WEBVTT - Jerome Powell 0:00:02.960 --> 0:00:05.760 One of the most important decision makers on economic policy 0:00:05.760 --> 0:00:08.119 in our country is the Chairman of the Federal Reserve Board. 0:00:08.360 --> 0:00:10.800 Our recently sat down with the chairman, J. Pow to 0:00:10.840 --> 0:00:15.520 talk about interest rates, inflation, and the overall economy in So, 0:00:15.680 --> 0:00:18.400 Jay Um, thank you very much for being here, and 0:00:18.440 --> 0:00:22.239 why don't we start with an easy question. So you 0:00:22.360 --> 0:00:25.000 made a speech last week commenting on the f O 0:00:25.120 --> 0:00:27.600 m c s decision to raise the FED discount rate 0:00:27.600 --> 0:00:32.360 by um a small amount relatively speaking basis points. Someone 0:00:32.440 --> 0:00:34.760 people would say that was small um, but at the 0:00:34.800 --> 0:00:37.800 time it wasn't clear that the Job's report would be 0:00:37.800 --> 0:00:40.760 as strong as it turned out to be. Subsequently, had 0:00:40.800 --> 0:00:43.400 you known that the Job's report was going to be 0:00:43.479 --> 0:00:48.560 as strong, would you have done twenty five basis points 0:00:48.680 --> 0:00:53.800 or something different? David, thank you for that question. Thank you, 0:00:55.000 --> 0:00:56.920 thank you for inviting me here today. It's great to 0:00:56.920 --> 0:00:59.480 be here. So we don't get to play it that way, 0:00:59.560 --> 0:01:02.920 unfortunately we have to, but I'll I'll take it this way. 0:01:03.520 --> 0:01:06.360 So the message we were sending at the fhone C 0:01:06.520 --> 0:01:11.280 meeting last Wednesday was really that the disinflationary process, the 0:01:11.280 --> 0:01:14.520 process of getting inflation down, has begun and it's begun 0:01:14.560 --> 0:01:16.679 in the goods sector, which is about a quarter of 0:01:16.680 --> 0:01:19.040 our economy, but it has a long way to go. 0:01:19.080 --> 0:01:22.880 These are the very early stages of disinflation. So the 0:01:22.920 --> 0:01:27.440 services sector really, except for housing services, pardon me, is 0:01:27.480 --> 0:01:30.959 not really showing any any disinflation yet. So our message 0:01:30.959 --> 0:01:33.480 really was this process is likely to take quite a 0:01:33.480 --> 0:01:36.680 bit of time. It's not going to be we don't 0:01:36.720 --> 0:01:39.920 think smooth. It's probably gonna be bumpy. And so we 0:01:39.959 --> 0:01:42.560 think that we're gonna need to do further rate increases, 0:01:42.640 --> 0:01:44.600 as we said, and we think that will need to 0:01:44.640 --> 0:01:47.720 hold policy at a restrictive level for a period of time. 0:01:47.880 --> 0:01:53.080 If next month you had another five thousand jobs created 0:01:53.400 --> 0:01:56.480 net jobs, would that be good or bad from your 0:01:56.480 --> 0:01:57.680 point of view? Have we got a lot of people 0:01:57.720 --> 0:02:01.680 working but maybe producing more inflation. We don't. We don't 0:02:01.680 --> 0:02:03.480 have the luxury of thinking about good or bad. It 0:02:03.520 --> 0:02:05.440 just is what it is. So but I would say 0:02:05.440 --> 0:02:11.120 again we most most analysts, most economists would say that 0:02:11.200 --> 0:02:14.679 to get inflation down from high levels that we've had, 0:02:14.880 --> 0:02:17.280 if you look at history, there is some softening and 0:02:17.360 --> 0:02:19.680 labor market conditions that goes along with that, and that 0:02:19.800 --> 0:02:23.200 is still you know, very possible and indeed likely here 0:02:23.280 --> 0:02:27.160 some softing and labor market conditions. However, this cycle is 0:02:27.200 --> 0:02:29.640 different from other cycles because of where it came from, 0:02:29.760 --> 0:02:33.080 and it's just confound at all all sorts of attempts 0:02:33.080 --> 0:02:35.359 to predict what it would do. Okay, so the markets 0:02:35.560 --> 0:02:38.800 um after your speech last week, the markets assumed that 0:02:38.919 --> 0:02:42.640 therefore there would probably be another basis point increase in 0:02:42.760 --> 0:02:47.519 your next f i MC