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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: We want to take you to the stage here at

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Speaker 2: Bloomberg invest Our own Michael McKee sitting down with the

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Speaker 2: President of the New York Fed, John Williams. You're going

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Speaker 2: to work against me, right, don will I start with

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Speaker 2: the I guess you'd call it the orange elephant in

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Speaker 2: the room, the tariffs that the President put on today.

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Speaker 2: For a long time, you've been saying to me, it's

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Speaker 2: too early to know the effect of the tariffs. Well,

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Speaker 2: now we've got some details on the tariffs.

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Speaker 1: Your reaction, right, And I think the reason I was

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Speaker 1: saying to you it's too early is because it really matters.

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Speaker 3: It matters you.

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Speaker 1: Know, which goods or where tariffs are applying, what countries,

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Speaker 1: how long they apply for.

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Speaker 3: So there's you know, when you look at the research

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Speaker 3: that looks.

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Speaker 1: At the effects of teriffs on the US economy, you know,

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Speaker 1: one of the things that's highlights it depends whether it's

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Speaker 1: consumer goods.

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Speaker 3: It depends on.

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Speaker 1: Whether it's goods that lots of kind trees produced, and

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Speaker 1: a lot of things like that. So you know, it

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Speaker 1: really made sense to let's wait and see find out

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Speaker 1: more about what policies may be put in place, uh,

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Speaker 1: and then kind of you know, come to I would say,

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Speaker 1: you know, conditional judgments about.

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Speaker 3: What does it mean for the US economy. And as

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Speaker 3: you said, we've we are seeing more.

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Speaker 1: Actual actions on tariffs in different dimensions. I would still

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Speaker 1: highlight there's a lot of uncertainty. We don't know how

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Speaker 1: long the tariffs will apply. We don't know what other

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Speaker 1: countries may do in response to this.

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Speaker 3: We don't.

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Speaker 1: We also don't know what else may happen in this, uh,

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Speaker 1: you know, in the in the kind of realm of

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Speaker 1: trade policy. You My own view is that based on

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Speaker 1: experience from previous episodes, based on analysis, is it you know,

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Speaker 1: tariffs on consumer goods especially, they do feed into import

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Speaker 1: prices pretty strongly. That does filter into prices that consumers pay.

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Speaker 3: That happens relatively soon.

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Speaker 1: Tariffs that feed into kind of intermediate inputs, the things

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Speaker 1: that companies use to make other things and to make

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Speaker 1: other things, those tend to pass through more gradually and

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Speaker 1: have maybe last a little bit longer in terms of effects.

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Speaker 3: My view is that, you know, based on what we.

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Speaker 1: Know today, given all the uncertainties around that, you know,

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Speaker 1: I do factory in some effects of tariffs now on

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Speaker 1: inflation on prices, because I think we will see some

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Speaker 1: of those effects later this year, not yet, but maybe

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Speaker 1: later this year. I also you have to factor in

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Speaker 1: how does that affect you know, economic activity, decisions by

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Speaker 1: businesses to invest, consumers to spend, And that's where I

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Speaker 1: think another big uncertainty is we've seen some kind of

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Speaker 1: movements in the data in the last couple of months.

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Speaker 1: I think some of that's in anticipation of tariffs, So

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Speaker 1: it's hard to really read the tea leaves there. But

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Speaker 1: that's something else will be watching carefully, is to what

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Speaker 1: extent is that affecting consumer confidence, business confidence, you know,

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Speaker 1: the uncertainty around this and the effects of the tariffs

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Speaker 1: on economic growth and employment and things like that. So

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Speaker 1: still a lot of uncertainty, I think directionally higher prices

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Speaker 1: in the outlook, at least in mind kind of thinking

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Speaker 1: about what's happening, but also a lot of uncertainly about

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Speaker 1: how the economy responds to this.

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Speaker 2: The twenty eighteen playbook for the tariffs and Trump one

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Speaker 2: point zero, basically outlined by the staff and the tailbook

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Speaker 2: that year, suggested that you basically had two options. You

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Speaker 2: could raise interest rates to fight inflation risk recession, or

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Speaker 2: you could look through ignore the tariffs, assuming that they

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Speaker 2: would be a one time rise in the price level

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Speaker 2: but not an ongoing cause of inflation. What do you

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Speaker 2: think this year, which of those two playbooks should you follow?

