the fed is in a good place. >> the fed chief is probably happy that bond yields are higher? >> yes. >> he's quite content with that? >> he likes the fact the market is not fighting with him anymore. >> we'll have you stick around as we get ready now for the decision from the fed, widely thought there will be no change. widely thought that, well, the door might be left open. let's go to steve. >> reporter: unchanged federal reserve leaving the interest rate unchanged at 5.25 to 5.5%. fed on hold first time since early 2022. the fed is still determining the extent of additional policy firming suggesting there's still a hiking bias in the statement among the committee members. the committee saying it remains atentative to the inflation risk, likely from the previous statement. the economy was updated a bit.

saying now it grew at a strong pace in the third quarter, a solid pace in the previous statement. job gains were also upgraded a bit, saying they moderated in instead of slowed in the prior statement. the statement mentions tighter financial and credit conditions, adding the word financial likely will weigh on the economy. that perhaps is a mention for the rise in the ten year yield and other yields that have affected the economy. the decision was unanimous and now we have a question. by the way, similar statement, only a few words swtweaked. does the upgrade to the economy put rate hikes on the table or the idea this statement is so similar to the other one does it lead you to again think they're teeing up another pause here. we have to wait for the press conference to find out, i guess. >> fascinating. steve stick around as we bring our panel back in and bob pisani and rick santelli also join us.

rick i'll start with you as it looks like we're seeing yields move lower. >> yes. we're moving lower whether it's two year or whether it's ten year. from three year out to 30 we have double digit drops in yield. the key is, why are yields dropping? as we look towards today obviously at 8:30 eastern we had a whopping 2 trillion less in the refunding package of threes, tens and 30s i doubt whether that 2 billion less is going to make a difference. but there was a psychological issue there and i think we have brought in many buy ers over the last couple of days with respect to treasuries. a failure to launch in 10 year with a close above 5%. now it's a three year sign many moving towards the wrong end looking at what they consider juicy yields. but the fed has a problem here. i go back to the notion that we spent $5 trillion during imposed

covid. that money isn't all spent and it's going to continue to give us a sugar buzz which makes the fed more complicated because we know the sugar buzz doesn't lead to an organic grow. and i leave with one final thought we have 307 trillion of global debt. that's for the institution of international finance, cnbc did a great write up about that, that's as of mid 2023. to me that's an issue. we have global slowing -- put the u.s. aside. look at germany, the global metrics, we are definitely slowing. and with regard to inflation, let's say that it's peaked. but one area that remains sticky is electricity and energy whether you're in europe, germany or the u.s. that transition is always out there. we have some inflation, lots of energy inflation we're not going

to have disinflation as tyler always brings up and 307 trillion of global debt. to me it's going to be an issue that continues to keep interest rates mostly higher, even though right now, it seems to me that if we close under 4.75 in tens any time this week i think we can go down another 30 or 40 basis points. but in the grand scheme of things i'm still looking for much higher rates. >> let's go to bob pisani and see how equities are reacting to this decision by the fed. bob? >> modest move up in the s&p, four or five points here. not much of a change in the statement. job rates have slowed in the prior meeting comments. so modest hawkish, i think the problem for the market is it's basically positioned in a dovish way. it's assuming that rate hikes are essentially done and the fed

is going to cut the middle of next year. so the pain trade, that is all wrong we are not going to get close enough to the fed's 2% target goal for them to enable essentially stop raising rates and start cutting in the middle of next year. that's the problem the market has right now. it's potentially wrong here. we had good news in the ism manufacturing. supportive of weaker economies. you have to have that -- the ability to show that the economy is slowing down here. i think powell is probably going to reiterate the economy is resilient, pricing pressure is still prevalent and they're prepared to raise if the evidence does not indicate they're getting closer to their 2% target. that's the risk right now and i can't help but think he has to maintain that position that a rate hike is still on the table. guys? the. >> jim, you have been the one that probably feels among this

group the fed feels aggressive. do you agree a rate hike is on the table and maybe this decision and this statement makes it more so? >> i think bob is correct. i'm in his camp here. the risk in the market is that the fed continues to hike interest rates. is it likely they keep rates higher for longer, yes. and yes, bond yields are higher, the economy is it cooling but that misses the point. is inflation falling fast enough and are they getting to target fast enough. and the question is, is that it might not be. all i'm saying is when we look at probabilities for the fed fund's rate to move in december. it's maybe in the low 20% probability that it happens. what i'm saying is it should be closer to 50%. i think the fed would be happier making the market think that. that wouldn't be good news for the bond market but that's part of the solution for the fed. so yes, financial conditions have gotten tighter but as steve