meeting. Um was that a 0:02:47.520 --> 0:02:52.160 bad assumption by the markets? So what again? What we 0:02:52.200 --> 0:02:58.160 said at the meeting was was that we we believe 0:02:58.280 --> 0:03:01.959 that we anticipate is what we said, that ongoing rate 0:03:01.960 --> 0:03:05.200 increases will be appropriate. Uh. And the reason is we're 0:03:05.240 --> 0:03:08.160 trying to achieve a stance of policy that is sufficiently 0:03:08.160 --> 0:03:11.200 restrictive to bring inflation down to two percent over time, 0:03:11.200 --> 0:03:13.880 and we don't think we've achieved that yet, so we 0:03:13.960 --> 0:03:17.280 said that. Uh. And and you know, now you see 0:03:17.280 --> 0:03:20.120 the labor market report, and I think again, financial conditions 0:03:20.160 --> 0:03:22.200 are are are more well aligned with that than they 0:03:22.200 --> 0:03:25.360 were before. So the assumption when you made your speech 0:03:25.520 --> 0:03:28.520 was that probably they're fed, might I am and consider 0:03:29.080 --> 0:03:31.799 uh decreasing rates by the end of this year, And 0:03:31.840 --> 0:03:34.160 the markets no longer assume that you think the markets 0:03:34.200 --> 0:03:40.600 are wrong. Well, so let me say these are all 0:03:40.640 --> 0:03:43.360 of these numbers that we're throwing around here are conditional 0:03:43.480 --> 0:03:46.680 on incoming data and what happens. So we never say 0:03:46.760 --> 0:03:48.760 this is this is what we think will happen. You know. 0:03:48.800 --> 0:03:50.760 We we make a tentative forecast and then we let 0:03:50.800 --> 0:03:53.680 the data come in. For example, if the data were 0:03:53.720 --> 0:03:56.520 to continue to come in stronger than we expect and 0:03:56.560 --> 0:03:58.560 we were to conclude that we needed to raise rates 0:03:58.640 --> 0:04:00.880 more than is priced to the markets, or then we 0:04:00.920 --> 0:04:03.760 wrote down at our last group of forecasts in December, 0:04:03.920 --> 0:04:05.880 then we would certainly do that. We would certainly raise 0:04:05.960 --> 0:04:09.440 rates more. So you've said their inflation rate target is 0:04:09.440 --> 0:04:13.840 two percent um, but why two percent and not three percent? 0:04:13.960 --> 0:04:16.760 Three percent could be tolerable really, I mean most for 0:04:16.839 --> 0:04:20.120 most of organized history, three percent is considered. Okay, why 0:04:20.120 --> 0:04:23.320 do you want two percent? Two percent is the global standard, 0:04:23.640 --> 0:04:26.279 and that is our objective two percent piece as measured 0:04:26.320 --> 0:04:31.119 by the PC index, and that's just that's not something 0:04:31.200 --> 0:04:33.120 we're looking at changing. That isn't going to change. It's 0:04:33.200 --> 0:04:36.080 that's not gonna change, not gonna change now. But okay, 0:04:36.120 --> 0:04:38.039 so you need to get the two percent, and your 0:04:38.400 --> 0:04:41.000 goal to get there is by what period of time 0:04:41.240 --> 0:04:43.080 would you like to get there? Well, we say, we 0:04:43.160 --> 0:04:45.320 say that we're using our tools to get there over time. 0:04:45.400 --> 0:04:47.880 If you look at our forecasts, we expect two thousand 0:04:47.960 --> 0:04:51.040 twenty three to be a year of significant declines in inflation. 0:04:51.080 --> 0:04:53.480 And it's actually our job to make sure that that's 0:04:53.520 --> 0:04:56.640 the case. But I would tell you that, uh, you know, 0:04:56.800 --> 0:05:01.320 with inflation headline headline PC in inflation is running about five. 0:05:01.880 --> 0:05:03.760 This is on a twelve month basis. Core is running 0:05:03.800 --> 0:05:06.080 at four point four. My guess is it will take 0:05:06.120 --> 0:05:09.600 certainly into not just this year, but next year to 0:05:09.680 --> 0:05:13.560 get down close to two. Okay, so two percent is firm. 0:05:13.720 --> 0:05:15.760 That's you're not going to get off that, yes, okay, 0:05:16.200 --> 0:05:20.480 So uh. The theory of raising interest rates um is 0:05:20.520 --> 0:05:24.800 that it will decrease economic activity and