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Speaker 1: You're going to get little frustrated, And I answer the

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Speaker 1: same way I answer the last question, Mike, and that

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Speaker 1: is it depends on how these you know, what goods

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Speaker 1: you know the tariffs apply to which countries, how long

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Speaker 1: they're in place for, you know how big they are.

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Speaker 1: So we have to depend on a lot of factors

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Speaker 1: about how big the effects are and maybe how long

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Speaker 1: these effects last. I do go back to the broader

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Speaker 1: context of monetary policy. It's not just about tariffs or

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Speaker 1: trade policy. There's a lot of factors in influence a

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Speaker 1: US economy, economic outlook, and the global economic outlook. You

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Speaker 1: have to take all of those into consideration, look at

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Speaker 1: the totality of the data, look at the risks and uncertainty,

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Speaker 1: and what that means for achieving our maximum employment and

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Speaker 1: price stability goals. So from my perspective, if you go

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Speaker 1: back to the twenty eighteen kind of briefing, we got,

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Speaker 1: you know, clearly you want to think about how long

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Speaker 1: lasting these are, how big the effects are. But I

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Speaker 1: would just reinforce this point, there's a lot of uncertainty

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Speaker 1: about that, and we need to be guided not only

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Speaker 1: by our economic analysis, by our you know, absolutely fantastic

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Speaker 1: staff who does all this work, but also what are

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Speaker 1: we seeing in the data, what are we hearing from

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Speaker 1: business leaders, what are we seeing in you know, out

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Speaker 1: there in the economy, and then from that information kind

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Speaker 1: of get a feel for which direction the economy is going,

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Speaker 1: both in terms of inflation and employment. I mean, the

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Speaker 1: good news here is we're starting the US acadomy is

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Speaker 1: starting in very good place. Unemployment is four percent, the

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Speaker 1: labor market is stabilized after cooling from red hot conditions

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Speaker 1: a couple of years ago. Inflation is two and a

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Speaker 1: half percent, and it's you know, been gradually coming down

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Speaker 1: towards our two percent goal. So we're starting with the

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Speaker 1: economy in a good place. And I would argue we

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Speaker 1: had started it with a monetary policy in a good place,

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Speaker 1: ready in a good position to adjust as needed depending

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Speaker 1: on how the data and the outlook and the risk

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Speaker 1: of the outlook evolved.

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Speaker 2: Well, given the uncertainty you talk about in the time

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Speaker 2: span before we might see things show up. Is it

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Speaker 2: fair to say that it's too early to consider changing

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Speaker 2: interest rates at the March meeting?

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Speaker 1: Well, in my view, I think we need, you know,

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Speaker 1: I think monetary policy is in a very good place.

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Speaker 1: It is you know, modestly restrictive. It is helping keep

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Speaker 1: the economy I think in good balance. I expect the

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Speaker 1: economy to continue to grow this year, roughly in line

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Speaker 1: with you know, the economy's potential. I expect inflation to

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Speaker 1: would you know, over time move down back.

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Speaker 3: To our two percole.

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Speaker 1: So I think monetary policy has got the right, you know,

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Speaker 1: kind of balance right now.

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Speaker 3: It makes sense.

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Speaker 1: To collect, you know, some more information not only about

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Speaker 1: what's happening with trade policy, but obviously there's also what

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Speaker 1: we're seeing in terms of other policies and fiscal policy

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Speaker 1: and regulatory policy. So getting that whole picture and then

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Speaker 1: watch what's happening here in our country but around the

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Speaker 1: world and put all those together to see where monetary policy,

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Speaker 1: you know, what the appropriate stance of policy will be.

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Speaker 1: But to answer your question, I think the current place

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Speaker 1: where policy is good. I don't see a need to

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Speaker 1: change it, right away.

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Speaker 2: All right, there you go, there's one market moving. You

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Speaker 2: mentioned what information you're trying to collect from the companies

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Speaker 2: that you speak to. Are the CEOs has lost as

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Speaker 2: the FED and the rest of us in terms of

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Speaker 2: what the impact of all this is going to be.

