and an equity of outcomes across the demographics so effectively what the fed needs to see is a labor force participation rate to at least pre-pandemic levels. >> all right we are going to take a break right there? mona, i'll get you in in a few seconds but let's go to steve liesman for the fed decision. >> interest rates unchanged after the april meeting and not changing, continuing with $120 billion of asset purchases under the quantitative easing program and noting progress on vaccinations and saying there had been help from strong support, strong policy support an upgrade tlohroughout to the economy. the fed said employment strengthened which is an upgrade from the prior payment and the pandemic affected sectors remain

weak but those sector shown impr improvement and the fed says largely due to transitory factors. some playing a drinking game there's the first transitory to the day from the federal reserve. the fed will continue to aim for inflation above 2% and it's committed to using the full range of tools. we have a federal reserve that is upgrading the outlook for the economy. noting the higher inflation rates that are out there but once again not changing policy in the face of that or even the policy outlook for the moment. >> is there anything in here textually or sub tex julily that would change anyone's you that the first tightening of quantitative easing comes not this year but next year?

is there anything to suggest that >> no. as you know, we take the uv light to the statement to make sure we don't miss any hidden signals. we do decoding of the first letter of each sentence and i don't see that in here i would not be changing my outlo outlook for fed policy based on this statement may have a chance listening to the press conference if powell moves to take the comment on the economy being at an inflection point and mover it over and say policy at an inflection point but not what he is saying so far. he continues to watch the virus and want to see the jobs numbers come down, get back to where they were before the pandemic and ready to imbide transitory inflation. >> stay there and as i bring back mona who wrote in the note this morning we believe the fed will be on hold and try not to

make waves at today's meeting. mona, you nailed it. that's what happened i like that. is there anything in what you have seen or heard that's different than what you expected >> look. i think the fed made it clear they knew if they started to talk about changing their stance either on tapering assets or the fed funds rate that would create a ripple through the markets i don't think that was the objective today? they clearly don't want to be front and center in the news just yet and couldn't get around acknowledging that the economy has strengthened we have seen it in retail sales, like the earnings figures, gdp growth will come out tomorrow. unemployment, the jobs report have all been pretty phenomenal. we heard from them last anytime that they don't want to make any decisions based on forecasts and want to see it in the data now we are starting to see it in the data so while this meeting is probably quiet we are not

sure if that can last too much longer we might start hearing more about tapering in the summer meeting and something to think about going forward. if this data trend becomes, if the economy continues at this pace they have to think about removing crisis level accommodation. >> jim, is the typical pattern, we are looking down the road here, the typical pattern is when -- or is it when the fed begins to pull back on the asset purchases that is a precursor to a higher interest rate >> yeah. so sequencing does matter and the fed's credibility is at stake. they knew the data would be strong like everyone else did in the second quarter so for them to change right now is probably premature, probably even in june and what their m.o. is at the jackson hole symposium in august they typically issue white papers that signal a possible

change and then at the september meeting they change -- typically change policy and might be enacted and tapering in december or the beginning of 2022 so yeah. i really do think that as soon as the fed starts to talk about tapering the market says, okay, so the next move is a rate hike. is sooner they talk about tapering the soon ir they have to talk about a rate hike. >> david, final question kelly, too the fed used that word you cited. transitory inflation you have said that obviously some symptoms of inflation supply chain snafus and the like do you think that the inflation that we are likely to see is transitory or potentially more sticky >> i think it's a little s stickier than think. these labor markets are

tightening very fast here and i think that's pushing up wages. more than just transitory but i think the other issue here is aset prices seeing stock prices go up 6% since the last fed meeting and the problem is that this very low level of interest rates feeding bubbles too and the fed thinks about that and shouldn't just be about inflation goods and services but other downsides to money this easy when the economy is doing this well. >> it is interests that to some extent coming from the fiscal side and people talk about excess savings, stimulus checks, money in the stock market, that's a liquidity issue but is it this time coming from a different place? is the fed expected to lean against it they seem to not give with one hand and take with the other. >> they should lean to think about it more carefully because monetary stimulus is not