liesman said there's been an upgrade to the economy. things are going the wrong way a little bit for the fed. over time i think they might be right but are they willing to risk inflation reaccelerating or do they want to take out one more insurance rate hike. i'm saying the odds could be closer to 50/50 for a rate hike in december and we shouldn't misprice that risk. >> i think everyone has a different sense perhaps of what insurance is these days. depending on where your view of the economy is in 12 months. let's bring steve liesman back in as he's combing through the statement. >> reporter: i like what jim said there's the risk out there. there's a bias in here that's basically an unchanged bias. they added a little bit on the economy but also added a little bit to the down side when it came to financial conditions. i think that the story here is that they noted that their upgrade of the economy had to do with the third quarter.

it wasn't a prospective comment so to the extent that bob pisani talked about getting good news and i don't like that phase for economic data, but it was good news for the fed in the ism manufacturing and the step down in the adp numbers that tends to rule out a rate hike. i think we are indeed data dependent when it comes to what the fed is going to do next. i think we may have a third month of holding here. >> david, is there anything in here -- you heard what steve just said -- is there anything in here that changes your view that the fed is done? >> no, i think it confirms my view. two things. one they didn't have to say that job gains were moderated we added 336,000 payroll jobs in the last print, not moderate at all. the fact that they said moderating suggests a little dovishness but more important,

the nod to the fact that financial conditions have tightened with the financial interest rates. it's like that's the last rate hike they would have done. to me, looking backwards, the economy is strong, labor market is strong but we acknowledge there's more pressure in the economy coming than these higher rates. they're not willing to claim progress. i think maybe in the months ahead they'll claim progress. but to me it's more likely the fed is done and they won't have an execcuse to tighten earlier. >> kristen is this a more dovish reaction? >> i think the way the market is reacting is dovish we'll see at the press conference. when we're talking the question of is there one more 25 basis points hike, chair powell said it was a question how fast, how high and for how long. i think the key question is the how long question. so what we look to in terms of the press conference is any

signals around how they're viewing inflation. when you look at how inflation is breaking down. you may have -- it's tough to see that path to 2%. i think you can see a path to 2.5%. but looking at the underlying come pponents components, everyone is looking at service. you're around 2.8%. all the other components are 2% or below and you have the owners equivalents with a lag. so there's an argument the inflation is getting you to a trajectory where you can see a path and see a path at 2.5% not the fed's target but something we want to hear more commentary about. paul, bring us across the finish line. >> i agree with a lot of what's been said here. the fed did make an acknowledgement that financial conditions have tightened. that's what we've all been talking about. they also acknowledge that the economy has been stronger than

expected. you put those two things together and effectively it says they're on hold. they also still have the bias to another hike. but i'm with david kelly, they're not going to do it. but the bias itself serves a purpose because it keeps us talking -- >> about it. >> -- and vigilant about it. keeps us from wanting a big rally and risk asset. i think bias itself is useful. reminds me of 60 years ago when my dad would say don't make me pull over this car. essentially that's what jay powell is saying don't make me pull over this car and do another hike. >> the last statement they cited tighter credit conditions this time tighter credit and financial conditions. >> yes. >> what does that tell with you the inclusion of the language? >> they're getting better transmission of tighter monetary policy. they control the rate and it's transmitted to financial conditions whether it's in the

banking system or financial markets. so they're getting better transmission. that's important. if you can get the same degree of tightness in the marketplace and the banking system, then you're getting what you want, which is tighter financial conditions. and the bias keeps the market from wanting to front run the fed on the dovish side. >> maybe this is my naivete on this, but is there any surprise in the fact that there's nowhere in this statement or geopolitics, the israel/hamas, would it have been out there to include a reference to it? >> it's not a surprise that my reporting and the guests you're interviewing as well, at the moment have a hard time drawing a line from the tragedies and the hostilities taking place in

the middle east to the u.s. economy right now. ukraine has been going on for a long time, that level of violence remains what it's been. what's happening in israel and gaza is new. but it hasn't had a market effect on oil prices. so to be completely clinical about awful human dramas there's not a line. >> i wanted to mention what was happening in the fed fund future. a slight bid. they took the anxiety about january and maintaining this could be just a hedge but there is something of a bid out there, but more interesting what's happened here is they took what was sort of a 50% probability of a cut in june and now they kind of skip june, skip july and now it's september with a cut. so what's i think happening here is there is a tradeoff and i

