17 Burst results for "Colby Smith"
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"The labor market has been rebalancing, but by many measures GDP growth has been strong, although many forecasters are forecasting -and they have been forecasting -that it will slow. As for the Committee, we are committed to achieving a of stance monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time. And we're not confident yet that we have achieved such a stance. So, that is the broader context into which this -the strong economy and all the things I said -that's the context in which we're looking at this question of rates. So, obviously, we're monitoring -we're attentive to the increase in longer -term yields, which have contributed to a tightening of broader financial conditions since the summer. As I mentioned, persistent changes in broader financial conditions can have implications for the path of monetary policy. In this case, the tighter financial conditions we're seeing from higher long -term rates, but also from other sources like the stronger dollar and lower equity prices, could matter for future rate decisions as long as two conditions are satisfied. the tighter conditions The first is would that need to be persistent, and that is something that remains to be seen. But that's critical. If things are fluctuating back and forth, that's not what we're looking for. With financial conditions, we're looking for persistent changes that are material. The second thing is that the longer -term rates that have moved up, they can't simply be a reflection of expected policy moves from markets, that if we didn't follow through on them then the rates would come back down. I would say on that, it does not appear that an expectation of higher near -term policy rates is causing the increase in longer -term rates. So, in the meantime, though, perhaps the most important thing is that these higher Treasury yields are showing through to higher borrowing costs for households and businesses. Those higher costs are going to weigh on economic activity to the extent this tightening persists, and the mind's It eye goes to the 8 percent -near 8 percent mortgage rate, which could have, you know, pretty significant effect on housing. So, that's how I would answer your question. Just as a quick following to be clear on this, in your opening statement just now, you seem to imply that you are not yet confident that financial conditions are restrictive enough to finish the fight. Is that true? Yes, that's exactly right. You know, to say it a different way, we haven't made any decisions about future meetings. We have not made a determination, and we're not, I will say that we're not confident this time that we've reached such a stance. We're not confident that we haven't. We're not confident that we have. And that is the way we're going to be going into these future meetings is to be determining the extent of any additional further policy tightening that be may appropriate to return inflation at 2 percent over time. Gina. Okay. Thank you so much for taking our questions. I wonder if you don't raise interest rates in December, would the presumption be that at that point that we should expect that rates are at their peak, or is there a possibility of increasing rate increases next year? And are there any costs to taking a more extended pause? So, let me start by saying we haven't made a decision about September, you're asking a hypothetical there, but we're going into December meeting. We'll get, as you know, two more inflation readings, two more labor market readings, some data on economic activity, and so we'll be taking -and also the broader situation, the broader financial conditions situation and broader world situation. We're looking at all those things as we make a decision in December. We haven't made that decision. I would say, though, that the idea that if you -the idea that it would be difficult to raise again after stopping for a meeting or two is just not right. I mean, the Committee will always do what it thinks is appropriate at the time. And again, we haven't made any decisions at all about December. We didn't talk about making a decision in December today. Really, it was a decision for this meeting and understanding broader world Nick Timiros of the Wall Street Journal. Chair Powell, did the Fed staff put a recession back into the baseline forecast in the materials for today's meeting? And how much does this tightening in financial conditions institute for rate hikes if the tightening is persistent? You had said it was worth maybe a quarter point when had we the bank failures in the spring. What is it here on something that's presumably more straightforward and more familiar to simulate? So I guess I don't want to answer question your about the recession, but the answer is no. I think I have to answer it since we did publicly saying in the minutes, you'll know anyway in the minutes. The staff did not put a recession back in. It would be hard see to how you would do that if you look at the activity we've seen recently, which is not really indicative of a recession in the near term. In terms of how to think about translation into rate hikes, I think it's just too early to be doing that. And the main reason is we just don't know how persistent this will be. You can see how volatile it is. Different kinds of news will affect the level of rates. I think any kind of an estimate that was precise would hang out there and have a great chance of looking wrong very quickly. I think what we can say is that financial conditions have clearly tightened. And you can see that the in rates that consumers and households and businesses are paying now. And over time that have will an effect. We just don't know how persistent it's going to be. And it's tough to try to translate that in a way that I'd be comfortable communicating into how many rate hikes that is. If I could follow up, I guess what makes you confident that tighter financial conditions will slow above trend growth when 500 basis points hikes, of rate QT, and a minor banking crisis have not thus far? Well, way that's the our policy works. And sometimes it works lags, with of course, which can be long and variable. But ultimately, if you raise interest rates, you do see those effects. And you see those effects in the economy now. You see what's happening in the housing market. You're seeing now. You'll see, if you look at surveys of people, it's not a good time, they think, to buy durable of goods various kinds because rates are so high now. I mentioned again, we're getting reports from housing that the effects of this could be quite significant. But you're right. This has been a resilient economy, and it's, surprising in its resilience. And there are a number of possible reasons why that may be. Our job is to achieve maximum employment and price stability. And so we take the economy as it comes. It has been resilient. So we just, we take it as it is. Thank you. Colby Smith with the Financial Times. In terms of the thresholds that you've laid out of what could warrant further tightening, additional the evidence of persistently above -trend growth or some kind of reversal in the recent easing of labor market that seems to suggest something more powerful than just one more quarter point rate hike would and be I'm just necessary. curious if that's And how the committee sees it. So we've identified those factors. Those are not meant to be the only factors or a specific test that we're going to be applying with some metrics behind it. Really we're going to be looking at the broader picture and you know what's happening with our progress toward the 2 % inflation goal. Is the labor market continuing to broadly cool off and achieve a better balance? We'll be looking at that. We look at growth insofar as it has implications for our two mandate goals. We look that at and we look at broader financial conditions. So we'll be looking at all of those things as we reach a judgment, you whether know, we need to further tighten policy and if we do reach that judgment then we will further tighten policy. And just in terms of the tightening of financial conditions, if that is having some kind of offsetting effect in terms of the to need potentially again raise rates, what then is the potential impact on the trajectory of rate cuts? Could we see those maybe pulled forward or have to see more than indicated? So the fact is the Committee is not thinking about rate cuts right now at all. We're not talking about rate cuts. We're still very focused on the first question, which is have we achieved a stance of monetary policy that's sufficiently restrictive to bring inflation down to 2 % over time sustainably. That is the question we're focusing on. The next question, as you know, will for be how long will we remain restrictive, will policy remain restrictive? And what we said there is that we'll keep policy restrictive until we're confident that inflation is on a sustainable path down to 2%. That'll the next be question, but honestly right now we're really tightly focused on the first question. The question of rates cuts It just doesn't come up because I think it's so important to get that first question, you close to right as you can. Steve Leesman CNBC. Mr. Chairman, I guess I had assumed that there was a tightening bias Committee you say in the statement you're looking to assess the appropriate stance of monetary policy the which extent to you may need to hike additionally. You didn't say earlier that you were sufficiently effective. There were forecasts for two rate hikes among most members of the committee. But then you just said You know, we haven't
Tech Path Crypto
"colby smith" Discussed on Tech Path Crypto
"We're going to be going over to the Fed here in a second. Looks like they're still on hold. Music is still coming in from the Fed meeting. Chair Powell will sometimes you know do a few things right before and of course it kind of depends on what they've done in terms of their meeting overall. We'll get into some of those. I'm going to go to the charts real quick. We'll just take a look at some of the charts right now where Bitcoin is. As you can see Bitcoin we're on. Looks like there he's getting ready to enter the room right now. I'm still on the one hour right there. You can kind of see a little bit of that moving up this morning right here for Bitcoin at holding around 27.1. They've gone to the live stream. He has not entered the room just yet so we'll see that come on. ETH is holding out fairly well after a little bit of a dip on the one hour down to around the 16.20 mark and recovering up here to around 16.30. Not bad. And of course if you're watching our sentiment data one thing you will note this is big news out there is that the crypto power index has been renamed to the market sentiment index and now we're covering and here comes Chair Powell now. Let's go ahead and break to that. Good afternoon everyone. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people. We understand the hardship that high inflation. 