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Speaker 1: Well, I think when you talk to business leaders, the

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Speaker 1: first thing that they tell you is they have to

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Speaker 1: prepare for whatever happens. They're not sitting there having to guess,

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Speaker 1: you know, well, this is what will happen or that

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Speaker 1: will happen, but really think through strategically about how to

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Speaker 1: manage you know, different scenarios and how to behave And

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Speaker 1: I think one thing you're getting more of a sense

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Speaker 1: of from some business leaders is, you know, kind of

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Speaker 1: a view of let's be cautious about making big business

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Speaker 1: decisions right now. Let's get that additional information around what's

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Speaker 1: happening in terms of this broad set of policies before

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Speaker 1: making decisions.

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Speaker 3: I mean, measures of you.

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Speaker 1: Know, uncertainty are pretty high right now, and I think

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Speaker 1: people are taking that into account as they think about,

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Speaker 1: you know, maybe collect that more additional information before they

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Speaker 1: make those decisions.

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Speaker 2: Well, as they try to put these things together, what's

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Speaker 2: their underlying view of the economy and what they would do,

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Speaker 2: and then how is this laid on top of it?

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Speaker 1: Well, you know, my again my view coming into this,

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Speaker 1: you know, setting aside to say some of the trade

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Speaker 1: policy issues that we're talking about, is the economy is

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Speaker 1: very strong, very solid growth. We've had very good productivity growth,

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Speaker 1: we have a solid labor market. Uh, and the economies

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Speaker 1: and in good balance, and inflation is coming down. So

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Speaker 1: I think that's your starting place. And then the question

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Speaker 1: is you know what happens with various policies and how

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Speaker 1: does that you know what adjustments you have to make

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Speaker 1: in your your thinking relative to that. But I, you know,

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Speaker 1: firmly believe that we're starting the year not only in

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Speaker 1: where we are today, but or the momentum we have.

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Speaker 3: Is good growth this year, slower growth.

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Speaker 1: Than say, last year, but and inflation, you know, inflationary

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Speaker 1: pressure is coming down. Now of course you have to

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Speaker 1: add to that any policy changes it affects them.

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Speaker 3: Well, that's the big question.

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Speaker 2: What are companies telling you about their plans for dealing

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Speaker 2: with tariffs? Are they going to pass them through?

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Speaker 3: Well?

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Speaker 1: I think you know, again it gets it depends on

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Speaker 1: which industry you're talking about.

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Speaker 3: It depends on uh uh.

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Speaker 1: You know, some tariffs are applying to may apply to

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Speaker 1: some industries or goods and not to others. I mean,

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Speaker 1: right now, I don't hear people literally say and here's

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Speaker 1: how it works. I do go back to the experience

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Speaker 1: of twenty eighteen, you talked about twenty nineteen, and also

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Speaker 1: some of the experience of the pandemic. I mean, when

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Speaker 1: producers or you know, retailers are confronted with much higher costs,

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Speaker 1: you know, they have to figure out what to do,

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Speaker 1: and they're going to you know, try to pass that

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Speaker 1: on to their.

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Speaker 3: Customers as much as they can.

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Speaker 1: They're going to try to find probably some ways to

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Speaker 1: adjust other margins of cost or prices, and you know,

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Speaker 1: other competitors and things may take actions as well. So

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Speaker 1: I think there's not a no, there's no kind of

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Speaker 1: plan that every business has for that. But based on history,

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Speaker 1: what we've seen is, you know, we see a pretty

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Speaker 1: high pass through of tariffs into it least into the

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Speaker 1: import crises.

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Speaker 2: Well, in twenty eighteen, you were looking up at the

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Speaker 2: two percent inflation target and companies had no pricing power,

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Speaker 2: and we were all very excited to go online and

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Speaker 2: shop and get very big discounts that all changed after

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Speaker 2: the COVID pandemic. Does that set us up in a

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Speaker 2: different way to deal with rising prices, our companies going

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Speaker 2: to say, hey, we did it, now, we can do

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Speaker 2: it again.

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Speaker 3: Well, I do think that you're absolutely right.

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Speaker 1: You know, the conditions back then where inflation had underrun

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Speaker 1: our target, you know, moderately for.

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Speaker 3: About a decade.

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Speaker 1: We were looking for inflation to get a little bit

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Speaker 1: higher on a sustained basis of two percent, and the

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Speaker 1: economy was strong.

