statement, the language in the statement then the press conference with chair powell david, i guess there's questions about whether they'll use the word yet in their statement to indicate flexibility about rate hikes or not hear. and we'll come back to you in a moment >> because steve liesman has the fed decision here in just a couple of seconds time will it be the quarter point >> raising by one quarter point bringing the funds rate up to five and quarter percent the federal reserve offering i guess i would call it strange somewhat hawkish forward guidance less than the last time. the fed saying it is determining whether additional policy firming may be appropriate that's a change from the prior move it removed where it said it anticipated firmer policy. it's gone from pretty sure it's going to hike to maybe, but it's maybe looking for a reason to do

so the fed saying it is determining whether additional policy firming may be appropriate taking out language saying that it anticipates the u.s. bank system statement says it's sound and resilient, but tighter credit conditions are likely to weigh on households inflation remains elevated the committee it says remains highly attentive to inflation risks. on the economy, just a couple of lines. economic activity expanded at a modest pace. job gains robust back to you guys to chew oaf t over that statement. is it a pause? >> was it a unanimous vote >> yes good question. >> we had some discussion from former fed officials saying if they continued to hike, it might pause. eric rosengren was one of those people on your screen is a board of the regional banks which are still in the green

first republic excepted from that pnc up, mnt up let me bring in bob and rick bob? >> the phrase, determining whether additional policy firming may be appropriate is different than saying some additional policy may be appropriate. that's a lot more indeterminate. the s&p moved up slightly on that so look, the question is the market was positioned for a hawkish hike meaning the fed's going to raise rates indicate inflation's coming down but it's still too high and we'll hike again if needed. the dovish hike would be okay, we had progress on inflation being made bank crisis is slowing lending implying they're unsure about how much more they want to hike. i think this satisfied a little of that. what makes it hard to figure out

is this whole impact of the banking crisis that seems to be the real issue here this bank thing is more from deposit flight to something bigger more regulation, tighter conditions particularly in commercial real estate lending that's what the market wants to hear that the banking crisis is causing the federal reserve to be more cautious than they normally would be. they want to know the rest of the year, nothing is going to happen that's why the market's holding up the market doesn't want to believe in the hard landing. their earnings aren't getting slashed. that's what we're seeing but it's dependant on how the fed is approaching the second half of the year i want to hear more about the banking crisis in the presser. >> rick, did the bond market hear what it wanted? i think it did as a matter of fact, if i look to my sources as reflecting the general sentiment within the buy

and sell side on the street, pr pretty much everyone was expected a quarter point because if the fed didn't deliver what it perceived the market priced in, many would question what the fed knew that the rest of the street didn't know not sure i'm buy into that, but the short answer is yes. two-year note yields have dropped three or four basis points fed fund future has moved up here's the way i would frame it to try to keep it simple for the most part or at the end of the line. if the fed needs to reverse course and ease at some point in 2023, i think they lose a bit of credibility again. the old mantra is don't fight the fed. well, let me think fed was buying treasuries in qe. they were buying mortgages kee keeping interest rates low and paying interest on excess

reserves then they embarked on one of the most aggressive tightening sequences since the '80s the fact it was really continues to make me scratch my head now we went from don't fight the fed to they switched from qe to t. i think what the federal reserve is locked into is more a function they really don't want to go back an and chew their tobacco twice. i know it's old school, but if you turn the gas down and it starts to choke, you crankit back a little. can't do that with the economy if you overtighten, it isn't a matter of just going back half a turn on the screw. what it means is you have to go back and try to save face because you went too far >>. >> kristen, we've seen the dow fluctuating between gains and l losses the real fireworks come at 2:30.

