for the economy to do in the first quarter? >> i think it will slow down, maybe 1% growth, and it will reaccelerate the second half of the year. >> folks, we'll take a pause as we await the 2:00 hour and the release of the fed decision here as we look at the s&p, the nasdaq was at record territory let's go to steve liesman now. >> thanks very much. the federal reserve leaving rates unchanged at zero to 0.25% and continuing to project zero rates through 2023 i can give you a little detail on that. only one fed official projects a rate hike in 2022. five forecast rate hikes at 2023 bottom line, very few are predicting anything to happen through 2023 it's leaving the long-run funds rate at 2.5% it sees a somewhat better economy, up 0.2%, a little

better unemployment rate, a little better job growth rate for 2021 but mostly leaving the forecast unchanged it's offering a little more detail on asset purchases than it had in the past markets were waiting for guidance on that we did get a little bit more asset purchases, the fed says we'll continue until employment or price stability goals are met -- and price stability goals are met. that brings in line the guidance that the federal reserve has provided for interest rates. brings in line the asset purchase guidance, which is pretty much what was expected. and then a whole bunch of stuff that reads exactly like it did last time. the reason is because it's the same they are committed to using their full range of tools, economic recovery remains well below beginning of the year, weak demand holding down inflation, weak oil prices, the path of the economy the fed has said depends on the course of the virus and the health crisis will continue to weigh on economic activity. it continues to aim for inflation above 2%, quote, for some time. and is maintaining zero rates

until maximum employment and price stability of 2% inflation is achieved. finally, one little note, or major note, the fed is extending the emergency dollar swap lines it put in place with nine foreign central banks. back to you. >> most of them think no changes in interest rates into 2023. only one saying rates might go up in 2022 did i hear you say that the prediction of economic growth for 2021 was 4.2 aggregate >> yes and i can double check that in a second yeah, it's 4.2 and i believe that's up 0.2%. >> from what it was. that would be a very good year, wouldn't it, steve, in terms of growth over the past few years we haven't even had a 3% growth year over the past four years. >> yes, that would be a very good year. and if you give me half a

second, i'll get you the actual projections. yes, from 4 to 4.2 going down to 3.2 back to 4.2. the fed believing the long-run rate is 1.8% for growth. you bring up an interesting point because really what's happening is the federal reserve expects the economy to run above potential for three years, as it catches up with the losses from 2020 and it sees really very modest inflation and very low interest rates in that context. so, you want to know a reason for buoyancy, perhaps, in the stock market, the fed is going to let it run for a while, not changing interest rates, not forecasting much inflation while the economy runs above potential. >> mona, let me -- steve, thank you very much. mona, what do you think of this response here of the fed is there anything in it that surprises you or anything that would change anything that you're doing with your -- as you manage assets? >> it was interesting. we were certainly keeping an eye

on that economic growth projection now that the vaccines are starting to roll out, what the fed react to it. it is interesting they did raise gdp. as steve noted, that's well above potential growth rate at 1.5 to 1.8%. it reiterates the message that next year could be a good year in terms of growth you have to be careful about more and more consensus. already had a nice run already s&p broadly has been 8.5%, 9% this quarter alone that value rotation we've seen over the past few weeks continues to have some legs. we think in 2021 as well certainly the fed is reiterating some of that positive growth outlook we expect. and that probably means -- probably comes more towards the second half of next year so, other than that, we were looking for the guidance around the bond purchases, as steve mentioned as well, and i think the market will be at least satisfied with them updating that to some extent.

>> so, obviously financial assets depend in large part on financial conditions the economy looks, according to the fed, i don't know how good their prediction rate is, at being accurate but the one thing we do know is interest rates are going to be very low for a very long time. that makes money very cheap. that's got to help risk assets >>ist really the combination of two things that matters. the first is the above trend growth, which you were asking steve about. the second is even though growth is going to be above trend, the fed is going to be very accommodative. we knew that from their guidance on rates and the new guidance on asset purchases kind of brings that in line what the fed is saying, even as growth accelerates or exceeds expectations next year, they're going to continue to buy bonds and they're going to continue to keep rates at zero i think you're right that is a very supportive backdrop for markets in general. we need the economic growth to