think powell is trying to make this trade. i'll trade you the next hike, i don't need to do that. i do need you to think higher for longer and price that in. that's what the market is taking and bidding right now. >> rick santelli, anything you add? had. >> no. i agree with much of what's said. as i look at the markets here's what i see. i see virtually unchanged on a ten year, maybe a basis point lower on two. which means the complex ignored or didn't see anything new to worry about. equity markets are darn close, within 10 points the dow jones so i see there are many, i know this was discussed earlier, there's many who the tightening fed doesn't effect. a lot of boomers that don't need credit. they don't have a mortgage, most likely not looking for a mortgage. so we can't get to that crowd. the rest that are affected are going to continue to be consumers that don't necessarily

participate. i think retail sales are going to start to slow down a bit and some of the metrics for gdp were distorted by inflation. i think the fed has done a good job as of late. i guess i'm a glutton for punishment because i bet you cheese burgers they don't have another hike in the cycle. >> david kelly, wrap it up for us. are you persuaded they are done, you said that before, but higher for longer is the regime? >> if the they follow their normal playbook they'll wait too long to cut rates but that's how it works. at some stage next year we might see some economic weakness trip into recession, the economy is going to be growing slowly anyway but when they cut people are going to say they waited too long to cut. >> i remember you saying this two years ago, they wait to long

to start and then wait too long to pull away the regime. >> out of sync. >> thank you very much. we're minutes away from comments from fed chair jay powell. we'll get some more analysis after a quick break. megawatts of power, rails and open road, and essential services of every kind. all running on countless invisible networks, making it a prime target for cyberattacks. but the same ai-powered security that protects all of google also defends the systems running america's infrastructure. for these services. for the 336 million of us living here. ♪

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i stole them from an airport. it's always something with you, man. great! solid! -greek salad? exactly! don't delay the game with verizon or t-mobile 5g home internet. catch it on the xfinity 10g network. welcome back. the fed leaving interest rates unchanged for the second time saying inflation remains elevated and they have their

eyes on it. let's get reaction from dennis lockhart. paul mccully still with us to participate in our conversation. mr. lockhart good to have you with us. what do you think? >> i've been listening to the commentary up until this moment in this half hour and i think people have it mostly right. david kelly thinks they're done. i would put this nuance spin on it. they're done if conditions allow them to be done. conditions that we really cannot predict very well for the coming months. but if their current outlook holds, there's a good chance they are done. but they're not done because they've made a decision to be done. i think powell and company will keep their options open and in the coming press conference i doubt you'll see much of a signal about what they'll do in december. >> we've had, paul, the set up before where market is almost

unchanged after the statement, then the press conference begins. he says something relatively hawkish and off we go for that day and sometimes the next several weeks. last time was a little bit of a break from that pattern. but point being what should we be on the lookout for in terms of his remarks in about ten minutes. >> i think a lot of the questions is going to be on the issue of how close are you to restrictive, that's fed speak for they want to get to sufficiently restrictive and then hold theres. that's a two-prong issue are you sufficiently restrictive, he'll fudge on that one, and the issue is how long do you plan to say there. as dennis was saying we're going to stay there until we get evidence we don't need to be here anymore. i think essentially he's going to try to encourage the marketplace to hold the back end

of the curve up in anticipation that long is long. >> mr. lockhart why has the economy remained so resilient in the face of what had been very aggressive and steep interest rate hikes? why isn't it seemed to slow it down maybe there are signs it is, in fact, slowing. >> well, i think the basic dynamic is one of consumer spending being held up by good employment outlook on the part of households. as long as people feel they're going to be employed and they have some income security, the american consumer will consume. i think when the outlook changes and there's more to worry about in terms of employment, maybe we'll see a slow down in spending but it's driven by spending, and the american household has perhaps the balance sheet, savings to continue spending still, as well as a positive outlook in terms

of income. >> and so just to stay on this point, dennis, for a moment then. do you think they can convince the markets to stay uphere at sufficiently restrictive for a pretty long period of time or does it still rely on things like the jobs report? >> in my experience it's hard for the committee to shape market outcomes. i think the committee is more of a mind to simply set policy at the policy stance they think is correct. and hope the markets are aligned. and hope the markets will help. but the idea that they can say something in a press conference or in a speech or in a statement that actually produces an outcome in terms of bond pricing in the markets, i just don't think they have confidence they can reliably do that on an ongoing basis. >> paul if you could ask

