surprise may have decreased. that being said we do expect jerome powell to talk about a march rate hike, four rate hikes this year and potentially start of qt but all in line with market expectations. >> we are going to go to steve liesman with the fed decision. >> thank you very much the federal reserve leaving the rate unchanged and will be appropriate to range the target rate the statement said inflation is well above 2 p%. the fed continues to taper and end the purchases in early march. the statement deletes a section saying the fed will use the full range of tools to support the

economy. covid affects the economy but overall employment and economic activity strengthen. job gains have been solid. supply and demand imbalances mostly from the pandemic contribute to inflation. the path of the economy, keeping a line from the prior statements, continues to dpepen on the path of the economy it makes no mention of the balance sheet and does have a -- new long run statement out which i don't see a lot of changes but note a line from the statement where it says the primary means of adjusting policy through the fed funds rate no mention of a balance sheet

adjustment in the statement but the fed funds rate is the will primary way to address the economy. >> thank you let's get quick response from the panel. rick, a quick thought on rates here >> yeah. rates -- 2-year note dropped with regard to rates and the curve steepening and now going up up in 2s and 10s and 30s makes sense. coming to interest rates i stress the fed hasn't raised anything or stopped buying anything and haven't shrunk anything putting the market through the ordeal generating the volatility they should stop buying rkt start raising and do it quickly. they don't do that to comment on what the fed is thinking i don't think they

necessarily are taking the path i would. i would say one thing. quantitative tightening most likely will be the most painful. if the economy can't stand to go to 1.25 by year end there's more wrong with the economy than omicron. >> there's the 10-year above 1.8% jim, just as you said to signal a rate hike in march you said more important is a signal on the operation. what do you make so far? >> thank you for having me on the show i think this is a clear lack of clarity and probably by design they did what the markets thought. signaled a rate hike and the rest of the stamtd is balanced what's top of mind for the market is the balance sheet and just like rick was saying that

this is really the pain point. any shrinking is maybe the second half of the year to focus on so if we think about how the fed is going to operate in this environment it's almost impossible to use the interest rate policy as the primary tool. it will be the primary tool but use that in compliment with the balance sheet so effectively if we are in a situation where we see that inflation continues to stay high and the fed has to act more they lean on the balance sheet. >> raising longer term rates is really what you can do through balance sheet maneuvers. let's go to bob for a look at how stocks reacted to this non raidsing of rates in the statement. it does look like markets like what they heard. >> yeah.

i'll tell you why. no balance sheet adjustment mentioned there. bulls down here are concerned about the stock market and how could powell sound phawkish but turn down the volume asset price buying will end. but no mention of the balance sheet adjustment is bullish for stocks overall in a way this is the most boring of the meetings. they give guidance in march and an outlook on the market in the second half of year and justify the hawkish stance turning down the temperature is why the market reacts. so we'll keep an eye on this but i like the fact they didn't leave a balance sheet comment in

there and the fed fund comment is very important. >> i'll be curious what chair powell will say and does he try to stay -- try to keep the lack of clarity what else can you add here, steve? >> there was i think no expectation that the fed would mention the balance sheet in this statement i made that comment in case anybody was looking for it there is no -- what's the word i'm looking for? no break i think it will be mentioned by powell the fed has not decided upon the balance sheet strategy and that is to come the expectation we have on the fed survey is the summer the fed will get one or two rate

hikes under the belt and i want to be clear. the fact it wasn't in the statement is not a dovish sign of anything. >> interesting quickly, steve, and then david the main way the fed could impact or influence longer term sbris rates is through interest rate >> i always give a "a. what will happen is a combination. this is the key and relying on guys like fed governors on this. what it will do is raise interest rates on the short end and then through a balance sheet activities and maneuvers try to flatten the aspects of that. it is a combination.