come through so it's primarily conditional on the pandemic subsiding and economic normalcy returning. but if that happens, having accommodative fed, i think, does provide a very constructive back drop and the announcement today on continuing bond purchasing throughout that period, i think, is important and goes in that same direction. >> let me bring steve back in before i pose one to david kelley steve? >> yeah, and i think i'm going to set up david kelley for you, tyler. i want to point out the 2021 forecast for unemployment has been slashed from 5.5% to 5.0% i think that comes from the better unemployment numbers. i want people to understand, these are conditional forecasts. want only are they forecasts, not promises from the fed but one piece is conditional on the other. you're not going to get zero rates if you have inflation that ticks up and goes to 3%, 4%, 5%. that's going to make the zero rate forecast change you can't take zero and go to

the bank and say, give me my zero interest rates if inflation is going to be higher. i think the fed is telling you, unemployment coming down and not creating inflationary conditions, that, yes, we will have low rates for a long time to come. >> david, why don't you react to that and also what i just noticed on the screen there, and i look at the ten-year -- a yield on the ten-year bond and it's 1.4 or whatever it was. it went quickly. or 0.98. why have those interest rates risen in the face of what we know are going to be prolonged very low, near zero bound interest rates >> because the fed has made a distinction between what it's going to do with long rates and short rates. it says it's going to keep the federal funds rates unless it achieved its targets of maximum employment and inflation above 2% but it's only going to keep buying bonds at this pace until

it's made substantial further progress towards those goals i think they'll meet that substantial further progress towards those goals by this time next year or maybe going into early 2022, if you get a surge in economic activity as the pandemic ends. and that says they stop buying the bonds at that point or taper the purchases. that's long before they'll get to a position of maximum employment, which might be a better full% unemployment rate the way this works out, they're guaranteeing a steeper yield curve rate that's their target, they'll stop buying bonds at the long end before they stop anchoring yields at the short end. >> go ahead. >> i think everybody expected them to stop buying bonds before the rate hike. if i could just say something about -- responding to what david said about employment being 4%, i don't think that's right. i think the fed has made their employment goals more ambitious. now they have a broad, inclusive

goal for the labor market. they talked about the labor market conditions at the end of last year what they're going for. that's not 4% unemployment rate, that's an unemployment rate with a 3 handle it's important to keep in mind, this is an ambitious fed with regards to the labor market. full employment means much more than it did previously because of that broad and inclusive nature and i think the fed will be more ambitious here, which could mean rates on hold for longer than what david is suggesting. >> david, why don't you -- david, react to that >> i can't disagree with that. i'm saying they'll keep rates low until we get to at least 4%. but jay powell and now janet yellen believe in super unemployment rate. i think they have social commitment to help those who find it hardest to find a job. i wouldn't be surprised if the fed felt it was their responsibility to keep the short rates at these levels until they get below 4% the key is they only have to

make progress along that road before they taper bond purchases. that suggests that the tapering of bond purchases is going to happen, you know, years, perhaps, in advance of an increase in short-term rates that's really what the key message here is. >> correct me if i'm wrong, david, but i thought i heard at the beginning of our segment you said something on the order that the economy is a little sluggish right now and you expect it to be slow into the first quarter of 2021. so, how do you then react to that 4.2% economic growth for 2021 overall >> i think it's perfectly reasonable this is a weird recovery this one we know when we get the population vaccinated, there's pent-up demand and also pent-up supply this is a situation where you can reopen the restaurants, reopen the sports stadiums, reopen airports, can you do it all very fast. it's almost baked in we get the surge have growth in the second half of 2021 which we've never

said about any previous recovery. >> mona, final thought from you here. >> absolutely. i think the fed is doing what we want for now keep that in mind. keeping rates low, accommodative with bond purchases as we are getting through this recovery over the next one or two quarters we have to be mindful of what we do second half of 2021 and into 2022 when we might have a very different economy as david just alluded to that surge in pent-up demand could be a driver of potential inflation as well. something to keep in mind. but for now, we like what we're seeing >> steve, you have a final one >> just real quick echoing what mona said i hope we get through this really difficult period here and come back in the next fedle meeting or the one after that, we're talking about tremendous upside from a recovering economy and whether the fed is correctly positioned for that kind of economy. >> let me close with this. i'm going to ask our three panelists. mona, you first, then john, then david. does chair powell get