president lockhart one question, and now is your chance, i might even give you a second question if it's a good question. what would you ask him? talk right to him. there he is. >> i would follow up on the comment he just made that the committee itself can't manage forward expectations on wall street very well. i would certainly agree with that. but my question is, can the chairman do that? can the chairman do that? >> i any the chairman can certainly have a big influence, the chairman speaks for the committee, when the chairman speaks it's different than, for example, the presidents speak. but at the same time we live in a world in which markets are influenced by all kinds of things that may not be anticipated in what the chairman has to say. so i think there's a limit to how much confidence the chairman

and the committee have in trying to actually produce a market response or market outcome. >> how soon, dennis, do you think it will be before we get to that 2% inflation threshold that the fed keeps talking about? >> well, i've noticed in the september seps that the committee appears to be patient and it's in the out year they get close to the 2% target. so i don't think it's any time soon. and i am prepared to believe the last mile, as it's called, is, in fact, going to be difficult. one of your earlier commentators spoke about getting to 2.5%. but getting from 2.5 to reliably around 2% could be a really long pull. so far i think the committee is prepared to -- to be patient.

and not overtighten in order to get there sooner. >> interesting. >> all right. >> dennis lockhart thank you very much. appreciate your time as always great to see you. paul you're going to stick around. you behaved yourself very nicely you get to stick around until the chairman comes on. >> chair jay powell's press conference begins at half past the hour. we'll take you there as soon as it begins. more of our special after the break. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. across the globe, industries are transforming and businesses need to navigate

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welcome back as we await fed chair powell let's get final thoughts from paul mccully. we haven't talked about qt yet that's not a big part of the statement but he might get questions about it in the press c conference. >> i'm sure he's going to get some questions about that at the press conference and appropriately so. qt is running in the background they've said that many, many times but essentially qt leads the treasury to have to list more duration to the marketplace and everyone is wrapped around the axle about the deficits and the auctions and that thing. essentially qt operates in the

same direction as a larger deficit. the treasury has a fund not just to the deficit but effectively the bonds that the fed is not rolling over, which leads to an increase in the term premium which we're all focused on now. i think qt is going to come back into the arena as an important topic of discussion. i do. >> what would be the most elegant way to achieve the monetary policy goals at this point? doing more of it, less of it, trying to get the curves through the balance sheet. >> i don't think they should be moving it around a lot. i think having it not on automatic pilot but in the background is important. they're doing a good job with it now but given the fact the marketplace has this notion, we need a positive term premium in the curve and that is tightening financial conditions, then qt

actually contributes to that and giving you a higher term premium, which means that an unchanged policy rate can give you tighter financial conditions. >> yes. >> and qt is contributing to that. so the fed doesn't have to brute force up financial condition tightness with the policy rate that qt can do some of the work along with the marketplace. >> absolutely. absolutely. >> on inflation i asked previously -- here comes chair powell. paul, great to be with you. >> great to be with you. >> thank you very much. here comes the chair. >> good afternoon, everyone. welcome. my colleagues and i remain squarely focussed on our dual man date to promote maximum employment and stable prices for the american people. we understand the hardship that high inflation is causing and we remain committed to bringing it back down to our 2% goal. price stability is the

responsibilities of the federal reserve without price stability the economy does not work for anyone. in particular without price stability we will not achieved a sustained period of strong labor market positions that benefit all. since early last year the fmoc has tightened the stance of monetary policy. we have raised our policy interest rate by 5.25 percentage points and reduced our securities holdings at a brisk pace. the stance of policy is restrictive, meaning putting downward pressure on economic activity and the full effects have yet to be felt. today we decided to leave our policy interest rate unchanged and continue to reduce our securities holdings. given how far we have come along with the uncertainties and risk we face, the committee is proceeding carefully. we will make decisions about the extent of additional policy firming and how long policy will

remain restrictive based on the totally of the data and the balance of risks. i'll have more to say about monetary policy after briefly reviewing economic developments. recent indicators sought that economic activity has been expanding as a strong pace and above earlier eccpeckations. in the third quarter real gdp is estimated to have risen 4.9%. boosted by a surge in consumer spending. of picking up somewhat over the summer, activity in the housing sector has flattened out and remains well below levels of a year ago, largely reflecting higher mortgage rates. higher interest rates also appear to be weighing on business fixed investment. the labor market remains tight, but supply and demand conditions continue to come into better balance. over the past three months payroll job gains averaged 266,000 jobs per month.

