fix this needs to be steady i agree with john there's a danger the economy will slow in 2023 and the fed doesn't want to overdo it and have to change course i want multiple years to rates back to normal. >> all right steve? >> federal reserve raises interest rates to a new range of .25 to .5% and anticipates increases to the funds rate and expects to do balance sheet reduction quote at a coming meeting. not specified which meeting but to adjust rates at needed? st. louis fed president dissented. on to the fed forecast, if i

have done the math right which i think i did the median fed official showing seven hikes for 2022 up to 1.88% forecast for 2023 and '24 both years to bring the rate up to 2.8% both years. the key right there is median fed official is expecting to raise the funds rate above the neutral rate which is 2.4% in the summary of economic projections. the median forecast 4.3%, plus 1.7 percent taj points and said inflation is elevated and supply and demand imbalances with other factors are causing it ukraine invasion is causing human and economic hardships implications are highly

uncertainly and likely to create upward pressure on the inflation and say that indicators of the economy have begun to strengthen and job adds are high. the median fed official sees the funds rate above neutral for two years. >> seeing big moves in the market stay right there the panel with bob and rick. rick, some immediate moves in the bond market here. >> i like to watch the yield curb that give it is immediacy. right before the announcement 31 now 27 so what happened is we are seeing short maturities, even out to five-year notes responsive with the selling pushes rates higher. coming close to 220 on a 10-year. that is the move there and if

you look at the dollar index rallied a bit and in a zone of roughly a two-year high and watching the markets, listening to steve it seems to me we are all putting faith in the market's assess ment on the fly with respect to the fed. i'll continue to throw it out there that whether it was 2018 or other cycles that these things can change very quickly just look at december of 2019 fed funds as the market at the ends of 2018 had tightenings and then didn't want them anymore and kicked them back out. >> thank you bob, your thoughts on the market and saw the dow come off the le levels prior to the decision. >> we are down modestly. buy the rumor, sell the news

powell is not saying anything that people did not anticipate high degree of uncertainty maintain maximum flexibility some people might be a little bit disappointed to look at seven rate hikes i'll tell you how confusing this is half the traders believe the fed will make a policy mistake not raising fast enough and others think raising rates too fast and induce a recession that's how confusing things are and remember that confusing you stay in the middle it is like chess when you don't know what to do push the pawn. i think he is pushing the pawn here and in line with the expectations. >> i'll call you the most bearish. so john, what is your reaction as someone that's worried the

economy is slowing and the fed raising a quarter point seven times. >> that price was in the market in particular. i think the risks are there. one thing that you just heard is yield curve flattening the mess age is the growth risk are there and why people prefer back end to front end bonds and not sure it's different than what the market predicts and the risks are there. the fed will take it seriously and not unaware of the yield curb and that could change the tone and inject a note of caution and get them to slow down a little bit. we are not there today but that's certainty a possibility.

>> the fed itself acknowledged quantitative easing. >> that's right. they can always affect that. i think this is a hawkish statement. having a dissent from bullard is hawkish. putting seven hikes into the dot plots, even six is less hawkish but seven basically means every meeting the expectation is the fed goes and very aggressive i spent years saying it's destabilizing to be so low but in danger to make the classic fed mistake of waiting too long and doing too much and worried this is aggressive for an uncertain economy to slow down with full employment. >> mona, listening to this with great respect to the panelists,

feels like a different discussion than people on main street feeling about inflation going we have an 8% cpi and the fed talks aboutbasically zero to what would that be? 1.5% by the end of the year. what do you think? is that too much markets may not be that happy about it but is that what we need to bring things back into check here >> yeah. look consumers feeling things at the gas pump and did grocery store but i'll say is if you take a step back the u.s. economy came into the crisis and the fed rate hiking cycle with relative position of strength we had nearly $2.5 trillion in excess savings versus prepandemic levels still above prepandemic trends above potential growth so this

is by no means an economy that's slowing to a recessionary condition. if you look historically it takes on average 24 months to get to a recession if you get to a recession. not every fed cycle ends in recession. we have seen markets sell off and down 10% in the s&p. so not a bad position in terms of oversold contrarian indicators. >> i appreciate the points 5s, 10s flirting with inversion. whether or not that's actually predictive of a recession is a huge topic of debate steve has more detail. we should show -- look at the levels 5-year around 2.20 these are some incredible moves.