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. Since early last year the FOMC has significantly tightened the stance of monetary policy. We've raised our policy interest rate by five and a quarter percentage points and have continued to reduce our securities holdings at a brisk pace. We've covered a lot of ground and the full effects of our tightening have yet to be felt. Today we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings. Looking ahead we're in a position to proceed carefully in determining the extent of additional policy firming that may be appropriate. Our decisions will be based on our ongoing assessments of the incoming data and the evolving outlook and risks. I will have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a solid pace and so far this year growth in real GDP has come in above expectations. Recent readings on consumer spending have been particularly robust. Activity in the housing sector has picked up somewhat though it remains well below levels of a year ago largely reflecting higher mortgage rates. Higher interest rates also appear to be weighing on business fixed investment. In our summary of economic projections or SEP committee participants revised up their assessments of real GDP growth with the median for this year now at 2.1 percent. Participants expect growth to cool with the median projection falling to 1.5 percent next year. The labor market remains tight but supply and demand conditions continue to come into better balance. Over the past three months payroll job gains averaged 150,000 jobs per month, a strong pace that is nevertheless well below that seen earlier in the year. The unemployment rate ticked up in August but remains low at 3.8 percent. The labor force participation rate has moved up since late last year 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. Although the jobs to workers gap has narrowed labor demand still exceeds the supply of available workers. FOMC participants expect the rebalancing in the labor market to continue easing upward pressures on inflation. The median unemployment rate projection in the SEP rises from 3.8 percent at the end of this year to 4.1 percent over the next two years. Inflation remains well above our longer run goal of two percent. Four percent over the 12 months ending in August and that excluding the volatile food and energy categories core PCE prices rose 3.9 percent. Inflation has moderated somewhat since the middle of last year and longer-term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households businesses and forecasters as well as measures from financial markets. Nevertheless the progress the process of getting inflation sustainably down to two percent has a long way to go. The median projection in the SEP for total PCE inflation is 3.3 percent this year falls to two and a half percent next year and reaches two percent in 2026. The Fed's monetary policy actions are guided 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 our policy rate by five and a quarter percentage points. We see the current stance of monetary policy as restrictive putting downward pressure on economic activity hiring and inflation. In addition the economy is facing headwinds from tighter credit conditions for households and businesses range for the federal funds rate at five and a quarter to five and a half percent and to continue the process of significantly reducing our securities holdings. We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our two percent goal over time. In our SEP FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate based on what each participant judges to be the most likely sorry the most likely scenario going forward. If the economy evolves as projected the median participant projects at the appropriate level of the federal funds rate will be 5.6 percent at the end of this year 5.1 percent at the end of 2024 and 3.9 percent at the end of 2025. Compared with our June summary of economic projections the median projection is unrevised for the end of this year but has moved up by a half percentage point at the end of the next two years. These projection projections of course are not a committee's decision or plan if the economy does not evolve as projected the path of policy will adjust as appropriate to foster our maximum employment and price stability goals. We will continue to make our decisions meeting by meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation as well as the balance of risks. Given how far we have come we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks. Real interest rates now are well above mainstream estimates of the neutral policy rate but we are mindful of the inherent uncertainties in precisely gauging the stance of policy. We're prepared to raise rates further if appropriate and we intend to hold policy at a restrictive level until we're confident that inflation is moving down sustainably toward our objective. In determining the extent of additional policy firming that may be appropriate to return inflation to two percent over time the committee will take into account the cumulative tightening of monetary policy the lags with which monetary sub-policy affects economic activity and inflation and economic and financial developments. We remain committed to bringing inflation back down to our two percent goal and to keep longer term inflation expectations well anchored. It's 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 and I look forward to your questions. Thank you Colby Smith with the Financial Times. What makes the committee inclined to think that the Fed funds rate at this level is not yet sufficiently restrictive especially when officials are forecasting a slightly more benign inflation outlook for this year. There's noted uncertainty about policy lags headwinds have emerged from the looming government shutdown the end of federal child care funding resumption of student debt payments um things of that nature. So I guess I would characterize the situation a little bit differently. So we decided to maintain the target range for the fellow funds rate where it is at five and a quarter to five and a half percent while continuing to reduce our securities holdings and we say we're committed to achieving and sustaining a stance of monetary policy that's sufficiently restrictive to bring down inflation to two percent over time. We said that um but the fact that we decided to maintain the policy rate at this meeting doesn't mean that we've decided that we have or have not at this time reached that that that stance of monetary policy that we're seeking. If you looked at the SEP as you as you obviously will have done you will see that a majority of participants believe that it is more likely than not that we will that it will be appropriate for us to raise rates one more time in the two remaining meetings this year. Others believe that we have already reached that so it's it's something where we're by by we're not making a decision by by deciding to about that question by deciding to just maintain the rate and await further data.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"And that's a labor market that continues to be strong but gradually slowing. I mentioned that the inflation report was actually a little better than expected but we're going to be careful about taking too much signal from a single reading. And, you know, growth came in stronger than expected so that's how we look at today. Nick Tamerosa, the Wall Street Journal. Chair Powell, markets widely believe the median FOMC participants' inflation forecast from June for the fourth quarter of this year will be too high given autos and shelter net by September that may warrant a downward revision in the inflation forecast of 20 to 30 basis points. Would that type of inflation progress be enough to hold rates steady from here or do you need to see below trend growth and decelerating labor income growth to be convinced that you've done enough? So it's hard to pick the pieces apart and say, you know, how much of this and how much of that. You know, we'll be looking at everything and, you know, of course we'll be looking to see whether the signal from is June CPI replicated or the opposite of replicated or whether it's somewhere the in middle. We'll be looking at the growth data. We'll be looking at the labor market data very closely, of course, and making an overall judgment about It's that. the totality of the data, I think, but with a particular focus on making progress on inflation. Thank you. If I could follow up, last month you said there were benefits to moderating the pace of increases because it would give you more information to make decisions. Would another CPI report like the one we just had in June allow you to at least maintain that slower pace and defer until the fall any decision on whether you need that second rate hike? I'm just going to tell you again what we're going to do in September. We're going to look at two additional job reports, two additional CPI reports, lots of activity data, and that's what we're going to look at and we're going to make that decision then. That decision could mean another hike in September or it could mean that we decide to maintain at that level. Again, the question we're going to be asking ourselves is, is the overall signal one that do we need more, to that we need to tighten further, and if we get that signal whenever we get it, and that's the collective judgment of the committee, then we will move ahead. If we don't, then we'll have the option of maintaining policy at that level. It's really dependent so much on the data and we just don't have it yet. Thank you. Confidence in the economy is rising, likely in large part because of the declines in headline inflation. You also see wages are also rising faster than prices now, after trailing them for a long time. How much are Americans truly harmed by inflation at its current headline level of 3 %? With that in mind, when do you put some weight back on the employment side of the dual mandate? So, I guess I'd say it this way. First, it is a good thing that headline inflation has come down so much because that's what really the public experience is. I would say that having headline inflation move down that much, almost creates, it will strengthen the broad sense that the public has that inflation is coming down, which will in turn, we hope, help inflation continue to move down. So, really, you are sorry, your question was? Well, you've talked for many press conferences now about the harm created by inflation, how hard it is for people. So, how much of that are we still seeing with inflation now down at three? So, I guess I would put it this way, we, I'd say it this way, it's really a question of how do you balance the two risks, the risk of doing too much or doing too little. And, you know, I would say that you know, we're coming to a place where there really are risks on both sides. It's hard to say exactly whether they're balance in or not, but as our stances become more restrictive and inflation moderates, we do increasingly face that risk. But, you know, we need to see that inflation is durably that down far. You know, as you know, we think and most economists think that core inflation is actually a better example of where headline inflation is going because headline inflation is affected greatly by volatile energy and food prices. So, we would want core inflation to be coming down because that's we think what is signaling where headline is going to go in the future. And core inflation is still pretty elevated. You know, there's reason to think it can come down now, but it's still quite elevated. And so, we think we need to stay on task, and we think we're going to need to hold, certainly hold policy at a restricted level for some time, and we need to be prepared to raise further if we think that's appropriate. Well, and then, if inflation were to just a quick follow, if it stays at three or drops even a little bit more, I mean, how much of an increase in unemployment do you think is acceptable to get that last bit of inflation? are People talking about the potential difficulty of the last, so -called last mile of inflation. Again, how much unemployment do you think is justified to get down that last one mile? It is a very positive thing. Actually, the unemployment rate is the same as it was when we lifted off in March of 2022 at 3 point 6 percent, so that is a real blessing in that we have been able to achieve some disinflation. We And don't seek