a strong pace that is never the less below that seen earlier in the year. the unemployment rate remains low at 3.8%. strong job creation is accompanied by an increase in the supply of workers. the labor force participation rate has moved up since late last year, particularly for individuals aged 25 to 54 years. and immigration has rebounded to pre-pandemic levels. nominal wage growth has shown some signs of easing and job vacancies have declined this year. although the jobs to workers gap has narrowed, labor demand still exceeds the supply of available workers. inflation remains well above our longer run goal of 2%. total pce prices rose 3.4% over the 12 months ending in september. excludeing the volatile food and energy categories, core prices

road 3.7%. inflation is moderated since the middle of last year and readings over the summer were quite favorable. but a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably towards our goal. the process of getting inflation down to 2% has a long way to go. despite elevated inflation, longer term expectations remain well anchored as reflected in the a broad range of surveys of businesses, 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 aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the cost of essentials like food, housing, and

transportation. we are attentive to the risks that high inflation poses to both sides of our mandate and we are strongly committed to returning inflation to our 2% objective. as i noted earlier since early last year we have raised policy rate by 5.25 percentage points and reduced security holds by $1 trillion. a restrictive monetary policy is putting downward pressure on economic activity and inflation. the committee decided at today's meeting to maintain the target range at 5.25 to 5.5% and to continue the process of significantly reducing our securities holdings. we are committed to achieving a chance of monetary policy that is restrictive to bring inflation down to 2% over time and to keeping policy restrictive until we are confident that inflation is on a path to that objective.

we are atentative to recent data showing growth to economic demand and labor. evidence of growth, or tightness in the labor market is no longer easing could put further progress on inflation at risk and could warrant further tightening of monetary policy. financial conditions have tightened significantly driven by higher longer term bond yields among other factors. because changes can have implications for the path of monetary policy we monitor financial developments closely. in light of the uncertainties and risks and how far we have come, the committee is proceeding carefully. we will continue to make our decisions meeting by meeting, based on a totality of the incoming data and the implications for the outlook and economic activity and inflation as well as the balance of risks. in determining the additional

extent of policy firming, the committee will take into account the tightening of monetary policy, and economic and financial developments. we remain committed to bringing inflation back down to our 2% goal and keeping longer term inflation expectations well anchored. reducing inflation is likely to require a period of below potential 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 longer run. to conclude, we understand that our actions affect communities, families and businesses across the country. everything we do is in service to our public mission. we at the fed will do everything we can to achieve our maximum employment and price stability goals. thank you and i look forward to your questions.

>> howard snyder, thank you. to what you referenced the rise in long term bond yields to what degree did that subplant action by the fed at this meeting? >> thanks for your question. i'll talk about bond yields but i want to take a second and set the broader context with which we're looking at that. look at the situation, look at the economy first. inflation has been coming down. but stillrunning well above the 2% target. the labor market has been rebalancing but still tight by many measures. gdp growth is strong although many fasters are forecasting and have been forecasting it will slow. the committee we have a policy that's restrictive to bring inflation down to 2% over time and we are not confident we have

achieved a stance. so that's the broader context in which this strong economy and the things i said, that's the context we're looking at the question of rates. so obviously we're monitoring we're attentive to the longer term yields. which is a tightening in conditions since the summer, consistent changes in financial conditions can have implications for the path of monetary policy in this case the tighter conditions we're seeing from higher long-term rates and also other sources like the stronger dollar and lower equity prices could matter for future rate decisions as long as two conditions are satisfied. the first is the tighter conditions would needs to be persistent. and that is something that remains to be seen. but that's critical. things are fluctuating back and forth that's not what we're looking for. we're looking for persistent changes that are material. second thing is the longer term rates that have moved up, they

can't simply be a reflection of expected policy moves from us that we would then -- that if we didn't follow through on them, then the rates would come back down. i would say on that, it does not appear that an expectation of higher near term policy rates is causing the increase in longer-term rates. so in the meantime, though, perhaps the most important thing is that these higher treasury yields are showing through at higher borrowing costs for household and businesses and they'll weigh on economic activity to the extent the tightening exists. it goes to the near 8% mortgage rate which could have a pretty significant affect on housing. >> just to be clear, in your hoping statement and just now you seemed to imply that you are not yet confident that financial conditions are restrictive enough to finish the fight. is that true? >> yes, that's exactly right. to say it a different way we