it is not one or the other and because it's so complicated and kelly i think said we don't know about the balance sheet reduction on the economy or on markets. the fed will tread carefully here and i believe it will d some that's my belief and of the market but in a measured way the expectation is $380 billion to come off the balance sheet this year. >> i first want your reaction to what the fed said in the statement. second i want you to drill down on something in my notes that the classic mistake of monetary policy to act too harshly, too aggressively too late which presumes you believe the fed is too late and now is playing

catch up >> i think the statement was on tarkt and setting people up for the expectation to raise rates four times this week and probably will start to talk about the balance sheet but want to give flexibility because there is no point to raise short tell rates to control inflation if you don't increase long term rates. yes they absolutely shouldn't overreact right now. if you slip to the left that's right but if you jerk on the steering wheel you spin out of control. they should have been tighter all along. they caused asset bubbles and they have to direct policy in a steady way to get back the normal, positive real interest rates and hope that the economy can hold it together as they do that. >> last cycle people might have

said is a different story. jim, can you clarify the importance of the balance sheet. the fed said they think the fed funds rate is primary mechanism for monetary policy and push people from obsessing. what is the impact of this going to be, of tightening, when it does happen and emphasizing the rate so much >> one thing i think the market is taking from this is that there was a fear factor built up to be overreacting to the inflation environment right now. the statement was very, very i guess somewhat tame. the balance sheet is the critical policy measure for this year we priced in four rate hikes the big issue here is how the fed uses the balance sheet and what level of inflation does the

fed feel comfortable with? will they stick with the core pce target or claim victory at 3% is there a level that the fed overreacts to with inflation if it does then the feear is th fed goes aggressively. this is the area to fine tune the back end of the curve because that's the only real way that they can keep back end rates higher there's still money in the system and qe. if they keep back end yields really low that sends the wrong message to the market. so there needs to be some complimentary moves here maybe less rate hikes and more with the balance sheet but this is a discussion for the second half of the year but this is

going to matter a lot for asset prices. >> i think rick mentioned the ib verted yield curve a few moments ago. mona, react to interest rates being too low for too long 40 years i think he said it feels a little bit like what david is saying is low interest rates are a financial crack -- crack cocaine, that is -- and now tie traited off that can the markets deal with that how slow or fast will the fed need to go as it calibrates this away from financial crack? >> yeah. absolutely we are already getting signals from the market as the fed raising rates the speculative 'sets highest valued are getting hit hardest and first and expect

that to continue keep in mind historically when the fed tightens rates we get valuation compression across markets but the highest valuation parts of the market that are hit hardest we expect that to continue this year more prodly stepping back and looking at where we are in this economic cycle we still very much feel we are mid cycle in the economic expansion post-pandemic. we have a pretty healthy consumer earnings growth 7 to 9% range. so can this economy handle four fed rate hikes this year we think that will not derail the understood lying expansion heading to 2023, perhaps 2024 economic growth will return back in line with trend and have to start thinking about where we want to be with inflation,

interest rates and the level of the yields can this economy handle for 2022 still very much mid cycle and early days and from a market perspective that protends pretty well. persons we get a value cyclical bent early on. but growth sectors return to favor. we fave a balanced portfolio here we are not near the end of the cycle. >> stocks edged higher rates higher but 10-year trying to hold. rick, what would you say awaiting the press conference in the next 15 minutes? >> rates aren't so far away from where they were before the statement. i think the fed needs to put guidance under the microscope. i think the guidance is

horrible i don't mean that they're communicating poorly i think never ripping off the band aid we'll blah, blah, blah we're going to blah, blah, blah. we should be surprising and orderly. maybe throw a 50-point rate hike in there they always want to ease and run away from tightening we didn't even normalize after the credit crisis if anything happens we have very few choices to make. they need to start sooner and explain less more action. less words the markets need to be able to handle it. >> last word goes to steve there is a statement of principles that released about

reducing the fed statement plans to reduce over time primarily with the amounts invested announcing the monetary policy it will do so after the process of raising the target rate has begun. there is a statement of principles on the balance sheet and will adjust the approach in light of developments. they have taken the initial steps by putting out a statement of principles. >> thank you thank you to the panel we'll see some of you later but appreciate the contributions today. coming up, more analysis of the fed. we'll ask what he expects to hear at the press conference starting at 2:30 p.m. eastern