efficient to promote aggregate growth but the stimulus is to low and middle income household that is will spend the money so i think the fed needs to watch carefully and if -- i think they need to lean against excessive fiscal stimulus. >> mona, would you sort of elaborate for a moment the announcements from the biden administration about the spend plans. why isn't that having a bigger reaction on the bond market? is it because of the fed's heavy involvement? >> we have seen overthe last few weeks has been the 10-year treasury for example from 175 down back to 155 we're starting to see that grind back higher and i think that trend could continue especially as we get the announcement of stimulus, the reopening of the economy and really true form this summer months and then the fed if it does commit to the sidelines for the quarters or the foreseeable future in one to two quarters that really is a

good backdrop for inflationary expectations to rise and rates to rise again. to your point on the biden administration, yes, we are seeing tremendous amount of proposals come through and not seen congress' reaction and keep in mind there has to be an approval process and make take sometime and i think he'll talk about 1.8 trillion tonight and probably a starting point for the negotiation so i think the markets are still also in wait and see mode to see what actually goes through for the bill tonight and the infrastructure front so there's still some unknowns out there but keep in mind generally we are set up nicely for rates to move higher, perhaps another leg of the value rotation to the summer. >> mona, you make a very good point with numbers tossed out there but really the sausage is not even in the making just yet and we haven't crossed the matter of taxes and whatever the

it is a hikes thereby. a lot of negotiating ahead of us steve, respond to this conversation and anything else you have seen in the statement. >> i was just going to make a similar point to mona which is the idea that -- this goes to kelly's question the first round of biden spending was not paid for. it was deaf sit increasing the next rounds that are being discussed with all of the uncertainty of how big it will be is important but it's supposed to be paid for in whatever you think is good or bad they take out from the economy a similar amount they put in and maybe some incremental increase in the deficit and not necessarily a problem for inflation or excess spending but maybe the productivity of the economy or businesses or the market but fiscally it is not i think the fed is going to abide this at the moment and not going to react until it's forced

to react and that's a good theme for the fed in general is that they have told us that they are going to be behind the curve and if it doesn't mover the fed is going to be satisfied to stand pat and not feel any compulsion to move ahead of the change in the data and maybe even ahead of the fall until we see what those infection rates are if we can get them down. >> that's a good point in fin trading, the fed fund futures are fully pricing in a march rate hike in 2023. so the market is crouching on the date there speculating in that direction. >> yeah. it makes perfect sense looking at the fed's forecast of march by the end of 2023 we would have a 3.5% unemployment rate and by the way ties the fourth quarter 2019 for the lowest since the 1950s and we

will have logged the third consecutive year of inflation at or below 2% and i think they'll ac achieve the long term role the fed doesn't want to say that but trying to hold down long term interest rates but not completely honest because if they were about the speed of the recovery rates would go up here and that's what they don't want to see happen. >> yeah. thank you all. we'll leave it there for the time being appreciate your thoughts the big conference at half past. let's get to bob for more of the market's reaction here bob? >> kelly, stock guys care about one question has anything changed since the last meeting that would indicate at all that the fed to change the policy path particularly regarding tapering the answer as you can see from the stock market, no

4186 we started at prior to the meeting. usually 4 or 5-gyration. ultimately resulting in not much movement at all. for more interest rate sectors very model uptick in 10-year yield on the reaction initially. a modest blip up in bank stocks but not much they held up well since earnings season we didn't get the dip. that's a good sign for earnings overall. i'd say the biggest problem for the stock market is not the federal reserve. stocks are a victim of the own success. the earnings picture is bafo look at the s&p 500. earnings started two weeks ago the stock market has not budged since jp mmorgan came out. that's a sign that the market is bumping up against the limits to