haven't made any decisions about futuremeetings. we have not made a determination. and we are not confident we have reached such a stance. we're not confident we haven't but we're not confident we have. that's the way we're going into these future meetings, to be determining the extent of any additional further policy tightening that may be appropriate to return inflation to 2% over time. >> hi, chair powell. thank you so much for taking our questions. i wonder if you don't raise interest rates in if december would the presumption be at that point we should expect rates are at their peak or a possibility of restarting rate increases next year and are there any costs to taking a more extended pause? >> so let me start by saying we

haven't made a decision about september. you're asking a hypothetical there. we're going into the december meeting we'll get, as you know, two more inflation meetings two more labor market readings. some data on economic activity and also the broader situation, the broader financial condition situation and the broader world situation. we'll look at all those things as we make a decision in december. we haven't made that decision. i would say that the idea that you wouldn't -- it would be difficult to raise again after stopping for a meeting or two is not right. the committee will always do what it thinks is appropriate at the time. we haven't made any decisions at all about december. we didn't talk about making a decision in december today. really it was a decision for this meeting and understanding broader things. >> chair powell, did the fed staff put a recession back into

the base line forecast in the materials for today's meeting and how much does the tightening and financial conditions substitute for rake hikes if the tightening is persistent. you said it was worth maybe a quarter point when we had the bank failures in the spring. what is it on something more straightforward and familiar to simulate? >> so i guess i don't want to answer your question about the recession, but the answer is no. i think i have to answer it since we did publically say in the minutes you'll know anyway, the staff did not put a recession back in. it would be hard to see how you would do that if you look at the activity we've seen recently. which is not really indicative of a recession in the near term. in terms of how to think about translation into rate hikes, i think it's just too early to be doing that. the main reason is we don't know how persistent this will be. you can see how volatile it is.

different kinds of news will affect the level of rates. i think any kind of estimate that is precise would hang out there and have a great chance of looking wrong very quickly. i think what we can say is that financial conditions have clearly tightened. and you can see that in the rates that consumers and households and businesses are paying now. and over time that will have an effect. we don't know how persistent it's going to be and it's tough to try to translate that in a way i'd be comfortable communicating into how many rate hikes that is. >> what makes you confident that tighter financial conditions will slow trend growth when 500 basis points of rate hikes qt and a minor banking crisis have not thus far? >> well, that's, you know, the way our policy works and sometimes it works with lags, of course, which can be long and variable.

but ultimately if you raise interest rates you see the effects and you see the effect bs in the economy now. you see what's happening in the housing market. you'll see, if you look at surveys of people, it's not a good time they think to buy durable goods of various kinds because rates are so high now. i mentioned we're getting reports from housing that the effects of this could be quite significant. but you're right. this has been a resilient committee. it's been i think surprising in its resilience and a number of possible reasons why that may be. our job is to achieve maximum employment and price stability and so we take the economy as it comes. it has been resilient so we just, we take it as it is. >> colby smith with the financial times. in terms of the thresholds that you've laid out of what could warrant further tightening the evidence of above trend growth or some kind of reversal in

easing of labor market tightness that seems to suggest something more powerful than one more quarter point rate hike would be necessary and i'm curious if that's how the committee sees it. >> we identified those factors those are not to be the only factors or tests we'll be applying with some met tricks behind it. really we'll look at the broader picture, the progress with the 2% inflation goal. is the labor market continuing to broadly cool off and achieve a better balance. we look at growth in so far as it has implications for our two mandate goals we look at that, and we look at broader financial conditions. we look at all of those things as we reach judgment whether we need to further tighten policy and if we need to reach the judgment we'll further tighten policy. >> in terms of the tightening of financial conditions if that's having an offsetting effect in the need to raise rates, what's

the impact of the rate cuts could we see those pulled forward or have to see more of what the september s.e.p. indicated? >> the fact is, the committee is not thinking about rate cuts at all right now. we're not talking about rate cuts. we're still focused on the first question, which is have we received a stance of monetary policy that's restrictive to br bring inflation down to 2% over time sustainably. that's the question we're focussing on. the next question is how long will we remain restrictive? what we said there we'll keep policy reasteriskive until we're confident that inflation is on a path down to 2%. that's the next question but right now we're tightly focussed on the first question. the question of rate cuts doesn't come up because it's so important to get that first question, you know, as close to right as can you.