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Speaker 3: The unemployment rate.

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Speaker 1: Was low in twenty eighteen twenty nineteen, so we're in

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Speaker 1: a very good economy. And the actual policy actions that happened,

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Speaker 1: both on fiscal policy and trade policy, I mean, they clearly.

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Speaker 3: Affected the economy.

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Speaker 1: We saw I think some boosts to inflation, short term

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Speaker 1: boost to inflation, but it was in the context of

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Speaker 1: economy that was you know, hadn't seen inflation for a

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Speaker 1: long time. You know, the experience of the past few

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Speaker 1: years has shown that businesses have become much more tuned

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Speaker 1: to how to figure out how to pass on cost increases.

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Speaker 1: They feel they have more pricing power. They've flexed that

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Speaker 1: pricing power quite a bit during the time of shortage,

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Speaker 1: and I think, you know, households also very sensitive to

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Speaker 1: prices high cost of many goods. So I think it

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Speaker 1: is a different situation today, and you see this in

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Speaker 1: surveys in other form, you know, we talk to people.

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Speaker 1: It is different than it was in twenty eighteen, where

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Speaker 1: really there is almost a decade of no inflation. So

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Speaker 1: I think you have to it's a different context.

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Speaker 2: Well, speaking of surveys, recent surveys that have come out

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Speaker 2: show people think inflation is going up, even at the

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Speaker 2: longer term. The Michigan numbers for five to ten years

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Speaker 2: are up. Are you worried that Americans are going to

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Speaker 2: be much quicker to sort of the anchor their inflation expectations.

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Speaker 1: Well, it's obviously something I watch very closely. Inflation expectations,

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Speaker 1: whether in surveys or market measures or from economists or

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Speaker 1: something that's really important for us to study to understand

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Speaker 1: where you know, the people are thinking about how they

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Speaker 1: view future inflation and that feeds back into the economy.

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Speaker 1: So it's a really important topic. I can't help but

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Speaker 1: point out that the New York Fed we carry out

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Speaker 1: our own survey of households, survey of consumer expectations and

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Speaker 1: study every month of the results from that survey.

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Speaker 3: So it's something I take seriously.

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Speaker 1: So what am I seeing in terms of the surveys

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Speaker 1: I think on the Michigan survey. Clearly it's you know,

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Speaker 1: the most recent readings have moved up quite a bit.

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Speaker 1: That's something to watch closely. I'm not going to say

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Speaker 1: it's not important. I do think that there are some

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Speaker 1: aspects of the Michigan survey that might make it a

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Speaker 1: bit sensitive to some spikes and things. We've seen that

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Speaker 1: in the past, particularly kind of how they ask the question,

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Speaker 1: how they collect the data. There's nothing wrong with it,

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Speaker 1: it's just we've seen that sometimes you'll get a big

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Speaker 1: movement that gets reversed in our survey of consumer expectations

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Speaker 1: that we've done, at least for the data we have,

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Speaker 1: which is not the most recent data. You know, we

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Speaker 1: haven't seen much of a movement in shorter longer run

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Speaker 1: inflation expectations, but something I'll be watching closely.

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Speaker 3: One thing that definitely happens.

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Speaker 1: I think we're hearing from businesses and I think we

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Speaker 1: are getting this from you know, some of the survey data,

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Speaker 1: like in the Michigan survey, is the talk of tariffs.

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Speaker 1: The sense that there's you know, higher prices you know

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Speaker 1: out there is clearly influencing how people are thinking about

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Speaker 1: inflation this year. I'm not seeing as much of an

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Speaker 1: indication in most of these surveys that that's about long

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Speaker 1: run inflation or inflation in the future, but more about

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Speaker 1: inflation in the near term.

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Speaker 3: And clearly, you know, people are.

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Speaker 1: Experiencing some higher prices and are maybe more focused on

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Speaker 1: that right now.

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Speaker 2: You have to come up with your own survey answers.

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Speaker 2: At the March nineteenth meeting. In December, when you put

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Speaker 2: out the last summary of economic projections, it was widely

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Speaker 2: assumed that was sort of a dead letter when you

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Speaker 2: put it out, because nobody knew what Trump was going

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Speaker 2: to do, and by March you'd have a much better idea.

