talking about the timetable. the one change i expect to see or one of the very few changes will be the acknowledgement the delta variant or variants of the virus have made the outlook more uncertain and an excuse not to give us a timetable until september. >> all right we're going to take a break right here and go to steve liesman who has the fed decision right now. steve? no change in interest rates. the federal reserve is keeping rates 0 to 0.25% on the issue of tapering the fed didn't say the words but saying the fed said the economy has made progress to the goals of substantial further progress which is the way it assesses whether or not to eventually begin to taper soap it's made progress towards that goal and will assess the progress in coming meetings. so that's the nod towards the idea they're thinking about or still considering this idea of tapering, and they say they've made some progress on the economy they say the

economic unemployment activity has continued to strengthen. sectors most affected by the pandemic have shown improvement but the fed saying those sectors are not fully recovered. continuing the language on inflation saying it largely reflects transitory factors. there's that word again. so give yourself a point if you were waiting on it the path of the economy the federal reserve continues to depend on the virus. risks remain to the outlook. no change in qe policy, just to be clear they're still going to say they're purchasing $120 billion a month, $80 million, $40 million mortgages. rates will remain in the current range until inflation and employment goals are reached one note of what david kelly just said. this idea would there be a nod to the delta variant, and i can tell you that he didn't say explicitly but did say the vaccine reduced the spread of

covid-19 they're siltill up on the vaccie but dropped that line saying the vaccine has reduced the spread of covid-19. kelly? >> a question on this repo i facility, what do you think the practical significance of that is >> i think they're trying to deal with the flood of cash that's in the system and sloshing around there and it's something that's been talked about. they were planning to do this. i can get you more details in just a second. it was something that was expected because of issues that are going on with the reverse repo facilities out there. >> steve, stick around, perhaps we can ask our guests about that and bring in bob pisani and rick santelli rick, we're seeing, if you want to call it a spike in yields, we're up a couple of basis points sometimes that gives us the market's take on what this meeting did or didn't do here. do you read a slightly hawkish tilt or is it way too early to

be having this discussion? >> reporter: hawkish hawkish? there's not a beak in it no, nothing. this is all about -- this is all about warming up the car when my significant other isn't ready, she says, go warm up the car. that's kind of what we're doing t they're not ready, and the delta variant as tyler brought up, and you get an a-plus today, it gives them another avenue to kind of stall a bit. now whether you want stalling or you don't want stalling, that's not for me to say. but here's a couple things i can say. if you look at what the markets did, 30-year yields are now a bit lower than they were they were around 1.91. they're at 1.90. they're back around 1.26 the sticky part is the short end in the form of five-year notes a real finance rate right there in the early part of the curve, five-year notes stuck so the

curve is flattening a bit. the best way to look at this is easy japan in 1989 had their stock market at an all-time high and they've gone decades and decades doing the wrong thing. so we have decades and decades in front of us, but at some point the stock market probably peaks and i don't think the fed balance sheet will ever get back down to normal size. didn't get back down to normal size after the credit crisis i doubt if it will get back down to normal size from these levels over $8 trillion you can guess where it's going to stop. with regard to the taper and mortgage securities and treasuries, you know what, i was in that camp they should probably stop on the mortgage securities. but in the end they should stop on it all. treasuries feed into this, too i don't think we have the type of crisis we need that extra liquidity but i don't suspect we'll see the taper anytime soon and if we're talking about talking about the taper, i think we all sound a bit childish. >> can i, steve, get you to respond to that before we bring in bob pisani? what would the fed say about

some of these discussion points? they're not just rick who feels this way, who wonders if it's all necessary. >> i'm sorry, are you talking to me, kelly? i can tell you that here's the deal, what will happen today at the press conference, i don't know for sure, is that powell is going to be asked about this delta variant. and i don't think he's going to take a victory lap because that's not what he's really going to do. listen, this affirms our decision to be very cautious about removing stimulus from the economy. look, i think they were wrong. i agree with rick, though not perhaps as vociferously as he put it i think the fed should have reacted to fiscal policy and drawn down some of its help to the economy for sure i don't think that's even debatable. at the same time i think what powell is going to say we've never been through this before there's no book on reopening a $20 trillion economy, and that the idea the delta variant came back and it was unclear what