>> steve liesman, cnbc. mr. chairman, i guess i assumed there was a tightening bias in the committee. you say in the statement you're looking to assess the appropriate stance of monetary policy the extent to which you may need to hike additionally. you didn't say earlier you were sufficiently restrictive. they were forecast for two rate hikes among most members of the committee. but then you just said that, you know, we haven't made a determination. would you say the bias right now is neutral? there's no disposition to hike again and that the committee largely has moved off of this forecast for two hikes? i'm sorry one additional hike? >> no, i went say that at all. the language, looking at it here, in determining the extent of additional policy firming that may be appropriate to return inflation to two% over time. that's the question we're asking. >> is it right to think of that

as a hiking bias still in the committee here? >> we haven't used that term. but it's fair to say that's the question we're asking, should we hike more. it's not -- you know, that is the question and you're right. in september we wrote down one additional rate hike. but, you know, we'll write down another forecast in december as you know. >> chris? >> thank you chris at associated press. >> well, since the last meeting the auto workers strike has finished, oil prices have levelled off, and yet on the other hand you have the outbreak of war between israel and hamas. how do you see those factors taken together avffecting the economy going forward? how are you looking at those? >> there are significant issues as you point out. global geopolitical tensions are certainly elevated, goes for the war in ukraine, the war between israel and hamas. we're monitoring that -- our job

is to monitor those things for their economic implications. so the uaw strike, as you point out, is -- appears to be coming to an end, oil prices have flattened out, i guess gone down a little bit from their earlier peak. another one isout, haven't gone down. they have gone down a little bit from their earlier peak. another one is the possibility of a government shutdown. we don't know about that one. so, there is plenty of risk out there. but i would go back to the, you know, the bigger picture from our standpoint is got a very strong economy, strong labor market, making progress on the labor market, making progress on inflation, and we're very focused on getting confident that we have achieved a stance of monetary policy that is sufficiently restrictive. that's really our focus. >> one quick thing, you last month had gone to york, pennsylvania, where you talked to a lot of -- yeah, last month,

where you talked to a lot of small business owners. curious, what sentiments did you hear from them or what did you pick up on and was there anything that surprised you the most in terms of what they talked about? >> i wouldn't say i was terribly surprised. i was very impressed by york as a town where the real strategy and i would say it is very impressive what the people there have put together in the face of, you know, some difficult longer run trends about offshoring of manufacturing and that kind of thing. they have done a great job as a city, i think. you know, what you hear is consistent there, which is people are really suffering under high inflation, you were there, we talked to some people who, you know, were feeling that in their businesses, and other people who were feeling it in their home lives as well. it is painful for people. particularly people who, you know, who don't have a lot of extra financial resources who are spending most of their income on the essentials of life. so we know that.

that wasn't new. but that did come through very clearly in the conversations we had in york and i walked away from that even, you know, i mean, just thinking that we really -- the best thing we can do for the u.s. is to restore price stability, fully restore price stability and not fail in that task and do it as quickly as possible, but also with the least damage we can. >> rachel. >> hi, chair powell. rachel seeingiegel from "the washington post." you've spoken before about the pain that likely would be coming for the economy in order to get inflation down. since the economy has not responded to rate hikes in ways that would normally be expected, have you changed your views on that at all on how necessary or inevitable that kind of pain would be, say, for the labor market or overall growth? >> well, i think everyone has been very gratified to see that

we have been able to achieve, you know, pretty significant progress on inflation without seeing the kind of increase in unemployment that has been very typical of rate hiking cycles like this one. that's historically unusual and very welcome result. and the same is true of growth. we have been saying that we need to see below potential growth and growth has been strong, but yet we're still seeing this. i think istill believe and my colleagues for most part i think still believe that is likely to be true. it is still likely to be true. not a certainty, but likely that we will need to see some slower growth and some softening in the labor market, in the labor market conditions, to get, you know, to fully restore price stability. so, but it is only a good thing we haven't seen and i think we know why. since we lifted off, we have understood that there are really two processes at work here. one of which is the unwinding of

the distortions to both supply and demand from the pandemic and response to the pandemic. and the other is, you know, restrictive monetary policy, which is moderating demand and giving the supply side time to recover, time and space to recover. so, you see those two forces now working together, to bring down inflation. but it is that first one can bring down inflation without the need for higher unemployment or slower growth. it is just -- it is supply, you know, supply side improvements like shortages and bottlenecks and that kind of thing going away. it is getting, you know, a significant increase in the size of the labor market now, both from labor force participation and from immigration. that's a big supply side, you know, gain that is really helping the economy and it is part of why gdp is so high. we're getting that supply. we welcome that. but i think those things will run their course. and we're probably still going

