fomc press conference introductory statement
FUNDER
22/09/2021
>> Victoria: hi, chair Powell. I I wanted to ask about the vice chair supervision position. I wanted you to talk about how you view that role and how you defer to that person on regulatory policy and a related question. Randy Quarells vice Chairmanship ends next month and I was wondering if he is going to maintain the role until he is replaced?
>> Steve: thank you. Chair Powell, I wanted to ask about the inclusive monetary policy frame work. In particular, Bloomberg surveyed economists and we found they predict lift off will happen when the US unemployment rate is 3.8% but the black unemployment rate is 6.1%. I'm wondering if a 6.1% unemployment rate for African Americans is consistent with full employment or whether it would need to be lower as part of our inclusive growth strategy?
>> JEROME POWELL: The point of the broad and inclusive goal was not to target a particular unemployment rate for any particular group. Really, we look at a broad range of -- a very broad range of metrics when we think about what maximum employment is. One of the things we look at is unemployment rates and participation rates and wages for different demographics and age ranges. We will do all of that. I think if you look back, what we are really thinking is we saw the benefits of a strong labor market. If you look at the last two or three years after the pandemic hit, after progress you saw a strong labor market. You saw wages at the low end moving up, that is something great to see. We saw the lowest unemployment rates for minorities of various -- you know for African Americans, for example, and also participation rates. We saw really, really healthy set of dynamics. And by the way, there was no reason why it couldn't continue. There were no imbalances in the economy and then along came the pandemic. There was nothing in the economy that looked like a build up of imbalances that could cause a recession. So I was very much thinking that the country would really benefit from a few more years of this. It would have been great. So we are eager to get back to that. We said we wouldn't raise rates just in response to very low unemployment in the absence of inflation. That was another aspect because we saw that really benefited labor market participants in a broad and inclusive way. That, of course, is not the situation. We have significant slack in the economy and inflation well above target, not moderately above target. That is how we think about it. It's taking all of that into your account into thinking what constitutes maximum employment.
>> Just to follow up, should there be a significant gap between black unemployment and overall unemployment for structural reasons that are outside the control of the fed that other people should be doing something about? Or should the gap be narrowed if not down to 0?
>> JEROME POWELL: Ideally, there wouldn't be any gap of course. We would love to see no such gap. This is a persistent gap and it's very hard to explain based on typical metrics. It's quite troubling. But we have famously broad and blunt tools. I think eliminating inequality and ration disparity is really something that fiscal policy and educational policies are better on focusing on. I think we have identified the part that we can do and we will do that part. But I have always been clear it's going to take policies broadly across society to work on these problems. >> thanks.
>> Michael McKee: do you have a plan for dealing with a debt default that included prioritization, that included changes in bank regulations and possibly selling defaulted -- non defaulted treasuries and buying those that are. Are any or all of those still on the table? Do you think any of those would work and what would happen to the economy in your view should the debt ceiling not be raised?
>> JEROME POWELL: I missed the first few words, but I think I have your question. It's just very important that the debt ceiling be raised in a timely fashion so the United States can pay its bills when it comes due. That is important thing. The failure of that can result in severe damage to the economy and to the financial markets and it's just not something we can contemplate or we should contemplate. I'm not going to comment on particular tactics or things like that. I think we can agree the United States shouldn't default on any of its obligations and should pay them when due and no one should assume that the fed or anyone else can protect the markets or the economy in the event of a failure -- fully protect in the event of a failure to make sure we do pay those.
>> If I could follow up, have you discussed options with members of Congress?
>> JEROME POWELL: I don't generally talk about the conversations I have with elected officials or other appointed officials. You can see it's a major focus among those who have responsibility for it included elected people. >> Thank you. Let's go to Hanna Lang.
>> Hannah. Senator Warren sent you a letter last week urging the fed to weak up wells Fargo. I was curious under what circumstances would the fed revoke a financial holding company's license and if the indiscretions at wells Fargo in your opinion warrant such an action. >> JEROME POWELL: We are very closely man toring Wells Fargo to fix its problems they present a serious problem to us and the firm is required to remediate them. We will take appropriate super visery action if the firm fails to meet your expectation. We hold them accountable with an asset cap which will stay in place until the firm has fixed its problems. We are not going to remove that asset cap until that is done. Bottom line is we will take strong supervisory action if a firm is -- I can't speak to supervisory assessments of any individual bank. >> Michael Derby.