happened affirms the cautiousness with which the fed is acting. i'm not a proponent of those ideas. that's just the way i think powell will say it >> to bob pisani and the reaction on the floor of the new york exchange on the major indexes. bob? >> reporter: fairly modest move on the major averages, tyler and down here it's pretty much, as we were discussing, the belief is that the fed is going to lean on the delta variant as an i told you so moment and certainly pushed back against any questions about accelerating the timetable for tapering and interest rate hikes. where does this leave the stock market we have earnings estimates continuing to go up every single day for the third quarter and the fourth quarter which is what matters. number two, we have margins near record highs there is no erosion in the margins despite concerns about higher costs in most cases passing on prices. what's the immediate threat to

the market most people down here believe it's not the federal reserve anymore. the threat to the market right now is the really high valuations we're trading at multiples that are still really elevated. we're going into a seasonally weak season, august, september, october, and you see this today in the earnings report apple just killed it today, and it's down 1.5% it has a very rich multiple despite the fact that it's continuing to grow its sales continuing to grow iphone higher than expected. the price of apple just reflects greater expectations even than the numbers that were actually reported that's the biggest threat to the market right now powell isn't the big, you. guys, back to you. >> let me ask you, we heard the word transitory. every time the word transitory is spoken, you chug a beer, okay that's the rule of the afternoon here and we heard it in the fed statement. but last hour kelly ran a bite

from ken langone and he made a very important point that is certain commodity prices will go down they are variable. the price of milk, the price of lumber, the price of copper. one thing isn't variable, and that's the price of labor. once it goes up, it tends to stay there so that component of inflation, which is key, feels like it's not transitory what do you say, jim >> tyler, i think had is a great question because i think it does bring in the idea there are more durable components to the inflation sector that may not come down as fast. inflation may still be anchored but it may not come down as fast the fed really has a problem with the price of money, and this is what bob pisani was alluding to just now if we think about it this way the fed's baseline policy forecast for the long term is the fed funds rate will go to 2.5% the market is pricing the funds rate at closer to 1.75%. so here we are talking about tapering and we have to understand the sequencing here

you have to taper first, get done with tapering and then start hiking interest rates. what the market is saying once up get done with tapering, the fed is not going to get to their long-term goal of where their terminal policy rate around 2.5% ought to be. so what this is creating is this view in the market that money is going to be cheap for an extended period of time. now we understand the technicals and we brought up the standing repo facility earlier, and there is a lot of money coming into the markets right now. this money needs to go some place. we also have the debt ceiling issue that's coming around as well the treasury general account is also being run down. there's not a lot of net issuance of u.s. treasury securities in fact, in the second quarter it was close to zero this is depressing interest rates artificially, i think, at this point i think rates should be higher, but they can stay around these levels, ten-year yields can stay around these levels if not drift lower for an extended period of time before they make their move higher which i think will be in

the fourth quarter >> steve, jump back in >> i just want to make a point here, tyler, make sure we're all looking for the same thing here. prices are going to go up about 5% inflation does not continue if they go up zero the next year. they're not supposed to go back down it would be good if they did in some cases in general that's not what the fed will be looking for. the fed will be looking to see they don't go up at the same pace prices go up and the gentleman is right they don't necessarily go back down when it comes to labor, labor prices are thought to be sticky but don't look for prices to roll back to think that inflation is gone. no, you don't want to have the same increase in inflation that you've had that would be the key that the federal reserve will be looking for and that's why what powell did he sort of set a six-month time frame, by the end of the year is when he expects these prices to roll back. you see the big trade deficit,

there is restocking going on there is going to be a period in the second half of this year which we're in now of inventory rebuilding and that should help with prices as we go forward >> alicia, a word on what up think the market will be listening for in this press conference >> i think it's really interesting because, you know, again, we'll drink a beer every time we hear transitory, the definition of transitory has changed. so originally it was several months, and now we're looking at several quarters and if you listen to business leaders, and this is something bob pisani just spoke about, corporate margins are at the highest ever old companies that have reported, most are essentially telling us they're passing costs on so what does that mean that means market pricing of inflation is very benign and has come down over the last few weeks. and at the same time inflation in the real economy, and if you speak to business leaders, will move forward now it is true that if your prices rise at a slower pace, so the second derivative is going in the right direction, then you

should be able to call victory on inflation but we think that inflation will end up at a higher rate than in the post global financial crisis world because we have higher prices there's clearly a mismatch between what is demanded, where labor is, and also the skill set. and so to that extent, the fed has really made better progress on its inflation goal than it has on unemployment goals. >> let me turn to you, david, and get your general reaction to what we've been talking about. i ask the question half jokingly daddy, why are bond yields so low? i don't understand it. if inflation is up, the economy is hot, why are the yields so low, daddy >> well, i think jim has it right. there's a lot of technical factors here we're running the big deficits but in the second quarter there was virtually no net issuance