to. It's not that we're aiming to raise unemployment, but I would just say the historical record, we have to be honest the about historical record which does suggest that when central banks go in and slow the economy to bring down inflation, the result tends to be some softening in labor market conditions, and so that is still the likely outcome here. And we hope that that's as little as possible. We have to be honest that that is the likely outcome. The worst outcome for everyone, of course, would be not to with deal inflation now, not get it done. Whatever the short -term social costs of getting inflation under control, the longer -term social costs of failing to do so are greater, and that the historical record is very, very very clear on that. If you go through a period where inflation expectations are not anchored, inflation is volatile, it fears with people's lives and with economic activity, and that's the thing we avoid and will avoid. At this point you say the policy is restrictive, but all year long we have growth surprised to the upside, unemployment to the downside, and inflation lately to the downside. So I'm wondering, by definition, should you be restrictive enough right now under these conditions? Do you think you might to need do more, because I'm curious about what you see as inflation dynamics now. Is the economy still moving in a direction where it creates more inflation? People talk about base effects and higher energy costs, and now we have some large labor settlements. Or is the economy and disinflating you're able to go back to the old Fed policy of domestic disinflation? So, I'll just say, again, the broader picture of what we want to see is we want to see easing of supply constraints and normalization of pandemic -related distortions to demand and supply. We want to see economic growth running at moderate or modest levels help to ease inflationary pressures. We want to see continued restoration of supply and demand balance, particularly in the labor market, and all of that should lead to declining inflationary pressures. And what we see is we see those pieces the puzzle of coming together, and we're seeing evidence of those things now. But I would say that what our eyes are telling us is that policy has not been restrictive enough for long to have its full desired effects. So we intend again to keep policy restrictive until we're confident that inflation is coming down, sustainably toward our 2 % target, and we're prepared to further tighten if that is appropriate. And we think process the still probably has a long way to go. Well, do you think under current conditions are you restrictive enough unless something changes? Well, I think today's we think rate hike was appropriate, and I think we're going to be looking at the incoming data to inform our decision at the next meeting about is the incoming data telling us that we need to do more. And if it does tell us that collectively, if that's our view, then we will do more. Thank you, Colby Smith with the Financial Times. If September is in fact a live meeting, does how that square with the need for a more gradual tightening pace that you spoke of last month in explaining rationale the for holding the funds rate steady at the June meeting? So, a more gradual pace doesn't go immediately to every other meeting. It could be two out of three meetings. could It be. It just means if you're slowing down, the point really was to slow down the decision cycle as we get closer and closer
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"It really It was a sidebar to the policy proposal. It's turned out to be considered relatively to people watching recessions. But that was never the point of it. The Heritage of Michigan with Betsy Stevenson and others there with Claudia Sam. The Sam rules now full front and center. Colby Smith writing it up in the FT ten days ago. How many states are in recession based on the Claudia Sam rule? Right. Well, there's different ways you can calculate it at the state level, but somewhere around ten or less states in are a place where their unemployment rate at the state level has risen more than a half a percentage point. So that's kind of the rule at the national level. We're not calibrated at the state level. And yet I think it's a good exercise to look under hood the and see how various states are doing in terms of their unemployment and a big one within that group that has this higher increase in unemployment is California. And that's a big state. If you do look these at some of pockets of pain and then you look at the overall aggregate, does it make the overall aggregate look worse or better because some of the increase that we've seen in unemployment have really been driven by a few pockets of pain? Right. And that's the thing to look at in a state like California. There's been some very specific areas distress. of So you think about the tech sector, which is important to California's economy. And the question now is where we see these pockets of stress, do they spread? Hear the full conversation on the latest edition of the Bloomberg surveillance podcast. Subscribe on Apple Spotify and anywhere else you get your podcasts. plus listen anytime on the Bloomberg Business App and Bloomberg .com. markets, headlines, and breaking news 24 hours a day at bloomberg .com on Bloomberg television and the Bloomberg Business App. This is a Bloomberg Business Flash. 855 on Wall Street. I'm Doug Krisner in New York. We check markets for you throughout the day Here on Bloomberg. At the bottom of the coming hour, the action will begin in Hong Kong. Yesterday, we had Hang Down about one and a half percent. Today in the US, many of the US listed Chinese shares were down. Really, a story about Alibaba, which was off about four and a half percent following the surprise replacement of the company's chief executive and chairman. Today, the NASDAQ Golden Dragon China Index was down nearly five percent. And the last check
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Growth from fixed asset investment that you get maybe by cutting borrowing rates for uh... for for borrowers by cutting uh... the uh... right overnight there in china uh... they have had a slow recovery from covid in terms of uh... domestic demand and this basic these rates basically free up uh... no additional money to be lent at uh... at lower rates what there's eight different picture different backdrop in china where there has been falling inflation in a much more significant pace or hasn't been the same kind of problem that lot a of central banks in the u s and in europe and other developed world uh... countries have been fighting it so how much does that really signal what others can do or is this very much a china specific story driven by that disinflation well for the moment it's pretty much a china specific story because they have low very inflation and their demand is low which is the opposite of what we're seeing in uh... the more developed countries of of the west of the one -year medium -term lending facility is their main rate which they haven't adjusted in awhile and there is a thought that they would do that this week but then we also have this story on Bloomberg today about uh... a number of different stimulus ideas that they are considering so that might put off an announcement of a medium -term rate cut. How about this? I know you're going to get the first question tomorrow in the press conference with Jerome Powell. It's real simple. They have a dual mandate. We're completely excited here five minutes away in the CPI report. Baloney, are they looking at the labor market or are they looking at inflation? Well, they're looking at inflation, the labor market as an input to inflation but they don't have a labor market problem right now. met They've their mandate. It's still below probably what they think full employment is. So for them it's all about inflation. We'll talk about this obviously but if the numbers come in high then you're going Wall to have Street start betting that maybe they will change their mind. I just wondered, I think the question of the day for Wall Street is what happens if the Wall Street Journal reporter is in the shower or something and misses the phone call? Yeah. Well, there was a story out from Nikki Leakes and it basically told us nothing. I was so excited and I read it Shouldn't Nikki Leakes just be happy with that assessment? Well, let's keep with the zeitgeist here. Colby Smith overnight with a treatment and Claudia Sam and recession are part of America as well. Colby Smith says inflation's cracking. Is it? No, I think that might be going a little bit too far. It is starting to decline, but we are in that cracking part where you've picked the low hanging fruit and it's going to be harder to get rid of some of the embedded inflation out there. So expect things to go down slowly. We may see a big drop to three, but after that gets tough. Being very kind to our friends at the Financial Times and Dow Jones this morning. Of course, Michael McKee with inflation data just moments away. Do you know the data already as we go to break here? Do they give it to you early? If I told you I'd have to kill you. Abby Joseph Cohen on the other side of that day to take from New York. This is Bloomberg. This is MasterCard. Opening doors, narrowing gaps and driving real change. This is solidarity in action. MasterCard is committed to creating an economy that includes everyone through investment, technology through partnership. By leveraging our powers and network to create true transformation. By implementing in speed and scale. Not long ago, it was a promise. Today, it's progress and where we're headed is priceless. I learned patience from my adoptive dad. All he had to say was... Hey, you got this. Just Hey, leave. we're pretty good. Might have to start a band. Learn about adopting a team from foster You can't imagine the reward. Visit AdoptUSKids .org to find out more. This message is brought to you by The U .S. Department of Health and