>> Michael: thank you for taking my question. You noted earlier in the press conference that you weren't aware of the trading activity of the Boston and Dallas fed bank presidents. As you know, all 12 regional bank rent through -- did anybody know -- did anybody at the board level know about the stock trading activity? Going forward, do you still have confidence in Dallas and Boston bank presidents to do their job?
>> JEROME POWELL: People file these reports annually. I think they were recently filed for 2020. I don't have any reason to think that people at the board would have known about any particular trading going on. They will see there are people at the fed who see the trading reports when they are annually filed. In terms of having confidence and that sort of thing, I think no one is happy. No one on the FOMC is happy to be in this situation, to be having these questions raised. It's something we take very, very seriously. This is an important moment for the fed and I'm determined we will rise to the moment and handle it in ways that will stand up over time. I'm reluctant to get ahead of the process and speculate about different things. When we have things to announce, we will go ahead and do that. That is really what I have for today.
>> One small follow up. I know you didn't have the 2020 forms in hand. You would have had past year forms in hand. In the case of the Dallas disclosure forms similar trading activity was shown in year's past. That in theory could have been something that came up in the renomination process.
>> JEROME POWELL: That is a good question. The five-year review that we do under this unusual provision of law where all of the reserve bank presidents are renewed for reappointment at the same time every five years, that is really a broad review about their leadership of the institution, the performance on the FOMC, all of those things. If there were a concern, a public concern or a private concern about something that someone had done, we wouldn't wait the five years. We wouldn't wait that day if there were concerns. You are right. We have had a frame work for a long time and it's similar to what other government agencies have, only it's a little stricter. It is that you can trade financial instruments but not bank debt. You can't trade during the FOMC and the blackout period during the meeting, and that you disclose it. All of these things have been a matter of public record. But it was seeming to work just okay. Now you look at it and you see this and you think, we need to do better and we will. But you're right. It has not been part of the process. And appropriately, I don't think it should have been. I wouldn't blame the people who conduct that review. I really think if someone had raised concerns or if we had concerns that would have been, but it wouldn't have been part of that process. It would have been raised instantly rather than once every five years.
>> >> I wanted to ask about how the fed would balance the two parts of the mandate. If inflation stays elevated but we still have a labor shortage and participation remains lower than ideal, would you hold off on raising rates?
>> JEROME POWELL: Let me say one thing, you are looking for conditions consistent with maximum employment to lift off. Those conditions can change over time. You are not necessarily bound by the level of employment rate or participation rate or anything like that which can change over time. More to your point we have a paragraph in our frame work and something like this has been there for a long time. I think it's paragraph six. You are talking about a situation in which the two goals are not complementary, they are some how intentioned. If we judge that affect is the case, what it says we take into account the employment shortfalls and inflation deviations in a potentially different time horizons. We used to call it the balanced approach paragraph because it has those words. It's a situation for any central bank to be in a situation where the two goals are intentioned. That paragraph tries to address it by saying we would weigh the equities between the two and how long are the gaps and that kind of thing. We don't really think -- we are sort of in that situation in a short term way, but we think we do expect that this is sort of because of the Covid shock and reopening and all of that, you are seeing this temporarily. >> Great. Thank you. We will go to Edward Laurence.
>> Thank you for taking the question. On corporate debt, what happened with Evergr ande. Is that what can happen with the level of corporate debt? What is your level of concern right now and would you consider that issue as a warning signal?
>> JEROME POWELL: United States? They are low right now. Building up to the pandemic we were concerned in the last year or two and very concerned at the beginning of the pandemic if you have a highly leveraged company and your revenue stops for an uncertain period as things happened at the beginning of the crisis. We were very concerned we would have a wave of defaults. Didn't happen to a significant extent because of the CARES act and the response that we undertook. It's a stronger response that we ever had. For whatever reason you had very low default rates among corporate debt. The everygrand situation seems particular to China which has very high debt for an emerging market economy. The largest. The government is working to get that under control. That is part of that effort. The government put knew strictures in place and everygrand is dealing with thosing strictures. In terms of the implications for us, there is not a lot of direct United States exposure. The Chinese banks are not tremendously exposed, but you would worry it would effect global around confidence channels. I wouldn't draw a parallel between the United States sector.
>> Brian: I was wondering if you can give us an update on whether or not you had conversations with the white house about a possible reappointed and whether or not you would like to be reappointed?