increase unemployment. But 0:05:24.920 --> 0:05:27.800 you've been increasing interest rates for a while and unemployment 0:05:27.839 --> 0:05:30.039 is now at to record low. So what's wrong with 0:05:30.080 --> 0:05:33.360 the theory. Why is unemployment not going higher? Well, the 0:05:34.160 --> 0:05:36.720 labor market is strong, because the economy is strong, and 0:05:37.000 --> 0:05:38.920 as I mentioned, it's a good thing that we've been 0:05:38.920 --> 0:05:42.040 able to see the beginnings of disinflation without seeing the 0:05:42.360 --> 0:05:47.279 labor market weekend. Um, it's just that there's a lot 0:05:47.320 --> 0:05:49.320 of demand for workers. In fact, if you look at 0:05:49.320 --> 0:05:53.760 the supply of workers versus demand for workers, demand for 0:05:53.760 --> 0:05:57.200 for US workers is now more than five million greater 0:05:57.520 --> 0:06:00.479 than the available supply, and available supply can systs of 0:06:00.880 --> 0:06:03.800 people who were either working or actively looking for a job. 0:06:03.839 --> 0:06:05.840 So this this is this was not the case before 0:06:05.880 --> 0:06:10.640 the pandemic. The pandemic really had a significant left a 0:06:10.720 --> 0:06:14.280 list lasting marks so far on labor supply in the 0:06:14.360 --> 0:06:17.800 United States. The labor force participation rate came down, and 0:06:17.839 --> 0:06:20.680 there now is a shortage of workers, and it it 0:06:20.720 --> 0:06:23.920 feels it almost feels more structural than cyclical. So that 0:06:24.040 --> 0:06:26.359 that's a that's a significant issue that you've resisted I 0:06:26.360 --> 0:06:29.960 think saying what unemployment rate would be acceptable to you? 0:06:30.160 --> 0:06:32.920 I think, but is there an unemployment rate that you 0:06:32.920 --> 0:06:36.680 think would moderate inflation such that you would tolerate unemployment 0:06:36.720 --> 0:06:40.760 at four, five percent, six percent? I guess I think 0:06:40.800 --> 0:06:44.560 about it this way. UM, we have two goals that 0:06:44.640 --> 0:06:48.640 Congress is assigned US, maximum employment and price stability. Price stability, 0:06:48.680 --> 0:06:53.000 as we've agreed, is two percent inflation. Maximum employment means 0:06:53.360 --> 0:06:55.640 if you want a job, you can get one. So 0:06:55.800 --> 0:06:58.799 right now the labor market is at least at maximum employment, 0:06:58.800 --> 0:07:01.120 but many would say that that is out of balance 0:07:01.160 --> 0:07:03.640 with more demand and there is supply. So what we're 0:07:03.640 --> 0:07:06.400 trying to do is get inflation down. We're not we're 0:07:06.440 --> 0:07:10.760 not targeting, you know, a different unemployment rate. We're trying. 0:07:10.760 --> 0:07:12.840 We're trying to use our tools to get inflation to 0:07:12.880 --> 0:07:15.200 come down over time. So if I wanted to go 0:07:15.400 --> 0:07:17.200 get a mortgage on a house I was gonna buy, 0:07:17.320 --> 0:07:19.840 for example, uh, you would say, I'm not going to 0:07:19.960 --> 0:07:22.760 be any better off waiting till next year than now 0:07:23.240 --> 0:07:25.840 because rates aren't going to come down that much at 0:07:25.840 --> 0:07:27.280 the beginning of next year, so I might as well 0:07:27.280 --> 0:07:31.560 get the house now mortgage. So I say, Surprisingly enough, 0:07:31.600 --> 0:07:33.800 I get a lot of requests for advice on those 0:07:33.840 --> 0:07:35.560 kind of things and you don't give anything, and I 0:07:36.080 --> 0:07:38.920 but I really can't, Okay, I can't really can't respond, 0:07:38.960 --> 0:07:43.960 So okay, So on the whole, to summarize where you are, 0:07:44.480 --> 0:07:47.920 you're basically saying that the job's data was that came 0:07:47.920 --> 0:07:50.680 out was a little bit surprising, but in the end 0:07:50.800 --> 0:07:53.800 you're taking you've taken into account and you're pretty comfortable 0:07:54.080 --> 0:07:56.560 with the guidance you gave last time, and you're not 0:07:56.560 --> 0:07:59.520 prepared to give anything that's completely different guidance