>> we're going to be watching that press conference closely. the comments about that something is going to break. there are things that are clearly breaking and so i think this commentary around the fact it opens up the potential for a pause, that is what we were hoping for and expecting i know some people are looking at equity markets, but q4 earnings, we have seven out of 11 sectors in a -- we know about the breadth of this equity market rally where you have sechbl companies comprising the gain >> jim, is this the pause you were looking for when they changed the language to determining whether further interest rate tightenings will be appropriate versus anticipates further tightening >> yeah. that's exactly right

so determining just means that they're on a wait and see course what they're saying is they're worried what if inflation doesn't go down as much they want then they're going to have to come back into the markets that's going to make it worse. they want to leave the door open that they may continue to hike i view this as a hawkish pause and if the data doesn't weaken, we may have to reanticipate the fed to come back in and they want to leave that door open >> david kelly >> i keep moving from land to weather. this is a pause and i don't think they'll raise rates anymore, but the real question for me now is can the economy actually function on the federal funds rate because it's been so conditioned on interest rates. the real key is let's keep an eye on the banking industry. we hope the worst is behind us

but if we continue to see deposits flow out, you could still have a problem here. there may be problems ahead aside of the debt ceiling. i still think the federal reserve is going to have to cut by the end of the year >> david, we all sort of look at this and say well, a quarter point can't make that much difference in the economy, but if that brings money market funds yields to over 5%, that's a big headline number. or other high yielding instruments. this could matter a lot. >> yes because we're assuming that deposits are sticky when is the last time we tested that more than 15 years ago when we had normal interest rates the last time. we don't know how sticky deposits are if the 5% out of the banking

system, there are going to be some problems. this economy, we don't know if over 5% is too far >> steve, i know you want to jump in. >> just seeing the june fed futures probability at 96% or a pause. that's where it's at now sorry, 88% for june with a slight hike built in at either side that 12 points is divided. i think this is not as dovish as maybe some had hoped if you think about it, they're saying they're determining whether additional firming may be appropriate they're not determining whether additional easing may be, but additional firming i'd say it's a halfway house for a pause more than it is anything else they could turn around and if they were to hike in june because we still have high inflation, they do not at the moment it would appear see the bank issues as being more important than the inflation

issues the gap between the fed and market remains where it was. 75 basis points of disagreement where the market continues to believe the fed's going to turn around and start cutting towards the end of the year. i think we pretty much are where we are with not as much dovishness as some hoped for >> it looks like the market is starting to price in rate cuts in september after this decision that's where it's been >> that feels like them reacting to you know, the language opening today by saying boom, we're going to start to get our cut in a couple of month's time. >> so the first quarter point is fully priced in september october. then another quarter, so you were at a 450, 440 is what it is for the end of the year. that's almost 75 basis points of cuts built in. you get the first one beginning by the end of the summer >> kristen, final thought here hard landing or something other

than that for the economy by the end of the year. >> we're in the camp that we will see a recession that it will be a mild one and i think the key factor now is this idea that we went from a rate shock and now we're evaluating what is a credit shock so this idea you're going to see the continued outflows of deposits into money market funds. weather seen already since the beginning of the rate hike close to a trillion dollars out of d deposits and just thinking of credit availability and what it means more broadly for the system i think that can create volatility >> jim, that makes me wonder what you think the ten-year yield's next stop might be >> great question. as steve was saying, look, bond markets take warn. because if the fed sees that inflation isn't coming down they could start to rehike again and i don't think anybody's pricing that bond markets aren't pricing that

they're pricing the fed's making a mistake and are going to have to cut if that doesn't happen, then some of these longer duration, high quality safe trades may actually add risk to portfolios. i don't think we're out of the woods yet. with inflation, volatility this is a long-term game and we're still playing it we see the ten-year yield below 4% and we've had guests who said 275 could be the next stop everybody seems to be on that side of the boat, david. even those who think the fed will keep hiking say it's going to cause more damage in the longer run >> yes i think we are out of the woods on inflation everything i'm looking at tells me it just comes down steadily it takes a few years to do this right. i believe by june, the cpi inflation rate will be well below 4% that's not too far away from