reappointed by now president-elect biden? >> i still say yes, tyler. i think he's been a great bipartisan i think he's gotten us through this crisis and he's the right person to take us out of it. >> certainly knows janet jelen that's one yes how about you, john bellows? >> i'm yes, too. i think it would be re-establishing the norm of reappointing fed chairs for a second term. obama did that. >> david >> absolutely. i think jay powell has proven very much the man for the times we're in right now >> jay powell, you're going to hollywood. thank you very much, guys. >> happy holidays. >> good holidays to everybody. let's go to kelly. >> thank you, ty let's take a look at the markets. they've been back and forth but the stocks are pretty much at session lows bob pisani has more. bob? >> not too much movement around

the fmoc statement take a look at the s&p 3698 where we were going into that statement at 2:00 p.m. eastern time we're a little below that. that's not terribly statistically significant. you get these gyrations around the fed minutes. what was interesting, that move up in the ten-year you heard commentary about that, 0.94 that moves some bank stocks. the kbe, a little move up. bank stocks have been holding up well in the last month a value play that has done well. the kbe moved into positive territory on that news overall on the markets, something noticeable in the last week or so is the markets have startened to flatten out a little bit i think this is more than just the late december lull we normally get the markets have been flatter, the volume has been lighter, the new highs are not advancing any more the new high list is rather borne boring and not interesting. so, i think what's going on here is pricing has really been pulled forward around the

vaccine rollout. now that that's happening, the market is starting to flatten out. the bulls are hanging their hat on that stimulus bill. it's still floating out there. i think the key thing is that would remove an element of uncertainty around the market but it's not at all clear that even getting a stimulus deal at this point is going to significantly move prices forward. remember, 22 times forward earnings right now for 2021. that's a very pricey multiple, even expecting a terrific spring reopening. guys, back to you. >> thank you let's go to rick santelli in chicago for a check on bonds hi, rick >> hi, tyler definitely we are seeing movement in treasuries as everybody has been discussing. let's go along the yield curve you see 2s, hovering at 12 basis points not a lot of volatility. the longer maturity, more volatility 91 basis points pre-fed statement, and that's the high water yield mark

165 we started at with regard to 30-year bonds. hovering close to 169. even the dollar index has managed to do a little trading above settlement that's not really a big deal considering they're still virtually at 31-month lows consider this, every orchestra has a conductor. every baseball game has an umpire you the umpires and conductors do not control the music or the game they're there to help guide to the long which is what the fed has done the discussion about the fed and the market, i understand, it has a big thumb on a small scale right now. in the end, we should remember a lot of issues from the credit crisis the main issue is, the fed, like many of us, has no idea how hot the market may get, how hot inflation may get and whether we're truly going to welcome the decade, in the old adage, the

roaring '20s kelly, back to you. >> rick santelli. we're about 15 minutes away from fed chair powell's news conference at 2:30 p.m. eastern time we'll bring it to you as soon as it begins. first, a former fed governor weighs in on the fed's actions and the marketctn. aio students of color typically do not have access to high quality computer science and stem education. ♪ i joined amazon because i wanted to change education and i am impatient. amazon gives me the resources to change the world at a pace that i want to change it. ♪ we provide students stem scholarships and teachers with support.

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ylan with some news on google go ahead >> texas is leading a multistage anti-trust lawsuit against google focused on its advertising business in a video posted to twitter, ken paxton said google is trying to control pricing, engage in market collusions and manipulate the advertising market now, if you remember, texas was one of the states that joined into the justice department's complaint against google back in the full in this case, this complaint will be focused on advertising and the ad tech business ag paxton saying if this was a baseball game, google would be

the pitcher, the batter and the umpire as well the doj's suit, however, was focused primarily on search. these two lawsuits remain separate for now we will see if they end up combined down the road we could also still see action from other states as well. for now, texas filing a multistate anti-trust lawsuit against google. >> thank you very much >> we're keeping an eye on the markets. google down about 0.6% the nasdaq still positive by about 15 points but the dow is down 100 right now as it digests the fed decision we just got joining us is former federal reserve board governor it's great to have you back and pick your mind some disappointment in the marketplace, they didn't do the twist, so to speak, and start buying more bonds and ten-year in the higher range. as we spoke about last hour, it's not clear why they would need to when the ten-year is

below 10%. at what point, if ever, do you think they're going to use that tool >> i think the key now is that it's in a wait and see mode. i'm not at all surprised by the fact they didn't do much today that's exactly what i expected there are a bunch of countervailing forces they're keeping a watch on and it can go either way right now the key thing, it's all about the covid. in terms of where they're sitting right now, they could have extremely bad, nightmarish winter, where economic activity is curtailed and people stop spending because things get so bad. it's tragic it's happening but that's the way it is of course, you have the good news on the vaccine and then the question is going to be, how quickly is the vaccine actually get administered to enough people so we actually can start returning to normal.