surprise you want to doubt me on that look at amd. i don't think you can get mump better guidance than they have been reporting and amd with a great number and overall doing nothing on tremendous guidance well above expectations. so i think we'll see now the focus is going to be not on the fed but on the rate of earnings growth and keeping that up and even biden's legislative agenda getting more attention from the stock market than the federal reserve and maybe different when jay powell takes the stage. >> good point. thank you. on that point let's get to rick santelli rick >> the fed is not moving the bond market. looking at the charts with a 2-year almost identical to where we were beforehand popped a little bit as the news started to hit the wires look at a 10-year. 164.8. pretty mump where it was i saw 165 and change

out to 231 and change. back out to 231 and 30s an ennot a movement the dollar index maybe weakened a couple of ticks. here's first of all when people and i heard somebody say the fed can't giver us the whole trust, you know, i'm sorry but i think they won't do anything until 2024 really how many bridges do you sell those bond sellers we don't know what is going to happen but as far as the inflation with the interest rates i find it funny that every time i bring up that i think rates may go higher it is inflation argument and i totally understand why let's see. do we forget the mountain of debt that could have something to do with it. and if they said the fed isn't going to move until they really start to see certain things in

the numbers. i'll tell you a number to make them move. if tomorrow you see 178 10-year and then 210 10-year the fed will tell you something new. really it is about the markets and what they do and why they do nobody exactly knows for sure. we could talk data all day long but trillions of dlashs will rain for quite a long time back to you. >> i was going to bring in steve liesman. do you want to respond >> no. i just want to ask rick thinking about data and we could talk all day long and let's do that for 30 seconds here. i have the fed funds pricing in a rate hike 2022 and kelly said the march 2023 would you square that circle so that we can be back in agreement where we always are? >> yeah. absolutely okay you told me that at 2:16 eastern

and the percentages are accurate until 2:16:10. okay it's like telling me t-bills and in a year i buy one and i say you lie to me. it is as good as the breath coming out ofrt broker're mouth that says it or the keyboard that typed it but yes accurate in realtime. >> which means they change all the time. >> i guess, kelly, the story -- one very quick point which is this the debate is that december '22 or march 2023? that's a huge victory for the federal reserve's forward guidance in that the debate we're having is a year and change away. during the financial crisis the market was always pricing in a rate hike six, eight monthses down the road. the fed has the market - >> too bad they didn't listen. too bad they didn't listen

yeah too bad ben and janet didn't listen back then. >> i agree december or march, we are talking about a long time from now at least thank you both rick and steve. coming up, less than 15 minutes from fed chair powell's press conference don't go anywhere.

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frederick michigan, former governor it's good to see you again first of all, is there anything that you found noteworthy from the statement just released or like everybody looking ahead to where we are by the end of the year or march of 2023? >> there are no surprises here reality hit the fed in the face that the economy is doing much better than expected and reflect that in the statement. they still are holding to their policy as part of the average inflation targeting framework which is new they want inflation slightly above 2% for a short period of time and they want to achieve that. the one thing that worries me here is that they keep on talking about getting employment to be high, that we really don't know where that is and actually i think the fed is much too relaxed about the fact that

think think the phillips curve doesn't exist much anymore i think they must keep the eye on the inflation ball and not let it get out of control and i think key. they need to communicate that better than they're doing. >> i sense you're mildly critical of the fed's communicating and it does seem that they've been quite careful about telling the markets and the players over and over again they're not going to touch interest rates for a long time and keep buying bonds for a long, long time. >> yeah. i think that this is an issue about how you do forward guidance which is to provide information about what you will do in the future the jay powell fed is very reluctant to let people know how they will react to future events and i think that's a mistake the issue is that they do and i think rightfully have moved to this new framework that if

inflation is too low in the pst we want it higher so that the average is 2%. but you do require explaining how that -- how you might change the policies given that there can be change in circumstances jay powell is reluctant to do that it's understandable. >> right, right. >> this is extremely important particularly because you worry about having another taper tantrum. in case the economy comes in stronger than they expected. the vaccine does work which we hope it does they will have to revise the plans and they should share how they'll do that. >> i think you have hit on the idea there that if i were in or maybe you were in jay powell's shoes the last thing to do would be to tie yourself down to if a then b or if a number comes out we'll do this and maybe there