where the fed's headed i think during the course of '24 will go down to two. inflation continue to fall, but growing concerns here about business spending in general and credit crunch. i think that's going to make them cut the problem is because what powell's going to say this afternoon is don't believe the markets about this we're not going to cut before the end of the year. and i think that's going to force them or they're going to force themselves into staying too tight for too long then cutting at the end of the year next year but it's going to be too late >> we have the markets in a similar pattern. dow was negative at last check rick, i wanted to ask you about the dollar it's softening its weakness if you want to call it that, has been a tailwind. does today change that >> you know, i was in the camp that the dollar is going to

weaken as we get to the end of the cycle and i believe we are at the end of the cycle. but now i'm going to revise that call i think the rest of the globe still has more intense economic issues than the u.s. i think the dollar is going to fool many traders and remain more buoyant i think it will test 100 and in the final analysis, i think that the biggest issue that i would look at is we're going to have a very stagflationist economy where growth is going to be less and we're not going to see 2%. maybe two and three quarters to 3% with regard to pricing and inflation. maybe the biggest issue i d disagree with, i think the curb is going to steepen. after that, i'd be careful that they start to move higher as the curve disinverts and resteepens. >> as we often see kind of as we get into the later stages into that slowdown. thank you so much for joining

us really appreciate your time. as we await comments from jay powell, we'll get that at 2:30 eastern time nar rr rhtft t reaction from setowaenig aerhis. ♪ imagine, a car that goes as far as it does fast. as sleek as it is spacious. as smart as it is beautiful. introducing lucid air. experience the best. ♪ ♪ at pnc bank, ♪ you can find us in big cities and small towns across the us, where our focus is to always support the people who live and work there. because you call these communities home,

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the fed decision on interest rates, joining us now, senator warren of massachusetts. good to have you you have been critical of mr. powell and you i think are going to be critical of this move today. >> i just think it's the wrong direction. all the seens are going in the right way. this is inflation is abating the economy's softening. we've seen gdp begin to pull back a little. we've acknowledged all along that the problems are not all problems that you can fix by raising interest rates we have a war in ukraine that messes up supply chain and food costs. a lot of price gaujing families are sure feeling it you can raise interest rates you have other tools

again, not affected by interest rates and what concerns me is that chair powell hasn't just raised interest rates, he has raised them a curve unlike anything we've seen. steepest in 40 years in 14 months, he's gone up five points here. and that's when things start to break plus look where he's aiming he's aiming to put people out of work >> so i take your point that inflation has come down, but it is still elevated by recent historical standards and that kpagts a severe price if you're committed to the idea of bringing down inflation, how can the fed help do that if not merely by raising interest rates? what are the other tools they have and let's put congress off

to the side because there's a fiscal side here, too. >> with respect, i think it's the wrong frame. when you start it by saying what else can the fed do. the fed is a one-trick pony. they raise and lower interest rates, basically so they look at the world through that lens. look at the effect of price gouging. at least 40% of the increase in prices attributed to price gouging. that is look at industries where there's greater concentration and what you see is prices went up more sharply and you see that profit margins were going up fed is the wrong actor to go after that that's the ftc >> in your view, they've done more than they should have done and to squeeze out what inflation remains, you would look at what, legislation to address price gouging?

>> legislation would be part of it but the ftc is part of it the attorney general we have laws in place that give us some tools on price gouging i'd like to see us do more that would be the legislation part states also have price gouging laws and can bring those to bear partly, you can jawbone on it, too. the chairman of the fed, the president of the united states can talk about these industries with specificity about who's in there pushing prices up more than is justified by an increase in cost. >> i hear from a lot of people who have been saying knowing we were going to speak with you today. they go normally i'm not a fan of senator warren's but they say i agree with her on this issue they may not agree with all the reasons you cited, but they say the fed is going to create a lot of job losses if they continue to hike here there's odd bedfellows

the progressive you on this and the people who are deeply in the markets are both calling for a pause here because they're concerned there's going to be a lot more pain to come economically speaking. >> what really troubles me about that is that the pain to come won't be a surprise. it won't even be incidental. read the fed from. for example, from december, which specifically said their target is to increase unemployment by one full point in less than 12 months a what that means is don't explain it to 2 million people who are going to lose their jobs who are making their payments. sorry. for the good of the overall economy, you have to lose your jobs but also look at the rest of it. how many times out of the last 12 times that unemployment has gone up a full point in the 12-month period have we avoided