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welcome back quick look at the market shows we are slightly below the levels of stocks into the fed decision 20 minutes ago still definitely green dow up 217 nasdaq up more than 2% now let's get to bob pisane at new

york stock exchange. >> it was in line with the current narrative to get a rate hike in march and every other meeting likely a quarter point and of course, going to end up with the asset price buying ending soon. i think that's why we initially rose the status quo is intact on the balance sheet is important. so you shoulded very mild. we came off the highs and slightly below where we were prior to the fed so i think at the presser mr. powell will get a lot of questions about that balance sheet statement and more about what's going on there and obviously concern for the market back to you. >> i'll pick it up thank you. our next guest said the fed move is disappointing and leaves the fed behind the curve

joining us is former fed governor mr. heller. thank you for being with us. >> good to see you. >> fantastic you say we have met our basic goal of full employment and so get about it and like to have seen them raise rates now. why do you think they didn't >> i have no idea. they have no backbone. they have no gumption. it is not paul volker in charge. i agree with rick santelli the fed needs more action and less words. >> how far behind the curve they are, number one? >> how much harsher do you think they will have to be going forward to catch up to where you

think they ought to be is four quarter points going to do it? >> no. the fed funds rate should be right now around 2%. long term interest rates should reflect the high inflation at the present time and they are nowhere near there because the federal reserve is stimulating the market by buying mortgage backed securities which is hardly needed when housing prices are going through the roof in double digits. >> i take your point that the system has been flooded with money. not just by this fed but by prior feds as they enage in quantitative easing which is basically the buying for cash of government and mortgage backed securities.

>> during 2020 and 2021 money soared 25% a year. never mind the virus but where does the productive capacity come from to deal with that enormous increase in demand such an increase in the money supply generates and well reflected in inflation data. first been in the stock market asset prices went up now in consumer prices and wages. we see more and more announcements of strikes and union negotiations and that will really build long term inflation into the economy which is something we don't want to have ji what do you think the economic significance is of the balance sheet and do you agree with the emphasis as the primary

lever and then the balance sheet to follow starting later this year >> i don't understand why the federal reserve can't walk and chew gum at the same time. you can move both policy levers at the same time and get a faer reaction and especially take the excessive stimulus out of the bond market for mortgage backed securities and assets like that. that is absolutely unnecessary right now. >> robert heller, thank you. good to see you today. >> good to see you. chair powell's conference begins in a couple minutes we'll bring it to you live when it happens but first some final thoughts stay with us

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welcome back the news conference is minutes away stocks slightly off session highs. slightly off where we were going into the 2:00 p.m. decision why the yield on the 10-year at 1.18% why creeping higher. what are the most contentious issues to listen for now

>> i think the chair's going to take a fair amount of heat for the level of inflation a lot of this inflation is caused by fiscal policy, by the fiscal stimulus and wasn't about monetary stimulus contributing to higher asset prices and the fed needs to raise rates gradually to normalize policy and can't if they the economy falls into recession a greatest risk is overreacts to the fed and jacks up interest rates and pushes the economy into a recession and will never normalize. they have to take it gradually and got to hold the nerve and deliver a steady message. >> how do you reabout when you hear what fed governor heller just said, they need more backbone and need to have acted quicker and do both things at the same time? adjust the balance sheet and

interest rates and when you hear rick say we need more action less words? >> i think the words is much more interesting with more action and less words but of course they should have been tighter but need to adjust gradually. you can't turn it on a dime causing volatility in the economy. this works with long and variable lags and the problem is the economy is very strong in the fourth quarter and looking very weak in the first quarter and lots of risks out there. you don't want a full employment economy and slam the brakes on. >> you can't have it both ways you say they're behind the curve why no >> yes i can believe that should have a proper diet -- >> they're not doing what bill

