if he left it all in bit coin he has earned about $300,000 since that point. remember doing real estate transactions and everything else? >> there's a lot of jokes of people who thought they were doing great a couple years ago and now they are again and maybe maybe it won't. >> i don't know about my salary in bitcoin. >> powell is going to talk "closing bell" starts right now. all right. thanks so much and welcome to "closing bell." i'm scott wapner live from post nine at the new york stock exchange fed chair jay powell will begin speaking and we'll take you there live as soon as he does begin his remarks. i want to bring in senior economics reporter steve liesman with what we may hear is what is the first remarks of the news conference a few weeks ago. >> and fed powell will say in dallas we are moving policy to a neutral setting but the policy

path is not preset the economy is not sending signals we need to be in a hurry to lower rates the strength gives the fed the ability to approach decisions carefully. inflation progress has been broad-based and substantially will say, quote, we're not there yet. he sees october pce at 2.3 this is taking into account the cpi and ppi and doing what economists have done all around wall street today. pce with the core rising to 2.8% expects inflation to continue to decline and a sometimes bumpy path, but he says it is on a sustainable path to 2% goal. the u.s. economy has weathered the global pandemic and is now back in a good place he says, it's remarkably good by far the best of any major economy in the world labor market is solid having cooled off significantly overheated conditions and no

longer is a source of significant inflationary pressure expects business investment and consumer spending are very good and singles out housing as being the weak sector. that's it, scott that's where we're at in terms of what powell says. i want to take one look at the probabilities but i don't see -- maybe it's down a little bit here it was down today. compared to where it was before the -- he spoke. maybe saying we have a lot of time might be something that might make the market think less is on the way. >> it's going to be a moderated conversation as well, so not just straight remarks from the chair. he will be asked questions which will make it a bit more interesting. it does come in a district where it was lori logan the dallas fed president, who while i suppose is taking a cautious tone like everybody else, did say, quote,

the fed will most likely need more cuts. so i mean the stage is set for something else to happen in december after that maybe is anybody's guess to the pace and size >> that's right, scott the direction is down. e're arguing over the pace right now. he says we're still on a path to neutral but not in a particular hurry to get there i will tell you i've been able to confirm the december fed funds at 69. i guess that's down from 74, 75 before he spoke and a little bit of a decline in the march contract which is the one that is the next cut that's priced in >> steve, thanks we'll stay with you, of course, throughout the remarks let's bring in rick reader of blackrock's global fixed income, the cio. what are your expectations, rick did you get a chance to hear what steve was saying from the text that we've gotten a peek at >> yeah, i did i think it's going to be fascinating. i think there's a bunch of

things, you've had some acceleration in inflation, the cpi was pretty good. the comment on housing is interesting. you've got the mortgage rate up and much of why housing inflation is high is because mortgage rates, brought the rate down, bring down affordability and so i think that's interesting. you know, one thing since they cut rates the -- first since they started cutting and cut 50 r the front end of the curve has backed up almost 130 basis points, so this question of is the market setting policy for the fed, i think comes into question i would love to know what the terminal rate is that the fed is assuming today the amount that has moved recently has been significant. anyway, there's a ton of questions. how do you interpret the new policy that could come in and affect your process from here. how much he describes around some of this in this forum not a ton, but i think there's a lot of questions out there. >> you make good points in that

the market has been undoubtedly moving towards the fed certainly interest rates have. while at the same time, you could make the argument, too, that conditions have gotten loser as a result of the rally we've had and the forceful one at that since the result of the election happened. stocks have surged the problem is rates have backed up as well >> so i agree with all that. there is, you know, so much of what's moving now is the interpretation of how is policy going to change. how is this administration and now what is a favorable congress, how is that going to move frankly, a lot of the current data is interesting, but the markets are interpreting where are we going from here it could be quite different. you know, watching how the markets are playing that out i think some of these things that are the superficial answer to what a new administration is, i think quite frankly would be much more complex than the

markets have reacted to today. but anyway, it's been wild to watch it and quite frankly to participate in it. >> your anticipation remains cuts coming next month and then we'll have to see what happens as we turn the calendar. that is a fair assessment? >> yeah. i mean, listen, i think, scott, i think december you got to get that funds rate closer to 4 or around 4 because of the effects we talked about before after that, you know, it will be fascinating to see the dot plot of the projections i can even throw out to a large extent what we got in september and i think we got a whole new ball game to think through listen, i still think they would like to get a couple cuts done, at least a couple cuts done into next year, but the pace of which that happens and when and whether they actually need it, because -- is really called into question part of why the front of the yield curve is interesting is you've priced out any further cuts for all intents and

purposes i think seeing the next projections where they have terminal rate, et cetera is going to be ing. >> the point that fed chair seems to be making he feels they have the luxury of going at the pace they want to because the economy isn't screaming they need to do anything. the risk is both sides of that, that they overstay their welcome in not cutting quickly enough and the economy starts to weaken or the labor market starts to weaken and waited too long a delicate dance still. >> it's a super delicate dance this is part of why i think just get the funds rate to get it done another 25 basis points, get it close to 4, there's a good debate whether that's restrictive or not it's very restrictive for the population today that's a borrower, home buyers, we talk about potential home buyers. get it to that number and you can evaluate the data. you can evaluate what policy will look like