>> JEROME POWELL: The phrase goes I have nothing for you on that today. Sorry. I'm focused on doing my job everyday for the American people and I don't have any comment on that, Brian. >> Sorry about that. Let's go to Greg Rob.
>> Greg: thanks for taking my question. I was wondering if in your discussion about the tapering that you said officials think it's appropriate to end around the middle of the year. If there was any discussion about what happens to the balance sheet, I have heard some fed officials say they wouldn't shrink the balance sheet. Was that discussed and what is your response on shrinking the balance sheet? Thanks.
>> JEROME POWELL: My thinking on this has been let's get through the taper decision and let's turn to those issues. There are a number of related issues that you mentioned one, Greg. But you know, which you need to start to think about. And we will do that. We want to get through this taper decision and then turn to these issues rather than start thinking about them now and get minutes discuss them and have people thinking we are focused on those issues. We are really not. We do have the experience of what happened last time. We watched other countries and what they have done. I think we will be able to get to sensible decisions fairly expeditiously in time but it's not time is my thinking.
>> Thank you. Let's go to Scott Horsley.
>> Scott: you talked a little about inflation expectations. There does seem to be something of a divide between market expectations and the views of professional economists which are in line with the FOMC members and lay people's expectations at least as reflected in the federal New York survey. How much weight do you put on lay people's expectations and what do you think accounts for that divide?
>> JEROME POWELL: So within -- let's just take the household surveys generally. The New York Fed survey -- let me talk about that specifically. This is from the New York Fed. It's only an eight-year old survey. It does seem as though they are looking three years out. It seems like there is a high correlation between three-year and one-year. For the most part, surveys are showing that households expect higher inflation in the near term, but not in the longer term. That is also what expectations are showing. There are many, many different inflation measures of course. That is why we have this thing called the CIE which is an
להודעת הפד:
תחזית הפד - אפשרות ל 6 -7 העלאות ריבית עד לשנת 2024 לרמה של כ 1.8%סיכום התחזיות הכלכליות - ועדת השוק הפתוח הפדרלי 22.9.2021 21:00 "הוועדה חושבת כי ייתכן שיהיה צורך להתמתן בקצב רכישת הנכסים בקרוב"
>> JEROME POWELL: Dodd frank created this position. There is a specific language. It means the vice chair for supervision is charged with setting the regulatory agenda. And, you know, it's a specific grant of authority. And, in the ten years almost that I have been at the fed that person has really done that. Dan did that and vice chair Quarrels did it as well. I respect that authority. I respect that. That is the person who will set the regulatory agenda going forward. I would accept that and -- furthermore, it's fully appropriate for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes and I welcome that. In terms of vice chair's term we are not in that situation and I don't have any updates for that on that today. We will keep you posted on that.
>> Steve Matthews.>> Steve: thank you. Chair Powell, I wanted to ask about the inclusive monetary policy frame work. In particular, Bloomberg surveyed economists and we found they predict lift off will happen when the US unemployment rate is 3.8% but the black unemployment rate is 6.1%. I'm wondering if a 6.1% unemployment rate for African Americans is consistent with full employment or whether it would need to be lower as part of our inclusive growth strategy?
>> JEROME POWELL: The point of the broad and inclusive goal was not to target a particular unemployment rate for any particular group. Really, we look at a broad range of -- a very broad range of metrics when we think about what maximum employment is. One of the things we look at is unemployment rates and participation rates and wages for different demographics and age ranges. We will do all of that. I think if you look back, what we are really thinking is we saw the benefits of a strong labor market. If you look at the last two or three years after the pandemic hit, after progress you saw a strong labor market. You saw wages at the low end moving up, that is something great to see. We saw the lowest unemployment rates for minorities of various -- you know for African Americans, for example, and also participation rates. We saw really, really healthy set of dynamics. And by the way, there was no reason why it couldn't continue. There were no imbalances in the economy and then along came the pandemic. There was nothing in the economy that looked like a build up of imbalances that could cause a recession. So I was very much thinking that the country would really benefit from a few more years of this. It would have been great. So we are eager to get back to that. We said we wouldn't raise rates just in response to very low unemployment in the absence of inflation. That was another aspect because we saw that really benefited labor market participants in a broad and inclusive way. That, of course, is not the situation. We have significant slack in the economy and inflation well above target, not moderately above target. That is how we think about it. It's taking all of that into your account into thinking what constitutes maximum employment.
>> Just to follow up, should there be a significant gap between black unemployment and overall unemployment for structural reasons that are outside the control of the fed that other people should be doing something about? Or should the gap be narrowed if not down to 0?