ackman. >> they shouldn't try to surprise markets it's a weird economy with omicron and everything they need to hope that everything else sort of smooths out here we have to just putt up with it. i think the trends of the global and u.s. economy are disinflationary and will get back to inflation. >> here comes the chair. >> -- achieving the monetary goals that congress gave us. today the federal open market committee kept the rate near zero and stated the expectation an increase in the rate would be appropriate soon the committee also agreed to continue reduszing the net asset purchases on the schedule announced in december bringing them to an end in early march. as i will explain against a back drom of elevated inflation and

strong labor market the policy is adaptding to the evolving economic environment and will continue to do so. economic activity expanded at a robust pace last year reflecting progress on vaccinations and the reopening of the economy fiscal and monetary policy support and the healthy financial positions indeed the economy has shown great strength in the face of thing on pandemic the recent sharp rise in covid cases with the omicron variant will weigh on economic growth this quarter high frequency indicators point to reduced spending in covid sensitive sectors such as travel and restaurants. activity more broadly may be affected as many workers cannot report for work because of illness or quarantine. fortunately health experts find

that the variant has not been as virulent as previous strains and expect cases to drop off rapidly. if the wave passes quickly the economic affects should as well and we would see a return to strong growth zwr that said the imply cases for the economy are uncertain and did not lose sight that for many individuals and families and the health care workers the virus continues to cause great hardship the labor market made remarkable progress and by many measures is strong job gains have been solid averaging 365,000 a month over 3 months over the past year payroll employment has risen by 6.4 million jobs the unemployment rate has declined sharply falling 2 percentage points over 6 months to reach 3.9% in december. the improvement in labor market

conditions have been widespread including for the lower edge and african americans and hispanics. labor demand remains strong. with constraints on labor supply employers are having trouble filling jobs and wages are rising while labor force participation edged up it is subdued reflecting the aging of the population in addition some who would otherwise would be seeking work are out of the wofrts from the pandemic including caregiving needs and the virus. the current wave of the virus may prolong the effects. over time there are good reasons to expect improvement in participation and employment inflation is above the longer run goal

supply and demand imbalances have continued to contribute to elevated levels of inflation in particular bottlenecks in supply constraints are limiting how production can respond to higher demand in the near term these problems have been large ore and longer lasting than anticipated. while the drivers of higher inflation are connected to the dislocations caused by the pandemic price increases have spread to a broader range of goods and services wages have risen briskly and attentive to the risks could put upward pressure on inflation like most forecasters we continue to expect inflation to decline over the year. we understand that high inflation imposes significant hardship, especially on those least able to make the higher

costs of essentials. we believe that the best thing we can do to continue gains is to promote a long expansion and that will require price stability. we're committed to the goal. we'll use the tools both to support the economy and strong labor market and prevent higher inflation from becoming entrenched we'll be watching to see if the economy is evolving in line with expectations the fed's monetary policy actions have been guided by the mandate. the committee left the target range unchanged and announced the plan to end asset purchases in march in light of the progress in the labor market and inflation above the goal the economy no longer needs sustained high levels over

support. that is why we are phasing out the asset purchases and will be appropriate to raise the target range for the federal funds rate the outlook is uncertain making appropriate policy in this environment requires humility recognizing that the economy evolves in unexpected ways we need to be nimble to respond to the plausible outcomes. with this in mind we will remain attentive to risks including that high inflation is persistent than expected and are prepyred to respond as appropriate to achieve the goals. for greater clarity today the committee issued a set of principles for a foundation and clarify that the federal funds rate is the primary means to adjusting policy

reductions will occur over time in a predictable manner through adjustments to readjustment. over time we intend to hold securities in the amounts needed for a framework and in the longer run holding treasury securities our decisions to reduce the sheet is guided by the goals in that regard we will be prepared to adjust to balance sheet management in light of developments the committee has not made decisions rarding the specific timing, pace or other details and will discuss in upcoming meetings and provide additional information at the appropriate time to conclude we understand that the actions affect communities, businesses and families across

the country. everything we do is in support of the public mission. thank you. i look forward to your questions. >> thank you for the first question - >> thank you, michelle thank you, chair powell. so this expected that the fed will hike rates perhaps every other meeting. but certainly in the past the fed has hiked at every meeting so i wanted to ask are rate hikes at consecutive meetings this year on the table is every meeting a live meeting? will the fed consider front loading some rate hikes even if it doesn't raise every meeting >> thank you. >> thank you as i referred to it is not possible to predict with