than you 0:07:59.600 --> 0:08:03.680 gave last week. Well, I mean, this is a world 0:08:03.680 --> 0:08:07.120 in which we've had the the inflation, sorry, the the 0:08:07.120 --> 0:08:09.840 the labor market report, and I think that does I 0:08:09.880 --> 0:08:12.600 think it underscores the message that I was sending at 0:08:12.600 --> 0:08:16.440 the at the press conference and in the meeting that 0:08:16.560 --> 0:08:20.200 we have a significant road ahead to get inflation down 0:08:20.200 --> 0:08:23.240 to two percent. And I think there has been an 0:08:23.280 --> 0:08:26.560 expectation that it will that will go away quickly and painlessly, 0:08:26.760 --> 0:08:29.000 and I don't think that's at all guaranteed. That's not 0:08:29.080 --> 0:08:30.920 the base case. The base cases it will for me 0:08:31.080 --> 0:08:34.080 is that it will take some time and we'll have 0:08:34.120 --> 0:08:35.760 to do more rate increases, and then we'll have to 0:08:35.760 --> 0:08:38.360 look around and see whether we've done enough. In hindsight, 0:08:38.480 --> 0:08:41.080 would you say that when COVID hit the economy and 0:08:41.120 --> 0:08:45.280 we chected five trillion dollars of physical policy into the economy, 0:08:45.920 --> 0:08:49.160 and the Fed did quantity of easing and other related 0:08:49.200 --> 0:08:51.240 things kept interest rates very low, would you say, in 0:08:51.320 --> 0:08:54.120 hindsight that was a mistake or was the right policy 0:08:54.160 --> 0:08:56.520 at the time. So I think you have to go 0:08:56.600 --> 0:08:58.880 back to the decisions that were made in real time, 0:08:59.080 --> 0:09:01.920 and it was something nobody had ever seen. The global 0:09:01.960 --> 0:09:05.600 economy came to a virtual stand still. People were talking 0:09:05.600 --> 0:09:08.840 about depression. People were talking and we didn't think. We 0:09:08.880 --> 0:09:11.920 had no idea when we would get vaccines that worked. 0:09:12.320 --> 0:09:14.679 So Congress took very strong measures, and we took very 0:09:14.679 --> 0:09:17.640 strong measures. And you see where the economy is. You've 0:09:17.679 --> 0:09:19.520 got a very very strong labor market, but you have 0:09:19.600 --> 0:09:22.160 high inflation. As I mentioned, we're at the beginning of 0:09:22.200 --> 0:09:24.520 getting that down. If you look around the world though, 0:09:24.559 --> 0:09:28.520 at other countries, they're also experiencing high inflation, including countries 0:09:28.600 --> 0:09:31.440 that didn't that didn't do that as much as we did, 0:09:31.520 --> 0:09:33.920 either from a fiscal or monetary standpoint. So that that 0:09:33.960 --> 0:09:36.400 tells you though that a big part of this inflation 0:09:36.559 --> 0:09:41.040 is actually related to the you know, the pandemic itself 0:09:41.160 --> 0:09:43.440 is shut down and then the reopening. That's a big 0:09:43.440 --> 0:09:45.360 part of it. So are some people that are worried 0:09:45.360 --> 0:09:48.079 about the federal debt limit and that we might not 0:09:49.000 --> 0:09:50.760 have to extend it on time. We have thirty one 0:09:50.800 --> 0:09:53.520 point four trillion dollars of debt. Are you a little 0:09:53.559 --> 0:09:57.240 worried about the debt limit not getting extended. So the 0:09:57.280 --> 0:10:00.920 debt limit is really something for the fisc authorities to 0:10:01.280 --> 0:10:03.600 deal with. The FED our only role in this is 0:10:03.640 --> 0:10:06.040 that we're that we're the fiscal agent of the Treasury Department. 