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Speaker 2: Do you have any better idea or is this also

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Speaker 2: going to be something we'll look at and go, we'll

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Speaker 2: see you in June.

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Speaker 1: Well, you know, if you look at my website, I

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Speaker 1: have this thing about research interests and it says monetary

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Speaker 1: policy under uncertainty, And I think that that's a good

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Speaker 1: good description of my job, because you always have uncertainty

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Speaker 1: of uncertainty about policies. We went through the pandemic, We've

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Speaker 1: gone through you know, various you know, events over the

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Speaker 1: past several decades, so you're you're always dealing with that

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Speaker 1: uncertainty and needing to make the best decisions, you know.

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Speaker 1: I do think relative December, clearly some of the actions

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Speaker 1: have happened, and even the discussions in Congress when physical

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Speaker 1: policy have provided you know, a better idea of the

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Speaker 1: types of policies that may that we will or likely see.

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Speaker 1: I still think that I don't have a lot of

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Speaker 1: confidence in say the base case that this is my

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Speaker 1: forecast for the economy, this is where it's going.

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Speaker 3: I'm much more in the kind of.

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Speaker 1: The mode of thinking, there's a bunch of scenarios that

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Speaker 1: could happen. We could see this happen, the tariffs be

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Speaker 1: very short lived, and then we move forward.

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Speaker 3: With there's other where you know, there's much you.

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Speaker 1: Know, more permanent or different, and so it's really thinking

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Speaker 1: through these scenarios, thinking through what the risks those imply

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Speaker 1: for achievement or maximum employment, price to ability goals, and

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Speaker 1: then how do we position policy for that.

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Speaker 3: So it's not.

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Speaker 1: About getting the getting the right guests about where everything's

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Speaker 1: going to happen. But it's really just getting policy position right.

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Speaker 1: So that's how I'm thinking about So do I have

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Speaker 1: more information that helps inform that, Yes, but it's still

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Speaker 1: you know, I think that the base case a would

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Speaker 1: you know, or the one that we're asked about, it's

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Speaker 1: kind of the most likely scenario, is not the only

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Speaker 1: one that's important. You really have to think through all

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Speaker 1: the different paths that we could be on.

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Speaker 2: We along with the summary of economic projections comes everybody's

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Speaker 2: favorite diagram from the FED of the dot plot. In December,

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Speaker 2: you said two this year the consensus median was too

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Speaker 2: rag cuts this year. As of today, we've priced in

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Speaker 2: three in the futures markets. Do you think two is

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Speaker 2: still a baseline or do you really have no idea.

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Speaker 3: At this point?

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Speaker 1: So, Mike, my whole attempt to say I'm not putting

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Speaker 1: a lot of weight on my base case didn't work

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Speaker 1: at all. Right, if I try it again now, I'm kidding.

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Speaker 1: I think it's really hard to know. I mean, right now,

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Speaker 1: the markets, as you say, they're pricing in three to

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Speaker 1: four rate cuts this year based on futures.

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Speaker 3: If you look at the modal.

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Speaker 1: Expectation in the market, based on options, it looks maybe

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Speaker 1: more like one or a little bit more than one

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Speaker 1: cut this year. And again these are market expectations. I'm

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Speaker 1: not making a prediction. I think that's actually really kind

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Speaker 1: of informative. You know, market participants are trying to figure out, well,

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Speaker 1: the modal case is.

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Speaker 3: Something like one cut or maybe a little bit more.

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Speaker 1: But there's just a wide dispersion of views out there.

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Speaker 1: And it gets back to these scenarios. If you're in

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Speaker 1: the market, you have to, you know, think about what

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Speaker 1: are the different scenarios and position for that. Clearly, market

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Speaker 1: participants are kind of thinking about some scenarios where they're

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Speaker 1: protecting against scenarios where the you know, the FED needs

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Speaker 1: to cut some.

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Speaker 3: More than the base case.