and when that happens, there could be a lot of good news because there could be pent-up demand both of those go in opposite directions the other issue is what's going to happen in terms of the federal reserve in terms of fiscal expansion i think the fed expects something will be passed but the question is, how much and that's something i think is really sort of not going to be a big surprise a juncture like this, you want to relax, wait to see the data and act appropriately when it does come in right now there's not much that should direct them. >> the key kind of part of this statement that i want to read to you is when they're talking about how long they're going to continue the current bond-buying, which is 80 billion of treasuries, 40 billion in mortgage-backed securities they say the federal reserve will continue to do so

we're talking about an unemployment rate below 7% today and the fed's own projections have it 5% in had the second half of next year now. doesn't that count as substantial progress >> the answer is there has been progress we have been experiencing a v-shaped recovery. the unemployment rate was close to 15% and now it's below 7% there's a lot of uncertainty now. given what's happened in terms of the pandemic, it's really gotten much worse in the united states these are very bad numbers we're. weeg sear bigger shutdowns even if a state doesn't shut down, if it's bad, people stop going out. you become a lot more cautious i know i am, things are getting worse even in new york and we're a little more reluctant, we won't go to a crowded grocery store, for example all that stuff is actually not good news and other signs which

are good news. in a situation like this, you want to wait to see what happens. the real problem is, not that we haven't had a v-shaped recovery. we have. but from here right now we don't know how quickly we'll be getting back to full employment, which is the nature of 4%. that's the problem with facing the fed at this particular juncture >> fair enough again, i still wonder if there shouldn't be more of a reaction to the changing fundamentals, but understandably this is a much larger scheme of things wants to focus on not tightening too quickly. that's the whole point of changing the inflation framework, right >> exactly i think the right way to think about this, the fed has to be forward-looking. yes, the numbers have been a little better in terms of how fast the recovery occurred that's good news on the other hand, the pandemic is now worsen in the united states than people expected. and so that could be the bad news again, looking forward, the

economy hasn't been hit that hard yet because we're just starting what we can have as a nightmare winter that's exactly what the fed should be worried about. in that kind of context, there's no reason for them to actually deviate from their expansionary policy they've been pursuing up until recently. >> understood. thanks for joining us today. it's good to see you with your thoughts about the central bank's decision. news conference a couple minutes away, ty. >> that is right let's take a look at the markets for you. they are slightly lower right now. the dow down about 100 points. when we come back, we'll get you set for the press conference from fed chair jay powell. the results are out. we'll hear what he has to say in about five minutes' time i will send out an army to find you in the middle of the darkest night

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as we await fed chair powell's press conference, let's go back to david kelley for some final thoughts welcome back let's switch and talk about the fiscal side of the equation here what would you look for or what would cheer you coming out of congress coming out of the last

three days >> a decision. no, i think we will get a $900 billion package. the most important thing is helping out with unemployment benefits, state and local aid. if they add $600 stimulus check to that, that's fine it's no harm but it doesn't really help things i think the most important thing is just stop negotiating and pass something to help people just pay the bills over the holiday season and into what's going to be a very tough first quarter. >> yeah, it's been going on and on and on since before the -- before the election, obviously and then it kind of got tabled and now it has come back, as i think everybody realizes we are heading into a dark corner here. as far as the longer for lower, there is nothing to change that view right now, is there, david? >> no. i think jay powell is going to cool like a dove he wants to be very -- he's going to have to be very concerned about the economy and he's going to be pretty sober about the whole thing because he

wants to hold long-term interest rates down confidence is going to come from a fiscal package and a vaccine the fed wants to hold long rates low. the best way to do that is sound concerned. i don't expect him to sound too bullish. >> it's been great to have you, as always, as we await chair powell to come out i don't expect there will be any bombshells here whatsoever you say he will cool like a dove and here comes santa claus, david. here comes santa claus walking down santa claus lane, jay powell >> we are strongly committed to achieving the monetary policy goals that congress has given us maximum employment and price stability. since the beginning of the pandemic, we've taken forceful actions to provide relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy. today my colleagues on the fmoc and i reaffirmed our strong forward guidance for interest