confidence exactly what path is appropriate. and so at this time we haven't made any decisions about the path of policy and i stress again that we'll be humble and nimble we will have to navigate cross currents and two-sided risks now and i'll say also to be guided by the data. i'll say that we'll be led by the incoming data and evolves outlook. we'll try to communicate as clearly as possible. moving moving transparentally we know that the economy is in a very different place than 2015 the economy is now much stronger the labor market is far stronger inflation is well above 2% target and these differences are likely to have important implications beyond that we haven't made any

decisions. >> thank you let's go to victoria at politico. >> hi, chair powell. i wanted to ask. you were talking about the health of the labor market and i wonder if you would call it maximum employment and along the same lines obviously rate hikes on the table this year do you think that the fed can raise rates? bring inflation under control without hurting jobs and wages >> sorry just getting both parts of your question written down. i would say and this view is widely held on the committee both sides of the mandate call for us to mover from the policies putt in place during the challenging economic conditions that the economy faced earlier in the pandemic. and i would say that most fmoc

participants say that there's maximum employment in the sense of the highest level of employment with price stability. that is a personal view. very broad support on the committee on the judgment to raise the target range for the federal funds rate the other thing is maximum employment will evolve over time and through the course of a business cycle in the particular situation it may well increase that's consistent with stable prices increase and we hope it will as more people come back into the market as participation rises. and the policy path to contemplate would be supportive, as well. so the thing about the labor market right now is that there are many millions of more job openings than unemployed people. you ask whether we can raise

rates and mover to less accommodative and tight finance shlt conditions. i think there's room to raise interest rates throughout threatening the labor market there is by so many measures a historically tight labor market. record level of job openings quits. wages are moving up. if you look at surveys of workers afind jobs plentiful all the of those readings at levels we haven't seen in a long time and some cases ever 0 this is a very, very strong labor market and the strong sense is that we can move rates up without having to severely undermine it i would point out that there are other forces at work this year to help bring down inflation and

work on the supply side. the timing and pace is uncertain. fiscal policy is less supportive of growth this year. the fiscal impulse to growth is lower. there's multiple forces that should be working over the course of the year for fla igs to come down we realize that the timing and pace of that are highly uncertain. inflation persisted longer than we thought and prepared to use the tools to assure that higher inflation does not become entrenched >> thank you let's go to tim at "the wall street journal." >> good afternoon, chair powell. timof "the wall street journal. i have a couple of questions on the balance sheet. the statement on the balance sheet today calls for significantly reducing holdings. what does that mean? and then, apart from moving sooner and faster, are there any

other ways which you and the colleagues are seriously thinking about recalibrating this process and finally, how much disagreement is there around how to use the tool including active sales or changes in the -- thank you. >> those are all great questions and the question it is committee is turning to now. we had a discussion of the balance sheets at this meeting we've gone through and carefully put together a set of principles to guide the decisions to make about the pace and the questions that you're asking and i expect the process is something to spend time on in coming meetings i can't tell you how many or how long it will take.

at the appropriate time we'll provide additional information the last cycle through balance sheet issues we did find that over the course of two or three meetings, for example, we came to interesting and better answers. we are in that process now and at the next meeting turning to the details you are asking about. i would say this the balance sheet is much bigger it's a shorter duration than the last time and the economy's much stronger inflation is much higher i think that leads you to -- i have said this being willing to move sooner than we did the last time and perhaps also faster. beyond that it's not appropriate for me to speculate what that would be but i would point you to principle number one viewing changes in the target rate for federal fund rates as a primary

mechanism to change the stance we want to operatalize that and want the balance sheet to be declining in a predictable manner and declining primarily by adjusting reinvestments. >> raising rates and reducing the balance sheet both restrain the economy and tighten monetary policy how should we think about the relationship between the two for example, how much of run yaufr is equal to a percentage point increase in the benchmark rate >> we think of the balance sheet as moving in a predictable manner sort of in the background and the active tool meeting to meeting is federal fund rates. there's rules of thumb that equate this and also an element of uncertainty around the balance sheet.

