thinking about questions of fiscal sustainability and we do. >> when your colleague being secretary yellen, was before this committee, she told me federal debt, which was then about 105% of gdp, she said, quote, that's not a number that i think is fiscally irresponsible. she also went on to say, quote, if interest rates are zero, we could substantially have a higher debt burden and in the formula in the following question she alluded to japan and the fact that it could be double where we are now, meaning $60 trillion of debt if you use her math do you agree with secretary yellen that having a national debt of over 100% of gdp is fiscally responsible given that interest rates can change and that historically low interest rates condition always be expected >> i guess i would say it this way. we're not on a sustainable path and we haven't been for some time and that means simply the

debt is growing faster than the economy by definition that is unsustainable. there will become a point, there will be a point at which it becomes a problem of servicing the debt we're not at that point. we're not close to that point. but it is -- we will need to get back where revenues and spending are better aligned we don't need to pay the debt down, we need the economy growing as fast or faster than the economy over a long period of time. we must do that. i wouldn't say any particular level. there is no level that i could point to where there's a lot of science behind it being a problem, but we know the path is not sustainable. >> you allude to growth being part of the solution, i want to talk about regulation for a minute, particularly since the biden administration delayed oil and gas sales this week due to environmental protests so if we pursue policies to increase american energy production by approving more leases and building more

pipelines to transfer that energy and cut down on regulatory barriers to make it easier for folks to produce energy and produce anything, wouldn't that make a real impact on energy prices and inflation in general without us needing to use the fed to slow the economy with monetary policy to deal with inflation >> these questions of the whole set of questions around energy are really questions for elected people we don't have a mandate there. the more supply there is the price of something can go down these are tradeoffs you really have to weigh as elected officials. >> i'll narrow it for a minute do you believe that the vast amount of regulation is an impediment to economic growth? >> i will say this, we try har at the fed to weigh the costs and benefits of regulation and do think it's important to think about it that way. there are benefits to regulation but there are costs and we don't

want the costs to be any higher than they need to be because that does weigh on economic activity, yes. >> i mean, when you talk about somebody trying to buy a home and now they're questioning it because of the rise in mortgage rates and then i hear for years 25% of the cost of any home is due to regulation at some level. so that's the point i'm trying to make we need to be very cautious with our regulations because a lot of -- it's constraining our growth and the growth ultimately which solves this fiscal problem. the point i'm trying to make we have much better tools like deregulation which can free up supply rather than just monetary policy and freeing up supply could largely solve the inflation problem for hard-working americans and not send us into a recession. i thank you for being here and, chairwoman, i yield back >> thank you the gentlewoman from iowa, also the vice chair of the subcommittee on housing, community development and

insurance is now recognized for five minutes >> thank you, chairwoman, and thank you, chair powell, for being here it's good to see you we've been talking inflation of course we know it's hurting iowa families and families across the country and all of us here have an absolute responsibility to address this, and i appreciate the comments of my colleague, representative himes, because i sure have heard a lot of talk about how bad inflation is from my colleagues over there on the other side of the aisle. i haven't heard much about the solutions that they want to provide. so i'm here to work on those solutions and i'm glad to have you here to talk with us about that we actually need to reduce inflation, and we have to figure out what's driving it. so the san francisco federal reserve bank just put out research looking at how much inflation was driven by supply versus demand. what they found was that supply factors are responsible for more than hatch of the current level of inflation i don't need to tell you while

prices increasing are hurting people across a heck of a lot of sectors gas prices have been driven up the last few months. so, chair powell, on gas prices, could you talk about some of the supply constraints that have pushed gas and energy prices higher recently? >> sure. two big things would be just, one, the price of oil is set glob globally and so we just take that price and the second piece of it is the spread that refiners earn. so if refinery is at capacity and spreads are high, then you have a high spread and we know the price of oil went up quite a bit, starting going up early in the year and has now come down a little bit in the last week or so those are the things that have contributed to the spike in gas prices we saw. we did see prices moving up but they really moved up quite

sharply beginning in the early parts of the year as the war came into focus. >> thank you so you talk about where folks are making more money and the refining process and that crack spread i think around $60 right now basically what's happening they're making more money because supply is down so would you agree that increasing the supply of gas could meaningfully lower prices? >> i think it's hard to argue that, sure this isn't a recent issue. with so many parts of our economy and you touched on that earlier, now here is the question i'd like to ask you will raising interest rates increase supply with fuel and are there extra tools to do that