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Thank you, Colby Smith with the Financial Times. At the March meeting, you mentioned that tightening of credit conditions from the recent bank stress could be equal to one or more rate increases. So given development since then, how has your estimate changed? Yeah, I think I followed that up by saying it's quite impossible to have a precise estimate of the words to that effect. But in principle, that's the idea. 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 when banks raise their credit standards, that can also make credit tightener in a kind of broadly similar way. It isn't possible to make a kind of clean, translation between one and the other, although firms are trying that and 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 a sufficiently restrictive stance. But I think conceptually, though, we think that interest rates 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 effects will be. We don't know how large they'll be and how long they'll take to be transmitted. But 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 to pause rate increases perhaps as early as next month? Even if the data remains strong then if it's having some kind of substitute effect. This is just something that we have to factor in as we want to find ourselves. So I guess I would say it this way. The assessment 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 are listed in the statement. The obvious factors. That's the way we're going to be thinking about it. And that's really all we can do. As I said, it does complicate. We have a broad understanding of monetary policy. Credit tightening is a different thing. There's a lot of literature on that, but translating it into ikes is uncertain, let's say it adds even further uncertainty. Nonetheless, we'll be able to see what's happening with credit conditions worth happening with lending. We get there's a lot of data on that. And we'll factor that into our decision making. Our Howard Schneider Reuters, thank you. So noting that the statement dropped the reference to sufficiently restricted restrictive. I was wondering, given your baseline outlook, whether you feel this current rate of 5 to 5 and a quarter percent is in fact sufficiently restrictive. So that's going to be an ongoing assessment. We're going to need a data to accumulate on that. Not an assessment that we've made. That would mean we think we've reached that point. And I just think it's not possible to say that with confidence now. But nonetheless, you will know that the summary of economic projections from the March meeting showed that in at that point in time that the median participant thought that this was the appropriate level of the ultimate high level of rates, we don't know that. We'll revisit that at the June meeting. And we're just going to have to, before we really declare that, I think we're going to have to see data accumulating and 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 indicated? It was already, I think, 40, 45% of banks were tightening credit as of the last survey. What did this one show and how did that do to your deliberations? So we're going to release the results of this loose on May 8th in line with our usual time frame. And 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 in what we're seeing from other sources. You will have seen the beige book and listen to the various earnings calls that indicate that midsize banks have some of them have been tightening their lending standards. Banking data will show that lending has continued to grow with the pace has been slowing really since the second half of last year. Nick Tamara, Wall Street Journal. Chair Powell, the argument around the end of last year in the beginning of this year to slow down the pace of increases was to give yourself time to study the effects of those moves. 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 differently if the whole point is 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, the reason is that we, again, with our monetary policy, we're trying to reach and then stay at for an extended period, a level of policy, a policy stance that's sufficiently restrictive to bring inflation at 2% over time. And that's what we're trying to do with our tool. I think slowing down was the right move. I think it's enabled us to see more data and it will continue to do so. So we really, you know, we have to balance. We always have to balance the risk of not doing enough. And not getting inflation under control against the risk of maybe slowing down economic activity too much. And we thought that this rate hike along with the meaningful change in our policy statement was the right way to balance
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"High chair Powell. I wanted to ask, 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. getting even larger. So we certainly don't. I don't have an agenda to further consolidate banks. There's been consolidation has been a factor in the U.S. banking industry. Really since interstate banking. And before that, even, it goes back more than 30 years. When I was in the government a while back, I think there were 14,000 banks. Now there are 4000 it changed. So that's going on. I personally have long felt that having small, medium, and large sized banks is a great part of our banking system. The community banks serve particular customers very well. Regional banks serve very important purposes and the various kinds of GCPs do as well. So I think it's healthy to have an arrange a range of different kinds of banks doing different things. I think that's a positive thing. Is it a financial so I would just say in terms of JPMorgan buying first republic, the FDIC really runs the process of closing and selling a closed bank completely that is their role. So I really don't have a comment 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 FDA see, I believe, is bound by law to take the bid that is the least cost bit. So I would assume that's what they did. But do you have any concerns about the fact that they're getting larger in general? So I think it's probably a good policy that we don't want the largest banks doing big acquisitions. That is the policy. And this is an exception for a failing bank. And I think it's actually a good outcome for the banking system. It also wouldn't have been a good outcome for the banking system, had one of the regional banks. But this company and that could have been the outcome. But ultimately, we have to follow the law in our agencies and the laws that goes to the least cost bit Thank you, Colby Smith with the Financial Times. At the March meeting, you mentioned that tightening of credit conditions from the recent bank stress could be equal to one or more
Tech Path Crypto
"colby smith" Discussed on Tech Path Crypto
"The stock market posted a solid game in January, does that make your job of combating inflation harder and could you see lifting rates higher than you otherwise would to offset the increase in or to offset the easing of financial conditions? So it is important that the overall financial conditions continue to reflect the policy restraint that we're putting in place in order to bring inflation down to 2%. And of course, financial conditions have tightened very significantly over the past year. I would say that our focus is not on short term moves, but on sustained changes to broader financial conditions. And it is our judgment that we're not yet at a sufficiently restrictive policy stance. Which is why we say that we expect ongoing hikes will be appropriate. Of course, many things affect financial conditions, not just our policy. And we will take into account overall financial conditions along with many other factors as we said policy. Rachel. Hi, chair Powell. Thank you for taking our questions. Rachel Siegel from The Washington Post. Over the last quarter, we've seen a deceleration in prices in wages and a fall in consumer spending all while the unemployment rate has been able to stay at a historic low does this at all change your view of how much the unemployment rate would need to go up if at all to see inflation come down to the levels you're looking for. So I would say it is a good thing that the disinflation that we have seen so far has not come at the expense of a weaker labor market. But I would also say that this inflationary process that you now see underway is really at an early stage. What you see is really in the goods sector, you see inflation now coming down because supply chains have been fixed, demand is shifting back to services and shortages or have been abated. So you see that in the other housing services sector, we expect inflation to continue moving up. For a while, but then to come down assuming that new leases continue to be lower. So in those two sectors, you've got a good story. The issue is that we have a large sector called non housing service core not housing services where we don't see disinflation yet. But I would say that so far, what we see is progress, but without any weakening in labor market conditions. Go ahead. How's your expectation for where the unemployment rate might go change since December? We're going to write down new forecasts at the March meeting and we'll see at that time. I will say that it is gratifying to see the disinflationary process now getting underway. And we continue to get strong labor market data. So we'll update those forecasts in March. Neil. I chair Powell Mueller one with axios. You and some of your colleagues have emphasized the possibility that job openings could come down and that would let some of the air out of the labor market without major job losses. We saw the opposite in the December jolts this morning, jog openings actually rising, that also was coincided with slowdown and wage inflation. Do you believe that openings are important indicator to be studying to understand where the labor market is and where wage inflation might be heading? So you're right about the data, of course, we did see, we've seen average hourly earnings and now the employment cost index abating a little bit still off of their highs of 6 months ago and more. But still at levels that are fairly elevated. The job openings number has been jolts has been quite volatile that recently. And I did see that it moved up back up this morning. I do think that it's probably an important indicator. The ratio, I guess, is back up to 1.9 job openings to unemployed people. People are looking for work. So it's an indicator, but nonetheless, you're right. We do see wages moving down. In across the rest of the labor market, you still see very high payroll job creation. And quits are still at an elevated level. So many, many, by many, many indicators, the job market is still very strong. But it called me in the house. Thank you, Colby smith with the Financial Times. Given the economic data since the December meeting is the trajectory for the fed funds rate in the most recent SEP still the best guidepost for the policy path forward or does ongoing now mean more than two rate rises now. So you're right at the December meeting we all wrote down our best estimates of what we thought the ultimate level would be. And that's obviously back in December. And the median for that was between 5 and 5 and a quarter percent. At the March meeting, we're going to update those assessments. We did not update them today. We did, however, continue to say that we believe ongoing rate hikes will be appropriate to attain a sufficiently restrictive stance of policy to bring inflation back down to 2%. We think we've covered a lot of ground and financial conditions have certainly tightened. I would say we still think there's work to do there. We haven't made a decision on exactly where that will be. I think we're going to be looking carefully at the incoming data between now and the March meeting and then the May meeting. I don't feel a lot of certainty about where that where that will be. It could certainly be higher than we're writing down right now. If we come to the view that we need to write down to move rates up beyond what we said in December, we would certainly do that. At the same time, if the data come in in the other direction, then we'll make data dependent decisions that come in meetings, of course. Follow-up, how are you viewing the kind of balance of risk between those two options of the likelihood of maybe falling short of that or going beyond that level? I guess I would say it this way. I continue to think that. It's very difficult to manage the risk of doing too little and finding out in 6 or 12 months that we actually work close but didn't get the job done and inflation springs back and we have to go back in. And now you really do worry about expectations getting unanchored and that kind of thing. This is a very difficult risk to manage. Whereas, of course, we have no incentive and no desire to over tighten, but if we feel like we've gone too far, we can certainly because it could certainly inflation is coming down faster than we expect, then we have tools that would work on that. So I do think that in this situation where we have still the highest inflation in 40 years, the job is not fully done. As I mentioned, I started to mention earlier. We have a sector that represents 56% of the core inflation index where we don't see disinflation yet. So we don't see it. It's not happening yet. Inflation in the core services X housing is still running at 4% on a 6 and 12 month basis. So there's not nothing happening there. In the other two sectors representing two less than 50%, you actually, I think now have a story that is credible that's coming together, although you don't actually put it in the private story that is correct. For the third sector, we very much. So I think the very premature to the clear history to think that we're really grateful we need to see that we get a goal, of course, is to bring inflation. There are many many factors that we get that done in that sector. There are many, many factors that have inflation, the disinflationary process again, they had a disinflation process so far we don't see that. And I think until we do, we see ourselves as having a lot of work left to do.