i think we have a better understanding of rates affect the balance sheet that's a relative lu new thing for the market and for us and less certain about that i think the pat erp to arrive at a timing and a pace and composition and then announce that with advance notice and it will start in the background and running in the background and have the interest rate bs the active tool of monetary policy that's the plan. i can't tell you much more about the very good issues about size, pace, composition. we'll turn to them at coming meetings. >> thank you. >> thank you now going to neil irwin. >> thank you, chair powell neil from axios.

i wonder if the volatility in the last few weeks stretches anything alarming or affect policy to the degree that conditions tightened couldn't that achieve the tightening goals >> so, as you know, the ultimate focus is on the real economy, maximum employment and price stability and financial conditions matter for achieving the dual mandate and look at broad irconditions not one or two markets what we are always asking ourselves is are we seeing changes that are material enough of a change in conditions that they are inconsistent with the goals. that's how we look at that and i don't want to comment on today's financial conditions broadly but we're not looking at any one market that's how we're thinking. in terms of what we have seen i would say this

we said at our last meeting published this summary of economic projections expected three rate increases this year and six weeks, seven weeks later now and you have seen that the communication channel with the markets is working. markets are pricing in a number of rate increases. surveys show that market participants are expecting a balance sheet runoff to begin, you know, at the appropriate time, sometime later this year perhaps. we haven't made that decision yet. we feel like the communications we have with market participants and the general public are working. and that the financial conditions are reflecting in advance the decisions we make. monetary policy works significantly through expectations so that in and of itself is appropriate.

>> thank you let's go to howard schneider >> you know, for a year -- hi. thank you, chair powell. so for a year now the statements reference the benchmarks statem referenced the benchmark, initial interest rate increase now that we're approaching that moment, what are the benchmarks going to be for subsequent rate increases? i know you can't stipulate the path, but how should we think about the criteria for the next step and the next one? >> well, you're right. we haven't gotten to that point. we haven't made a decision yet and we'll make that decision at the march meeting. we'll make it decision whether to raise the federal funds rate. i would say that the committee is, is of a mind to raise the federal funds rate at the march meeting, assuming that conditions are appropriate for doing so we have our eyes on the risks

particularly around the world, but we do expect some softening in the economy from omicron, but we think that should be temporary and we think that the economy should be underlinement the economy should show through quickly after that. >> if i could follow, just a related question the copacetic sort of circumstances where inflation comes down without the federal funds rate ever getting over the estimate of neutral, given developments, you still think that's a credible narrative for the ultimate path to follow? >> highly uncertain and we're committed to using tolls to make sure high inflation we're seeing does not become entrenched so a number of factors would be -- it's not just monetary policy a number of factors are supporting a decline in inflation, as i mentioned.

fiscal policy, requiring significantly less impulse to growth we do expect this year, although we expect now it will come slower than we had expected and hoped, there will be relief on the supply side. so that, too, should lower supply side errors which is a big story of inflation monetary policy becoming significantly less accommodative. the question is we'll be asking this question all year long. and that will be, are things turning out as we expect there's a kiss that a case for whatever reason the economy slows more, inflation slows more than expected. we'll react to that. if instead see inflation at a higher, more persistent level, we'll treecreact to that. our policy will reflect the differences.

>> thank you let's go to gina finelli let's go to geena? okay. let's go to steve liesman. >> thank you, thank you mr. chairman mr. chairman, one sort of technical question and one question or principle. the question is if you're going to discuss balance sheet at the next upcoming meetings and won't become balance sheet reduction until after you bick rate hikes, seems to me technically you can't begin balance sheet reduction until the summer is that correct? second of all, with balance sheet running in the background, that you would possibly be