0:10:06.080 --> 0:10:08.040 We're not a policy maker on that. And I will 0:10:08.080 --> 0:10:11.040 just say this, this can this really can only end 0:10:11.080 --> 0:10:13.200 one way, and that is with Congress raising the debt 0:10:13.240 --> 0:10:16.120 ceiling in a timely fashion so that the US can 0:10:16.160 --> 0:10:18.920 pay all of its bills one and as do. That's 0:10:18.960 --> 0:10:21.720 what has to happen. And if that doesn't happen, no 0:10:21.760 --> 0:10:24.400 one should think that the FED has the ability to 0:10:24.480 --> 0:10:27.880 shield the financial markets or the economy from the consequences 0:10:27.920 --> 0:10:30.920 of moving too slow. So you don't have any program 0:10:31.080 --> 0:10:33.640 in place ready to go if, in fact, the that 0:10:33.760 --> 0:10:36.240 limit isn't passed in time. This is something that Congress 0:10:36.240 --> 0:10:39.079 has to deal with. And the so called trillion dollar 0:10:39.480 --> 0:10:42.360 gold coin solution is not one year in favor of 0:10:42.480 --> 0:10:45.040 I guess I. As I said, this ends in only 0:10:45.080 --> 0:10:48.200 one way, and that way is Congress voting to raise 0:10:48.240 --> 0:10:50.199 the debt ceiling so that the US can pay all 0:10:50.240 --> 0:10:54.760 of our bills. And today, what about the debt total 0:10:54.840 --> 0:10:57.640 debt of the United States, which produces some inflation. With 0:10:57.760 --> 0:11:00.280 thirty one point four leaving inside the debt limit, are 0:11:00.320 --> 0:11:03.480 you worried about the total indebtiness United States producing inflation 0:11:03.559 --> 0:11:05.880 or you don't think that's a big problem. Yeah, it's 0:11:05.880 --> 0:11:08.440 not the level of debt. I would say. The thing 0:11:08.480 --> 0:11:11.040 I'd say about the level of debt is really it's not. 0:11:11.080 --> 0:11:12.839 First of all, it's not the Fed's job. But I 0:11:12.880 --> 0:11:16.280 would say that we we we're on an unsustainable fiscal 0:11:16.280 --> 0:11:18.960 path at the federal government level. That has been the 0:11:18.960 --> 0:11:21.560 case for some time, and it's something we will have 0:11:21.640 --> 0:11:24.679 to deal with it. Better to deal with it sooner 0:11:24.880 --> 0:11:28.400 rather than later. Now, many of your predecessors were economists, 0:11:28.440 --> 0:11:32.199 your train as a lawyer. Um so Um, they spoken 0:11:32.240 --> 0:11:35.280 what I call FED speak, which is to say, incomprehensible 0:11:35.360 --> 0:11:38.960 kind of economic language, which was done intentionally. I think 0:11:39.120 --> 0:11:42.680 sometimes they would say, so you tend to speak in English? Um? 0:11:42.800 --> 0:11:45.160 Is that have been a plus? You'd say, when you're 0:11:45.160 --> 0:11:47.439 dealing with members of Congress, they can understand what you're saying. 0:11:47.800 --> 0:11:49.439 I like to think, so, you know, I've made it 0:11:49.440 --> 0:11:53.160 a real priority to to engage a lot with Congress. 0:11:53.440 --> 0:11:56.360 In our system of government, unlike the parliamentary system. Our 0:11:56.400 --> 0:11:59.640 accountability is to the legislature. It's to send it in 0:11:59.679 --> 0:12:02.480 the House, and particularly the two oversight committees Senate Banking 0:12:02.480 --> 0:12:06.440 and House Financial Services. And I think it's very important 0:12:06.480 --> 0:12:08.800 that we respect that and explain what we're doing and 0:12:08.840 --> 0:12:11.679 listen to their concerns and and share with them how 0:12:11.720 --> 0:12:13.960 we're thinking about things. And I think they appreciate that. 0:12:14.400 --> 0:12:17.280 And but that is, you know, we have this precious independence. 0:12:17.320 --> 0:12:19.800 We can't be removed from office. We serve these long terms. 0:12:20.160 --> 0:12:22.680 The other side of that has to be accountability. And 0:12:22.720 --> 0:12:24.719 the way for us to get accountability is to be 0:12:24.760 --> 0:12:27.760 as transparent as possible and try to reach you know, 0:12:27.800 --> 0:12:30.319 the people of the United States through their elected representatives. 