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Thank you. Colby Smith with the Financial Times. On the need to slow the pace of rate increases at some point, is a downshift contingent on a string of better inflation data specifically between now and let's say the December meeting. Or is that something that the fed could potentially proceed with independent of that data given the lag effects that you mentioned? So a couple of things on that. We do need to see inflation coming down decisively and good evidence of that would be a series of down monthly readings. Of course, that's what we'd all love to see. But that's I've never thought of that as the appropriate test for slowing the pace of increases or for identifying the appropriately restrictive level that we're aiming for. We need to bring our policy stance down to a level that's sufficiently restrictive to bring inflation down to our 2% objective over the medium term. How will we know that we've reached that level? Well, we'll take into account the full range of analysis and data that bear on that question. Guided by our assessment of how much financial conditions have tightened the effects of that tightening is actually having on the real economy and on inflation. Taking into consideration lags, as I mentioned, we will be looking at real rates, for example, all across the yield curve. And all other financial conditions and as we make that assessment. Hi, Howard Schneider with Reuters. Look, I'm sure there's going to be tons of confusion out there about whether this means you're going to slow in December or not. Would you say that the bias right now is not for another 75 basis point increase. So what I want to do is put that question of pace in the context of our broader tightening program if I may. And hit the talk about the statement language along the way. So I think you can think about our tightening program as really addressing three questions. The first of which was and has been how fast to go. The second is how high to raise our policy rate. And the third will be eventually how long to remain at a restrictive level. So on the first question, how fast the Titan policy it's been very important that we move expeditiously and we have clearly done so. We've moved three and three quarters percent since March admittedly from a base of zero. It's a historically fast paced and that's certainly appropriate given the persistence and strength and inflation in the low level from which we started. So now we come to the second question, which is how high to raise our policy rate and we're saying that we'd raise that rate to a level that's sufficiently restrictive to bring inflation to our 2% target over time. And we put that into our post meeting statement because that really does become the important question we think now is how far to go and I'll talk more about that. We think there's some ground to cover, but before we meet that test and that's why we say that ongoing rate increases will be appropriate. And as I mentioned incoming data between the meetings, both the strong labor market report, but particularly the CPI report, do suggest to me that we may ultimately move to higher levels than we thought at the time of the September meeting. That level is very uncertain though and I would say we're going to find it over time. Of course, with the lags between policy and economic activity, there's a lot of uncertainty. So we note that in determining the pace of future increases will take into account the cumulative tightening of monetary policy as well as the lags with which monetary policy affects economic activity and inflation. So I would say as we come closer to that level, move more into restrictive territory, the question of speed becomes less important than the second and third questions. And that's why I've said it the last two press conferences that at some point it will become appropriate to slow the pace of increases. So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made, it is likely we'll have a discussion about this at the next meeting, a discussion. To be clear, let me say again, the question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restricted, which really will be our principal focus. If I could follow up on that, to what degree was there an importance or weight given to a need to signal this possibility now given all the concerns really around the globe about fed policy sort of driving ahead and everybody else dealing with their own stress as a result. Well, I think I'm pleased that we have moved as fast as we have. I don't think we've over tightened. I think there's very difficult to make a case that our current level is too tight given that inflation is still runs well above the federal funds rate. So I think that at this meeting, the last two meetings, as I've mentioned, I've said that there would come a point, and this was a meeting at which we had a discussion about what that might mean. And we did discuss this. And as I mentioned, we'll discuss it again in December. But there's no, I don't have any sense that we've over tightened or moved too fast. I think it's been good and a successful program. That we've gotten this far this fast. Remember though, that we still think there's a need for ongoing rate increases. And we have some ground left to cover here. And we
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Sam in a couple of weeks time. Yeah, you taught me this. I was a PMI. The PMI. Was dreadful. And we've kind of shaken it off because I've excuse me S&P guidebook because this is not a dig. I think that market participants have shaken it off because it's S&P Global and they prefer here in the United States to look at the ISM. Well, and it hasn't been as reliable. It hasn't been as correlated with the official ISM as other indicators have been that said, the peripheral read is that you are seeing a material slowdown and it's not just the manufacturing. It's also in a services. That was what really struck me and you're seeing that in the earnings as well. Will it be confirmed by the ISM in the next couple of weeks, and then we've got another payrolls report. We've got another CPI report before we even begin to really think about September 21 with a full set of data in front of us. The smell of the data and as we go to September here in this, of course, off what we've seen of what we see, I should say with the speech tomorrow, J Bryson joins us. He's with Wells Fargo. His chief economist, and with an international carriage there, but of a company a bank with acute and micro analysis of the American economy. Jay dovetail your international view with your domestic view right now. How close are we to recession? Well, you know, right now, Tom, you know, I think that we're not in a recession right now. I mean, the big indicator I would look at is what you folks have just been talking about. That's the labor market. It doesn't seem to be falling apart. Certainly at this point. But I think later this year, early next year, that's when we think you're going to start to see a modest recession. Inflation remains high, what we have seen is real disposable income has trended down. That's another way to say that is purchasing power. And credit card debt is up, savings rate is down and we think eventually consumers are going to hit the wall here. And they're going to start to retrench and that puts us into a, let's call it a modest recession beginning of next year. Jim, I've got to go to the franchise, which is Wells Fargo, economics, and of course, I dovetails with your housing expertise. Give us an update on housing inflation and rental inflation in America. Yeah, so Tom, so the way that enters into the GDP numbers, where the CPI numbers, I should say, is it comes in with quite a long lag. And I mean, what we are seeing is we are seeing some softening in house prices. We are starting to see some softening a little bit in terms of rental prices as well. But that's going to remain coming in with a long, long lag. And so that's one of the reasons why we continue to believe that the core PCE deflator or the core CPI index the year over year rates are going to remain relatively elevated. And so Lisa was talking about the core PCE deflator earlier. We think at the end of this year, you're still looking at a year over year rate of 5 and a half, four and a half percent. So what does that mean for next year? And this is, I think, where the market would disagree with you or disagree with some and say, well, it's going to then come down really quickly that the year over year comparison effects are going to take effect and you're going to see a real deceleration in inflation. Do you agree or are you looking at something much closer to the January as stickier inflation that the fed could hold rates higher for longer for? Well, so first of all, we do believe the core PCE inflation rate is going to come down next year, but that's predicated on our view of a recession. Once you get a recession, you start to get softness in prices. If we don't have a recession, if consumers continue to go out there and spend, we don't have the recession, then we don't think the core PCE inflation comes down as fast as we generally think. And also in terms of the fed, you know, generally when you see a recession, at least in history, they start to cut pretty quickly. We think they're going to hold the fed funds rate constant at four to four and a quarter or say through, say, the middle part of next year, just to make sure that inflation is coming back towards their 2% target. So I don't think the fed comes running to the rescue as soon as we start to see the economy tipping over into recession. And they keep saying their data dependent, and we keep asking what data are they looking at. But I want to ask you about the messiness of that data because last year we got labor market data that really underestimated just how much strength there was, how much demand for labor. What's your view on what we're getting wrong now? Which data is distorted that we're going to look back and say, if only we had gotten a little bit clearer picture. Well, I think the thing that we may be getting wrong right now may be the labor market. So we're getting mixed signals there. You know, if you look at the ISM numbers that you folks were talking about, you know, just recently. We've seen some real softness over the last few months in terms of the ISM sort of numbers. The birth death model, which is a technical sort of thing. That may be pushing up the reported non farm payroll numbers right now. So I think maybe we're getting some of the labor market data wrong. I'm sure the people at the federal crunching through all those numbers right now. But that would be the thing I think I would really look at. Your student history and I want to go to a marvelous effort by the FT today and their Colby Smith on the 40 50 year history of the fed. Has there been any time in the span of the half century or in this fed right now where they're really addressing the Americans outside the financial elite and outside the financial system? Is it just