recession? zero here's the other one how many times when unemployment has gone up by a full point have we been able to stop it at one point? >> never >> once. >> really? when >> i don't remember which. but the point is it almost never happens. this is where the fed is aiming. that's the part that gets me so worried about this first, they do not have all the tools to fix the problem >> they have one sort of blunt instrument quantitative tightening. >> that's their success. >> let's turn to the other aspect of this, trying to claw back from the banks. i don't know if you heard senator kennedy who said he thought this was an issue of bank mismanagement so, a, how do you come at that

and b, it's quite obvious m mismanagement of not, we have a concern about the health of the banks more broadly you never want the public in that condition do you support raising deposit insurance limits on payroll accounts >> let's start with claw backs because the advantage, here's a to go where we can better align incentives it means you're more likely to get the outcomes you want. right? rather than solely by regulation the idea is to break the cycle where we are now the folks at svb bank, signature, first republic, they all came to congress in 2016 and said loosen regular laces. donald trump said i'll loosen the regulations on these multibillion dollar banks. they put in regulators who loosened the regulations

in 2018, congress came along at donald trump's request and with help from democrats and republicans, loosened the regulations even more. you know what happened exactly what you would predict the banks loaded up on risk in order to boost their short-term profits and paid themselves huge salaries, bonuses, stock options. then when the banks blew up, they kept the salaries and bonuses. if you can get yourself to a position where you're one of the top executives -- >> how far back would they go? >> five years. >> total comp they would have to give back? >> it's because what the data show right now, gao report on this, said svb started its pumping its profits by taking on

risk and pushing that money out to the executives five years before the failure you don't have to take it back if that didn't happen, but at least you've got a five-year window to say if you guys start behaving like this, you have to give back that amount you took that's the message we need to send to every seingle executive. >>. >> i take your point regulations were loosened but mr. barr of the fed took a fair amount of responsibility on to the fed for failing to do what they needed to do to prevent these banks from failing so it's not like there was, there probably was adequate regulation or they could have known what was goeing on in thes banks and done something about et it and didn't. >> true.

let me ask you two questions why was the fed able to loosen regulations? part of that is from the 2018 change in law that gave the fed the opportunity but the second part was the culture it invited the fed to loosen those regular regulations. randy quarrel, you remember him. let's play the tapes from him tal talking about his mission was to change the culture at the fed so that they were lighter, more hands off, not looking over your shoulder and now we've reaped the consequences of both the decision in congress and the decision by jerome powell to back up the fed in doing this. >> you would say on that point it was a problem of regulation and the regulators >> yes, one and two. and the fix is exactly one and two. so if fix is congress should do its part and tighten down so the

fed can't do this, but even before congress acts, i mean this very afternoon. instead of holding a press conference, jerome powell should be tightening down those regulations at the fed where they have the discretion to do that then part three is put more tools in the arsonal like clawbacks. in order to align the incentives of the banking regulators better with keeping those banks stable. >> let's talk about a topic we touched on the last tieme we wee together stock holdings and investments of members of congress what progress, if any, has been made on that front i note you do not have any stock holdings you have funds >> mutual funds. that's right that's it for me >> so what's happened and what's left to do a lot. >> so you want to talk about something that's hard. trying to get members of congress who will all say in

general that they think -- some will say there's a problem with stock trading, but look. i've been in negotiations with this i've got good, bipartisan partnerships going on here we've met, we've got the language down. we're meeting again next week. i don't want to show too much here but we're moving this thing along because we've got to the american people cannot read. time after time. that members of congress were trading in bank stocks while is fed is trying to figure out whether to move in on a bank we jus have to stop this this is part of the cost of being in public service. if you want to be a stock trader, bless your heart knock yourself out terrific there are about 8 billion different jobs you can have that you can trade stocks on the side

or you can make it your principle occupation, but you want to be -- >> we have 19 seconds. >> an elected official >> would you raise deposit insurance payroll cap? >> right now, we have unlimited deposit insurance. oh, come on. e everybody knows it those taking advantage of it aren't paying a penny for it we need to raise it and make people take advantage of it pay for it >> this is hurting small banks because they're going to have to pay into these and because of the lack of clarity, the big banks keep getting bigger. >> the little banks are subsidizing the big ones >> they want the insurance rates. we can compete with the big guys if you raise that cap for us would you do that? >> absolutely. >> i've got one eye on the door and there's dchair powell.