to be left, we think, and i think, still be left with some ground to cover to get back to full price stability and that's where monetary policy and what we do with demand is still going to be important. >> against that backdrop, have you gotten any clarity on lags? if you have a economy that has been so resilient to high rate increases, does that suggest to you there isn't necessarily this huge wave of tightening that is still coming through the pipeline and it may have already come into effect? >> i continue to think it is very hard to say. it has been one year at this meeting and one year ago this was the fourth of our 75 basis points hikes, so that's a full year since then. i think we are seeing the effects of all the hiking we did last year and this year. we're seeing it. it is very hard to know exactly twha might be. but you can -- for example, an example of whereyou wouldn't have felt this yet is debt that had been termed out. it is going to come do and have to get rolled over next year or the year after. there are little things like that where the effects have just

taken time to get into the economy. so, i don't -- i think we have to make monetary policy under great uncertainty about how long the lags are. i think trying to make a clear answer and say i'm going to assume this is really not a good way to do it. this is one of the reasons why we have slowed the process down this year was to give monetary policy time to get into the economy, and it takes time, we know that, and you can't rush it, so, doing -- slowing down is giving us i think a better sense of how much more we need do, if we need to do more. >> michael. >> michael mckie from bloomberg television and radio. i'm trying to connect the dots here. one quick clarification i want to ask about rachel's question is you said you need slower growth. you had always said before a period of lower than trend growth. has that changed. and, two, it sounds to me like

you're basically saying here that the kind of dot plot is out the window that every meeting is live with the possibility of a rate increase for right now, doesn't matter about the turn of the year. and that there is not an objective way to determine whether or not you got enough tightening in the system. just going to be a subjective judgment meeting by meeting. >> well, so, let's talk about the dot plot first. the dot plot is a picture in time of what the people and the committee thinks is likely to be an appropriate monetary policy in light of their own personal economic forecast. in principle, when things change, it is not -- that's not like a plan that anybody agreed to or that we will do. that's a forecast that would change, for example. many things could change that would cause people to say i wouldn't write down that dot six weeks later. think of the number of things that could change your mind on that. i think the efficacy of the dot

plot probably decays over the three-month period between that meeting and the next meeting. but nonetheless, it is out there, and we do personally update our forecast, but we don't formally update the dot plot. i think we try to be as transparent as we can about the way we're thinking about these things. we're laying out there our thinking and, you know, as we approach the meeting we'll all be -- my colleagues and i will be talking about how we're processing that data. in terms of -- so we're not really dhachanging the way, in terms of growth, what i said was below potential. what you have here recently is growth that is temporarily, potential growth is elevated for a year or two right now over its trend level. so the right way to think about it is what is potential growth this year? people think trend growthover a long period of time is a little bit less than 2% or just around 2%. but what we had was with the

improvement in the size of the labor force, as i mentioned through both participation and immigration, and with the, you know, the better functioning in the labor market and with the unwinding of the supply chain and shortages and those kinds of things, you're seeing elevated potential growth, catch-up growth that can happen in potential. and that means that if you're -- you could be growing at 2% this year and still be going -- growing below the increase in the potential output of the economy. i hope that's clear. that's really what's going on. that's why i would say it as below potential. >> if you could clarify what i asked about the meeting by meeting, we essentially now are supposed to assume that it is a meeting by meeting, live meeting with a chance of a rate increase that will be decided on subjective criteria rather than objective at each meeting. >> i mean, i don't know that i want to just accept anybody's

characterization. i'll tell you how we're doing this. so, we're going meeting by meeting, we're asking ourselves whether we would achieve the stance of policy that is sufficiently restrictive to bring inflation down 2% over time. that's the question we're asking. we're looking at the full range of economic data including financial conditions and all of those things that we look at and then we're, you know, we have come very far with this rate hiking cycle, very far. and you saw the spread at the september meeting of, you know, it is a relatively small spread of people think one or two additional hikes, so you're close to the end of the cycle. that was an impression as of september. it is not a promise or a plan of the future. and so we're going into these meetings one by one, we're looking at the data. as i mentioned, we're also -- we're being careful, we're proceeding carefully because we can proceed carefully at this time. monetary policy is restrictive. we see its effects, particularly in interest sensitive spending