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Is a Bloomberg business flash. And good morning, I'm Karen Moscow, U.S. stocks advancing his investors assess the outlook for corporate earnings and global growth amid Europe's deepening energy crisis, the S&P 500 is climbing along with the tech heavy NASDAQ bouncing back from yesterday's late day losses ahead of earnings from Netflix that are due later today. We check the markets every 15 minutes throughout the trading day on Bloomberg, the S&P is up 1% at 37 points at 38 68, the Dow Jones Industrial Average of 7 tenths percent or 231 points at 31,300, and the NASDAQ F9 10% or a 102 points at 11,460, ten year treasury at four 30 seconds June 2.97%, they yield on the two year 3.14%. Nymex screwed oil down 1.3% on a dollar 34 at a $101 28 cents a barrel. Combat school that'll change at 1709 80 ounce. The Euro one O two four 6 against the dollar, the yen one 37.55, and Bitcoin this morning, it's higher of 2.9% to $22,100. That's a Bloomberg business flash Tom and Paul. Thanks so much, Karen. Greatly appreciate it. We're going to digress right now. With, I guess, president Trump talking about a second term, President Biden talking about a second term. I don't know, Paul, what do you think? Doctor Fauci? A second term? Exactly. 81 years old. With the iconic Brooklyn childhood, his father was a pharmacist, and he literally delivered prescriptions. Yeah. A long time ago. A long time ago, I mean. And why are we talking about the angst of a retirement of a guy? 81. 81 years old. He became stunning. Before this pandemic time, I honestly had never heard of him and I'm guessing I represent a lot of people were like me as well, but jeanie bauman certainly did. Jenny Bowman Bloomberg lost senior healthcare reporter. So Jeannie, Doctor Fauci, announcing he's going to retire at some point before the end of Biden, President Biden's term here. Just give us a little perspective here. He's been doing this a long time, hasn't he? Yes, 7 administrations he has been the director of the National Institute of Allergy and Infectious Diseases since 1984, but he's been at NIH long before then, I believe since the 60s. And yeah, he has been on the front lines of pretty much every infectious disease outbreak from HIV onward. So you're talking Ebola and Zika and pandemic flu and of course COVID and now monkeypox. And of course he got his bachelor in classics from the college of holy cross in 1962 before going into medicine here. So, I mean, what's the feeling as we look back a little bit here, you know, two and a half years into this pandemic Genie about his handling and his office is handling of this once in a 100 year type pandemic. Well, I mean, I think there are obviously his name has become, as you said, a household name where it wasn't maybe not before COVID and things have definitely become deeply politicized in a way that it has not been before. And he said, you can always look back and say that we could have done things better. He said that at the beginning, we probably should have flooded the system with tests and that's been his own his own commentary. So the National Institute of allergy and infectious disease, are they by definition the folks that should be dealing with these types of pandemics or did he just surface on his own and we as consumers just kind of glommed on to him because he kind of made some sense, I guess. Well, you know, he's been a national expert in pretty much every infectious disease outbreak. The White House tends to call him, no matter who is running The White House going back from. So it's not surprising to me to see has gone up and testified. Jenny to be clear here in the only equivalent, I mean, I think averell harriman is separate in John hay, a zillion years ago from Lincoln to Roosevelt, but the only analog I could come up with is Rick over of the United States Navy, who retired in huge controversy. I remember the tension in the house when Rick over retired pro and con. That's not the case with Fauci, right? No, I mean, at least I know things have definitely got more controversial, but I remember going to hearings before and he was very well respected by both Democrats and Republicans. They listened to him very carefully. And I remember hearing publicans say if I would want to know what's going on, I call Doctor Fauci and Democrats as well. Interesting. So do we have any idea who may replace him because he's now established this position as one of the more important ones for the public here. That's true. And one of the largest Institutes at NIH, but there are deputies who've been around for at least 15 years since 2006, a couple of them, including Clifford lane, one of the principal one of the deputy director and Steve docking cost. So I think he has done it in intentional job of setting it up. Jenny, wonderful, great brief. Ginny Bowman, thank you so much Bloomberg last senior healthcare reporter expert. And the career of mister Fauci, Doctor Fauci, I should say, is well, Paul, to say it's green on the screen, doesn't let me get the standard of course. I think you and I we do our part every day. We leave here in the markets up, and then Carol massard, Tim Stevenson committee. Mark gurman. And his market rally going In this so called bear market, that's what Colby Smith would call it. In March, we went up 11%. I'm doing the actual mousy
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"High chair Powell Neil or one from axios thanks for taking our questions The late breaking decision to go to 75 basis points Do you worry that that will make policy guidance a less effective tool in the future And should we think of that as a kind of symmetrical reaction function if we start to get soft readings on inflation or labor market starts to roll over To take your second question first yes I mean I think again we're going we're resolved to take this on but we're going to be flexible in the implementation of it Sorry and your question was guidance So Again the overall exercise is that we try to be provide as much clarity about our policy intentions as we can Because we think that makes monetary policy work better It's always a tradeoff because you have to live with that guidance And so you do it and it helps a lot of the time I frankly think this year has been a demonstration of how well it can work With us having really just done a very little in the way of raising interest rates financial conditions have tightened quite significantly through the expectations channel as we've made it clear what our plans are So I think that's been a very healthy thing to be happening So and I would hope that it's always going to be any guidance that we give us always going to be subject to things working out about as we expect And in this particular situation we're looking for something specific And that is progress on inflation We want to see progress We want to see inflation can't go down until it flattens out And that's what we're looking to see And if we don't see that then that's the kind of thing that we'll call even if we don't see progress for a longer period that could cause us to react But we will soon enough we will be seeing some progress at some point And we'll react appropriate to that too But I would like to think though that our guidance is still credible but it's always going to be conditional on what happens This is an unusual situation to get some data late during blackout pretty close very close to our meeting Very unusual to one that would actually change the outcome So I've only seen in my ten years plus here at the fed have only seen something like that even close to that one or two times So I don't think it's something that will come up a great deal Thank you so much for taking our questions Colby Smith of the Financial Times On the clear and convincing threshold for the inflation trajectory what is the level of realized inflation that meets that criteria and how is the committee thinking about the potential tradeoff of much higher unemployment than even what's forecasted in the SCP if inflation is not moderating at this acceptable pace So the second part I didn't get What's the potential tradeoff with higher unemployment than even what's forecasted in the SEP if inflation is not moderating at an acceptable pace Right So what we want to see is a series of declining monthly readings for inflation And we like to see inflation headed down So but right now our policy rate is well below neutral right So soon enough we'll have our policy rate Let's assume the world works out about like the SEP says the policy rate will be up where we think it should be And then the question would be do you slow down Does it make you that you'll be making these judgments about is it appropriate now to slow down from 50 to 25 let's say Or speed up So that's the kind of thinking we'll be doing And again we're looking ultimately we're not going to declare victory until we see a series of these really see convincing evidence compelling evidence that inflation is coming down And that's what I mean by that's what it would take for us to say okay we think we think this is this job is done Because we saw and frankly we saw last year inflation came down over the course of the summer and then turned right around and went back up So I think we're going to be careful about declaring victory But again the implementation of our policy is going to be going to be flexible and sensitive to incoming data Are you more concerned now that to bring down inflation it's going to require more than just some pain at this point Again I think that I do think that Their objective and this is what's reflected in the SCP But our objective really is to bring inflation down to 2% While the labor market remains strong I think that what's becoming more clear is that many factors that we don't control are going to play a very significant role in deciding whether that's possible or not And there I'm thinking of course of commodity prices the war in Ukraine supply chain things like that where we really we really can't the monetary policy stance doesn't affect those things So but having said that there is a path that there's a path for us to get there It's not getting easier It's getting more challenging because of these external forces And that path is to move demand down And you have a lot of surplus demand in for example in the labor market So you have two vague job vacancies essentially for every person seek actively seeking a job And that has led to a real imbalance in wage negotiating You could get to a place where that ratio.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Next two weeks Let's go to Colby Thank you Colby Smith and the Financial Times Given the expectation that inflation will remain well above the fed's target at year end what constitutes a neutral policy setting in terms of the fed funds rate And to what extent is it appropriate for policy to move beyond that level at some point this year So neutral When we talk about the neutral rate we're really talking about the rate that neither pushes neither economic activity higher nor slows it down So it's a concept really It's not something we can identify with any precision So we estimate it within broad bands of uncertainty And the current estimates on the committee are sort of two to 3% And also that's a longer run estimate That's an estimate for an economy that's at full employment and 2% inflation So really the way really what we're doing is we are raising we're raising rates expeditiously to what we see as the broad range of plausible levels of neutral But we know that there's not a bright line drawn on the road that tells us when we get there So we're going to be looking at financial conditions Our policy affects financial conditions and financial conditions affect the economy So we're going to be looking at the effect of our policy moves on financial conditions Are they tightening appropriately And then we're going to be looking at the effects on the economy And we're going to be making a judgment about whether we've done enough to get us on a path to restore price stability It's that So if that path happens to evolve levels that are higher than estimates of neutral then we will not hesitate to go to those levels We won't But again there's a sort of false precision in the discussion that we as policymakers don't really feel You're going to raise rates and you're going to be.