rates and also provided additional guidance for our asset purchases. together these measures will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete economic activity has continued to recover from its depressed second quarter level the substantial reopening of the economy led to a rapid rebound in activity and real gdp rose at annual rate of 3% in the third quarter. in recent months, however, the pace of improvement has moderated. household spending on goods, especially durable goods has been good. in contrast, spending on services has been low, including travel and hospitality the overall rebound in household spending owes, in part, to federal stimulus payments and expanded unemployment benefits, which provided essential support

to many families and individuals. the housing sector has fully recovered from the downturn, supported in part by low mortgage rates business investment has also picked up. the recovery has progressed more quickly than generally expected and forecasts from fmoc participants for economic growth this year have been revised up since our september summary of economic projections even so, overall, economic activity remains well below its level before the pandemic and the path ahead remains highly uncertain. in the labor market, more than half of the 22 million jobs lost in march and april have been regained as many people were able to return to work as with overall economic activity, the pace of improvement in the labor market has moderated. job growth slowed to 245,000 in november and while the unemployment rate has continued to decline, it remains elevated at 6.7%.

participation in the labor market remains notably below prepandemic levels although there has been much progress in the labor market since the spring, we will not lose sight of the millions of americans who remain out of work looking ahead, fmoc participants project the unemployment rate to continue to decline. the medium projection is 5% at the end of next year and moves below 4% by 2023 the economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been the hardest hit. in particular, high level of joblessness has been especially severe for lower wage workers in the service sector and for african-americans and hispanics. the economic dislocation has up-ended many lives and created great uncertainty about the future the pandemic has also left a significant imprint on inflation. following large declines in the spring, consumer prices picked up over the summer but have

leveled out more recently. for those sectors that have been most adversely affected by the pandemic, prices remain particularly soft. overall, on a 12-month basis, inflation remains below our 2% longer run objective the median inflation projection from fmoc participants rises from 1.2% this year to 1.8% next year and reaches 2% in 2023. outlook for the economy is unsxern will depend in large part on the course of the virus. news on vaccine has been very positive however challenges and circumstances remain with regard to the timing, distribution of vaccines as well as their efficacy it remains difficult to assess the timing and scope of the economic implications of these developments the ongoing surge in new covid-19 cases, both here in the united states and abroad, is particularly concerning and the

next few months are likely to be very challenging all of us have a role to play in our nation's response to the pandemic following the advice of public health professionals to appropriate social distances and wear masks in public will help get the economy back to full strength a full economic recovery is unlikely until people are confident that it is safe to engage -- re-engage in a broad range of activities. as we previously announced, we are now releasing the entire package of our sep materials at the same time as our fmoc statement. included in these materials are two new exhibits that show how the balance of participants' assessment of uncertainty and risks have evolved over time since the onset of the pandemic, nearly all participants continue to judge the level of uncertainty about the economic outlook as elevated. in terms of risks to the outlook, fewer participants see the balance of risks as weighted to the downside than september

while a little more than half of participants now judge risks to be broadly balanced for economic activity, a similar number continue to see risks weighted to the downside for inflation. the fed's response to this crisis has been guided by our mandate to promote maximum employment and stable prices for the american people, along with our responsibilities to promote the stability of the financial system as noted in our statement on longer-run goals and monetary policy strategy, we view maximum employment as a broad-based and inclusive goal our ability to achieve maximum employment in the years ahead depends importantly on having longer term inflation expectations well anchored at 2% as we reiterated in today's statement with inflation running persistently below 2%, we'll aim to achieve inflation moderately above 2% for some time so inflation averages 2% and long-term inflation rates remain well anchored at 2%. we expect to maintain an

accommodative stance until these goals are achieved with regard to interest rates, we continue to expect it will be appropriate pro maintain the current zero to 0.25 for federal funds rate until labor markets have reached maximum employment and inflation is 2% and on track to moderately exceed 2% for some time in addition, as we noted in today's policy statement, we will continue to increase our holdings of treasury securities by at least 80 billion er month and of agency mortgage-backed securities by 40 billion per month until substantial further progress has been made toward our maximum employment and price stability goals. we believe the increase in our balance sheet this year has materially eased financial conditions and is providing substantial support to the economy. combined with our forward guidance for the federal funds rate, our enhanced balance sheet guidance will ensure that the stance of monetary policy remains highly accommodative as the recovery progresses.