are extenuating circumstances or maybe the consensus is not there in the room to do that i guess that would be the -- that would be the hindrance there about being more transparent, right >> yes but you can do more than they're doing. i really don't have a problem with the fed's actual policies but i have had some problem with their communication. they've been much too loose on describing the new frame work that they have so they say average but don't tell you average over how long and could mean anything. averages over 30 years don't money anything. >> right you have to set the time frame average over a year or two years. >> can't be completely loosey goose sy but provide a feel for what you are trying to do and it does pin you down a little bit but i think you can deal with that this is more like old style central banking. a lot of theory and research

actually says new style central banking is more transparent. i don't believe there should be strict rules but -- i'm sorry about that >> jay powell online one. >> yeah. >> he wants to communicate effect ifrly. >> he wants to yell at me on this one it is tough but they need to do somewhat better on this. >> let me wrap it up with this are you surprised just as an economist and policymaker and a person at how the strong american friday is or more or less worried of lasting inflation than you thought you would be at this point >> i have been in the camp of thinking that the economy is much stronger than the fed is thinking and in fact that's been

realized that there was all this money and seeing the recent shows i said, look, most people's finances are in better shape. they have been able to go out. i'm eating at restaurants. it is fantastic. i'm vaccinated there's a lot of pent-up demand and americans are doing that and i expected that to happen and exactly what is happening. so far the vaccine looks like it's pretty damn good. a major success of science that it seems that the vaccine is not only working against past variants but the current ones so all of this is actually something that puts strength in the economy and that of course is a biden plan, bill passed which i think is excessive at this particular time so all of that leads to strength in the economy. and in fact i'm somebody that believes that the phillips curve is hibernating i am worried about this issue.

i think the fed needs to make it clearer that the average has a time frame so it does pin down inflation expectations and do whatever they need to do whether the time is right and they just can't say that they're not going to raise rates for a very long time depending on what happens >> fascinating those are topics to pick up on next time. i'm sure in six week's time it will only get more interested. thank you. >> you're welcome. fed chair powell will communicate in a news conference the dow is down 100 inpots we'll be right back.

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like you become an agent of innovation with invesco qqq welcome back as we wait to hear from fed chair powell himself let's turn back to david kelly for final thoughts before he speaks. this is where he's moved the market before. >> it's a tricky business because he has to keep it real there's a long list of positives in the change of the economic outlook here employment, pmi numbers, retale sales and past the pap s pandemic. and if that pushes up long-term

interest rates that's no harm and greater harm caused if the fed undermines the credibility that it won't push up rates until 2024 or super dovish forever and dangerous to the market and the economy ultimately so i hope he keeps it real. >> i think he prides himself on that but i wonder if tying this all to metrics is where everybody can agree we have heard this from different guests this week. steve liesman mentioned it different fed board members mentioned it david, thank you >> maximum employment and price stability. today my colleagues on the fmoc and i kept interest rates near zero and maintained our sizable asset purchases. these measures along with the strong guidance on interest rates and on our balance sheet will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete

widespread vaccinations along with unprecedented fiscal policy actions are also providing strong support to the recovery since the beginning of the year indicators of economic activity and employment have strengthened household spending on goods has risen robustly the housing sector more than fully recovered from the downturn while business investment and business manufacturing have increased spending on services has picked up including at restaurants and bars more generally the sectors of the economy most adversely affected by the pandemic remain weak but have shown improvement. while the recovery progressed more quickly than generally expected, it remains uneven and far from complete. the path of the economy continues to depend significantly on the course of the virus and the measures undertaken to control its spread since march progress on vaccinations has limited the

number of new cases, hospitalizations and deaths. while the level of new cases remains concerning especially as it reflects the infectious strains continued vaccinations should allow to more normal economic conditions this year. in the meantime continued observance of ginsz will help us reach that goal as soon as possible as with overall economic activity, conditions in the labor market have continued to improve. employment rose 916,000 in march. as the leisure and hospitality se sector sector posted a notable gain employment is more than 3 million below the level of the on set of the pandemic payroll employment is 8.4 million below the pre-pandemic level. the unemployment rate remained