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Expect those to be relatively limited because of the additional supply and also just the slowing in job creation Implications for inflation really that really the wages matter a fair amount for companies particularly in the service sector Wages are running high the highest they've run in quite some time And one good example of our good illustration really of how tight the labor market really is The fact that wages are running at the highest level in many decades And that's because of an imbalance between supply and demand in the labor market So we think through our policies through further healing in the labor market higher rates for example a vacancy filling and things like that and more people coming back in We like to think that supply and demand will come back into balance and that therefore wage inflation will moderate to still high levels of wage increases but ones that are more consistent with 2% inflation That's our expectation that your third question was your level of confidence that you can slow hiring without pushing the economy into a downturn So I guess I would say it this way There's a path that there's a path by which we would be able to have demand moderate in the labor market and have therefore have vacancies come down without unemployment going up because vacancies are at such an extraordinarily high level 1.9 vacancies for every unemployed person 11 and a half million vacancies 6 million unemployed people So and we haven't been in that place on the vacancy the vacancy unemployed curve the beverage curve We haven't been at that sort of level of a ratio in the modern era So in principle it seems as though by moderating demand we could see vacancies come down And as a result and they could come down fairly significantly And I think put supply and demand at least closer together than they are And that that would give us a chance to have lower get to get inflation You got to get wages down and get inflation down without having to slow the economy and have a recession and have and have unemployment rise materially So there's a path to that Now I would say I think we have a good chance To have a soft or soft dish landing or outcome if you will and I'll give you a couple of reasons for that One is households and businesses are in very strong financial shape You're looking at excess savings on balance sheets excess in a sense that they're substantially larger than the prior trend Businesses are in good financial shape The labor market is as I mentioned very very strong And so it doesn't seem to be anywhere close to a downturn It's therefore the economy is strong and is well positioned to handle tighter monetary policy So but I'll say I do expect that this will be very challenging It's not going to be easy And it may well depend of course on events that are not under our control But our job is to use our tools to try to achieve that outcome And that's what we're going to do Steve Steve Lee has been CNBC thanks for taking my question mister chairman You talked about using 50 basis point rate hikes or the possibility of them in coming meetings Might there be something larger than 50 is 75 or a percentage point possible And perhaps you could walk us through your calibration Why one month should or one meeting should we expect a 50 Something bigger why something smaller What is the reasoning for the level of the amount of typing Thank you Sure So 75 basis point in an increase is not something the committee is actively considering What we are doing is we raised 50 basis points today And we've said that again assuming that economic and financial conditions evolve in ways that are consistent with our expectations there's a broad sense on the committee that additional 50 basis increases should be on 50 basis point acres should be on the table for the next couple of meetings So we're going to make those decisions at the meetings of course And we'll be playing close attention to the incoming data and the evolving outlook as well as the financial conditions And finally of course we will be communicating to the public about what our expectations will be as they evolve So the test is really just as I laid it out economic and financial conditions evolving broadly in line with expectations And I think expectations are that we'll start to see inflation flattening out And not necessarily declining yet But we'll see more evidence We've seen some evidence that core PCE inflation is perhaps either reaching a peak or flattening And we want to know we'll want to know more than just some evidence We want to really feel like we're making some progress there But we're going to make these decisions and there will be a lot more information I just think we want to see we want to see that information as we get there It's a very difficult environment to try to give forward guidance 1690 days in advance They're just so many things that can happen in the economy and around the world So we're leaving ourselves room to look at the data and make a decision as we get there I'm sorry But if inflation is lower one month and the unemployment rate higher would that be something that we would calibrate towards a lower increase in the funds rate I don't think the one month one month is not now One month's reading would not doesn't tell us much We'd want to see evidence that inflation is moving in a direction that gives us more comfort As I said we've got two months now where core inflation is a little lower but we're not looking at that as a reason to take some comfort I think we need to really see that our expectation is being fulfilled The inflation in fact is under control and starting to come down But again it's not like we would stop We would just go back to 25 basis point increases It'll be a judgment call when these meetings are right But again our expectation is if we see what we expect to see then we would have 50 basis point increases on the table the next two weeks Let's go to Colby Thank you Colby Smith and the Financial Times Given the.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"The fed many central banks around the world are wanting to tighten And that is a very unusual cycle when it comes to synchronized global tightening of monetary policy That will weigh on economic activity in the U.S. and around the world And we have a number of geopolitical developments the war in Ukraine the lockdowns in China Those are all going to impact economic activity going forward So it's not a question of whether we are in a recession or we'll be in a recession in a month's time It's a question of how rapidly the economy slows and how strongly the fed presses on the policy break over the coming months I think 2023 is really going to be a key year in terms of economic activity Well how does a fed even begin to gauge this at a time when they haven't even started to unwind their balance sheet They haven't made massive moves on rate hikes We're not looking at a fed that's gotten aggressive They're just talking with some aggression perhaps I mean how much further do they have to go than the market is expecting in your view Well I think the fed has to continue pressing on the policy break We've seen the effect of Ford guidance filter through to longer term rates as we were discussing earlier We saw mortgage rates and we're seeing mortgage rates up nearly 200 basis points over the past three months That will weigh on interest rate sensitive sectors Real estate activity will cool and we're going to see it not initially in the starts data but actually in the sales data And that will weigh on starts data later on Construction activity we know has been lagging on the real estate front That will still continue to hold up over the coming months because there's a shortfall in terms of available supply But overall this fed tightening of monetary policy will weigh on the economy via the credit channel but also and perhaps more importantly via the financial conditions channel And we haven't seen the full extent of that I think Greg if the fed goes through with what's expected of them where do you think the inflation rate will end next year CPI I think inflation will take some time to come back down Even if the fed is much more deliberate in terms of raising interest rates probably 50 basis points at the next two meetings And rate hike at all the other meetings through the end of the year even with that tightening inflation will take some time to call back come back down Let's go to your Wheelhouse center on that If we get 50 50 whatever the parlor game is in the old days we used to go what's it mean for business What's it mean for corporate America Does that question matter anymore I think it does Because it affects both consumer spending and business investment What is business investment going to do given this original leap Forget about 75 BS What these leaps up That's the key uncertainty that we don't facing right now because businesses are uncertain about the outlook We were in an environment where demand was quite robust and where tightening of interest rates would affect the cost of credit But as we look into 2023 there's a question about pricing power And in an environment where you're more constrained in terms of pricing power how do you pass on the higher input costs the higher wage cost in an environment where interest rates are hiring doctor Dudley that we're back to the 60s Everybody's focused on dismal 70s And he's saying forget about that It's Walter Heller in the 1960s I think we're in 2022 I don't think it's good to compare to any historical precedent There are similarities across time You got to admit But this is a very unusual business cycle much faster than anything we've seen And I think there are two important themes to remember When you rebalancing you rarely come out where you want it to come out And the initial sorry the end point is very different from the starting point So we have to be cognizant of the fact that this rebalancing will be unique in its own and that will lead to a very different economic cycle this time around than anything we've seen in the past Greg do you agree with Bill Dudley that if the fed does not somehow spur or at least allow some sort of downturn in the next two years that the end terminal fed funds rate is going to be a lot higher and the pain a lot greater in the long run Well I think it's clear that the fed wants to get control over inflation It wants to regain control over the inflation narrative It will tighten monetary policy use its full arsenal to do so The key question is how high it needs to go to do so I think we have to remember that the fed is in this very unusual position of having to tighten very late in the game in terms of monetary policy The tightening cycle this time around will probably be the fastest since 1994 It wants to get back to neutral as quickly as possible to avoid having inflation move further up But we have to consider the fact that there may be some recalibration even in 2023 of monetary policy because as I said there are going to be tightening in an economy that is slowing not accelerating and that will make a soft landing a very difficult task Of a wide path but deadly agrees with this greater catch up as always You've picked up on a move at a front end by almost 7 basis points now on a two year to two 51 with very close to 3% on a 30 year old I just looked at the basis points I think we can round that up Tom Two 99 38 With a leg up and there's a thrust here is the way I would put it Colby Smith and the FT used the word surge here Maybe that captures a job but housing comes out My key reports on it And with all the distractions that we've got I think we're forgetting about looking actually at the market data and you just see it with a surge is the only word for it and the two year yield almost up to two 52 That's the U.S. and moving Germany too Global ex Japan Let's put it that way Ten basis points in a bond market on a German ten year to 94 basis points I just wonder do we get to the point where economic data suggests that the fed is not working to curtail inflation and how much does that become a liability for markets I mean honestly the idea that we got better than expected starts data that we saw the fastest pace of housing starts going back to 2006 Seems to be jarring to a market looking at 5% mortgage Probably before I run someone messaged me and asked whether you're holding that mask burning party later on this afternoon or into the weekend Details TBD You haven't decided Yeah But they can bring a kegger They can bring a wall You don't even know what that is Come on What happened Well that's like a term I didn't know Some education been on this program It's amazing I think she learned some discussion Really important stuff It is Troika eski of FS investments is going to be joining us on the show In 20 minutes Oh boy This show.