>> JEROME POWELL: Ideally, there wouldn't be any gap of course. We would love to see no such gap. This is a persistent gap and it's very hard to explain based on typical metrics. It's quite troubling. But we have famously broad and blunt tools. I think eliminating inequality and ration disparity is really something that fiscal policy and educational policies are better on focusing on. I think we have identified the part that we can do and we will do that part. But I have always been clear it's going to take policies broadly across society to work on these problems. >> thanks.
>> Michael McKee: do you have a plan for dealing with a debt default that included prioritization, that included changes in bank regulations and possibly selling defaulted -- non defaulted treasuries and buying those that are. Are any or all of those still on the table? Do you think any of those would work and what would happen to the economy in your view should the debt ceiling not be raised?
>> JEROME POWELL: I missed the first few words, but I think I have your question. It's just very important that the debt ceiling be raised in a timely fashion so the United States can pay its bills when it comes due. That is important thing. The failure of that can result in severe damage to the economy and to the financial markets and it's just not something we can contemplate or we should contemplate. I'm not going to comment on particular tactics or things like that. I think we can agree the United States shouldn't default on any of its obligations and should pay them when due and no one should assume that the fed or anyone else can protect the markets or the economy in the event of a failure -- fully protect in the event of a failure to make sure we do pay those.
>> If I could follow up, have you discussed options with members of Congress?
>> JEROME POWELL: I don't generally talk about the conversations I have with elected officials or other appointed officials. You can see it's a major focus among those who have responsibility for it included elected people. >> Thank you. Let's go to Hanna Lang.
>> Hannah. Senator Warren sent you a letter last week urging the fed to weak up wells Fargo. I was curious under what circumstances would the fed revoke a financial holding company's license and if the indiscretions at wells Fargo in your opinion warrant such an action. >> JEROME POWELL: We are very closely man toring Wells Fargo to fix its problems they present a serious problem to us and the firm is required to remediate them. We will take appropriate super visery action if the firm fails to meet your expectation. We hold them accountable with an asset cap which will stay in place until the firm has fixed its problems. We are not going to remove that asset cap until that is done. Bottom line is we will take strong supervisory action if a firm is -- I can't speak to supervisory assessments of any individual bank. >> Michael Derby.
>> Michael: thank you for taking my question. You noted earlier in the press conference that you weren't aware of the trading activity of the Boston and Dallas fed bank presidents. As you know, all 12 regional bank rent through -- did anybody know -- did anybody at the board level know about the stock trading activity? Going forward, do you still have confidence in Dallas and Boston bank presidents to do their job?
>> JEROME POWELL: People file these reports annually. I think they were recently filed for 2020. I don't have any reason to think that people at the board would have known about any particular trading going on. They will see there are people at the fed who see the trading reports when they are annually filed. In terms of having confidence and that sort of thing, I think no one is happy. No one on the FOMC is happy to be in this situation, to be having these questions raised. It's something we take very, very seriously. This is an important moment for the fed and I'm determined we will rise to the moment and handle it in ways that will stand up over time. I'm reluctant to get ahead of the process and speculate about different things. When we have things to announce, we will go ahead and do that. That is really what I have for today.
>> One small follow up. I know you didn't have the 2020 forms in hand. You would have had past year forms in hand. In the case of the Dallas disclosure forms similar trading activity was shown in year's past. That in theory could have been something that came up in the renomination process.
>> JEROME POWELL: That is a good question. The five-year review that we do under this unusual provision of law where all of the reserve bank presidents are renewed for reappointment at the same time every five years, that is really a broad review about their leadership of the institution, the performance on the FOMC, all of those things. If there were a concern, a public concern or a private concern about something that someone had done, we wouldn't wait the five years. We wouldn't wait that day if there were concerns. You are right. We have had a frame work for a long time and it's similar to what other government agencies have, only it's a little stricter. It is that you can trade financial instruments but not bank debt. You can't trade during the FOMC and the blackout period during the meeting, and that you disclose it. All of these things have been a matter of public record. But it was seeming to work just okay. Now you look at it and you see this and you think, we need to do better and we will. But you're right. It has not been part of the process. And appropriately, I don't think it should have been. I wouldn't blame the people who conduct that review. I really think if someone had raised concerns or if we had concerns that would have been, but it wouldn't have been part of that process. It would have been raised instantly rather than once every five years.