elevated at 6% in march and understates the short fall in employment particularly as participation remains pre-pandemic levels. the economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been hardest hit. the high level of joblessness is es severe for lower wage workers in the service sector and african-americans and hispanics. the economic dislocation up ended many lives and createden certainty about the future readings on inflation increased and likely to rise somewhat further before moderating. 12-months measures of pce inflation are expected to move above 2% past increases in oil prices pass through to consumer energy prices beyond these effects we are also likely to see pressure on prices

from the rebound in spending as the economy continues to reopen, particularly if supply bottlenecks limit how quickly prix can respond in the near term however these one-time increases in prices are likely to have transitory effects on inflation. the fed's response to this crisis has been guided by our man date to promote maximum employment and stable prices for the american people along with our responsibilities to promote the financial stability. as we said in the statement on longer run goals and policy strategy, we view maximum employment as a broad based and inclusive goal our ability to achieve maximum employment in the years ahead depends on having longer term inflation expectations well anchored as the committee reiterated in today's policy statement with inflation running below 2% we'll aim to achieve inflation above 2% for sometime so that

inflation averages 2% over time and longer term inflation expectations well anchored at 2% we expect to maintain an accommodative stance until the outcomes are achieved. with regard to interest rates we continue to expect it will be appropriate to maintain the current 0 to.25% target until labor market conditions reached levels consistent with the assessment of max mull employment and inflation to 2% and is on track to moderately exceed 2% for sometime i would note a transitory rise in inflation above 2% this year would not meet this standard in addition, we'll continue to increase our holdings of treasure securities by at least $80 billion a month and of agency mortgage backed securities by $40 billion until further progress is made toward our maximum employment and price

stability goals. the increase in our balance sheet since march 2020 materially yeezed conditions and providing support to the economy. the economy is a long way from the goals and it is likely to take sometime for substantial further progress to be achieved why the guidance for interest rate and asset purchases ties the path of the balance sheet to the employment and inflation goals and when outcome based guidance ensures that the stance of policy remains highly accommodative. to conclude, we understand that our actions 'fekt communities, familiars and businesses across the country. everything we do is in service to our public mission. we at the fed will do everything we can to support the economy for as long as it takes to complete the recovery. thank you. i look forward to your questions. >> thank you, mr. chairperson. first we'll go to paul kiernan.

>> hi, chairman powell thank you for doing this i guess since i'm first i'll read the question from the last press conference is it time to talk about talking about tapering yet have they had conversations to that effect? thanks. >> thank you it is not time yet we said we would let the public know when it is time to have that conversation and well in advance of a decision to taper the asset purchases and we will do so and monitoring progress toward the goals we first articulated this test at the december meeting. economic activity and hiring have just recently picked up after slowing over the winter and takes time to see substantial further progress. >> thank you. >> thank you john allen at reuters.

>> hi, thank you so much my question is about what's going on with the virus and what if we don't reach a level of herd immunity per se in your scenario thinking about the outlook and the economy, do you have some model where you might start to still normalize policy even if there's a baseline of infection going on >> yeah. so we have to leave that questions about herd immunity and what that looks like to the health experts but i would certainly say that what matters the most to the economic recovery is controlling the virus. the economy can't fully recover until there's maybe people around the labor force that don't come back in unless they feel really comfortable and there might be parts of economy that just won't be able to

really fully reengage until the pandemic is decisively behind us but we arctic latted particular guidance for tapering aset purchases and lifting interest rates. we have said we'll continue at the current pace of asset purchases until we see further progress toward the goals so that is what it is substantial further progress for interest rates as i said a moment ago we want to see labor market conditions consistent with maximum employment, inflation at 2% and on track to exceed 2%. those are the tests. we don't have an independent test to do with the virus. i'll say though as i started with the path of the virus will have an affect on the ability to achieve both of those tests.