the tools are not in our hands >> okay, thank you for pointing that out i want to make sure we are looking at those solutions and trying to understand what better tools we have. are there better options out there you could suggest right here >> honestly, we're an agency with a narrow but important mandate and a set of tools and our focus is on using tools. other agencies how they might use their tools. >> i appreciate that we can talk further about that i want to move on to housing here as well we saw less homes built than the previous four decades and more than 5 million short of where we should be. i see that all over iowa and

small towns in particular as well businesses want to expand but there are not enough houses there. housing is one of the most sensitive areas relative to interest rates i want to ask the same thing here will rising interest rates help supply there and are there other tools we should be looking at to do that? >> i would agree with you if there was longer term housing supply and the difficulty of creating adequate housing. what our tools can do in the near term and better balance in the housing market housing increases across the country over the last couple of years. the housing sector slow down to some extent because of higher mortgage rates

>> is there anything on the radar to assist with this? >> these are issues around housing supply if you talk to builders, and we do talk to builders. we had a group that will talk about the longer term issues, lack of supply of lots, lack of workers, lack of appropriate zoning >> the gentleman from indiana, mr. hollandsworth, is now recognized for five minutes. >> before i get started on my questions, i wanted to comment on mrs. axne. an underinvestment in the biden war on energy especially on american produced energy continues to bear the fruit they expected and that is a deep

concern for americans paying more at the pump we collectively find ourselves in the present situation because we fail to anticipate the future even if that future is inherently uncertain you said a few moments ago we have a job to do on demand i like that. and in the recent past and present the policy signals i feel like have been unambiguous for the fed, the labor market is robust unemployment bouncing along lows, economic growth has been very high but i worry that lucidity is a luxury that is fleeting. i believe the future will be more ambiguous as we head into a time where economic growth seems to be approximately zero and labor market weakness is beginning to emerge. i think the policy signals will be less clear going forward. q1 was negative albeit for reasons you called technical in nature but still negative, nonetheless.

q2 economic growth is currently projected to be approximately zero according to the tracker and many economists. still yet inflation as a lagging indicator remains, as you put earlier this week very, very high i've praised the fed's tardy yet sudden total focus on price stability. the cost of aggregate reduction, technical reasons americans will feel reduction where gdp growth is already zero as a recession i am curious to hear your thought process in an environment where inflation is steadying or coming down at multiples of your target and unemployment is escalating quickly and economic growth is negative tell me how you'll think about that environment and approach that from a policy and rate setting perspective. >> that's not the environment we

see or expect. growth should still be strong. it is coming down from the reopening levels the first quarter was anomalous. private spending was very healthy. >> i assume you could be correct but you could be incorrect about that soft landing. >> what we're trying to achieve is to have a moderation in demand so supply can catch up. inflation can come down. >> if inflation were to come down after that fact, demand will come down first, inflation will lag that. unemployment because of that sagging demand goes up tell me how you think about that environment. >> we raised interest rates,

that affects broad financial conditions that affects the economy the question we'll be asking is, you know, is our policy rate, the thing we control, is it at the right level so that it's affecting financial conditions in the way that we need and intend >> i want to know how you will intend to affect them where economic growth is negative but inflation remains high >> in that hypothetical situation i think you would say that would be a setting in which inflation could be expected to come down. we'd like to see inflation coming down as well. >> you could move rates down in advance as long as you saw it beginning to come down if economic conditions or your other mandate, full mremploymen begin to show weakness >> as a colleague said, it's the same question, do you raise the same or bring down rates

we have to see what's happening. we can't fail. we're going to see evidence it really is coming down before we declare any sort of victory. we would be reluctant to cut >> this will have costs to americans. not just watching a lagging indicator. with that i will yield back. >> the gentleman from new jersey who is also the vice chair of the subcommittee, national security, international development and monetary policy is now recognized for five minutes. >> the most recent consumer price index, shelter owned and rented has increased 5.5% since last year. apartment rental costs up 15% or more do you believe the measure of