>> the market's adjusting to realities. the first in a second. and the idea that it will be too much drags down the long end but i want to make two points here the market is very quickly priced in the seven hikes beginning to price in that eighth hike and can't get a great read on it but close to pricing in the eighth for february to me the profound difference is the belief by the median fed official for the years 2023 and 2024 the funds rate needs to be above knew tralt i don't know maybe larry summers is doing a jig some place because he just won at least part of the way the notion that larry laid out in the piece at "the washington post" and something we have been talking about for a long time. would the fed have to raise

above neutral? now the median fed official believes that to be the case and i believe that to be a profound shift on the part of the committee here. >> steve, let's come back to washington now and joined by ivory johnson and jamie cox. i saw you talking about seven rate hikes this year believing your head when rick mentioned the curve tighter on 2 to 10s, 5 to 10s you don't believe the fed can hold to what they said >> no. i think the word or the phrase is policy error. late in 2021 now they're going to go too fast in 2022 and perhaps throw the economy in 2023. the economy is much different and no reason for the fed to go

this quickly they have other tools and bring rate where is they need to be and control inflation a different way. >> this is a year to keep your knees flexed and in ready position, ivory. it is clear that fed chair powell targeted inflation as objective number one and risks in an election year the stagflation or a recession or close to a recession and really punishing inflation. >> yeah. i think it's going to be difficult to raise seven times and the yield kumpb reaction, understand the market is saying we don't growth because discounting the time value effect the 10 and 2-year spread one year forward negative. that suggest the yield curve might invert and a sense of how little growth we have.

>> looking at highest yields since 2013 let's bring it home. what should i do with my money >> if you have been involved in financials you will be happy last 30 years there's a change and interest rates rise it's a negative correlation well, in 2021 that reversed positive and has to be an inflation for it partly coming off a low base and energy and material companies are some of the highest yielders if you want the inflation play >> a quick thought. >> economic growth slows and you want gold. >> gold? >> and long bonds with disinflation and that's good for bonds. >> thank you very much kelly? >> we want to check on the markets. dow has gone negative and we were up more than 500 points before the fed earlier today

going into the decision we were up more than 200 dow down 45. nasdaq is up 110 david kelly, quick eaction. >> i'm not surprised that the dow is down. i think this is very aggressive move i want the fed to maintain flexibility. long run we have to get rates back to positive real levels we have a lot of financial assets built on the edifice of super low rates. so i think it's a little dangerous and rather to take it easy and do more work on the balance sheet than the rate hikes and try to stretch this out and they're being aggressive here. >> how do you think the bond market will react to this? you are concerned about the

yield curve and you are concerned about economic growth. how should we expect everything from the long end and where we price auto and home loans and expect credit markets? give us your sense of how markets shake out here. >> i think there's some value there because the fed's saying 7 hikes and the market is pricing 8 if i heard correctly i think long bonds provide diversification. and then, credit spreads have widened. prices are a little bit cheap esch than the beginning of the year avoiding a policy mistake, there' time to get this right and if we can avoid a policy mistake you'll realize value in credits. i think you need to be looking at this as an opportunity. >> all right mona, what would you add to that

and to investors looking at stocks and wondering, we see often a three-act play in response to the fed. what happens in the first couple minutes. we get what happens between the decision and powell. and then we get the act that begins after hearing from powell and lasts into the coming weeks. how should we make of what we are seeing >> we'll say is that in some ways the fed is smart putting out seven rate hikes when the economy is somewhat more resilient and being able to pull that back if needed would be supportive of markets but near term we think the overhangs that the market is worried about wanted clarity from the fed and starting to get that we are also seeing more hope around a solution to the geopolitical crisis.

if both overhangs are lifted we think that some of the correction in the market could get a rebound with the safe haichs reversinging and perhaps some reopening 2.0 as the pandemic trends in the u.s. improve and financials is part of that as the fed is moving. >> let's turn back to rick santelli >> i think it is very fascinating to see 3s, 5s, 7s and 10s having a traffic jam getting the yields closer. of course 7s to 10shave a mino inversion. they did back in february. minor inversion in 2008. then again it's a liquidity issue. 7s on the as liquid like 20s we are all losing sight of the

curve is going to get flat at a pancake and see all short rates gravitate to the 10-year rate around 2.5%. we are witnessing something historic the end of globalization and just in time inventory and crashing in a post-covid russian invasion type world and what it means to me is you can talk about stagflation, labor costs, energy costs and housing costs aren't moderating any time soon and ex-food and energy will take on a monumental meaning in the quarters ahead. >> bob last thought on stocks. >> up 40 on the s&p and now 10 i said earlier the problem is half the traders think the fed won't move quickly enough and the other concerned they might induce a recession acting like this is on the aggressive side.