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Speaker 1: And I think, you know, I think, what's that's just

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Speaker 1: reminding this is just you know, we're you know, there's

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Speaker 1: a lot of uncertainty about economy, about the policies. I'm

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Speaker 1: always just focused on one thing, which is, you know,

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Speaker 1: how can we set policy and hopefully set a path

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Speaker 1: of policy that you know, best achieves our goals. We're

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Speaker 1: starting in a good place. Let's just try to keep

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Speaker 1: the economy on the right track to get the inflation

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Speaker 1: down to two percent over the next couple of years

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Speaker 1: and keep the you know, maintain the sustaining the strength

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Speaker 1: in the economy and the labor market.

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Speaker 2: I want to switch over to the balance sheet because

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Speaker 2: there's still a lot of interest in our projections. Basically

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Speaker 2: are going to stop QT roughly the middle of this year,

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Speaker 2: but there's also a paragraph in the last minutes that

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Speaker 2: suggests that you might stop it early if the debt

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Speaker 2: ceiling is not resolved, because that could affect liquidity. Is

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Speaker 2: that a real possibility.

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Speaker 1: Well, let me explain you know that that notion. I

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Speaker 1: mean right now, our strategy is hasn't changed. The strategy

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Speaker 1: is we want to continue to reduce our holdings of

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Speaker 1: treasury and mortgage backed securities until we get the level

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Speaker 1: of reserves to what we is somewhat above ample. And

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Speaker 1: that's something we study very carefully.

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Speaker 3: We have a lot of.

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Speaker 1: Information from market participants. We have various statistical and other

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Speaker 1: analysis we do to try to measure or are we

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Speaker 1: providing enough reserves into the banking system to achieve our

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Speaker 1: interest rate control goals. So that is that is a

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Speaker 1: strategy we put in place a couple of years ago.

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Speaker 3: We're still executing on that.

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Speaker 1: One of the things about that strategy is we need

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Speaker 1: to be monitoring what's happening in money markets, what's happening,

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Speaker 1: the repot markets, the FED funds markets, what's happening you know,

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Speaker 1: you know, all these different indicators we're looking at. And

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Speaker 1: with the debt ceiling dynamics that we're talking about here

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Speaker 1: is that during a period of the debt ceiling, what

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Speaker 1: happens is basically the Treasury spends out a lot of

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Speaker 1: their money that they hold in account of the FED.

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Speaker 1: That actually increases reserves. As the debt ceiling is ended,

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Speaker 1: that switches, and so you get big movements in reserve

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Speaker 1: in the amount of reserves out there. There's really not

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Speaker 1: driven by the demand by banks, So the financial sysm

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Speaker 1: the kind of artificially moved around by you know, kind

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Speaker 1: of the dynamics resulting from a debt ceiling issue. And

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Speaker 1: so the point that we're really making is we want

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Speaker 1: to have a good view of what's happening in the

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Speaker 1: money markets, in what's happening in kind of in general there.

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Speaker 1: And this is in a way making it harder to

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Speaker 1: see what's happening because these other movements driven by the

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Speaker 1: debt ceiling dynamics are kind of clouding that picture. So

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Speaker 1: the idea of either pausing or slowing the shrinking of

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Speaker 1: the balance sheet temporarily was really just to make sure

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Speaker 1: that we're you know, while during a period where we

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Speaker 1: don't see things as well, but you know, we don't

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Speaker 1: inadvertently get to a place where reserves are lower than

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Speaker 1: we intend. So it isn't a change in the strategy.

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Speaker 1: It isn't a change in kind of what we're trying

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Speaker 1: to do, But it's really about how do we best

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Speaker 1: execute on that strategy in a way that achieves the

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Speaker 1: shrink each of the balance sheet without any market disruption.

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Speaker 2: All right, we're getting a little low on time, so

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Speaker 2: I'm going to shorten my questions. We'll do something of

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Speaker 2: a lightning ground here. We know that FED defends its

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Speaker 2: independence as important for good monetary policy. Are you worried

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Speaker 2: about FED independence over the next four years.

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Speaker 1: I'm not worried about independence. I am obviously you know

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Speaker 1: Field that FED independence or independence of central banks in general,

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Speaker 1: is extremely important. We carry out our decisions or analysis.

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Speaker 1: Everything we do is to achieve the goals you know

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Speaker 1: that we've been given by Congress of maximum employment and

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Speaker 1: price stability, where just you know, everybody who works in

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Speaker 1: the FED is just committed to achieving those goals as

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Speaker 1: best we can. It's not in any way influenced by

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Speaker 1: partisan or political influences. I think the evidence internationally is

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Speaker 1: having an independent central bank gives you better outcomes for

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Speaker 1: the economy for the people of the country. So it's

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Speaker 1: not because it's not like I like independence because.