costs understates housing costs and do you have any suggestions for the short and long term? >> there's a sense it migh understate costs because it's not capturing leases that haven't turned over yet. >> so probably a higher rate >> overall we think it's a decent measure remember that in the cpi housing services has a weight that's doubled and we look at personal consumption expenditure. a better representation of the inflation happening in people's live we would tend to look at that. >> thank you, mr. chairman i want to shift to another issue covering your june report. a run on stable coin can stabilize financial markets. the so-called stable coin

collapsed. my draft legislation would establish a definition or requirements for qualified stable coin and defined as cryptoc cryptocurrencies this would reduce financial instability and support innovation in fintech and create a pathway for banks and nonbanks the federal oversight, do you believe nonbank entities of qualified stable coins if they can prove they are fully backed by cash or cash equivalents? >> we've recommended congress look at this and there are many approaches including yours the president's working group did recommend that i think it's great congress is looking at different approaches. you want to be sure they are regulated and in our view in some sense at the federal level.

i think it's going to be a question for congress. you know what the pwg came up with there are different approaches >> any view on what the regulators should be or the occ, a problem with the occ being a primary regulator? >> for national bank charters, yes. stable coins are used now principally as you know around the platforms, the digital platforms. in the baileywick. we're blessed by a plethora of regulatory agencies in the financial sector it will need to be sorted out. >> something given the challenges we've had in the last months, something we have to move quickly on? are you concerned with how long it's taken congress to actually

act there? there comes a point at which a new regulatory framework is needed to beloprotect the publid reserve competition and support all that that time is coming and i think, i'm encouraged there are a bunch of bills and congress is working on this. they can grow really quickly we have seen they can have reverses as well >> and you think overall the ideal role of the fed in overseeing stable coins is ultimately long term what's the role of the fed? >> one question is around cbdcs do we want a private stable coin to wind up being the digital

do dollar we don't know we need a digital dollar as such yet it should be government guaranteed money not private money that is really created for the benefit of the private issuer anything to do with payments that the public is involved in we should be involved in that, too. >> thank you so much i yield back >> thank you very much the gentleman from tennessee, mr. rose, is now recognized for five minutes >> thank you, chairwoman waters, for holding the hearing today and thank you, chair powell for being here with us a few moments ago mr. himes noted that the american recovery plan, i think he meant american rescue plan, is not mentioned in the monetary policy report chair powell, is it federal reserve practice to comment on

bills passed by congress in the monetary policy report >> no. >> turning to a question we obviously talked about a lot already, inflation and rising prices on things like food and fuel are having a devastating impact on people all across middle tennessee and, indeed, across the country you have told us you will not comment on fiscal policy but you have also previously urged congress to support fiscal spending some of which caused this inflation in my view. democrats are still pushing a reckless spending proposal reports are it will be smaller than the one they tried to ram through congress late last year. chair powell, will you commit to pushing back as strongly against reckless spending proposals that would exacerbate the current inflation as much as you pushed congress to support more fiscal spending during the pandemic >> i did not support any particular bill but i did say

there was more to be done, and, by the way, i completely ended that practice at the end of 2020 '20 or '21 '20. i completely stopped talking about that publicly at all the reason i did it before, first of all, i was encouraged by leadership on both sides of the hill and in both parties they were asking me for ideas, don't you think we need to do something more, can you help us. that kind of thing that's all done, that's over with i'm not -- the fed should not play or seek to play a role in fiscal policy. we have our own mandate. we need to stick to that now >> would you agree with this statement that the analysis that the fed had through much of last year and that the administration, to some extent, continues to advance, with respect to inflation and the policy prescriptions has proven

to be far more transitory than the inflation itself >> if i understand your question, we did think these were going to be passing forces. we thought the shocks we're hitting, supply side shocks, would be like oil shocks where they come and go and other supply side shocks, commodity shocks of various kinds. as the course of 2021 went on, it became increasingly clear particularly in the fall that wasn't going to be the case. we weren't going to see that kind of progress, and we pivoted seven months ago now to address this with our policy tools i think our judgment in real time proved to be incorrect but it was not an irrational judgment and was one widely held at the time by other central banks and economists generally and it wasn't about economics. it was how long is this going to last are these things that are happening to our economy, which are unprecedented, are they