outside of the federal reserve, and that's because we built up a huge stockpile in the treasuries checking account of the federal reserve. they've been working down that over the second quarter and now we have the debt ceiling issue which will, again, probably prevent janet yellen from borrowing more money there is a technical issue here. on this issue of transitory i do think inflation, we have a sticky situation here. i think some of the inflation will go away it's not just wages. expectations have gone up. inflation can be a somewhat self-fulfilling prophecy a big part of inflation is rent and we see huge increases in home prices. that's going to be fomd, we believe, by some increases in mortgage rates that means a carrying cast of rental properties will go up and so our models are saying we're going to have some pretty high rent increases over the next few years and that will make inflation sticky. i think we are back to a new old normal of inflation running above 2% for a while here.

that's not a terrible thing. i'm more worried about asset bubbles being created by too much liquidity sloshing around than inflation overall i do think we're looking at higher inflation in this recovery, this expansion, than after the last one >> and, rick, your thoughts here >> reporter: rates are starting to slip right now, and that doesn't surprise me. david kelly and i are in totally agreement here talk to any big pension fund if they needed, in the old days when rates used to be at a normal level on the long end, they needed to buy so much paper to take care of their long-term liabilities. now they have to buy twice as many, three times as many. there is an impetus for buying that's coming in and it's not going to go away with respect to buying, this morning ken langone and others were talking about 80% of inflation are going to go away yes, i could agree with that i think it's the other 20% that

will hurt. my final thought i couldn't agree more the way steve presents how we target inflation. if it jumps, the rate of change goes into the numbers. if it sticks, it flat lines at zero the fed will say it's victorious how will that affect the average middle-class family. might be victory for the fed if they stick higher it will not be a victory for the middle class. >> steve, why don't you react to that once prices do go up and if they stick, even if they don't go up more and inflation is reported as zero or 0.2%, that doesn't erase the fact they may be 4% or 5% higher than 16, 15 months ago. >> absolutely. rick is correct about that

it depends on if wages go up commensurate with that the standard of living i was going to make a quick point. the battle powell has been fighting is over the taper tantrum. the fed makes an incremental step to the taper and bond markets slip, powell is winning that battle. i wonder if he's losing a broader war and we'll see, it's thought to be transitory, but that's his gamble. he's had to make a play here, winning against the taper tantrum. he's announced he's going to talk about it and do it. the market seems comfortable with that. the risk on the other side is we end up like alicia and rick are concerned about with higher inflation on the back end. that's the new battle to watch >> i love the language of fed discussions, they'll talk about talk about earlier, steve, you said the fed says it's made progress towards making progress.

i love the way we speak circularly about the fed ladies and gentlemen, thank you very much for jim, david, we appreciate your time the countdown is on to fed chair powell's news conference the former fed governor will tell us what to expect and whether he thinks the fed is at the risk of falling behind the curve. more analysis, market reaction straight ahead on "power." usaa is made for the safe pilots. like mac. who can come to a stop with barely a bobble. with usaa safepilot, when you drive safe... ...you can save up to 30% on your auto insurance. usaa. what you're made of, we're made for. get a quote today. ♪ ♪ experience, hyper performance that takes you further. at the lexus golden opportunity sales event. get 0.9% apr financing on the all 2021 lexus hybrid models.

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some volatility in stocks and bonds. says the economy continues to strengthen, make progress to policy goals fed chair powell's press conference is just a few minutes away, about ten. joining us now is frederic mishkin, former federal reserve board member welcome. good to have you back with us. >> good to be here >> let's talk a little bit about the delta variant and whether that gives the fed some cover to delay more explicit discussion of tapering and rate hikes and so forth does it, in your view, do that >> i think -- not internally they are going to be discussing this issue despite the delta

variant because there's a tremendous amount of uncertainty about whether the delta variant will be a serious problem to the economy or not a serious problem in many states but that doesn't mean that it's going to have a big effect on the economy. so i do think that it does add an important wrinkle up to now the fed has been behind the curve but, in fact, if the delta variant becomes a serious problem in terms of how much spending is going on, then they're going to have been right. sometimes -- my mother used to say to me it's better to be lucky than good. that could be part of the scenario we could see going forward but we don't know. i think internally they'll be discussing this but i think externally they don't need to rush >> at the close of the last discussion the fed is at risk of