>> great thank you. y that. >> thank you for taking the questions. i wonder if you could talk about that test. you made it clear to see improvements in the real economy and the real data and not in just sort of expectations data before making that move but i guess i wonder what happens if inflation expectations were to move up before you see some sort of return to full employment you know, it seems like a sort of stability in inflation has been tied to the fact that those so low and stable and i guess i wonder how much your reaction to that is -- how you think about that >> right so it seems unlikely, frankly, that we would see inflation moving up in a persistent way to move inflation expectations up while there's significant slack in the labor market. i won't say it's impossible but

it seems unlikely. it's much more likely that we would having achieved maximum employment conditions also be seeing 2% inflation and on track to see inflation above 2% and tend to mover together so that's not to say inflation might not move up but for a persistent way that would have to -- that would take sometime and you would think that it would be quite likely to be in very strong labor markets for that to be happening if that were to happen there's a paragraph in the statement on longer run goals and strategy which says that when the two goals are somewhat in conflict we weigh the factors including the time to get back and forth and doesn't really tell you what to do but we'll weigh those two factors and how far we are from

them and how long to reach team with an unlikely state. >> thank you steve liesman. >> thank you mr. chairman, i want to follow up on janelle's question to understand better your thinking about how covid infection rates and the virus calibrate with monetary policy. we had a major resurgence in the virus last fall. i'm wondering, would you need to be assured there's not such a resurgence coming before you began -- i mean for lacking of a better term -- thinking about thinking about talking about this would it be from the cdc or the woshld health organization downgrading, for example, the virus from a pandemic before you had the comfort several to reverse course on policy thank you. >> we really have just articulated the goals i mentioned a couple times which is substantial further progress

toward the goals before we taper. that's likely to achiever that very likely going to be the case that we've also made really significant progress on controlling the virus. through vaccination and other -- those two things should more or less coexist and not a separate test for the state of the virus because we are not -- we are not experts in that area but focused on the economic outcomes and again my guess is that we -- it is very likely to achiever the economic outcomes we need to taper or to raise interest rates we would have to have made very substantial progress in getting the virus under control. not necessarily fully under control why there is a possibility, of course, that we will havine ongoing outbreaks. but we'll be looking for

substantial further progress toward our goals as we think about tapering asset purchases. >> thank you. >> thank you victoria >> hi, chair powell. i wanted to ask, you have talked a lot during this crisis about the need to have a lot of help from fiscal policy and monetary policy so there's not long term scarring in the economy and given all the policies that have been put in place do you expect there to still be some long term scarring if so, what are you most worried about? where are you most worried about that showing up? >> so i would say that we were very worried about scarring both in the labor market from people being out of the labor market for an extended period of time the evidence is clear it's much more difficult out for a long time to get back in and back to the life that you had. same thing with the small businesses many of which that are the work of generations and wipe out many of those

unnecessarily. that is a big concern. i would say so far here we are in late april of 2021 we haven't experienced that level of scarring in the labor market and not living that downside case. notwithstanding that, we are a long way from full employment. we are payroll jobs are 8.4 million below february of 2020 we have a long ways to go and also it's going to be a different economy so we've been hearing from companies that they are -- they have been looking at deploying better technology and perhaps more people. it may well be -- seems quite likely that a number of people who had those service sector jobs will struggle to find the same job and may need time to find work and these are people who were working in february of 2020 they clearly want to work.

so those people are going to need help. so while i would say we haven't seen really highly elevated severals of unemployment for the teens that we thought we mifr for an extended of time we have people out of work we want them back to work as quickly as possible and that's a thing to achiever with the policy >> thank you rachel, siegel. >> thank you for taking our questions. the housing market in many american cities is seeing booming prices, bidding wars and all cash offers well above asking price and this is happening at the same time that housing is becoming mump more expensive for lower income americans and those struggling from the pandemic. do you have concerns of localized housing bubbles and what is the fed doing to monitor or address this? thank you. >> we do monitor the housing