going to get better? millions of people dropping out of the labor force or, you know, the problems with the global supply chain. there was no model of that we can't look at the last 20 times it happened. for sure in hindsight it was not transitory >> the committee for a responsible federal budget estimated canceling federal student loan debt held by americans could increase the inflation rate as much as a half a percentage point and would add $1.6 trillion to the national debt this notably did not incorporate the possible effect student loan debt cancellation would have on increased college tuition prices the impact of these proposals to forgive student loans actively considered by congressional democrats and the administration >> we would look to cbo and

legislation in our models of the economy when we think there's really likely going to be legislation. >> $1.6 trillion in debt to have an inflationary impact >> well, again, i'm going to leave that to cbo to score and also the congressional -- office of management and budget we routinely do not score congressional proposals. it would get us involved in political things and why would we be independent then these fiscal issues are your job. >> thank you i yield back >> thank you the gentlewoman from massachusetts, ms. presley, is recognized for five minutes. >> chairman powell, the fed has a role to play in healing our

economy but as with any treatment the wrong medication can cause even more harm and make the patient more ill. your latest press conference you stated, quote, wages are not principally responsible for the inflation we are seeing. i agree with that assessment as do many economists considering wages are not driving inflation why is the fed addressing inflation with tools which primarily impact wages such as interest rates >> our tools impact inflation, not necessarily wage inflation our job is price inflation i will say on wage inflation the issue is over time wages are really very important over time looking forward very important for service companies where most of the costs are in wages and we all love to see big wage increases.

some are substantially bigger than with 2% inflation >> thank you throughout today's hearing to that point you've indicated the fed doesn't have a more precise tools at your disposal the root causes are supply chain disruptions whether it's covid-19 lockdowns in china or the russia/ukraine war why this knee jerk response to raise interest rates is so alarming. this policy choice would plunge millions of people back into unemployment tip the economy into a recession. if all you have is a hammer, everything looks like a nail you've said the fed's tools like interest rates and the balance sheet are famously blunt and

lack precision so in that case do you agree that the fed needs new tools that are more precise to better fulfill its statutory mandate of price stability and to maximize employment >> no. i don't think we're looking for new tools. a big part of the inflation is really not going to be affected by tools that's the part related to demand. >> by your own account you stated on the record the fed's current tools are ill suited to deal with the inflation we are seeing perhaps now is the time to expand the fed's tool kit that we fiend ourselves in. for example, one tool that could help the fed to inflation is direct credit regulation this would allow the fed to regulate the availability of credit in the specific sectors

of the economy without impacting other sectors. would you smor support congress passing legislation to give the fed more precise tools to tackle infl inflation such as this idea? >> it's up to congress to make those decisions, though. >> by your own admission your tools are too blunt. what do you think the fed needs to responsible more precisely to inflation? >> our tools are blunt but they are the right tools to deal with broad demand and that is a more important determine of inflation as painful as energy and food prices are we can't help with energy and food prices, to your point we can help and do that with the tools we have. that's a question for congress

congress can change our tool kit or our mandate >> well, in this moment of too high inflation we need policies that respond to the needs of the american people. the fed knows that raising interest rates will not address the root causes but will keep doing so we need a more sophisticated tool kit for the era we are in to truly heal our economy and tackle inflation responsibly thank you. i yield. >> thank you mr. stile is recognized. >> thank you tore being here, chair powell you noted that you ended your

public statements in support of fiscal stimulus by the end of 2020 is that correct? >> yes >> and so after that the democrats under one party control passed $1.9 trillion of additional fiscal stimulus after it had already stopped making public statements in support of additional stimulus. do i have the time line correct? i'm not asking you to opine. >> i took no position publicly or privately >> it ended in 2020. the democrats under one party control passed $1.9 trillion of fiscal stickmulus. cognizant of the time we have, and you've noted that you think the fed should not play a role in fiscal policy i have grave concerns ofthe fiscal policy we've seen playing out in washington, not asking you to opine on that looking at 2021, we saw real gdp growth about 5.6% in that year

is that correct? >> yes >> over 5% a reasonably robust rate and at that period of time in the year of 2021 we saw the fed's balance sheet increase by about $1.5 trillion. is that correct? >> sounds about right. >> so in the period of time we were seeing robust economic growth, the federal reserve was continuing to build its balance sheet to the tune of $1.5 trillion during the year 2021 the federal reserve ultimately purchased about 54% of all federal debt issued by the treasury is that accurate >> i don't know that if you have the number in front of you -- >> i do have it in front of me roughly half of the federal debt issued in 2021 was acquired by the fed and placed on the federal reserved balance sheet my concern that hid the real cost of borrowing that was being driven by the biden administration at that time.