our guidance is outcome-based and tied to progress towards reaching our employment and inflation goals. thus, if progress toward our goals were to slow, the guidance would convey our intention to increase policy accommodation through a lower expected path of the federal funds rate and higher expected path to the balance sheet. overall our interest rate and balance sheet tools are providing powerful support to the economy and will continue to do so. the federal reserve has also been taking broad and forceful actions to more directly support the flow of credit in the economy for households, for businesses large and small, and for state and local governments. preserving the flow of credit is essential for mitigating damage to the economy and promoting a robust recovery. many of our programs rely on emergency lending powers that require the support of the treasury department and available in only unusual circumstances such as though those we find ourselves in today. these programs serve as a backstop to key credit markets and helped restore the credit to

private lenders through normal channels we have enabled in large part by financial backing and support from congress and the treasury although funds from the c.a.r.e.s. act will not be available to support new loans or new purchases after a -- of assets after december 31, the treasury could authorize support for emerging lending facilities if needed through the exchange stabilization fund when the time comes after the crisis has passed, we will put these emergency tools back in the box. as i have emphasized before, these are lending powers, not spending powers. the fed cannot grant money to particular beneficiaries we can only create programs or facilities with broad-based eligibility to make loans to solvent entities with the expectation the loans will be repaid many borrowers are benefiting from these programs, as is the overall economy. but for many others, getting a loan that may be difficult to reradio pay may not be the answer in these cases, direct fiscal

support may be needed. elected officials have the power to tax and spend and to make decisions about where we as a society should direct our collective resources the fiscal policy actions that have been taken thus far have made a critical difference to families, businesses and communities across the country even sew, the current economic downturn is the most severe of our lifetimes. it will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year and it may take continued support from monetary and fiscal policy to achieve that to conclude, we understand that our actions affect communities, families and businesses across the country. everything we do is in service to our public mission. we are committed to using our full range of tools to support the economy and help assure the recovery from this difficult period will be as robust as possible thank you. i look forward to your questions. >> thank you

rich miller. >> thank you very much, mr. chairman thank you, michelle. i wonder if i could start with the -- we have unemployment now at 6.7%, the sep sees it falling. core inflation is 1.4 and the sep sees it rising to 1.8 likewise would that constitute substantial further progress toward the committee's maximum employment and price stability goals? >> yes so, we're not going to be identifying specific -- associating that test with specific numbers at this point so, really the question is, what do we mean by -- by that language and really the overarching message, rich, is our guidance for both interest rates and asset purchases will keep monetary policy accommodative until our maximum employment and price stability goals are

achieved that's a powerful message. so, substantial further progress means what it says it means we'll be looking for employment to be substantially closer to assessments of its maximum level and inflation to be substantially closer to our 2% longer run goal before we start making adjustments to our purchases. i would also point out that by increasing our asset holdings, we see ourselves as adding policy accommodation there will come a time when the economy does not require increasing amounts of policy accommodation and when that time comes, and that will be uncertain, in any case, is some ways off so, i can't give you an exact set of numbers as we approach that point, we'll be evaluating that when we see ourselves on a path to achieve that goal, then we will say so undoubtedly well in advance of any time when we would actually consider gradually tapering the pace of

purchases. >> very quickly on that. you mention the next couple of months is going to be very challenging and regarding asset purchases, why not increase the duration you just said given what you see as a very challenging period ahead. >> so, you know, again, i would start with what we actually did at the meeting, which was we provided this guidance about the path of asset purchases. i just went through what they -- what the guidance we put forw d forward. i guess since september we adopted a flexible average inflation targeting framework. we have provided rate guidance that is tightly linked to the goals as expressed in that new framework and now we've done the same for asset purchases so, you know, we've been sort of -- as the future has become

clear and as we've absorbed new developments in the medical sphere and also in the economy, we have began to see further so, we started to be able to provide further important guidance we think that the asset purchase guidance is very important we think the priorle language of -- in coming months was obviously temporary. this links that guidance -- those purchases to actual substantial further progress towards our mandated goals we think that's important. and we think that that is important to have done i would just add, though, that we also continue to think our current policy stance is appropriate. we think it's providing a great deal of support for the economy. financial conditions are highly accommodative. and, you know, we monitor a range of financial condition indexes. there are many of them they'll all pretty much tell you that you can also look at the

interest-senses ive parts of the economy, for example, housing, durable sales, vehicle sales if those parts of the economy are performing very, very well the parts of the economy that are weak are service sector that involve close contact. those are not being held back by financial conditions but, rather, by the spread of the virus. i'll close by just saying, we do have the flexibility to provide more accommodations through the channel. you mentioned and through other channels and -- we are committed to using our full range of tools to support the u.s. economy, to achieve our goals. we will continue to use our tools to support the economy for as long as it takes until the job is well and truly done no one should doubt that >> thank you >> thank you nick >> thank you "wall street journal."