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"We saw wages persistently higher for people at the lower end and there really was no obvious imbalance in the economy that threatened that expansion It could have gone on for years were it not hit by the pandemic So we'd love to find a way to get back to that That's going to require price stability and that's going to require the fed to tighten interest rate policy and do our part in getting inflation back down to our 2% goal So I mentioned two sided risks a couple of things One COVID is not over and COVID can continue to evolve And we have to accept that it's not over and the risks to it can slow down growth And that would be sort of a downside risk from a growth standpoint I would point to another risk is just further problems in the supply chains which could slow down activity and you see the situation in China as a situation there where that's no COVID policy may cause more lockdowns as likely to and that may play into may play into more problems and supply chains In addition there's what's going on in Eastern Europe and things like that So there's plenty of risk out there and we can't forget that their risks on both sides So that's there That's what I would say I know you've been all over this issue with my colleagues Greg on the issue of information We don't have that information at the board and I asked the inspector general to do an investigation And that is out of my hands I'm playing no role in it I seek to play no role in it and I don't really I can't help you here today on this issue and I'm sorry I can't Okay Thank you We'll go to Gina now Thanks for taking my question to chair Powell and sorry for my tech issues I wonder if you could tell us a little bit about where you're thinking on inflation stands today You know the last time we saw an SEP back in September we saw that you and your colleagues were projecting that inflation would sink back down quite close to target by the end of the year And I wonder if you still think that projection from December is a reasonable one and if you're thinking it's changed at all I wonder how you're thinking about that And I also wonder if you could talk a little bit about the pathway to getting to that deceleration like how do we get from here 7% CPI to where you expect to be at the end of the year So I'd say you know since the December meeting I would say that the inflation situation is about the same but probably slightly worse I'd be inclined to raise my own estimate of 2000 22 core PCE inflation Let's just go with that By a few tenths today But we're not writing down an SEP at this meeting but I think it hasn't gotten better It's probably gotten just a bit worse and that's been the pattern That's been the pattern So I think if you look at the FOMC participants or there's a range there and that range has been moving to the right for a year now And by the way if you look at other forecasters essentially all other macro forecasters to do this for a living You've seen the same pattern So what do we think about that Well I think we you know we wrote down rate increases in the December meetings Each of us individually And I think to the extent the situation deteriorates further our policy will have to address that I mean if it deteriorates meaningfully further either in the time dimension or in the size of the inflation dimension So that's how we're thinking about it As I mentioned though I think it's part of this will be that the fed moving away from a very highly accommodative policy to a substantial or less accommodative policy And in it over time to a policy that's not accommodative in time I don't know when that will be Those are the things that we're thinking about That's part of it Another part of it is that fiscal policy provided a impulse to growth over the last two years that impulse will be less in fact will be negative this year And so that's another thing The other one is we will eventually get relief on the supply side And the ports will be cleared up and they will be semiconductors and things like that Now what we're learning is it's just taking much longer So I think longer than expected And that I think does raise raise the risk that high inflation will be more persistent I do think we'll come off of the highs that we saw in the early part of this episode in the spring last year but really what's the question is going to be what is inflation running at And so we'll be watching that And our objective is to get inflation back down to 2% It's also to provide enough support to keep the labor market healthy The labor market is very very strong right now And I think that that strength will continue There's really a shortage of workers We see it particularly among production and non supervisory workers and people in the lowest court time You see very large wage increases I mentioned some of the other indicators So I think that's what we're looking at And we're also you know we realize I think as everyone does that this outlook is quite uncertain and that we're going to have to adapt and we're going to communicate as clearly as we can but we're going to have to be adaptable and move as appropriate Thank you Let's go to Colby Smith.
Bloomberg Radio New York
"colby smith" Discussed on Bloomberg Radio New York
"Again 1825 an ounce Bitcoin It's slightly higher just over $46,000 per token I've been looking at the yield curve for a long time and I've always been saying we've got a Federal Reserve that is accelerating tapering We've got a Federal Reserve that's talking about raising rates Yet my ten year was just sticking there with 1.41 .5% but I look down today 1.65% we've got yields moving higher so I said we gotta talk to our good friend and soccer guru Ira Jersey He does I think interest rates for Bloomberg intelligence He's been doing it for like 20 25 years on Wall Street He is our go to guy I read Jersey So Ira we're starting to see the yield curve reflect I think where the fed wants to go What do you make of it Yeah So we certainly this the last couple of trading days have really seen a lot of new risk positions being added So one of the big ways that people have been kind of getting short rates now that we're gone into the new year is really by selling a lot of out of the money puts so you look at options on futures and people have been selling ten year treasury futures via puts in a very big way And in fact one of the highest trading volumes that we've had for out of the money puts basically for a year So there are people who are really worried that interest rates are going to go up and that will see 1.9% ten year yields Even in the near term I mean we're even talking here Paul over the next three months These are march puts that are really getting bought in a hurry So you've been doing this a long time You know everybody on Wall Street Where did the smart rates traders that you talked to What do they think the ten year might end up by the end of this year People are kind of all over the place There was a few that I've talked to in the last couple of weeks where they think that we're pretty close to kind of where the ten years going to be that it's really the front end of the yield curve that is going to move higher So we see the flattening of the yield curve which of course risk assets often don't like ultimately because people will start to say that the flattening of the yield curve means that we're going to have a slower economy in the future And generally speaking that's been true in the past But it takes a long time kind of for the economy to slow down as the yield curve as the yield curve flattened significantly So there's definitely more like a two year lag between when the yield curve gets close to flat and when you tend to have a significant slowing in the economy So and we're just on the first rows of this The yield curve between the two year and the ten year is still close to 90 basis points So we're still have a long way to go before we get to kind of that worry signal on the economy that a lot of people talk about with the curve flattening I gotta say once again in 2021 shock of shocks I read Jersey was correct There's a gloom crow that says the repo market we're all going to die with all this liquidity Colby Smith over at the FT yesterday wrote up the repo market I was looking for her to quote Ira Jersey She didn't She went down in flames on that But give us an update Ira Jersey You said remain calm should we remain calm about the wall of money that's out there right now Yeah I think we can be And one of the reasons is that the Federal Reserve did a decent job in creating their reverse repo facility So people are able now to basically go to the Federal Reserve get a few basis points right now on their money when they have excess liquidity that they don't want to keep just in cash earning zero So that's one of the huge ways that the repo market stayed relatively calm Now what's going to be interesting Tom is that remember that the reverse repo facility is currently about one and a half $1 trillion That will go down naturally over the next couple of weeks as the Treasury Department issues a lot of T bills But we'll wind up kind of at the end of at the end of the fed purchases at around 1.21 $.3 trillion in that program I think that they're actually going to start to reduce the size of the fed's balance sheet very early as early as midyear of this year And it's going to take about a year to run off that excess liquidity that's currently in that reverse repo facility That when that ends that's when we have to start looking at the repo market again for any kind of fragility in the market Haven't we've done this experiment before do you feel that just possibly there may be a shock as they say in the equity market to the market iro when the experiments with this wind up roll up I should say Well I think that's a big risk Because obviously the anti QE trade is that the QE trade is interest rates go up a little bit or inflation expectations go up a little bit interest rates tend to stay stable or go down Equity markets skyrocket up and up and up And obviously the unwind of that is the anti.