my concern is the federal reserve by increasing the balance sheet by $1.5 trillion at a period of time democrats put forward a gigantic stimulus package after you had stopped your public calls for requesting additional fiscal stimulus, that's all part of the problem it's both the fiscal policy and the monetary policy coming together let me keep going here for a moment we paid -- we, the federal government -- paid in debt payments last year $580 billion. is that correct? >> i don't know. >> that's the numbers i have 5.8% fiscal side the projections of cbo interest over the next decade one of the cbo projections will triple to $1.2 trillion. but that's assuming -- that's assuming federal debt remains in a range of 2.4% to 3.8%. that's the cbo's projections to get to debt payments increasing to $1.2 trillion by the end of

the decade we're sitting here at a period of time when the ten-year treasury yield has crossed 3%. 3.16%, i believe, as of yesterday. a year ago that was 1.48%. so we're already approaching the high interest rate threshold that cbo has for interest on the debt to triple do you project that interest payments on the debt, the interest payment number that's impacted by the interest rates set by the fed will remain in a range of 2.4% to 2.8% or will dramatically be above that >> we don't publish projections on treasury rates. >> so as interest rates are moving, as you're doing, i think appropriately so, to address the inflation environment that we're in, the federal reserve doesn't project the cost on the debt moving forward >> internally. we don't publish, as i said. internally we have a path for

the ten year, for example, and for many, many years it's always showed rates returning to levels even where we are or even higher that's what goes into our models because we assume over time -- for example, we're reversing -- we're going to be shrinking our balance sheet in the range of a trillion a year in coming years. that will put more supply out. that should put upward pressure on rates so we do -- it's not our business to project this publicly but our assumptions are that rates will return to levels that are somewhat higher >> let me, for the record, state i'm very concerned we will see interest rates remain high the committee for a responsible budget notes 50 basis points is $153 billion in debt i'm concerned we're on a path that's unstable. i appreciate you being here. i yield back >> thank you the gentlewoman from new york ms. ocasio-cortez is recognized for five minutes

>> thank you so much, madam chair. thank you, chairman, for coming in to speak with us today. chair powell, in the summer of 2019, which admittedly was a different world, during a financial services committee hearing you relayed to me, quote, i would look at today's unemployment as well within the range of plausible estimates of what the natural rate of unemployment is. do you recall what the unemployment rate was around that time in 2019? >> i want to say 3.5%. >> yes, it was 3.5%. and what is the current rate today? >> 3.6%. >> 3.6 you also said, quote, when unemployment went way up, you didn't see inflation go way down so you don't see inflation reacting to unemployment the way it does because inflation seems very anchored. again, that was at that time but, chair powell, would you say, briefly yes or no, would you say some of the contributing

factors to today's inflation include ongoing supply chain issues including volatility of commodity prices as a result of the ongoing conflict in ukraine and companies also raising prices because they can? >> i would say on supply side issues for sure those are playing an important role. >> and am i correct that american workers' wage gains have actually trailed inflation? while the cost of goods went up 8.6% on average wages did not increase by that much. >> it depends. for some people at the lower end of the spectrum actually have been getting positive real wage gains. for most people, though, inflation has been higher. >> on average a wage growth about 6.1% so average wages are trailing inflation. it does seem that american workers are not primarily responsible for the inflationary issues we're seeing today.