2. 8% for 2023 we'll see but as rick said this is a very difficult situation. it is not clear how well and effective to combat inflation and same time they may eventually stall out the economy. i think you will see a lot of de demand destruction this summer that may help slow inflation down and slow the fed down itself demandy instruction. >> all right thank you. a real big thanks to the panel john, david, mona, standing by to walk us through the big fed decision and the first rate hike since the end of 2018. coming up randy crosner joins us the news conference minutes away beginninha pg lfast the hour we'll have live coverage with the dow up 44.

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at helpfosterchildren.com welcome back yields are climbing further. last saw the 10-year above 2.2%. dow is dropping. after the fed raised rates first time going back to december 2018 four and a half years. signaling six more hikes coming this year.

one a meeting. let's bring in randy crosner with the yirnt of chicago booth consume of business. welcome back. >> they needed to do this and needing to raise rates through the year so i think finally on the right path if question is, is it going to be enough? little bit too late? inflation is already obviously gotten into the system. >> you're in the same camp that we might find larry summers and opposite from the market practitioners on the panel what would you say who say the fed is making a mistake here >> it is important that inflation expectations don't get out of control and these disruptions associated with the war in the ukraine, with the lockdowns in china that are going to disrupt supply, that's out of the fed's direct control

and doesn't mean they shouldn't respond to it. people don't care about the source prices going up they demand higher wages and if the fed doesn't do anything about it they say the fed doesn't care and even higher wages from inflation from under 2 to 8 and could go to 10. >> randy, how does the fed thread the needle and go from maybe behind the curve to use the cliche to at least equal to where the curve should be? how do they do that without tipping the economy into a recession? >> that is always the challenge because they got to rebuild credibility and make sure that they -- not clear they have lost credibility but not to lose it and build credibility. late '70s paul volker had to

raise rates aggressively i think with the combination of higher rates and with all the uncertainties of war and sanctions and weighing on investment and consumption it is a tough -- so i think the chance of us tipping into a recession is now reasonably high >> let's talk a little bit about the decision not to begin to reduce the fed's balance sheet at this meeting. sounds like over to the next until. how important is that in fighting inflation reducing the amount of money in the system is that -- i hesitate to use the word, a more humane way to practice monetary restraint? >> i think they both have to do with the amount of resources and

reserves in the system and the liquidity putt in the system and work through similar means and both will tighten credit conditions so i think a reduction of the balance sheet would be putting pressure on interest rates also and consequences is similar. i think what they wanted to do is start with something more traditional. 25 basis point increase. not 50 wanted to signal things are going to move in a direction towards trying to bring rates up we still have to remember that inflation's at 8%. they expect to be at 1.75%, 2% still means that the inflation adjusted rate is negative 6% still not very restrictive but i think they need to do it and i think they are at -- on that path i think the balance sheet reduction will be a compliment

to that and more have that in the background rather than a primary tool. >> a couple guests were skeptical that the fed would raise interest rates seven times and continue the hikes into 2023 do you have any reason to be skeptical of that? >> certainly we don't know exactly where the economy's going to go. we don't fully understand the consequences of the war or what could happen there could be very dire consequences for the global economy or we could get a relatively quick resolution. very hard to predict and so if there are more dire consequence would have affects and the fed would take that into account but remember as i said inflation rates 8% in 1970s in similar range and

volun volker raised double digit. >> primarily attributed to the pandemic and because corporations have too much market power and raising prices beyond the level that the market is requiring them to. >> that's really hard to see there's been a dramatic change in market power in two to three years so it's hard to say that suddenly corporations have become powerful. remember we had a decade of -- more than a decade of very inflation rather than high inflation. it's not a sudden change in market power there are a lot of sources for the high inflation some of them have to do with the pandemic or the responses to the pandemic like the large amounts of still lusz provided and a