chair powell, two-part question. what, if anything, would prompt the fed to shift treasury purchases toward the longer end of the curve as you did with your prior qe programs and does your guidance today on asset purchases foreclose the possibility that you could at some point lengthen maturities while simultaneously tapering the monthly purchase amounts >> well, nick, on the first part of the question, i wouldn't want to sort of talk about hypothetical situations. we look at our overall stance of policy, overall financial conditions, we look at what's going on in the economy, different parts of the economy we ask ourselves, should we change our policy stance we do that at every meeting. we look at where financial conditions are now and we feel they are appropriate for now any time we feel like the economy could use stronger

accommodation, we would be prepared to provide it right now we're providing a great deal and we happen to think it's the right amount. you mentioned -- i think you're referring to the idea of maintaining the duration, but reducing the quantity, which is sort of what the bank of canada did. that is something that we -- you know, that we talked about in the last meeting and was addressed in the minutes views were mixed i wouldn't say that's something that's high on our list of possibilities. >> thank you >> thank you victoria >> hi, victoria with politico i wanted to ask about the 133 facilities chair powell,ing you said you accept secretary mnuchin's interpretation of the c.a.r.e.s. act on what should happen with those programs first of all, i'm curious whether under a new treasury secretary you will accept

whatever legal interpretation they put forward for those programs and then also, given there isn't a statutory requirement for you to have financial backing from treasury for 133 facilities, do you have plans for any future facilities that don't require treasury backing >> so, on your first question, we really have not thought about that we're very focused on -- we have a lot to do now and we have not focused on that question and i really have nothing to add on that. your second question is -- sorry -- oh, if there were -- no, we would have the ability -- certainly we would have th ability to do facilities under 133 in some cases with no backing but we can't do any 133 facilities without the approval of the treasury secretary. but we did some facilities -- i think one of our facilities this time didn't have any treasury backing, and i think some in the

round of -- during the global financial crisis also didn't have any >> do you have any plans -- would you consider doing more facilities if that became necessary without treasury backing? >> i would say we're -- we have the authorities we have. we will use them if they're needed and if the law permits us to do so we would always do that. we do not have any plans for the future about this. we're very focused on getting through year end we've been very focused on the issues that are right in front of us. honestly, we're not -- we're not planning on anything or having any discussions about what we might do down the road >> thank you >> thank you steve liesman. >> thank you, mr. chairman happy new year i know how much you enjoy talking about fiscal stimulus, so let me ask you directly about fiscal stimulus. there's talk right now of $900

billion fiscal stimulus program in congress. is that sufficient is that what you're looking for? you think that will be sufficient for helping the economy? finally, you talked about the idea of how concerning the recent surge is. i wonder if you could put some . i wonder if you can put detail on that. where could employment go? what could happen to gdp in the first quarter? thank you. >> so on fiscal policy i would say a couple of things the case for fiscal policy right now is very, very strong and i think that is widely understood, i would say now. the details of it are entirely up to congress, but with the expiration of unemployment benefits, some of the unemployment benefits, expiration of eviction moratoriums, with the virus spreading the way it is, tlas a need for households and businesses to have fiscal support. i think that is widely

understood so i think it would be -- i certainly would welcome the work that congress is doing right now. it's not up to us to judge that work it's really theirs and i don't have a view for you on the size of it. it's obviously a substantial bill on the surge, you know, it's an interesting question we, and others, too, have consistently expected there to be more economic -- that growth in cases would hold back the economy more than it has we've overestimated the effects of the economy that these spikes are having this spike is so much larger, and i think forecasters generally do think that this will have an effect on suppressing activity, especially getting together in bars, restaurants, in airplanes and