before discussing, conditions have broadly improved and the u.s. banking system is sound and resilient. we will continue to monitor conditions we're committed to learning the right lessons from this episode and will work to prevent events like these from happening again. as a first step in that process, last week, we released barr's review of the federal reserve's supervision and regulation of silicon valley bank. the fienldings underscored the need to address our rules and supervisory practices to make for a more resilient banking system and i'm confident we will do so. from the perspective of monetary policy, your focus remains on dual mandate to promote stable prices for the american people

my colleagues and i understand the hardship that high inflation is causing and we remain strongly committed to bringing inflation back down to our 2% goal price stability is the responsibility of the federal reserve. without it, the economy does not work for anyone. in particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. today, the fomc raised its policy interest rate by a quarter percentage point since early last year, we've raised rates by a total of five percentage points in order to obtain a monetary policy that is restrictive to return inflation to 2% over time. we are also continuing to reduce our securities holdings. looking ahead, we'll take a data dependent approach in determining to which extend additional firming may be appropriate. i will have more to say about today's monetary policy actions

after briefly reviewing economic developments the u.s. economy slowed significantly last year with real gdp rising at a below trend pace of 0.9% the pace of economic fwgrowth i the first quarter continued to be modest despite a pick up in consumer spending. activity in the housing sector remains weak largely reflecting higher mortgage rates. higher interest rates and slower growth appear to be weighing on business fixed investment. the labor market remains very tight. over the first three months of the year, job gains averaged 345,000 jobs per month even so, there are some signs that supply and demand in the la labor market are becoming into better balance the participation rate has moved

up for individuals 25 to 54 years. nominal wage growth has shown easing but overall, labor demand still substantially exceeds the supply of available workers. inflation remains well above our longer run goal of 2%. over the 12 months ending in march, total pce prices rose 2.4% colluding the food and energy prices, core prices rose 4.6% inflation had moderated somewhat since the middle of last year. nonetheless, inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go. longer term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters as well as measures

from financial markets the fed's monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the american people. my colleagues and i are acutely aware that high inflation imposes significant hardship as it erodes purchasing power especially for those unable to meet the high cost of essentials we are highly attentive to the risks inflation poses to both sides of our mandate and are strongly committed to returning inflation to our 2% objective. at today's meeting, the committee raised the target range for the federal funds rate by a quarter percentage point bringing the range to fiv5.25%. with today's action, we have raised rates by five percentage points in a little more than a year we are seeing the effects of our

policy tightening, particularly on housing and investment. it will taek time for the full effects of monetary restraint to be realized. especially on inflation. in addition, the economy is likely to face further headwinds from tighter credit conditions credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic outlook but the strains that emerged in the banking sector in march appear to be resulting in tighter credit conditions for households and businesses. in turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. the extent of these effects remains uncertain. in light of these uncertain headwinds along with monetary policy restraint, our future policy actions will depend on how events unfold. in determining the extent to

which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take into account the tightening of monetary policy, the lags with which it affects economic activity and inflation and economic and financial developments we will make that determination meeting by meeting based on the totality of incoming data and their implications for the the outlook of economic activity and inflation. we are prepared to do more if greater monetary policy restraint is warranted we remain committed to bringing inflation back down to our 2% goal and to keep our longer term inflation expectations well anchored reducing inflation is likely to require a period of below trend growth and some softening of labor market conditions. restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the long run. to conclude, we understand that