reason why inflation is higher in the u.s. than other countries with more government spending and more stimulus. the initial response was very important globally and so i don't want to suggest that that was inappropriate. i have more questions about the subsequent of checks to people and that then leads to people having ability to spend and a lot of pent up demand cooped up for a couple years so supply epa demand things why not all the fed is doing some the fed's doing but who it is is the fed's issue about inflation and inflation expectations and they have to worry where the inflation expectations go. people want to wait but it's very risky to wait because it's much more painful to wait. >> it is a great point and

perhaps we can show some of the inflation break even that is we track here we appreciate your time today and thoroughness thank you. >> great to be with you. >> the dow down 19 points. >> yeah. i'm thinking of the famous howard cosell call down goes frazier. who's howard >> what's frazier? >> down goes the dow as we saw there as the fed came outwith what i think is interrupted as a much more aggressive targeting of high inflation. we are at a generational moment i believe, kelly we haven't seen inflation this high and persistent since the early '80s when the fed chair at that time came out with a bazooka and went after it. fed chair powell is in a position and having and forgive

me for the wartime mott fors but using using heavy artillery against inflation. >> not a dramatic market significance but negative for the first time in a couple years and the 10-year break evens and they have come down and that is going to have to be a goal of the feds for example, on the 5-year it was 5.4% yesterday here comes fed chair jay powell. >> i want to acknowledge the hardship the ukrainian people are suffering. the human toll is tragic the financial and economic implications for the global economy and the u.s. economy are highly uncertain at the federal reserve we are committed to attaining the goal that is congress gave. maximum employment and price

stability. today in support of the goals the fmoc raised the policy interest rate by one quarter percentage point the economy is very strong and against the backdrop of an extremely tight labor market and inflation the committee anticipates ongoing increases will be appropriate. in addition we expect to begin reducing the size of the balance sheet in the coming meetings economic activity expanded at a 5.5% pace last year reflecting progress on vaccinations and the reopening of the economy, fiscal and monetary policy supporter and the healthy position of households and businesss the rapid spread of the omicron variant led to some slowing in economic activity this year and cases declined sharply since mid-january and slowdown seems to have been mild and brief. although the invasion of ukraine represents a downside risk to

did outlook of economic activity the participants foresee solid growth the median projerks for real gdp growth stands at 2.8% this year, 2.2% next year and 2% in 2024. labor market continued to strengthen and is extremely tight. over the first two months of the year employment rose by more than a million jobs. in february the unemployment rate hit a post-pandemic low below the median of committee estimates of longer run normal level. the improvements in labor market conditions widespread including for workers at the lower end and african americans and hispanics. labor demand is very strong and while participation increased

supply is subdued. employers have difficulty filling openings and wages rise at the fastest pace in many years. participants expect the labor market to remain strong with the median projection for the unemployment rate declining to 3.5% the end of this year and near that level thereafter inflation remains well above our goal of 2% and demand is strong and bottlenecks in supply constraints are limiting how quickly production can respond these supply disruptions have been larnger and long r lasts exacerbated by the virus and price pressures spread to goods and services higher energy prices are driving up overall inflation the surge in prices of crude oil from the invasion will put additional upward pressure on inflation here at home

we understand that high inflation imposes a significant hardship, especially on those least able to handle the costs we know that the best thing to support a strong labor market is promote long expansion possible only in an environment of price stability. as we emphasize in the policy statement with appropriate firming in the stance of monetary policy we expect inflation to return to 2% while the labor market remains strong. that said inflation is likely to take longer to rurp to price stability goal than previously expect jd the median inflation projection is 4.3% this year and falls to 2.7% next year and 2.3% in 2024. this trajectory is higher than projected in december and continuing to see risks as weighted to the upside the fed's monetary policy

actions have been guided by the mandate to promote maximum employment and stable prices for the american people. our policy has been adapting to the economic environment and it will continue to do so as i noted the committee raised the target range for the federal funds rate and anticipates that ongoing increases in the target range will be appropriate. the median projection for the appropriate level of the federal funds rate is 1.9% this year, a full point higher than projected in december. over the following two years median projection is 2.8%. of course these projections do not represent a committee decision on plan and no one know where is the economy will be a year or more from now. reducing the size of the balance sheet will play an important role in firming the stance of policy at the meeting that wrapped up

today the committee made good progress on a plan to reduce the securities holds and expect to announce reduction at a coming meeting. in making decisions about interest rates and the balance sheet we will be mindful of broader context and use the tools to support stability as we noted in our policy statement, the implications of russia's invasion of ukraine are highly uncertain in addition to the direct effects from higher global oil and commodity prices the invasion and related events may restrain activity abroad and disrupt supply chains with spillovers to the u.s. economy the volatility in financial markets particularly if sustained could act to tighten credit conditions and affect the real economy making appropriate monetary policy in this environment requires a recognition that the