but despite this we are seeing some comments from individuals like former u.s. treasury secretary summers earlier this year said that in order to contain inflation the u.s. needs five years of unemployment above 5% or one year of 10% unemployment do you agree withthat assessment >> i understand how that number can be arrived at or derived, but i think there's so much uncertainty. in particular the answer is going to depend 30 a significant extent on what happens on the supply side. if we do get these supply side problems worked out, which i think is certainly going to happen in time, then you wouldn't see anything like that. it's a highly uncertain time our intention is to bring down inflation while keeping labor markets strong >> i think it's important to drive home what a 10% sustained unemployment would look like in

this country we didn't even reach 10% during the great recession. we did experience 10% unemployment in 1982 following the volcker shock. in this market to get to 10% unemployment that would require about 10.5 million additional people out of work and historically we know black unemployment is usually double that of white unemployment, correct? >> yes, it tends to move at twice the speed both up and down certainly moving up. >> when the former treasury secretary says he wants 10% unemployment overall, he's also saying that we need black unemployment of nearly 20% -- or implies that but, chair powell, i do think despite the tools you don't have, congress does have tools as well. would you say the following actions, granted in the scope of congress, could be deployed to impact inflation using antitrust laws against companies that are

raising prices, using their market power >> i didn't hear the last part >> would this action -- would using antitrust laws against companies that are raising their prices have an impact -- >> anti what laws? >> antitrust >> sorry the acoustics in here. >> would that make an inflationary impact? >> it's hard to say. >> would subjecting them to a windfall tax have an impact? >> again, i -- >> would requiring government contractors have certain impacts on inflation >> there's a long history of price controls when inflation has been high and it was not a successful one really it comes down to getting demand and supply in alignment >> and if the fed's tools impact demand but most of those inflationary issues could be impacted by supply how high do you think the fed would have to drive unemployment

to actually have an impact >> that's going to depend on a lot of things. ideally we can raise rates and it's very important that we get inflation back down particularly for people in the margins of society suffering the most from inflation and maybe a longer conversation >> thank you >> thank you very much the gentleman from south carolina is now recognized for five minutes >> thank you, madam chair. congratulations on being confirmed to your second term as chair. some rocky times ahead wish you luck. the last time you were here we talked, we discussed how rising interest rates really inflates debt services costs for the federal government i know what you're going to say. that's a concern for fiscal policymakers, the congress, to take into account not the fed, and that is mostly true. i still think with everyone

being fully aware of just how costly servicing our debt will be now that interest rates are returning to historically normal levels, according to the cbo interest payments on the debt are the fastest growing part of the budget the cbo projects servicing our debt will cost $8.1 trillion of the ten-year budget window and their inflation assumptions are projecting interest rates are fairly lower than current levels and quite a bit lower than where rates are likely headed to get inflation under control. and i thank you for your efforts to get inflation under control but for every half percentage point rate hike that is an estimated $131 billion of annual increases -- $131 billion in annual increase in debt ser servicing costs. that's a staggering amount of money. we, congress, must get our fiscal house in order. we have to there is no other option the dollar's position in the

world is solid there are no immediate signs of that changing. but if we continue on our current trajectory that will not always be a given. my question is are you worried if our current fiscal path continues, which i should note with each rate hike it looks worse and worse, that the dollar's position in the world could be challenged in the long term is that a concern? >> certainly in the long term. the dollar is the reserve currency and i don't see it as particularly under threat at the moment given the advantages that we have which are many you're right the u.s. federal budget is on an unsustainable path and we will have to deal with it, the sooner the better unsustainable means the debt is growing faster than the economy, which can't be sustained over time >> thank you for the record i want to follow up you stated the following as congress considered the biden stimulus quote, in addition workers and

households who struggleto find their place in the post pandemic economy are likely to need continued support. the same is true for many small businesses that are likely to pros per once the pandemic is behind us from your speech on february 10th of 2021. i wanted to add that in for the record one final question, during a meeting last week at the international association of insurance supervisors the aias continued a consultation paper on criteria looking at the use of international capital standard versus the aggregation method the u.s. has committed to use an aggregation approach through insurance commissioners group calculation and the fed's proposed building block approach moreover the eu and the uk through their covered agreements with the u.s. recognize these a

app approaches insurers representing more than 95% of the european market takes the view there cannot be two versions of an international capital standard my question is this. will you continue to advocate and support the aggregation method as an alternative to the capital standard >> i'm a little rusty on that. i will say this. i know we're strongly committed to capital standards that work for u.s. insurance companies >> i get that. what i'm getting at is we had a different way of regulating insurance in the u.s we all know that and it works for us we do not need to let them change our way of doing things we need you to stand up for the american way of doing things and for american businesses. can you commit to doing that >> i think that's what we're doing. yes. >> madam chairman, i yield back.