raising rates and running off the balance sheet at the same time that's sort of a technical question, part of it the principle question i have, you said running in the background but the statement on, on the balance sheet principle says, the committee's prepared to adjust any details of its approach based on financial developments, which suggests there's something of a reaction function associated to the balance sheet and it won't be running in the background. could you give us any sense of distributionary recommendations on what is the reaction function surrounding the balance sheet? thanks >> so let me start by talking about that last paragraph. so you'll remember during the last cycle that this process of building up and then shrinking the balance sheet is a complicated one that involves inevitably surprises so during the years, during the prior cycle we amended a couple of times didn't intend to do that

events required us to do that. a robust paragraph saying we're free to do it whenever if the situation turns out different than we thought we're not sticking with something that isn't working. all that's saying. meant to are quite a general statement rather than a hint so, i mean, i like to think that our philosophy of the balance sheet is embodied in these principles so you know, the idea that, for example, that the federal funds rate is a primary means of adjusting the stance of policy it will use, determine timing and pace of reducing the balance sheet to foster the dual mandate that will begin ton reduce the size after we begin the process of raising rates and on and on like that. those are all the things that try to describe how we will proceed, but it may be at a higher level to try to get at

your question, you know, asset purchases were enormously important at the beginning of the recovery in terms of restoring market function as they were right after, in the critical phase of the global financial crisis, and then after macro economic tool to support demand now the economy no longer needs this -- this highly accommodative policy we put in place. so it's time to stop asset purchasing first and then at the appropriate time start to shrink the balance sheet. the balance sheet is substantially larger than it needs to be. we've identified the end state as, amounts needed to implement monetary policy efficiently, effectively in the ample reserve regime, so there's a substantial amount of, of shrinkage in the balance sheet to be done that's going to take some time we want that process to be orderly, and predictable, and --

so -- those are some of the ways i would think this lays out our, you know, the way we're thinking about this in terms of the times, i can't really help you. you know, just as after we get under way. so worry,i would say we'll have another discussion at the next meeting. my guess is we'll have at least one other discussion at the meeting after that, and, you know, we'll tell you as we make progress, and we'll, you know, we'll start the process of allowing runoff and shrinking the balance sheet what we find to be the appropriate time i wish i could say more, but honestly, we haven't made those discussions and actually haven't really even really had the important discussions on a lot of the details that we will have at coming meetings. >> thank you let's go to craig florez. >> chairman powell, chair

powell, good afternoon, michelle and chair powell from bloomberg chair powell, beginning of the conversation you said risks are two sided. i wonder if you can elaborate on what are the risks to be illusive soft landing? is fed policy a risk, overtightening, or what are the risks? then second, chair powell a quick administrative question. you know, robert kaplan's disclosure of security transactions in a couple months, chair powell, maybe sooner, you and i will file our tax returns and list transactions and all kinds of things. next to those transactions we'll put dates. bloomberg asks for the dates of mr. kaplan's transactions, dallas fed is not giving the dates. i don't see why this is a matter for the inspector general or anybody else i mean, why can't he give us the dates? will you help us get the dates of those transactions? thanks.

>> so you asked about the risks first. the one risk is that inflation risks are still to the upside, and in the views of most participants and certainly my view as well there's a risk the high inflation we're seeing will be prolonged and move even higher so we don't think that's the base case, but you asked what the risks are. and that's, we have to be in a position with our monetary policy to address all of the plausible outcomes, and that calls for us to be in position we have an expectation about the way the economy's going evolve but got to be in a position to address different outcomes including the one where inflation remains higher, and, of course that is a risk to the -- to the expansion. you know, we've been saying that what we need here is another long expansion which is the kind of thing, we

saw over the last which is a record-long expansion, we saw labor force participation rise we saw wages persistently higher for people at the lower end, and there really was no obvious imbalance in the economy that threatened that expansion. it could have gone on for years were it not hit by the pandemic. so we looked to try a find a way to get back to that and tra requires fed tinting interest rate policy and do our part getting inflation back down to our 2% goal. i mentioned two-sided risks. you know, a couple things. one covid is not over. and covid can continue to evolve, and it's just, we have to accept that it's not over and the risks to it can slow down growth and that would be, that's sort of a down-side risk from a growth standpoint. i would point to, you know, another risk