0:12:30.320 --> 0:12:33.000 So this is a very high priority and we're gonna 0:12:33.080 --> 0:12:35.240 keep doing it. So when you testify in front of Congress, 0:12:35.320 --> 0:12:37.200 how much time does it take to prepare for that? 0:12:37.280 --> 0:12:39.599 Is that a one hour preparation session or is it 0:12:39.679 --> 0:12:42.920 a one day session or a one week session? These 0:12:42.920 --> 0:12:45.319 are supposed to be monetary policy hearing is under the 0:12:45.400 --> 0:12:49.280 Humphrey Hawkins Act, and they're actually on any anything that's 0:12:49.360 --> 0:12:52.360 any political issues, So it's it's quite extensive. You have 0:12:52.400 --> 0:12:55.400 to prepare for everything that the FIT is involved in 0:12:55.400 --> 0:12:57.080 and many things that the FIT is not involved in. 0:12:58.080 --> 0:13:00.360 So it's it's a lot of preparation. So when you 0:13:00.360 --> 0:13:02.320 get questions from some members, you have to bite your 0:13:02.360 --> 0:13:04.560 tongue and say, why are you asking a question like that? 0:13:04.640 --> 0:13:08.480 Or you never have that problem? That never happens, Never happens, Okay. 0:13:08.600 --> 0:13:12.360 In terms of consultation, um, do you consult regularly with 0:13:12.400 --> 0:13:15.040 the Treasury Secretary or the head of the National Economic 0:13:15.080 --> 0:13:17.040 Council or the President United States? How do you kind 0:13:17.040 --> 0:13:20.600 of relate to the administration? For a long long time, 0:13:20.640 --> 0:13:22.840 you know, sixty or seventy years there, I think there's 0:13:22.880 --> 0:13:26.360 been a weekly breakfast or lunch with the Treasury Secretary 0:13:26.360 --> 0:13:28.840 and the FED Chair. And that's what I've had with 0:13:28.840 --> 0:13:32.880 with Treasure secretaries that I've had as FED Chair. I've 0:13:32.920 --> 0:13:36.720 also had a regular article it called irregular lunches with 0:13:36.760 --> 0:13:39.680 the head of the NBC. We also have regularly, regularly 0:13:39.720 --> 0:13:42.800 scheduled lunches with the Council of Economic Advisors. And that's 0:13:42.880 --> 0:13:46.040 that's really the that's the that's the institutional structure of 0:13:46.040 --> 0:13:48.480 our of our contact with the administration. Does the President 0:13:48.480 --> 0:13:50.720 United States ever call you with any advice or you 0:13:50.760 --> 0:13:54.400 don't really the President Trump ever call you, or President 0:13:54.440 --> 0:13:57.200 Bide never call you, or well, I think it's a 0:13:57.240 --> 0:13:59.959 matter of public record that President Trump did used to 0:14:00.000 --> 0:14:08.000 call me from time to time. What did he call you? Um, no, 0:14:08.160 --> 0:14:10.400 I I haven't had that kind of I haven't gotten 0:14:10.400 --> 0:14:13.640 any calls from from President Biden. For people who aren't 0:14:13.640 --> 0:14:16.079 familiar with the f O m C, who is actually 0:14:16.160 --> 0:14:18.760 is on the f O m C. The US Central 0:14:18.760 --> 0:14:21.120 Bank consists of a board of governors. Here in Washington, 0:14:21.160 --> 0:14:24.480 they're seven governors. Those governors are nominated by the President 0:14:24.640 --> 0:14:28.240 and confirmed by the Senate, and we serve terms that 0:14:28.240 --> 0:14:31.320 are that are not syncd up with the election cycle, 0:14:31.440 --> 0:14:34.520 so we're we're independent. There are also twelve reserve banks 0:14:34.520 --> 0:14:37.440 around the country which have a degree of independence, and 0:14:37.480 --> 0:14:40.400 they're so so each each reserve bank is led by 0:14:40.440 --> 0:14:43.080 a president who works there full time. All twelve of 0:14:43.120 --> 0:14:46.080 them sit on the FMC. So that's nineteen people sit 0:14:46.120 --> 0:14:48.480 on the FMC, so it's quite a large committee, of 0:14:48.520 --> 0:14:52.200 which twelve vote in any given year. The reserve bank 0:14:52.200 --> 0:14:54.760 presidents vote on a rotating basis, except New York, which 0:14:54.840 --> 0:14:57.360 votes every year. So when you vote, do you vote 0:14:57.360 --> 0:14:59.400 at the beginning of an f o MC meeting and 0:14:59.440 --> 0:15:01.920 then just kind of have discussions afterwards, or do you 0:15:01.920 --> 0:15:05.080 wait till the very end and then you vote. Now, 0:15:05.120 --> 0:15:06.840 we voted at the end, I mean the whole the 0:15:06.920 --> 0:15:09.840 FMC meeting process takes, you know, more than a full week. 0:15:09.880 --> 0:15:13.120 I'm talking to all of the participants all night, eighteen 0:15:13.160 --> 0:15:16.640 other ones, and staff is sent around memos and there's 0:15:16.640 --> 