our actions affect communities, families, and businesses akcros the country. everything we do is in service to our public mission. we at the fed will do everything we can to achieve our maximum employment and price stability goals. thank you. i look forward to your questions. >> thanks for taking our questions. i wonder if you could tell us whether we should read the statement today as a suggestion that the committee is prepared to pause interest rate increases in june and i also wonder if the fed staff has revised their forecast from a mild recession and if so, what it would look and feel like when it comes to for example, the unemployment rate >> taking your question, of course, our decision was to raise the federal funds rate by 25 basis points. a decision on a pause was not

made today you will have noticed that in the statement for march, we had a sentence that says the committee anticipated that some additional policy firming may be appropriate. that sentence is not in the statement anymore. we took that out instead, we're seeing that in determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take into account certain factors. that's a meaningful change we're no longer saying we anticipate so we'll be driven by incoming data and approach that at the june meeting >> so the, the staff's forecast is so let me say start by saying that that's not my own most likely case, which is really that the economy will continue to grow at a modest rate this year i think that's so dicfferent

people in the committee have different forecasts. staff produces its own forecast and it's independent of the forecasts of the participants which include the governors and reserve bank presidents. we think this is a healthy thing. the governors are not taking what the staff says and writing e down it's actually good that the staff and individual participants can have different perspectives so broadly, the forecast was for a mild recession and by that, i would characterize one in which the rise in unemployment is smaller than has been typical in modern era recessions. i wouldn't want to characterize the staff's forecast for this meeting. but broadly similar to that. >> thank you, chair powell

thanks for taking our questions. can you talk about the possible effects of a debt limit standoff you've said the ceiling must be raised, but do you see economic effects of getting close to a default and what type of situation would that look like >> i will say this these are fiscal policy matters and therefore, congress and the administration for the elected parts of the government to deal with and they're really consigned to them. from our standpoint, i would say this it's essential that the debt ceiling be raised in a timely way so that the u.s. government can pay all its bills when they're due. failure to do that would be unprecedented. we'd be in unchartered territory and the consequences to the u.s. economy would be highly uncertain and could be quite averse i'll leave it there. we don't give advice to either

side we just would point out that it's very important this be done and the other point i'll make about that though is that no one should assume that the fed can protect the economy from the potential short and long-term effects of a failure to pay our bills on time. it would be so uncertain that it's just as important that this, we never get to a place where we're actually talking about or having a situation where the u.s. government is not paying its bills >> was discussion around the uncertainty, did that affect today's decision >> we talk about risks to the outlook. a number of people did raise it as a risk to the outlook i wouldn't say it was important in today's monetary policy decision >> steve liesman, cnbc can you tell us what the federal

reserve board did in the wake of that february presentation where you informed that silicon valley bank and other banks were experiences risks and can you tell me what you've done to make sure banks are currently managing risk? part three, but still the same question do you still think the separation principle that monetary policy and supervision can be handled with different tools? >> sure. so the february 14th presentation, i didn't remember well, but now i remember it was a general presentation, an informational briefing of the entire board it was about interest rate risks in the banks and lots of data. there was one page on silicon valley bank which talked about the amount of losses, mark to market losses they had in the

portfolio. nothing in it about, that i recall anyway, about the risk of a bank run it was i think the takeaway was they were going away to do an assessment horizontal assessment of banks it wasn't presented as an urgent or alarming situation. it was an informational, non-decisional kind of thing and i thought it was a good presentation and did remember it in terms of what we're doing, i think banks themselves are, many, many banks are now attending to liquidity and taking opportunity now really since the events of early march to build liquidity and you asked about the separation principle you know, like so many things that it's very useful. but you know, ultimately, it has

its limits i think in this particular case, we found that monetary policy tools and financial stability tools are not in conflict. they're working well together. we've used our stability tools to support banks through our lending facilities and at the same time, we've been able to use monetary policy tools to foster price stability >> i don't mean to be argue mentive, but the staff report said svb has significant interest rate risk it says measurements failed and banks face soundness risks why was that not alarming? >> i didn't say it wasn't alarming they're pointing out something they're working on not sure whether they mentioned, i think they did, actually they mentioned they had taken regulatory action or supervisory action in the form of matters requiring attention. i think that was in the