>> >> I wanted to ask about how the fed would balance the two parts of the mandate. If inflation stays elevated but we still have a labor shortage and participation remains lower than ideal, would you hold off on raising rates?
>> JEROME POWELL: Let me say one thing, you are looking for conditions consistent with maximum employment to lift off. Those conditions can change over time. You are not necessarily bound by the level of employment rate or participation rate or anything like that which can change over time. More to your point we have a paragraph in our frame work and something like this has been there for a long time. I think it's paragraph six. You are talking about a situation in which the two goals are not complementary, they are some how intentioned. If we judge that affect is the case, what it says we take into account the employment shortfalls and inflation deviations in a potentially different time horizons. We used to call it the balanced approach paragraph because it has those words. It's a situation for any central bank to be in a situation where the two goals are intentioned. That paragraph tries to address it by saying we would weigh the equities between the two and how long are the gaps and that kind of thing. We don't really think -- we are sort of in that situation in a short term way, but we think we do expect that this is sort of because of the Covid shock and reopening and all of that, you are seeing this temporarily. >> Great. Thank you. We will go to Edward Laurence.
>> Thank you for taking the question. On corporate debt, what happened with Evergr ande. Is that what can happen with the level of corporate debt? What is your level of concern right now and would you consider that issue as a warning signal?
>> JEROME POWELL: United States? They are low right now. Building up to the pandemic we were concerned in the last year or two and very concerned at the beginning of the pandemic if you have a highly leveraged company and your revenue stops for an uncertain period as things happened at the beginning of the crisis. We were very concerned we would have a wave of defaults. Didn't happen to a significant extent because of the CARES act and the response that we undertook. It's a stronger response that we ever had. For whatever reason you had very low default rates among corporate debt. The everygrand situation seems particular to China which has very high debt for an emerging market economy. The largest. The government is working to get that under control. That is part of that effort. The government put knew strictures in place and everygrand is dealing with thosing strictures. In terms of the implications for us, there is not a lot of direct United States exposure. The Chinese banks are not tremendously exposed, but you would worry it would effect global around confidence channels. I wouldn't draw a parallel between the United States sector.
>> Brian: I was wondering if you can give us an update on whether or not you had conversations with the white house about a possible reappointed and whether or not you would like to be reappointed?
>> JEROME POWELL: The phrase goes I have nothing for you on that today. Sorry. I'm focused on doing my job everyday for the American people and I don't have any comment on that, Brian. >> Sorry about that. Let's go to Greg Rob.
>> Greg: thanks for taking my question. I was wondering if in your discussion about the tapering that you said officials think it's appropriate to end around the middle of the year. If there was any discussion about what happens to the balance sheet, I have heard some fed officials say they wouldn't shrink the balance sheet. Was that discussed and what is your response on shrinking the balance sheet? Thanks.
>> JEROME POWELL: My thinking on this has been let's get through the taper decision and let's turn to those issues. There are a number of related issues that you mentioned one, Greg. But you know, which you need to start to think about. And we will do that. We want to get through this taper decision and then turn to these issues rather than start thinking about them now and get minutes discuss them and have people thinking we are focused on those issues. We are really not. We do have the experience of what happened last time. We watched other countries and what they have done. I think we will be able to get to sensible decisions fairly expeditiously in time but it's not time is my thinking.
>> Thank you. Let's go to Scott Horsley.
>> Scott: you talked a little about inflation expectations. There does seem to be something of a divide between market expectations and the views of professional economists which are in line with the FOMC members and lay people's expectations at least as reflected in the federal New York survey. How much weight do you put on lay people's expectations and what do you think accounts for that divide?
>> JEROME POWELL: So within -- let's just take the household surveys generally. The New York Fed survey -- let me talk about that specifically. This is from the New York Fed. It's only an eight-year old survey. It does seem as though they are looking three years out. It seems like there is a high correlation between three-year and one-year. For the most part, surveys are showing that households expect higher inflation in the near term, but not in the longer term. That is also what expectations are showing. There are many, many different inflation measures of course. That is why we have this thing called the CIE which is an
להודעת הפד:
תחזית הפד - אפשרות ל 6 -7 העלאות ריבית עד לשנת 2024 לרמה של כ 1.8%סיכום התחזיות הכלכליות - ועדת השוק הפתוח הפדרלי 22.9.2021 21:00 "הוועדה חושבת כי ייתכן שיהיה צורך להתמתן בקצב רכישת הנכסים בקרוב"