economy often evolves in unexpected ways. we need to be nimble to respond to data and the outlook and we'll strive to avoid adding uncertainty to what is already a challenging and uncertain moment we are atentative to the risks of pressure on inflation and inflation expectations the committee is determined to take the measures necessary to restore price stability. the american economy is very strong and well positioned to handle tighter policy. to conclude, we understand that our actions affect communities, families and businesss we'll do everything we can to achieve the max mull employment and price stability goals. thank you. i look forward to your questions. >> thank you let's go to gina at "the new york times." >> hi.

thank you so much for taking our questions. i wonder if you could detail the thinking about how you consider the risks of going too fast and potentially tipping the economy into recession and weighing the risks of going too slowly allowing inflation to be embedded and behind the curve. >> so i guess i would start by saying in my view the probability of a recession within the next year is not particularly elevated. aggregate demand is strong and most forecasters expect it to remain so. labor market, very strong. conditions are tight and payroll growth is continuing household and business balance sheets are strong. so all signs are that this is a strong economy indeed, one that will be able to flourish not to say withstand but certainly flourish in the face of less accommodative

monetary policy so i guess that's how i would say i'm looking at that. the objective is price stability and sustaining a strong labor market and the objective and feel the economy is strong and well positioned to withstand tighter monetary policy. >> thank you let let's go to howard at reuters. >> hi, chair powell. you have a markdown to a gdp from 4 to 2.4% how much do you feel is the result of the fed's stiff action is this going to bite quicker than expected? >> i don't think that's a big piece of it, actually. i think some of that is an i recally assessment of the effects of spillovers from the war in eastern europe. which will hit the economy through channels

highly uncertain but you are looking at higher oil prices and commodity prices it will be -- we think that will weigh on gdp and part of what moved the assessments down monetary policyworks with a lag and some of that in a lag but remember that's strong growth. we think that the potential growth rate is between -- around 1.75%. 2.8% is strong economic growth one of the last of the expansion. lower than last year is still strong growth and quite a strong forecast. >> so in that context what would -- go faster or slow esch on the rate hikes? we don't know if this is coming in bigger chunks.

>> the way we think about this is every meeting is a live meeting and looking at evolving conclusions and if it's appropriate to move more quickly then we'll do so i can't be specific about it but that's a possibility going through the year. >> thank you. >> thank you let's go to rachel at "the washington post." >> thank you thank you for taking our questions. i'm curious if you can be specific on when you expect to see inflation come down with rates going up, fiscal aid d dissipating from the economy and if you don't see that what will you be looking for and what will you be looking for over the course of the year thank you. >> if you take -- before the

invasion of ukraine by russia, i would have said the expectation is that inflation would peak in the first quarter of this year and then maybe stay at that level or lower and come down back half of the year. now we are going -- already seeing a little bit of short term upward pressure in inflation due to higher oil prices not natural gas so much but we have the natural gas supply and the other thing is seeing supply chain issues around shipping and around lots of countries and companies and people not wanting to touch russian goods so that's going to mean more tangled supply chains and could push out the relief we were expecting on supply chains generally. i would say the expectation is

still that inflation will come down second half of the year but i read the s.e.p. meeting and expect inflation to be high this year, lower than last year and particularly with the effects of the war and the data this year expecting inflation to remain high and then come down and more sharply next year. >> let's go to nick at "wall street journal." >> chair powell, over the last six months the fed shifted the policy stance quite a bit. six months ago still buying assets most officials not projecting a rate increase this year. and yet, despite the shift, real rates are as negative today as they were then so how concerned are you that further inflation

surprises will an offset the effects of recent policy firming by allowing real rates stay at levels that don't provide restraint to the economy thanks. >> that's one of many ways of capturing the situation which is that we -- the committee does understand that the time for rate increases and shrinking the balance sheet has come and i would go back to the economy's very strong. as i mentioned tremendous momentum in the labor market we expect growth to continue as i -- clearly time to raise rates and wants to say as i looked around the table today i saw a committee acutely aware of the need to return the economy to price stability and determined to use the tools to do that. you koumped it in terms of ream rates. i would say if you look at the