presentation i think it was to say yes, this is a bank and there are many others experiencing these things and we're on the case. >> hi, chair powell. i wanted to ask obviously with the recent bank turmoil, we've seen multiple banks buy others and i was just curious whether you think that further consolidation in the banking sector would increase or decrease by stability and whether you have concerns about the biggest bank in the u.s. getting even larger. >> we certainly don't, i don't have an agenda to further consolidate banks. there's been consolidation has been a factor in the u.s. banking industry really since interstate banking and before that it goes back more than 30 years. i think there were 14,000 banks, now there are 4,000 and change i've long felt that having

small, medium and large sized banks is a great part of our banking system the community banks serve particular customers very well regional banks serve very important purposes and the various kinds of gsivs do as well it's healthy to have a range of different banks doing different things i think that's a positive thing. so i would just say in terms of jpmorgan buying first republic, the fdic really runs the process of closing and selling a closed bank that is their role so i don't have a comment on that process there's an exception to the deposit cap for a failing bank the fdic i think is bound by law to take the bid that is the least cost bid so i would assume that's what they did >> they're getting larger in

general. >> so i think it's probably good policy that we don't want the largest banks doing big acquisitions that is the policy but this is an exception for a failing bank and i think it's a good outcome for the banking system it also would have been a good outcome for the banking system at one of the regional banks bought this economy and that could have been the outcome. we have to follow the law in our agencies and it goes to the least cost bid >> thank you at the march meeting, you mentioned that tightening of credit conditions from the recent bank stress could be equal to one or more rate increases. given developments since then, how has your estimate changed? >> i think i followed that up by saying it's quite impossible to have a precise estimate.

but in principle, that's the idea we've been raising interest rates and that raises the price of credit and that in a sense restricts credit in the economy working through the price mechanism. when banks raise their credit standards, that can make credit tighter in a broadly similar way it isn't possible to make a clean transition between one or the other although firms are trying it and we're trying it. ultimately, we have to be honest and humble about our ability to make a precise assessment. it complicates the task of achieving a restrictive stance, but we think that interest rates in principle, we won't have to raise rates quite as high as we would have the extent of that is so hard to predict because we don't know how persistent these effects will be. we don't know how large they'll

be we'll be watching carefully to find out >>. >> what does it suggest about the scope of the committee to pause rate increases as early as next month even if the data remains strong if it's having a substitute effect? >> this is just something we have to factor this is just some have to factor in. >> so i guess i would say it this way the assessment of -- will be an ongoing one, meeting by meeting, and we'll be working at the factors that i listed that's really all we can do, as i say it does complicate it. we have a broad understanding of monetary policy, tightening is different. there's a lot of literature on that, translating it into rate hikes is uncertain

nonetheless, we'll be able to see what's happening with credit conditions, what is happening with lending there's a lot of data on that. we'll factor that into our decisi decisionmaking. >> reporter: noting that the statement dropped the references to efficiently restrictive, even your baseline outlook, do you feel this is sufficiently restrictive? >> that's an ongoing assessment. we need data to accumulate on that not an assessment we have made, that would mean i think we have reached that point it's not possible to say that with confidence now, but nonetheless, you will know that the summary of economic projections from the march meeting showed that at that point in time, that the median participant thought this was the appropriate level of the

ultimate high level of rates we don't know that we'll revisit that at the jump meeting. before we declare that, i think we'll have to see data accumulating, and as i mentioned, it's an ongoing assessment. >> can you give us a sense of what the survey indicated, was it already 40%, 45% of banks were tightening credit as of the last survey? >> so we're going to release the results along with our usual time frame i would say that the sluice is broadly -- and what we're seeing from other sources i would have seen the beige book and other earnings call that indicates that some banks have been tightening their lending