0:15:19.120 something called the Teal Book, which is the staff's assessment 0:15:19.280 --> 0:15:22.760 of the you know, of the economy and international economy 0:15:22.760 --> 0:15:25.120 and monetary policy and all that. Then we have an 0:15:25.120 --> 0:15:28.240 extensive discussion on the morning of the first day about 0:15:28.240 --> 0:15:31.280 the economy. Everybody talks about that. On the second day 0:15:31.360 --> 0:15:33.520 we talk about monetary policy, and then we vote on 0:15:33.560 --> 0:15:37.920 monetary policy around noon on the second day. So there's 0:15:37.960 --> 0:15:41.120 the Chairman of the Federal Reserve Board speak first and 0:15:41.200 --> 0:15:43.720 say here's what I think, and or does he wait 0:15:43.800 --> 0:15:45.880 until the end and say, well, thanks for what you think, 0:15:45.880 --> 0:15:47.600 but let me tell you what I think. What do 0:15:47.640 --> 0:15:50.200 you do for different chairs have done in different ways, 0:15:50.240 --> 0:15:53.520 and so I tend I've tended to do what my predecessor, 0:15:53.600 --> 0:15:56.280 media predecessor did. I think, Well, this is what I do. 0:15:56.320 --> 0:16:00.000 I speak last on the sort of the economic go around, 0:16:00.040 --> 0:16:02.840 So everyone else talks about what they think about the 0:16:02.880 --> 0:16:05.200 economy and in their district, for example of the Reserve 0:16:05.240 --> 0:16:07.680 Bank president, and I listened to all that, and then 0:16:07.760 --> 0:16:09.720 I give my comments at the end, and I kind 0:16:09.720 --> 0:16:11.800 of sum up what people have said, and then I 0:16:11.880 --> 0:16:16.040 speak first on monetary policy. So do you consult regularly 0:16:16.040 --> 0:16:18.680 with some of your predecessors, I mean, obviously wanted Secretary 0:16:18.720 --> 0:16:21.840 of the Treasury now, but Ben Bernaki for example, Or 0:16:22.400 --> 0:16:24.880 I do. I I talked to U former Chairman Bananke. 0:16:24.960 --> 0:16:28.840 I talked to you know, uh, Secretary yelling. I still 0:16:28.840 --> 0:16:31.720 talk to Alan Greenspan now. And again, when you're dealing 0:16:31.760 --> 0:16:34.840 with this with your colleagues on the FED board and 0:16:34.920 --> 0:16:36.600 you disagree with them, do you say, look, I'm the 0:16:36.680 --> 0:16:39.120 chairman of the FED. I am the person who has 0:16:39.160 --> 0:16:41.160 to make the final decision, and this is what we 0:16:41.200 --> 0:16:43.320 should do, or you don't quite do it that way. 0:16:44.880 --> 0:16:49.240 It's a it's a process of reaching agreement, and um, 0:16:49.280 --> 0:16:51.520 I hear what people have to say, I tell them 0:16:51.560 --> 0:16:54.000 what I think, and then I'm the one who has 0:16:54.040 --> 0:16:56.080 to bring a proposal in front of the full committee, 0:16:56.120 --> 0:16:57.760 not just the Board in front of the Full Committee 0:16:57.760 --> 0:17:00.520 on Monetary Policy, and it works. Know, we have to 0:17:00.560 --> 0:17:03.480 reach an agreement, and uh, you know, we get to 0:17:03.520 --> 0:17:06.920 a place. I think you can tell today we are 0:17:06.960 --> 0:17:10.199 blessed with a diversity of perspectives on the FOMC with 0:17:10.320 --> 0:17:13.560 nineteen people. Of course we are. But you have one 0:17:13.600 --> 0:17:15.159 thing that unites all of us, and that is a 0:17:15.240 --> 0:17:18.280 very strong commitment to getting inflation down. And when you 0:17:18.280 --> 0:17:21.080 want to talk to members of the of the Board 0:17:21.280 --> 0:17:23.160 of the Federals a board, do you go to their 0:17:23.240 --> 0:17:26.119 office or they come to your office. I like to 0:17:26.160 --> 0:17:28.280 do both. I mean, I really don't like to sit 0:17:28.320 --> 0:17:30.080 in my office all day and and have just have 0:17:30.240 --> 0:17:32.080 people come to see me. I like to go barge 0:17:32.080 --> 0:17:33.760 in on people. And you know, I think it's much 0:17:33.800 --> 0:17:36.080 better to get up and walk around and see people. 