s.e.p. you have people close to or bo in many cases the estimate of the longer run neutral rate so i understand that doesn't do it for real rates but out a year or two people in the forecasts are having tight policy from a real interest rate stand point and something that we are focused on of course it is a highly uncertain environment and we don't know what's going to happen and we do know that we will deploy the tools to achieve the goals and that includes the price stability goal >> let's go to victoria at politico >> hi, chair powell. so looking at the summary of economic projections you have inflation coming down over the kous of the year to 4.3% and then also have rates going up to what appears to still be below

roughly what would be estimated to be the neutral rate but that's uncertainty how much of inflation coming down do you see being as a result of the fed itself raising rates? also if i could just ask that given that raskin withdrew the nomination what do you expect to do >> okay. so sorry tell me again the fist question. >> how much do you expect inflation to come down as a direct result of the fed's actions. >> okay. so part of the inflation coming down at the very beginning is clearly to do with factors other than policy including the supply chains better. base effects lapping as you know looking at a 12-month trailing window lapping inflation and should beeffects from that in the 12-month

picture why what we are looking for is moby month inflation coming down and all the things we have been talking about that haven't helped much including supply chains getting better, labor force participation. sticky and not happening but a big part of it is the base effects as i mentioned i think monetary policy starts to bite on inflation and on growth with a lag of course and so you would see that more in '23 and '24. also remember, we started to talk about increases last year financial conditions incorporated a significant number of rate increases and doesn't start today. the effect, the moves are already priced in to the market for a few months now so the clock is running on that. i think some will be seen in the

second half of the year, as well so on the regulatory portfolio, i would say this we have an obligation to carry out under the law and in supervision and regulation and we are doing that. that's what we are doing the committee is not active so things are coming to the full board epa getting the business done we got the stress test done. looked at a number of proposals for mergers so we are working ahead. of course we don't have a vice chair for supervision as you mentioned but making due with the situation we have and things come to the board for approval >> let's go to neil irwin at axios. let's go to neil irwin >> hi, chair powell. it's neil irwin at axios

thank you. in the projections we see a forecast of 1.9%, 2.8. wondered if that aligns with your own expectations and the point to overshoot the long term neutral rate and also anything how that might be paced, front loaded, back loaded? >> so i don't -- neil, i have never talked about my own projection it is in there but i think fed chairs have generally not done that because we haven't done it and we have to put together the consensus on the committee and present that consensus so i wouldn't talk about my individual one and in terms of the pacing of it i point out that that is -- seven remaining meetings this year not something we discuss or debate or agree on i would add there's also the shrinkage of the balance sheet

and people do the math different ways and might be another rate increase just from the runoff of the balance sheet. so i don't -- i don't know -- we haven't made any decisions on front end loading or going steadily through the year. thro. as i mentioned, if you look at the sep, i can't give you -- not going to try to give you a specific test what it would take to do that, but i will say this. looking at data as they come in. looking to see whether the date -- data show improvement, making a judgment. each meeting is a live meeting if we conclude appropriate to raise interest rates more quickly, then we'll do so.

>> as we wait for chair powell to continue his press conference let quickly check on markets with the dow up about 50 points. jumping around really. up more than 200 prior to the decision top of the hour to hike rates. about 0.1% gain. nasdaq up, all talk focused on the bond market. five-year yield floating with levels above the ten-year yield. month macrosignificance no one likes to see inverted curves 2.21 on the ten year just over 2.5% on the third year and heard the chair emphasizing how much he thinks the committee is serious about returning to price stability to use his quote

there. said he looked around the table and saw a group of people committed to price stability several times including in that response said there were fed members who wanted to do more than the quarter point hike per meeting this year. if conditions warranted they would absolutely look at doing more explicit language what they would do at the outlook as they see it and mentioned, by the way, 2.8% growth he views pretty bullish. let's go back to the chair. >> -- as high as it is july 1981, 19.2%. given the current data, how far behind the curve of inflation do you believe the preserve is, in your mind? >> so i just would say a couple things we have the tools that we need and we're going to use them, and as you can see, we have a plan over the course of this year to raise interest rates steadily,

and also to run off the balance sheet. we will take the necessary steps to ensure that high inflation does not become entrenched also supporting a strong labor market and appropriate to move more quickly, we'll do so. i will leave it to others to make the judgment you ask for. >> then, as a follow on to that. iwanted to get you on the records on this. wa impact on your job given the fact that -- >> lost you in the middle of the question. >> edward, can you repeat that question >> -- the impact, given you're not actually confirmed and governor brainerd not actually confirmed, impact onyour job or the fed's ability to handle inflation? >> none whatsoever.