statistics banking data has will show a slowing since mid last year. >> reporter: chair, at argument around the last year and beginning of this year to slow down paces of the increase was to give yourself time to study the effects of those moves as after the behavioral failure, my question is why it was necessary -- or put differently, the whole point is slowing down the pace, was to see the effects of your moves. now for the last two meetings you have been seeing the effects. why did the committee feel it was necessary to keep moving >> again with our monetary policy, we're trying to reach and stay at for an extended

period, a level of policy stance that's, 2% over time and, you know, that's what we're trying to do with our tool i think slowing it down was the right move i think it's enabled us to see more data and we continue to do so so, you know, we really, you know, we always have to balance the risk of not doing enough and not getting inflation under control against the risk of maybe slowing down economic activity too much. we thought this rate hike was the right way to balance it. >> just to follow up, you said in response to howard's question, you'll knee data to accumulate to determine if -- does that data need to accumulate, or could it

accumulation over a lounger period than a six-week intervying cycle >> as i mentioned, i would say this assessment is ongoing you know, with economic data, you could -- you'll -- look back, we've seen inflation come down, move back up, two, three typed. so i think you're going to want to see that, you know, that a few months of data will persuade you that you've got this right kind of thing. you know, we have the luxury we raised 500 basis points i think fed policy is tight. i think real rates are probably -- you can calculate them many different ways, one is to look at the nominal rate and subtract a reasonable estimate, so you have twos of real rates,

that's what most people would 'says as a neutral rate. so policy is tight you see that intersensitive activities, and you also begin to see it more and more in other activities if you put the credit tightening on top of that and the qt that's ongoing, i think you feel like we may not be far off or possibly at that level >> reporter: guards lawrence with fox business. so if the federal reserve gets down to the 3% projection, or close to it, would it be okay for a prolonged period of 3% inflation and hoping for an outside event to move it down to 2%. >> i think we'll always have 2% as our target. we're always going to be focusing on getting there. >> but would you be okay with a

prolonged 3% >> you know, let me just say that's not what we're looking for. we're looking for inflation going down to 2% over time that's not a question that's in front of you ultimately we're not looking to get to 3% and then drop our tools. we have a got of getting to 2% we think it will take time we don't think it will be a smooth process, and i think we're going to need to stay at this for a while. >> how does the job side of the mandate, going from 3 to 2, how does the other i'd of the m&a mandate balance? >> i think they'll matter, you still have 1.6 job openings, even with the lower number, for every unemployed person. we do see some evidence of softening in the labor market conditions, but overall you're near a 50-year low in unemployment wages

you'll have seen that the wage numbers from late last week, you know, whenever it was, and, you know, it's a couple percentages points above what would be consistent with 2% inflation over time. so we do see some softening. we need new labor supply coming in, but the labor markets are very, very strong, whereas inflation is, you know, winning high, well above our goal. right now we need to be focussing on bringing inflation down unfortunately, we had been able to the that so as far as without unemployment going up. >> -- they seemed to imply a -- according to the tracking estimates. so i'm just wondering if you could elaborate on, you know,

why you're optimistic a recession can be avoided given that's the fed staff's forecast, possibly a broad of forecast as well, and also most private sector forecasters i don't think -- i know what's printed in the summary and all that i don't think you candeduce exactly what you want about what participants thinking, because you don't know what they were thinking for first quarter gdp at that point in any case, i think possibly this time is different. the reason is there's just so much excess demand, really in the labor market it's interesting you know, we raised the rates by five percentage points in 14 months the unemployment rate is 3.5%, even lower than when we started. job openings are still very, very high. we see by surveys and much, much evidence that conditions are

cooling gradually, but it really is different it wasn't supposed to be possible for job openings to decline as much as they have with our unemployment going up well, that's what we have seen there's no promises in this, but it just seems to me that it's possible that we can continue to have a cool in the labor market without the big increases in unemployment that have gone with many prior episodes. that would be against history. i fully appreciate that. that would be against the pattern, but i think that the situation in the labor market with so much excess demand, yet wages are actually -- have been moving down. wage increases have been moving down that's a good sign, down to more sustainable levels i think it's still possible. >> you know, ithink the indicate of avoiding a rescission is, in my