winning the battle to the point you're making, but losing the war. >> yes i don't know it's always a question about how things evolve. there's always a lot of uncertainty about that forecasting is a very tough game that if you make really bad mistakes, you get in trouble i do think one thing that has been positive the fed has been emphasizing more their concerns about inflation not being as temporary as they thought it was. it's very key the markets understand that we're not going to have deja vu and go back to the '60s we have a lot of things like the '60s, very expansionary fiscal policy, an economy that's roaring ahead, limits to what's going on in terms of the labor market that push up prices however, in the '60s and '70s the fed did not do its job properly it did not actually say that we have to control inflation and they have been much better on that this time around, they've

indicated that inflation is not as temporary as they think that will mean that they have to do more in terms of raising rates and the taper could occur sooner that communication has been very positive we'll have to wait and see >> one additional question, let's say you're explaining to a 12-year-old why the fed needs to buy $120 billion worth of securities every month in this economy. not why they did it a year ago or six months ago but why are they continuing to do it today >> i think the key here is inflation has been too low so it's a remarkable event, by the way. i've been studying monetary economics starting in the 1970s, which was when i started to become an economist. the one thing you never worried about was inflation might be too low. always worried about it being too high and also the difficulty of central banks to get inflation to rise to levels they think are appropriate, extraordinary

situation. i think that's what has led the fed to actually be more expansionary than they otherwise would, having a commitment to exceed their inflation target for a period of time that all makes sense the problem is if you get too complacent about inflation which has been really quite high and i think importantly, a lot of this inflation is not just because of temporary supply issues. it's because of very expansionary policy and fiscal policy if it was just the supply shops, i would be less worried about it it's a situation where the economy is being boosted up a lot. that's when you get into a danger zone. >> it's bizarre we have these discussions where everybody agrees it might be bad in the long run but makes sense for now. i suppose that's where we are and the challenge he steps into when he walks up to the podium in a moment. >> it's always the timing. i do think the fed was behind

the curve. and they may get lucky the delta variant may mean they're behind the curve. >> frederic mishkin, thank you for joining us good to hear your thoughts today. right after this we'll hear from fed chair jay powell himself ♪ ♪ ♪ digital transformation has failed to take off. because it hasn't removed the endless mundane work we all hate. ♪ ♪ ♪ automation can solve that by taking on repetitive tasks for us. unleash your potential. uipath. reboot work.

michael santoli with some reaction to what we've seen the markets do so far in response to their decision, mike >> reporter: the first move wrong move rule applies, a little bit of a head fake, and that also applies after the press conference i think if you squint hard at the bond market you would say that it was on a net basis relative to the market stance before hand, slightly hawkish or nondovish. not a lot of words offered to say there was some slow down risk, we're still making progress if the fed is going to preserve flexibility and its ability to be deliberate about the tapering process, which it always wants to do, i think it's done that so they're going to consider the progress over the coming meetings, plural, that would

mean september/november. it doesn't seem the market is too exorcised. no dots this time. no outlooks from the committee members. that was all the source of a lot of confusion last time maybe they'll be a little clearer, more consistent message from chair powell since he's speaking just for himself and his assessment of the committee. >> you nailed it that's what feels different this time no dots. all the drama is in the dots there's no dots. >> reporter: exactly you characterize what the discussion was in the meeting but there's not a lot of that kind of what the individual members foresee about policy and growth this time it might be a little bit lower drama, at least with the press conference maybe still will be pressed to say what, practically speaking, is the good of the $120 billion, a month of qe. they also keep accentuating substantial further progress that they're looking for is relative to december of last

year not relative to the lows of last spring of 2020 that sort of gives them an ability to say, not there quite yet. >> it's a subtle nuance. in five seconds, mike, anything else you think would be causing the markets to tumble this afternoon? >> reporter: nothing except the fact it's been unsettled already and we've had really poor market breadth. i would say there's not a quorum of trading wait until we close to see the real assessment. >> michael santoli, thank you, sir. to fed chair jay powell. good afternoon at the federal reserve we are strongly committed to achieving the monetary policy goals that congress has given us, maximum employment and price stability today the federal open market committee kept interest rates near zero and maintained our asset purchases. these measures, along with our strong guidance on interest rates and on our balance sheet, will ensure monetary policy will continue to support the economy until the recovery is complete progress in vaccinations and