0:17:36.600 --> 0:17:39.359 The fet has been pretty good at avoiding leaks of 0:17:39.440 --> 0:17:42.560 its decisions. How do you do that? Because most people 0:17:42.560 --> 0:17:44.520 in Washington are not so good at that. How do 0:17:44.560 --> 0:17:46.920 you avoid leaks? We do have, you know, we've got 0:17:47.040 --> 0:17:50.400 very strict rules around confidentiality, particularly around the written materials 0:17:50.440 --> 0:17:52.600 that we have. You know, we we publish these things 0:17:52.720 --> 0:17:55.399 internally for for the FOMC, meaning the memos and the 0:17:55.440 --> 0:17:58.560 Teal Book and all that um. But the other thing 0:17:58.600 --> 0:18:01.240 to remember, though, is you know, we're not trying to 0:18:01.320 --> 0:18:04.000 hide our decisions from the public. We actually, in the 0:18:04.040 --> 0:18:08.120 modern modern monetary policy, we want the public to understand 0:18:08.200 --> 0:18:11.159 how we think, how we're thinking. And and you know, 0:18:11.200 --> 0:18:14.120 if markets really understand how you're thinking in a new 0:18:14.240 --> 0:18:15.960 a new piece of data comes in, the markets will 0:18:15.960 --> 0:18:17.720 go where they're going to do this, and it sort 0:18:17.720 --> 0:18:20.680 of happens organically. And that happened all last year as 0:18:20.720 --> 0:18:23.320 we were, you know, talking about raising rates. The market 0:18:23.359 --> 0:18:26.360 priced in rate increases long before we actually enacted them. 0:18:26.400 --> 0:18:28.639 So it's not we want to be transparent. We're not 0:18:28.680 --> 0:18:31.600 looking to surprise markets with these decisions. So you get 0:18:31.680 --> 0:18:34.159 data from all the various government agencies. But do you 0:18:34.160 --> 0:18:37.000 ever use anecdotal things like you go to the supermarket 0:18:37.000 --> 0:18:38.520 and you see prices are high, and you say, this 0:18:38.600 --> 0:18:40.440 price is high? Or how do you get you ever 0:18:40.440 --> 0:18:42.520 get anecdotal things or people ever call you up our 0:18:42.560 --> 0:18:44.399 friends and say, by the way, you should do this 0:18:44.520 --> 0:18:48.120 or that. I mostly get data, but I will say 0:18:48.320 --> 0:18:52.480 the the I I do believe that ancdotal information is 0:18:52.600 --> 0:18:55.119 very useful and one of the things the reserve banks 0:18:55.119 --> 0:18:58.119 are great at is all twelve of them have big 0:18:58.119 --> 0:19:01.880 operations where they talk to business is and nonprofits, universities, 0:19:02.000 --> 0:19:04.920 every sector of the of the country and the economy, 0:19:04.920 --> 0:19:07.720 and they bring that back to the FMC means and 0:19:07.760 --> 0:19:09.760 they talk about what they're seeing. So there has been 0:19:09.800 --> 0:19:13.560 discussion recently about the FED some FED members, pread board 0:19:13.560 --> 0:19:17.520 presidents selling their securities and maybe not doing everything that 0:19:17.520 --> 0:19:19.159 they were supposed to do in terms of disclosing it. 0:19:19.359 --> 0:19:23.320 What have you done to fix that process. We've put 0:19:23.400 --> 0:19:25.520 a new system in a new set of rules in place, 0:19:25.920 --> 0:19:28.639 which I think are best in class for a public 0:19:28.640 --> 0:19:31.679 institution like the FED. And uh, you know, the the 0:19:31.720 --> 0:19:35.840 innovations were that that if someone wants to sell something 0:19:35.880 --> 0:19:37.680 that they own or buy something, they have to clear 0:19:37.720 --> 0:19:39.920 them at advance with with staff at the Board of 0:19:39.960 --> 0:19:42.080 Governors and then you've got to wait forty five days 0:19:42.680 --> 0:19:45.800 for that to execute. Also, you can't own individual stocks 0:19:46.560 --> 0:19:48.600 and there there you can only do these you can 0:19:48.600 --> 0:19:53.200 only authorize these transactions or execute them during specific times. Um. 0:19:53.320 --> 0:19:54.960 And it's you know, it's it's a and we we 0:19:55.000 --> 0:19:58.120 just of course all these are disclosed. If if you're 0:19:58.560 --> 0:20:01.520 if your idea is to go to trade things, buy 0:20:01.520 --> 0:20:03.880