>> thank you the gentleman from massachusetts is now recognized for five minutes. >> thank you, madam chair. welcome, chairman. i want to start by asking you about inflation expectations which as you obviously well know can be very difficult to dislodge once they are anchored in the minds of consumers and what the fed can do both to address inflation but also to convince americans that inflation will be lowering in the medium term and thereby prevent expectations from getting anchored >> if you look at inflation expectations and we measure professional forecasters, households, market based break evens, a broad range of things, you do see people expect inflation to be high in the very near term but they expect it could come down fairly quickly

generally, as a general matter, the evidence is clear people do expect inflation to come back down to levels consistent with our price stability mandate. but this is -- we haven't had a test like this we haven't had an extended period of high inflation for a long time and so it's not a comfortable place to be. short term inflation expectations are higher and it does add to our desire to move expeditiously. and we're forced to get rates up >> building on that one degree removed. the degree to which businesses and consumers do not have confidence or the u.s. government at large makes it harder to make capital investments, to do wage negotiations is there a measure of the degree of confidence that business and

consumers have so that we can measure the degree of confidence and not having to see unexpected inflation in the future? >> i agree ultimately this is -- the point is that if the public retains confidence that inflation will come down then it will come down >> self-fulfilling >> we track them all we put them all in one big measure. the message that, yes, expectations are anchored but, as i said, that's good but not enough over time the expectations will be under pressure.

>> it seems you want to track volatility to see the confidence people have. >> yes we look at the distribution and there are small signs and our whole framework is about keeping expectations well and truly anc anchored >> and it is auto catalytic. businesses and consumers have that confidence. >> absolutely. >> can you explain how quantitative tightening will play into that the last ten years >> sure. quantitative easing in reverse it reduces risk free longer term assets and that tends to drive rates down as people want those.

that should have some upward pressure over time markets are forward looking so they're pricing this in. >> you don't project changes in how to do qt >> we put out a plan, we've announced it it's sort of priced in we would intend to keep to that plan it will be flexible if that's warranted. >> last question, can you give us an update on fed now and your plans for access both to establish banks as well as to technologies >> live next year. we believe we're on track to do that we have people working hard on it i didn't catch the laths part of the question >> and how to make access available. just for certain types of banks?

financial technology companies >> it's mainly for the broad sweep of banks we'll have to look at going beyond that. >> i yield back. >> thank you the gentleman from south carolina, mr. norman, is now recognized for five minutes. >> thank you, chairwoman waters. glad to have you here. on the direction the economy is going? >> it's certainly an important indicator. >> because it affects so many different facets of the economy. is that right? >> i'm sorry i'm having a hard time hearing. >> because it affects so many facets of the economy, housing, commercial or residential, you buy a lot of products that are

across the spectrum. >> it's an important --a very important sector of the economy for the reasons you point out. >> and one of the reasons most economists predict a severe recession is housing as a leading economic indicator i've done that that's where i made my living. it's simple to solve, to get the housing at a point that it was under the previous administration i'm from south carolina. people are moving there. in the last probably four months it's been a severe cutback despite the fact people are coming in and need it and it's because of this administration's war on energy and natural gas. the fed can't regulate that. putin can't regulate that. it's policies of this administration

the war on energy, you can't afford gas for your product. when you pay people not to go to work, it's a disincentive. supply chain has been mentioned when the leader producer of chicken cannot get feed is a problem. interest rates, which is at your disposal, will affect the housing industry when you are paying 6% long term mortgage rate along with every other cost increase directly caused by the policies of this administration, housing is going to come to a stopping point as it is now likely to have

regulations have been mentioned here we now face on simple projects a regulation and i would point out many of them needless to be 35%, 38%. when you combine all of these things, housing will take a tremendous drop. that will affect the economy, wouldn't you say >> i think all of those things are affecting the economy. >> is greed that has been mentioned here leading cause of inflation? >> i think it's a macroeconomic phenomenon caused by the things we've been talking about >> was greed not a factor four years ago? if it's a factor now, were they just less greedy in '16 through '20? >> it's hard to see why there would have been. >> right and did putin -- was he responsible for the low gas prices that we experienced from '16 to '20

