWTH, THAT IS
00:29:12ENSURING CONTINUOUS, SUSTAINABLE, DURABLE ECONOMIC GROWTH.
00:29:15THAT IS THE BUSINESS WE ARE IN.
00:29:19THE JOB WE DID TODAY AND WE WILL CONTINUE TO DO IS TO ENSURE
00:29:22PRICE STABILITY WHICH CAN MEAN SUSTAINABLE AND DURABLE ECONOMIC
00:29:25GROWTH CAN GO ON FOR LONGER.
00:29:27THE ECONOMY CAN BE STRONGER.
00:29:32AND AS I MENTIONED BEFORE, THE LEAST WELL-OFF CAN GET THE BENEFITS OF IT.
00:29:37>> THANK YOU.
00:29:40CHAIR WARSH: THANK YOU.
00:29:47>> PRESIDENT TRUMP HAS WEIGHED
00:29:50IN ON THE FED'S DECISION TO RAISE INTEREST RATES.
00:29:54HE POSTED THIS. INTEREST RATES IN THE UNITED
00:29:57STATES SHOULD BE 1% OR LESS BECAUSE WE HAVE THE BEST CREDIT
00:30:01IN THE WORLD BY FAR. OUR COUNTRY IS BOOMING.
00:30:07IF WE STOP TRADING WITH EVERY COUNTRY WE HAVE A DEFICIT WITH,
00:30:09WE WOULD MAKE AT LEAST 1.5
00:30:13BILLION -- $1.5 TRILLION A YEAR.
00:30:17WE ARE CARRYING ALMOST EVERY COUNTRY IN THE WORLD AND THAT
00:30:20CANNOT GO ON ANY LONGER.
00:30:25LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST.
00:30:27>> JOINING US WITH MORE ON THE FEDERAL RESERVE RAISING INTEREST
00:30:32RATES A QUARTER OF A PERCENTAGE
00:30:33POINT IS THE FINANCE REPORTER FOR THE HILL.
00:30:38THANKS FOR BEING WITH US. THE FIRST INTEREST RATES INCREASE IN OVER TWO YEARS.
00:30:42WHAT REASONS DID THE FED GIFT FOR THIS MOVE?
00:30:46>> WE HEARD A BIT FROM FED
00:30:49RESERVE CHAIR WARSH EARLIER.
00:30:52THEY HAVE BEEN POINTING TO INFLATION THAT WE SAW SPIKE AFTER THE PANDEMIC.