unprecedented fiscal policy actions are also providing strong support to the recovery indicators of economic activity and employment have continued to strengthen and real gdp appears to be on track to post its fastest rate of increase in decades. much of this rapid growth reflects the continued bounceback in activity from depressed levels the sectors most adversely affected by the pandemic have shown improvement but have not fully recovered. household spending is rising at an especially rapid pace, boosted by the ongoing reopening of the economy and ongoing policy support the housing sector remains very strong, and business investment is increasing at a solid pace. in some industries near-term supply constraints are restraining activity these constraints are particularly acute in the motor vehicle industry where worldwide shortages of semiconductors have sharply curtailed production so

far this year. as with overall economic activity, conditions in the labor market have continued to improve. demand for labor is very strong and employment rose 850,000 in june with the leisure and hospitality sector posting notable gains. nonetheless, the labor market has a ways to go the unemployment rate in june was 5.9%, and this figure understates the participation in the labor market has not moved up from the low rates that have prevailed most of the last year. care giving needs, ongoing fears of the virus and unemployment insurance payments appear to be weighing on employment growth. these factors should wane in coming months leading to strong gains in employment. the economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been hardest

hit. in particular despite progress joblessness continues to fall disproportionately on lower wage workers in the service sector and on african-americans and hispanics. inflation has increased notably and will likely remain elevated in coming months before moderating as the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices particularly because supply bottlenecks in some sectors have limited how quickly production can respond in the near term. these bottleneck effects have been larger than anticipated, but as these transitory supply effects abate, it is expected to drop back to the longer run goal very low readings from early in the pandemic as well as the past increases in oil prices to consumer energy prices also contribute to the increase although these base effects and energy effects are receding. the process of reopening the economy is unprecedented as was the shutdown at the onset of the

pandemic as the reopening continues, bottlenecks, hiring difficulties and other constraints could continue to limit how quickly supply can adjust. raising the possibility that inflation could turn out to be higher and more persistent than we expect. our new framework for monetary policy emphasizes the importance of having well-anchored inflation expectations both to foster price stability and to enhance our ability to promote our broad based and inclusive maximum employment goal. indicators of long-term inflation expectations appear broadly consistent with our longer running inflation goal of 2% if we saw signs that the path of inflation or longer term inflation expectations were moving materially and persistently beyond levels consistent with our goal, we'd be prepared to adjust the stance of policy. the effects of the pandemic on the economy have continued to diminish be but risks remain progress on vaccinations has limited the spread of covid-19

houf, the pace of vaccinations has slowed and the delta strain of the virus is spreading quickly in some areas. continued progress on vaccinations would support a return to more normal economic conditions the fed's policy action have is 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 the committee reiterated in today's policy statement, with inflation having run persistently below 2% we will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer term inflation expectations remain well anchored at 2%. we expect to maintain an accommodative stance of monetary policy until the employment outcomes are achieved. with regard to interest rates, we continue to expect that it will be appropriate to maintain the current zero to 0.25 for the

federal funds rate until labor market conditions have reached levels consistent with the committee's assessment of maximum employment and inflation has risen to 2% and is on track to moderately he ca ly exceed 2m time we're continuing to increase our holdings of treasury securities by at least $80 billion per month and of agency mbs by at least $40 billion per month until substantial further progress has been made toward our maximum employment and price stability goals. our asset purchases have been a critical tool. they helped preserve financial stability and market functioning early in the pandemic. and since then have helped foster accommodative financial conditions to support the economy. at our meeting that concluded earlier today the committee continued to discuss the progress made toward our goals since the committee adopted its asset purchase guidance last september. we also reviewed some considerations around how our asset purchases might be adjusted including their pace

and composition once economic conditions warrant a change. participants expect the economy will continue to move toward our standard of substantial further progress in coming meetings the committee will again assess the economy's progress toward our goals and the timing of any change in the pace of our asset purchases will depend on the incoming data. as we've said, we will provide advanced notice before making any changes to our purchases on a final note we announced the establishment of two standings repo facilities, domestic for dealers and banks and for foreign and international monetary authorities these facilities will serve as back stops in money markets to support the effective implementation of monetary policy and smooth market functioning. 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 at the fed will do everything

we can to support the economy for as long as it takes. thank you. i look forward to your questions. >> thank you let's go to steve liesman with cnbc >> thank you very much mr. chairman, i wonder if you might be able to put some, i don't know, numbers or maybe more detail around this concept of substantial further progress. what counts as the progress numerically, if you will, or citing data, if you could, that you cited in the statement today, and if you could be more specific about what substantial further progress would look like and if that would then lead you to an announcement of an actual reduction in the purchases of your assets. thank you. >> thank you so more detail on substantial further progress let's talk about the maximum employment part of that.