hotels, things like that you're starting to see that. in the high frequency data, you're starting to see that show up the case numbers are so high and so widespread across the country that that seems like it must happen now, how big will it be? we don't really know you know, there are a lot of estimates. the general expectation is you're seeing some slowing now and you'll see the first quarter could well be -- what we said is coming months are going to be challenging. the first quarter will certainly show significant effects from this at the same time, people are getting vaccinated now they're getting vaccinated and by the end of the first quarter into the second quarter you'll be seeing significant numbers of people vaccinated how will that play into economic activity again, we don't have any experience with this you have to think that some time in the middle of next year, you will see people feeling

comfortable to go out and engaging in broader activities some people are doing it now without a vaccine, right, in many farthers of the country my expectation, nonetheless, and many people have the expectation that the second half of next year should -- the economy should be performing strongly. we should be -- you know, we should be getting people back to work businesses should be reopening and that kind of thing the issue is more the next four or five months next four, five, six months. that is key. clearly, it's going to be need for help there and, you know, my sense and hope is that we'll be getting that. >> thank you gi gina. >> hi, chair powell. thanks for taking our questions. mentioned as valuation concern especially and you mentioned earlier today

that the housing market looks more or less fully healed. so i guess i wonder, are you worried about valuation pressures there? and if so, what can the fed do to contain those >> you know, so we monitor and housing prices is something we've been monitoring. you see them moving up you see very high demand this is the housing market people have been expecting since 2010 and then, you know, not many, when the pandemic hit, thought this would produce that. but it has they're not a level of concern right now. it's just reflective of a lot of demand and builders are going to bring forth supply there's also a sense that this may be pent-up demand from when the economy was closed once that demand is met, the real level of demand will be more manageable.

housing prices themselves are not a financial stability concern at the moment. we will watch that carefully but in the near term that's not an issue we're concerned about. >> thank you edward lawrence? >> thank you for the question, mr. chairman we're talking about retail sales numbers are sluggish this month, unemployment, job growth has slowed down. is there more that the fed can do or is it squarely in the congress' realm? >> there is more we can do asset programs, focus on -- there's a number of options we would have to provide more support to the economy

i would say, though, in the near term the help people need isn't just from low interest rates it's really support. we've talked about this as all of these government policies trying to work together to create a bridge across this chasm, economic chasm created across the pandemic. for many americans, that bridge is there, and they're across it. there's a group for which they don't have a bridge yet. that's who we're talking about here it's the 10 million people who lost their jobs, people who may lose their homes there's need out there there's small businesses all over the country that have been basically unable to really

function and they're just hanging on by the way, now that we can see the light at the end of the tunnel, it would be bad to see people losing their business, their life's work or generations worth of work because they couldn't last another few months, which is what it amounts to we have more we can do and we'll i think we'll need to continue to support this economy because it should be growing at a fairly healthy clip by the second half of next year but it's going to be a while before we are really back to the levels of labor market -- conditions in the labor market we had earlier this year and much of the last years. that's how i think about it. >> thank you. >> thank you howard schneider

>> hi, chair powell. thanks for doing this. thanks, michelle do you have a working estimate on when the u.s. might reach something approaching herd immutant secondly, if you could, please, connect with me the lack of movement on the the decision to leave the bond purchases with inflation reaching 2%. some might argue that you need to do more to start fixing those expectations and to let this drift and say we're going to miss our target for another three years. >> in terms of the vaccine, we do estimates on when we would reach herd immutant. it depends on assumptions, such as how many people will take the vaccine and how fast will the rollout be it's assumption, based on assumption, based on assumption.

but, you know, some time it's possible some time in the middle or second half of next year. i'm not going to try to be precise. it's just another estimate under a normal set of exceptions, it could happen as early as next year your second question, in terms of inflation, a couple of things you have to be honest with yourself about inflation there are significant disinflationary measures around the world and have been for a while. they persist today it's not going to be easy to have inflation move up it's going to take some time it took a long time to get inflation back to 2% in the last crisis we're honest with ourselves and you, and the s&p, that even with the very high level of accommodation that we're

providing both through low rates and very high levels of asset purchases, it will take some time because that's what the under drls lying issue is in our economy. that's why we say that and we've adopted the flexible inflation target that's why we're aiming for an overshoot. we're honest with ourselves and the public that it will take some time to get there in terms of would it really speed it up a lot to move asset purchases? i don't think that would really be -- i think it's going to take a long time, however you do it we've been having long expansions because the old model was inflation would come along, the fed would tighten and we would have a recession now, inflation has been low and we haven't had that dynamic, and the result has been three of the