market very carefully, of course i would say that before the pandemic it's a very different housing market than it was before the global financial crisisand one of the main differences was that households were in good shape financially compared to where they were. in addition, most people who got mortgages were people with high credit scores and not the subprime, you know, low doc no doc lending practices were not there so we don't have that thing where we have a housing bubble where people are over levered in owning a lot of houses but prices are going up and watching that carefully. it's partly because there's clearly strong demand and there's just not a lot of supply so builders are struggling to keep up with the demand clearly. inventories are lower. we are all hearing the stories and if you're an entry several

housing buyer this is a problem because it just is going to be that much hard ir to get that first house and that's a problem. we -- it is part of a strong economy with people having money to spend and wanting to invest in housing so in that sense it's good it is clearly the strongest housing market we have seen since the global financial crisis and my hope would be on time housing builders respond and workers come back in that industry so it is not a good to have prices going up this much and we are watching it carefully. i don't see the financial stability concerns that reside around the housing sector. so many financial crack-ups have been around housing. we don't see that here we don't see bad loans and unsustainable prices and that kind of thing.

>> thank you chris, associated press. >> thank you for taking my question i wanted to ask about the labor market do you see things such as in the beige book anecdotes of businesses not able to find workers. labor market for fear of getting sick child care concerns and so forth. do you see these as temporary bottlenecks? how are you thinking about these kinds of issues? >> you were breaking up a little bit but i think i did get your questions. i think there are a number of things going on there. the tension between high level of unemployment and yet many, many companies saying they can't find workers so what is going on

there? should be a number of different things workers that don't have the specific skills that they're looking for. might be geographical differences. it may also be that, for example, one big factor would be schools aren't open yet so there's still people at home aren't open yet so there are still people at home taking care of children who would like to be back in the work force but can't be yet there are virus fears weighing on people so some people doercht want to go back to work. also a significant number of people say they have retired a large number of people said they have retired. it is hard to say whether or not they will come back in as the labor market strengthens and as covid becomes in the rearview mirror n the history books, if you will so -- but, clearly, there is something going on out there, as many companies are reporting labor shortages. we don't see wages moving up yet. and presumably, we would see that in a real -- you know n a

really tight labor market. we may well start to see that. i do think -- so what will happen what we saw during the last expansion, and maybe a different action pangs -- we don't know. but what we saw was that labor supply generally showed up in other words, if you were running out of workers, it seemed like we never did you know, labor force participation held up. people came into the labor force, they stayed in the labor force longer than expected so my questions would be that you will see people coming back into the labor force and these jobs will be -- that the labor market will reach equilibrium. maybe pay will go up but i do think that -- i do think, also, that unemployment insurance benefits will run out in september to the extent that's a factor, which is not clear -- it will no longer be a factor fairly soon my guess is we will come back to this economy where we have

equilibrium between labor supply and labor demand it may take some months, though. >> thank you heather scott? >> a quick follow? >> i'm sorry go ahead go ahead, chris. [ no audio ] >> we lost you, chris. let's go on to heather >> thank you good afternoon chair powell. i wanted to ask, you have been hearing, of course, these concerns raised by larry summers and others about inflation and the fact that they think the fed right let things get out of hand with the new policy stance so my question is, can you tell us, what is different this time versus previous periods like in the '60s when inflation got out of control why are you confident with the lags in monetary policy, that

the fed can get ahead of inflation and make sure it doesn't go too far above the 2% target >> i have a couple of thing i would lick to say about inflation, including addressing your question. let me start with just saying that we are very strongly committed to achieving our objectives of maximum employment and price stability. our price stability goal is 2% inflation over the longer run. we believe that having inflation average 2% over time will anchor long term expectations at 2%, with inflation below 2% for some time, the committee seeks inflation moderately above 2% for some time. so, with a little bit of context, we are making our way through an unprecedented series of events, really, in which a synchronized global shutdown is now giving way to widespread reopening of economies many applies around the world in the united states, fiscal and monetary policy continue to