as you know, with maximum employment, unlike with price stability where we can target a number of 2% on average, with maximum employment, there isn't a single number that we can target we monitor a broad range of data about different aspects of the labor market there's unemployment, unemployment among different age groups and such. there's participation, there's wages, there's all kinds of flow data and we look at all of it to try to arrive at a picture of what is maximum employment. so there isn't -- i can't give you a set of numbers, for example, a numerical threshold like we used for a time back in 2012, i guess it was we didn't do that here we said substantial further progress toward our goals and what we said we would keep, effectively, we would give advanced warning as we -- as more and more clarity as we move forward, and that's what we're going to try to do

so what would substantial further progress be? i would say we have some ground to cover and the labor market side i think we're some way away from having had substantial further progress with the maximum employment goal. i would want to see strong job numbers. and that's kind of the idea. >> if i could follow up. you talked about one side of the equation do you feel you've reached your goal when it comes to the inflation side thank you. >> inflation is running well above our 2% objective and has been for a few months and is expected to run certainly above our objective for a few months before we believe it will move back down to our objective the question whether we've met that objective is one for the committee to make. i can't do that by myself. but it's clear that at this time inflation is actually running

above 2% and, again, has been and will be at least, we expect it will, in coming months before returning down to our target >> thank you ann sophia with reuters. >> hello can you hear me? hello? can you hear me? i'm sorry. >> yes, we can hear you. >> i apologize to follow up on the question, i want to ask is it correct to see this as the start of the advanced notice process before taper and, also, can you speak to how the recent surge in covid factors into your thinking o the taper? thanks >> so, as you know, we're in a process now where what we said

is that in this meeting and coming meetings we're going to be continuing to assess the economy's progress toward our goals and give advanced notice we'll be trying to provide additional clarity about our thinking both in the post meeting statement and in the minutes and in the public comments that people make. our approach here has been to be as transparent as we can we have not reached substantial further progress yet, so we're not there and we see our selves as having tomorrow ground to cover to get there that's what i would say. in terms of covid and the delta strain, i'll say a couple things of course it will have significant health consequences for many, and we need to keep that in mind before we mention and move to the economic questions. this is rising cases in a number of parts of the country and some

forecasts are for them to rise quite significantly. we'll see. what we've seen, though, with successful waves of covid over the past year and some months now there has tended to be less economic -- less in the way of economic indications from each wave and we will see whether that is the case with the delta variety but it's certainly not an unreasonable expectation. it certainly is plausible people would pull back from some activities because of the risk of infection, dining out, traveling, some schools might not reopen we may see economic effects from some of that or it might weigh on the return to the labor market some people might choose again, we don't have a strong sense of how that might work out, so we'll just be monitoring it carefully >> thank you we'll go to the wall street journal and mike timorose.

>> in your opening statements in march and april you noted that a transitory rise in inflation above 2% this year would not meet the threshold of exceeding 2% for some time, and i noticed you didn't repeat that qualification last month or today. and so, in your view, has the rise in inflation this year met the threshold of moderately exceeding 2% for some time >> that would, again, be a question for the committee but i would really say the guidance you're talking about is really the guidance to do with liftoff. the guidance for liftoff we have to have labor market conditions with full employment, inflation 2% and on track to run moderately above 2% for some time it really isn't relevant now because we're looking at tapering asset purchases we're clearly a ways away from considering raising interest

rates. it's not something that is on our radar screen right now so when we get to that question, when we start to get to the question of liftoff, which we are not at all now or near now, that's when we'll ask that question that is when that will become a real question for us >> thank you gina from "the new york times. >> hi, chair powell. thank you for taking our questions. i wonder if you could talk a little bit about -- does that affect how you're thinking about tapering? does it affect how you're thinking about potential liftoff down the road, and if you could talk a little bit about that >> gina, i'm sorry, for the first 15 seconds of your question you froze could you say that again i apologize. >> yes, no, sorry. i was wondering if you could talk a little bit about how the