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Speaker 3: It feels good or it's comfortable.

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Speaker 1: It's because it's been shown to yield better results in

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Speaker 1: terms of inflation and economic results. And that's why I

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Speaker 1: think it's really important.

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Speaker 2: You've started your review of the monetary policy framework. Is

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Speaker 2: you're expecting to find or do there's been criticism of

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Speaker 2: the FED letting the economy run hot for too long.

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Speaker 2: Do you need to get back to perhaps anticipatory rate

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Speaker 2: moves to keep inflation in check.

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Speaker 1: Well, you know, obviously we are in the process of

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Speaker 1: reviewing our framework, and that a very thorough discussion of

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Speaker 1: a lot of lessons learned, so I won't comment on that.

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Speaker 1: I do think you one important thing was, you know,

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Speaker 1: the previous framework, which was institute in twenty twenty.

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Speaker 3: Was heavily influenced.

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Speaker 1: By the basically decade of very low inflation, interest rates

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Speaker 1: near zero for seven years, and very unusual environment, and

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Speaker 1: designed to address some of those issues, but at the

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Speaker 1: same time, it was designed to be able to set

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Speaker 1: us up for success if the opposite happened, if we

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Speaker 1: had high inflation or two. So although a lot of

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Speaker 1: the attention on the twenty twenty framework was about the

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Speaker 1: changes we made then, from twenty twelve through today, you know,

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Speaker 1: our framework has always emphasized the importance of achieving two

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Speaker 1: percent inflation, price stability, always emphasize the importance of well

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Speaker 1: anchored inflation expectations, and I think just it has always

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Speaker 1: been founded on this notion the price stability is essential

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Speaker 1: for economic prosperity. So that's always been there, that's not

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Speaker 1: going to change, And I think, and again I'll just say,

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Speaker 1: there was never any confusion about that or in any

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Speaker 1: way did our framework interfere with us making the decisions

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Speaker 1: we need to make to make sure that we ultimately

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Speaker 1: restore price stability.

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Speaker 2: Well, let me tie it all together in one last question,

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Speaker 2: because we're basically out of time. But given what's happening

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Speaker 2: on the fiscal side and in Washington, given your review

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Speaker 2: and given where we are in the economy, are we

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Speaker 2: looking at a regime shift in the US economy, one

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Speaker 2: that would lead to changes in the way you think

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Speaker 2: about or perform monetary policy.

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Speaker 1: Well, I think, you know, the economy is US economy

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Speaker 1: is amazingly dynamic.

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Speaker 3: I know that's a theme here.

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Speaker 1: You know, you know, we are the leaders in innovation,

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Speaker 1: We are the leaders of you know, dynamism in the

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Speaker 1: in the global economy. So you're always operating in changing environment.

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Speaker 1: Fiscal policy is part of that. Other policies are part

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Speaker 1: of that change. But in my thirty years of the FED,

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Speaker 1: I've been through, you know, many different cycles of fundamental

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00:23:18,640 --> 00:23:21,520
Speaker 1: changes in our economy. When I you know, when I

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Speaker 1: started out, we didn't have the Internet, we didn't have

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00:23:23,640 --> 00:23:26,760
Speaker 1: a lot of things we take for granted. But I think,

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Speaker 1: you know, from my point of view, we always need

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Speaker 1: to be open to the fact that parts of the economy,

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Speaker 1: parts of the global economy, of changing, and again, how

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Speaker 1: do we take that into account, do our best to

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Speaker 1: understand what that means for achieving our goals and make

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Speaker 1: the right decisions. So is you know, are we seeing

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Speaker 1: changes in you know.

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Speaker 3: Fiscal policy or trade policy?

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Speaker 1: Yes, but we but in the broader context, you know,

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Speaker 1: my whole you know, I would say my whole career

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Speaker 1: has been a time of various changes. We just have

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Speaker 1: to be good at adapting to a changing environment and

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Speaker 1: carrying out our mission.

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Speaker 2: John Williams, thank you very much for joining us today

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Speaker 2: on