provide strong support, vaccinations are widespread and the economy is beginning to move ahead with real momentum during this time of reopening, we are likely the see upward pressure on prices i will discuss why but those pressures are likely to be temporary as they are associated with the reopening process. an ep side of one-time price increases as the economy reopens is not the same thing as and is not likely to lead to persistently higher year over year inflation into the future inflation at levels that are not consistent with our goal of 2% inflation over the time. indeed it is the fed's job the make sure that does not happen if inflation were to move persistently and materially above 2% in a matter that threatened to move longer term inflation expectations materially above 2% we would move to bring levels down to mandate consistent levels. that is a principle difference from -- we are all very familiar

at the fed with hit trees of 1960s and '70s of course we know that our job is to achieve % inflation over time. we are committed to that we will use our tools do that. there are many differences than what you had in the 1960s. many differences actually let me talk quickly about the two reasons -- two or you could say three, or really two reasons why we think inflation will move up in the near term. the first is the base effects. 12 month measures of inflation are likely to move above 2% as the low readings of april in last year drop out of the calculation. the process started to show up you saw it in the march cei righting and you will see it this week. n the pce data -- the increases will disappear

over the following months and they will be transitory. they carry no implication for the rate of inflation in later periods. that's base effects. the other big one i would talk about is bolling neck. this is what we are seeing in supply chains in various industries we are in close touch with all of these industries. the fed has a network of contacts that is unequalled in businesses and in non-profits for that matter, too what do we mean by a bottleneck? a bottleneck is a temporary blockage or restriction in the display chain for a good or goods, something that slows down the producing of goods to market we think the bottles neck will evolve and we think of them as not calling for a change in monetary policy because they are temporary and resolve themselves it is hard to predict the amount of time will it take to resolve the bottle necks or the

temporary effects they will have on prices in the meantime. so you know i will sum up and say we understand our job. we will do our job and we are focused, as you have seen, for many years, we have been focused on inflation deev yatding below %. and we used our tools aggressively to keep it back at 2% if we see inflation moving recall thely above 2% in a persistent way that provides risk then we will use our tools to guide them back down to 2%. no one should doubt that we will do that. this is what what we expect but no one should doubt that in that event we would be prepared to use our tools. >> thank you james polityi. >> you said a few weeks ago that -- thank you, chair powell. you said a few weeks ago that it would take a string of months of

job creation of about 1 million to achieve progress towards your goal can you define what your definition of a string of months is more specifically and on inflation, the fyc says the rise in inflation we are beginning to see largely reflects trapser to factors like you described. why use the word "largely "what are the factors driving higher prices that are not transitory. >> what do i mean by a string? i would say what we have right now is one really good i can tell you it is not one really good employment reading which is what we got in march. we got close to 1 million jobs in march and a very strong labor market reading and i was just suggesting that we would want to see more like that we are 8.5 million jobs below where they were in february of 2020 that doesn't account for growth in the labor force and growth in the economy, the trend we were on so we are a long way to our

goals. and we don't have to get all the way to your goals to taper asset purchases. we just need to make substantial further progress it is going to take some time. on largely you know, there are a bunch of factors. we were really thinking of the base effects and also the energy effects. i wasn't meaning to say there are some real effects. there are always relative prices going up and down within inflation. there is a basket for cpi or pce. there are many, many, many factors that go into it. relative prices are always moving up and down this -- we think it's very fair to say that the increases we see and frankly are about to see later this week are largely due to base effects. it would have been more contention to say entirely due to base effects because there are some things that are always going up so we just said largely.

>> chair powell, thanks for taking our questions over the past decade, the fed has invested significant resources in large scale bank supervision. it has completely overhauled that approach. and it has even created a special committee that looks horizontally across the largest banks to find common risks z. the fed not see that multiple banks had large exposures to archegos if not, why not? and then what regulatory changes would you like to see implemented to change that going forward? >> we -- we supervise banks to make sure that they have risk management systems in place so that they can spot these things. we don't manage their companies for them or try to manage individual risks in the grand scheme of these large institutions, the archegok