divergence in global growth and sort of multispeed recovery we're seeing around the world impacts how the fed thinks about its policies so do you take into account that sort of multispeed recovery when you're thinking about tapering qe and do you take it into account when you're thinking about liftoff? >> so it's an important feature of this recovery is how uneven it is and in many cases it's related to the fact that some countries have had little in the way of access to vaccines and are seeing significant outbreaks whereas other countries such as the united states in particular are having a very strong rebound. how does it affect our policy? in a couple of ways potentially. one just is that in general economies through financial markets and trade are deeply

interconnected now, and so a stronger global economy will lead to more u.s. exports and that will help economic activity to the extent the global economy is weak and the up states is strong, it will wind up exporting some of our demand through imports rather than having a lot and on the risk side as long as there's time and space for the development of new strains, no one is finally safe. the strains, there's no reason they can't keep coming one is stronger than the next. that's a plausible outcome as vaccinations rise we can get back to our economic activity. it is in our interests to make sure vaccination happens broadly around the world just for that

reason >> thank you james at the "ft." >> thank you very much chair powell, how would you describe the risk to the outlook on inflation at the moment after the last data came out higher than expected? do you believe the risks are tilted to the upside, and does the committee share that view? or are they in balance are you worried there could be a hit to demand from the delta variant that could tilt them sort of to the down side again if you could give us a sense of that, that would be very helpful. >> sure. i would be glad to if you look again at the most recent inflation report, what you see is it came in significantly higher than expected but essentially all of the overshoot can be tied to a handful of categories. it isn't the kind of inflation that's spread broadly across the economy. it's new, used and rental cars,

airplane tickets, hotels and a couple of other things and each of those has a story attached to it that is really about the reopening of the economy. so we look at that, and we think that those are temporary things because the supply side will respond, the economy will adapt. we have a very adaptable, flexible economy and labor market and it's a real asset that we have and so we think that inflation should move down over time now we don't have much confidence, let's say, in the timing of that or the size of the effects in the near term i would say in the near term that the risks to inflation are probably to the upside i have some confidence in the medium term that inflation will move back down again, it's hard to say when that will be i will say, though, inflation is half of our mandate, price stability is half of our mandate. and if we were to see inflation moving up to levels persistently

above significantly, materially, above our goal and particularly if inflation expectations were to move up, we would use our tools to guide inflation back down to 2% so we won't have an extended period of high inflation we think that some of it will follow away naturally as the the process of reopening the economy moves through and it could take some time. in any case we'll use our tools over time as appropriate to make sure that we do have inflation that averages 2% over time >> thank you victoria, politico >> thank you, mr. chairman bond market pricing seems to suggest that investors think the fed might overtighten. so my question is do you think markets have bought into the central bank's new framework and how do you balance that with

inflation concerns >> so in terms of what's been happening in bond markets, i don't think there's a consensus on what explains the moves between the last meeting and this meeting we've seen long-term yields go down some of it is a fall in real yields which may have been connected to sentiment around the spread of the delta variant and concern around growth. also some decline in inflation compensation which is significantly reversed and there also are technical factors where you put things you can't quite explain. i don't see in any of that, that there is really anything that challenges the credibility of our framework, if that's really your question. we are committed to achieving 2% average inflation over time. what we said was that, in particular, when we see a very

strong labor market, high levels of employment, low levels of unemployment, that won't be enough for us to raise interest rates until we see some inflation. of course, what we have today is kind of the opposite we've got, you know, 7 million or 8 million fewer people than were at work before the pandemic, so we're a ways away from full maximum employment but we have high inflation so it's kind of the opposite case. and we have to deal with that. any central bank has to deal with that by looking at the inflation and asking whether it is broad based and likely to be persistent and whether inflation expectations are implicated in a way that could cause them to rise so we're monitoring that very carefully. and we're prepared to use our tools as appropriate but again, i think our framework is pretty well understood and i think the real test of it will be down the road when it's time to think about raising interest rates and how we assess that set

of issues. >> rich at bloomberg >> thanks very much, michelle. chairman powell, you just alluded to the fact that you're prepared to use your tools to slow the economy down if need be if inflation looks like it's getting out of control i want to try to understand that in the context of the framework. does that mean you'd be prepared to raise interest rates even if we're not at maximum employment at that point? do you see this danger of inflation? and, two, does it also mean you'd be prepared to raise interest rates even if you are still buying assets? thank you. >> so there's a part in our statement on long-run goals and monetary policy strategy which, rich, i'm sure you are familiar with, which talks about that case in which the two goals are