>> okay. let's go to colby smith at the ft >> thank you, michelle chair powell, how is the committee about notable pick-up in services of inflation perhaps less likely to self-correct and to what does it affect the committee's confidence long-term won't be anchored in the coming months as well as raising interest rates further above neutral than indicated in the dot file >> thank you of course, something we're watching report by report and certainly noticed it in the last meeting, and it's part of the overall picture. we have expected services and inflation to move where it was part of what's happening's in the case of some services. prices are still getting back up to where they were before the crisis in other cases, it's pretty clear that inflation has spread more broadly across services, and, yes, that is concerning meanwhile, we see some progress

on the good side, but really in this latest report, confined to two vehicles, admittedly a large category. so, you know, as i mentioned the committee acutely feels its obligation to move to make sure that we restore price stability, and determined to use its tools to do so. >> thank you let's go to steve liesman at cnbc. >> thank you mr. chairman, i wonder if you could help me understand the kind of logic, if there is, the sep here as i look at the median forecast, for example for unemployment, it runs for the three-year window below the long run rate -- i looked at inflation -- three-year window, the long run or call it the neutral rate so

the economy still runs hot that is all true in a regime when you run at least for two years the funds rate above the long run rate. so i guess my question is this -- are you not, giving a forecast essentially that suggests you will be continuing to run further behind the curve and never really get in front of inflation, because the economy will continue to run hot, and kind of on a related issue, you are said earlier inflation will take longer to return to price stability than we originally expected isn't that a choice you're making, and if so, why are you making that choice, let inflation run above price stability longer than you'd like >> so if you look, our -- first of all, you're looking at medians, but understand that there's no, it's not something we voted on. it's not a plan, but if you look, people do have their, by

end of this year, broadly people are at or close to, or in some cases above, their estimates of longer run neutral interest rate okay that should stop pushing, that should, in other words that should be removal of ac accommodation for monetary policy basically same time, a balance sheet runoff and think of that as further. in the next year, and just looking at the median, now above the, above the what people estimate to be the longer run median so -- also in many people's forecast that actually amounts to tight policy in real rates as well so why does unemployment remain at 3.5%? you know -- a couple points. one is the connection between -- in the economy we had before the pandemic, the connection between inflation and the level of unemployment was not very tight. but this is clearly, clearly what this is, an expectation

really amounts to the idea that wage increases, now running above the level that would be's consistent over the long run with 2% inflation will move back down to levels which are still very attractive, full economy, full employment kind of wages, but not to a point they're pushing up inflation anymore as i mentioned, a lot of factors causing inflation to come down. and, you know, the reality is, there are many, many moving pieces and we don't know what will actual happen, but no matter what happens this is a committee that is determined to use its tools to make sure that higher inflation does not become entrenched and so we are determined on that front, and we'll deal with what comes this is a, most likely an expectation but we'll deal with what comes whether better or worse. >> thank you let's go to chris at the a.p

>> hi. thank you. well, let me follow-up a bit on that i mean, there are a lot of economists skeptical that you can reduce inflation as much as you've pencilled in without raising the unemployment rate. i'm wondering what are the mechanisms you see in reducing demand outside housing and autos, how do higher fed rates reduce consumer demand, unless it's through higher unemployment? thank you. >> well, if you take a look at today's labor market what you have is 1.7-plus job openings for every unemployment person. so that's a very, very tight labor market tight to an unhealthy level i would say. so in principle, if you were -- say our tools work as you

describe and the idea trying to better align demand and supply, just say in the labor market so it would actually -- if you were just moving down the number of job openinging so they were more like one to one, you would have less upward pressure on wages. you would have a lot less of a labor shortage, which is going on pretty much across the economy. hearing from companies that they can't hire enough people having a hard time hiring. so that's really the thinking there. these are fairly well understood channels interest-sensitive, and basically across the economy we'd like to slow demand so that it's better aligned with supply. give supply at the same time time to recover and get into a better, a better alignment of supply and demand and that over time should bring inflation down i'll say again, though we don't have a perfect crystal ball about the future. and we're prepared to use our tools as neede