>> not as far as i know. >> i don't think he had much impact if he did, it would be a sad state for the united states. i think one other congressman mentioned about the debt, the debt relief of college students that's been proposed by the current administration how will that have an effect on the economy and i think the number that's been talked about to forgive $50,000 per student, will that affect the inflation and the economy? >> as i mentioned we don't score these bills from an inflation standpoint >> it wouldn't be possible, would it >> sorry >> i doubt it would be positive, would it >> i don't know. that's for elected folks >> and on the central bank digital currency would you have to have approval from congress before the federal reserve got involved >> i can't imagine that we would

move forward without authorizing legislation. >> you would have to have approval of congress >> yes >> well, thank you for what you're doing, using the tools you have at your disposal. most of this can be eliminated if we had a policy now that was pro-business, pro-growth, and i'm thankful for what you're doing and congratulations on being reappointed as chairman. >> thank you >> thank you the gentleman from california, mr. vargas, is now recognized for five minutes >> thank you -- i'm over here, mr. chairman thank you very much, madam chair and ranking member mr. chairman, thank you very much for being here and congratulations, i think i'm not sure you're running into pretty heavy lift here going forward. very much i appreciate you being here today i believe that inflation is real, obviously, and it's hurting a lot of people. it's the causes, i think, that are being manipulated and,

frankly, lied about. and there's one big criticism that i make of you and also and especially, i guess, secretary yellen that you haven't explained inflation within the context of the world environment what's happening globally. my good friends on the other side of the aisle love to blame inflation singularly on president biden and his policies i didn't get a chance to ask secretary yellen any questions when she was here last time, kind of low on the totem pole here but i wanted to scream because every time she led with her chin as opposed to explaining this inflation is globally. but now that i have you here, i get to ask you some questions. what is the inflation rate in the european union

>> overall, i wouldn't -- >> it's 8.8% according to s statistica did they receive any money from the american rescue plan >> not to my knowledge >> what is then f inflation rate est estonia? >> comparable to ours. >> it's over three times higher. did they receive any money from the american rescue plan >> not to my knowledge >> how about latvia? what is the inflation rate in latvia >> no idea >> it's 16.8%. did they receive any money from biden or the american rescue plan >> not as far as i know. >> how about bulgaria? 13.4 >> i knew that one >> you knew that one i apologize. i'll let you try with poland they're a friendly nation.

12.8 did they receive any money from the american rescue plan and if they didn't, why do they have inflation that's so high? >> not as far as i know. >> so why is their inflation rate so high >> in europe the inflation they're seeing is principally, i believe, due to energy prices and food prices. it's due to the war and it's due to the situation with russia being their principle energy supplier >> so not the american -- they didn't receive any money from the american rescue plan >> not as far as i know. >> okay. let's keep going romania, 12.4. slovakia, 11.8 hungary, 10.8. croatia, 10.7. greece, 10.5 the netherlands, come on, you ought to know the netherlands. >> since we're going down, it would be lower >> 10.2. >> see >> but you do see -- i'm glad --

germany. how about germany. very similar to us >> i'm not going to guess. >> 8.7 and the reason i wanted to go through the litany of these things i hear that inflation somehow magically exists because of biden's policies. because of the american rescue plan well, if that's true, then there shouldn't be this other inflation in other countries it's a global phenomena, as clinton used to say, it's the economy, stupid. here it's the pandemic and things that happened we have a situation around the whole world yet you don't explain it globally. i shouldn't yell at you because i like you a lot and do think you're doing a good job, trying very hard. but i did want to yell at yellen she didn't explain anything globally don't you think you have a

responsibility to the american people i know in my district most people believe that inflation is only happening here because of the rhetoric that they hear on the other side and you guys, i think, have the opportunity and the responsibility to give them the full picture not this limited picture. and i hope you do so again, with that, i yield back thank you very much, madam chair. >> the gentleman yields back the gentleman from oklahoma is now recognized for five minutes. >> thank you, madam chair. i think my timing for my question is perfect. chairman powell, i would like to discuss with you an issue of significant concern to me and many of my colleagues. the s.e.c.'s regulatory agenda has more than 50 significant proposals that are currently under way or approaching a final vote these rules cut across every asset class under the s.e.c., the securities and exchange commission's jurisdiction, the sheer complexity and volume of these overlappin