intention. most of the time if you have high inflation you also have high employment. but they tend to go together this is a situation where they are temporarily in different directions we're not at full employment but we are having high inflation we feel like we're going to be making good progress over the next -- the course of the next couple of years really toward maximum employment this is a very strong labor market if you look at the number of job openings compared to the number of unemployed, we're clearly on a path to a very strong labor market with high participation, low employment, high employment, wages moving up across the spectrum that's the path that we're on, and it shouldn't take that long in macro economic time to get there. so that's what i think is really the likely case. again, it's not timely for us to be thinking about raising interest rates right now

what we're doing is looking at our asset purchases and judging what is right for the economy and judging how we -- how close we are to substantial further progress and then tapering after that the question you ask about, would we raise rates if we hadn't finished cutting -- hadn't finished the taper. hypothetical question, we'd face the circumstance at the time we could always just -- one thing one could do would be to just cut asset purchases all the way to zero if you wanted to do that it's hard to answer what you would do without knowing a lot more about the situation ideally, you wouldn't be still buying assets and raising rates because you're adding a combination by buying and removing a combination by raising rates. that wouldn't be ideal i'll say that. >> thank you we'll go to edward lawrence at fox business >> thank you, mr. chairman thank you for taking the question you are talking about jobs you said we're on a path to i

havar strong job market. 1.9 million people unemployed and 9.2 million job openings so what's the disconnect is it the skills gap is it the extended unemployment benefits is it the fact that people aren't willing to relocate what is the disconnect there >> it's a really unusual situation to have the ratio of vacancies to unemployed be this high and we think there are a number of things at work there. maybe the place to start is just to say that this is now not so much about people going back to their old jobs it's about finding a new job so that's a time intensive, labor intensive process, and there may be a bit of a speed limit on that. there's research that suggests there is a speed limit on that so it's not like you can have millions of people at the beginning of the recovery going back in a single month because they're just going back to their

old job. this is about job selection. there may be factors holding people back and that's -- this is what surveys say. there are people who are reluctant to go back to work because they still feel exposed to covid these could be jobs where there is a lot of interaction with the public and where perhaps there's a family member who is vulnerable or -- for whatever reason there's also caretakers who are -- where schools are not fully open and parents are at home or taking care of older people and there's also been very generous unemployment benefits which are now rolling off. they'll be fully rolled off in a couple of months and all of those factors should wane and, you know, we think we should see, because of that, we should see strong job creation moving forward ultimately, it's unusual to see aspects like the job openings number in a context where there are that many unemployed people.

that many job openings would typically suggest a tight labor market of course, we hear from businesses all over the country that it's very hard to hire people and that may be because people are shopping carefully for their next job i mean, i think the bottom line is people want to work if you look at where labor force participation can get, people will go back to work unless they retire some people will retire. generally speaking, americans want to work, and they'll find their way into the jobs that they want. it may take some time, though. >> thank you rachel with "the washington post" >> thank you, michelle and thank you, chair powell, for taking our questions. i wanted to follow up on what you said about there tending to be less in the way of economic implications from each wave of covid cases. could you elaborate on what you've seen to that end during previous waves and then looking

forward, how vulnerable is the labor market to the delta variant? i'm thinking, or wondering if you have concerns that jobs that may have come back in travel or tourism could be susceptible if people started reconsidering their travel plans or caretakers were suddenly faced with the prospect of schools not reopening. how do you see some of those risks going forward? thank you so much. >> if you remember the summer wave last year of covid, which was largely southern and western states, the economy just performed much better than anyone expected. we were coming off the spring wave where there were a lot of shutdowns and then this big second wave hit and i think that the natural thing was to expect it would have a real impact on the economy and it was much less than people thought. people -- what's happened is, first of all, many people are vaccinated they're going on with their lives. second, we've learned to live with it. a lot of industries have kind of improvised their way around it,

particularly, for example, buying a new home. that process of buying a new home very quickly moved to much more of a virtual process. and so they were able to do that and other industries as well have gone to takeout and no-contact things. so that can all -- it seems like we've learned to handle this we would like to get back to, you know, the way things were, and i hope to some extent we will over time but of course, the big wave we had last winter had significant employment effects particularly in, you know, hospitality and leisure and other areas with a lot of direct contact. a lot of jobs were lost because that was a very strong wave that happened in the winter months last year. just before the vaccines arrived. so with delta we'll just have to watch. again, with a reasonably high percentage of the country vaccinated and the vaccine apparently being effective we're not experts on