you can -- you have a very good sense or more so where we will be with tariffs, the growth in the rest of the world is going to look like once you get that rate there then you can sit back and say okay, what do we need to do from this point going forward >> how are you thinking about fed independence in the wake of the election i thought marc short, formerly chief of staff for vice president pence, had some interesting comments earlier on this network in which he said there will be pressure on fed chair powell to lower rates. you're likely to see more volatility in that relationship. how are you assessing that is that volatility, if it does occur in that relationship, concerning to you in any way >> so listen, i think on both -- by the way, on the bond side and equity side you have to now evaluate the factthat the rang of outcomes for both is wider. the influence the administration, opinion or

otherwise, has on the markets and interpret how they're trying to influence policy or what have you is going to create a wider band around these markets and you have to build how much risk you take into each of those markets. i think you'll see preservation of fed independence. i am pretty convinced you will see that play out going forward, about us there's no doubt there's going to be calls for lower rate, calls for -- you think about we got a big debt burden in the country today. one of the ways you help that is bring the interest rate down, so debt service doesn't move significantly higher but listen i think at the end of the day this administration will preserve the idea of fed independence with some opinions along the way. >> you can bet on that to say the least. you know, you are already feeling as though the air was getting a little thin at the high of the market and here we are with a significant rally since the election so what do you think now if you want to judge equities first and

then we can talk about fixed income afterwards as we wait for fed chair powell to start speaking of. actually, rick, before you answer that, we may actually be getting the chair walking towards the podium there because i think he was just introduced we can't hear it, but -- i have a feel -- there he is. to the fed chair's. >> to the federal reserve bank of dallas, and to the dallas regional chamber for the kind invitation to be with you today. i have just a few brief comments on the economy and monetary policy before we move to our conversation so looking back, the u.s. economy has weathered a global pandemic, and its aftermath and is now back to a good place. the economy has made significant progress toward our dual mandate goals of maximum employment and stable prices. the labor market remains in solid condition. inflation has ease the substantially from its peak and we believe it is on a

sustainable path to our 2% goal. we are committed to maintaining our economy's strength by returning inflation to our goal while supporting maximum employment the recent performance of our economy has been remarkably good by far the best of any major economy in the world the economic output grew by more than 3% last year and is expanding at a stout 2.5% rate so far this year growth in consumer spending has remained strong, supported by increases in disposable income and solid household balance sheets business investment and equipment and tangibles has accelerated over the past year in contrast activity in the housing sector has been weak improving supply conditions have supported the strong performance of the economy the labor force has expanded rapidly and productivity has grown faster over the past five years than its pace in the two

decades before the pandemic. increasing the productive capacity of the economy and allowing rapid economic growth without overheating. the labor market remains in solid condition having cooled off from the significantly overheated conditions of a couple years ago and it is now by many metrics back to more normal levels consistent with our employment mandate. the number of job openings is now just slightly above the number of unemployed americans seeking work the rate at which workers quit their jobs is below the prepandemic pace after touching historic highs two years ago wages are still increasing, but at a more sustainable pace and hiring has slowed from earlier in the year. the most recent jobs report for october reflected significant effects from hurricanes and labor strikes making it difficult to get a clear signal. finally at 4.1% the employment rate is notably higher than a year ago but flattened out in recent months and remains

historically low turning to inflation, the labor market has cooled to point where it is no longer a source of a significant inflationary pressures. this cooling and this substantial improvement in broader supply conditions have brought inflation down significantly over the past two years from its mid 2022 peak above 7% progress on inflation has been broad-based. estimates based on the consumer price index and other data released this week indicate that total pce prices rose 2.3% over the 12 months ending in october and that excluding the volatile food and energy categories core pce prices se 2.8% core measures of goods and services inflation excluding housing fell rapidly over the past two years and have returned to rates closer to those consistent with our goals. we expect that these rates will continue to fluctuate in their

recent range and watching carefully to be sure they do, however, just as we are closely tracking the gradual decline in housing services inflation which has yet to fully normalize inflation is running closer to our 2% goal, but it's not there yet and we are committed to finishing the job. with labor market conditions in rough balance and inflation expectations well anchored i expect inflation to continue to come down toward our 2% objective, albeit on a sometimes bumpy path given progress toward our inflation goal and the cooling of labor market conditions, last week my federal open market committee colleagues, and i took another step in reducing the degree of policy restraint by lowering our policy interest rate by a quarter percentage point. we're confident with an appropriate recalibration of our policy stance, strength in the economy and the labor market can be maintained with inflation moving down to 2%. we see the risks to achieving

our employment inflation goals as being roughly in balance and we are attentive to the risks of both sides and we know that reducing policy or restraint could quickly could hinder progress on inflation. at the same time reducing policy or strength too slowly could unduly weaken economic activity and employment we're moving policy to a normal setting and the path for getting there is not preset. considering additional adjustments the target range for the federal funds rate we will assess incoming data, evolving outlook and the balance of risks. the economy is not sending signals we need to be in a hurry. the strength we see in the economy gives us the ability to approach our decisions carefully. ultimately, the path of the policy rate will depend on how the incoming data and the economic outlook evolve. we remain resolute in our commitment to the dual mandate given to us by congress, maximum

employment and price stability our aim has been to return inflation to our objective without the painful rise in unemployment often accompanied past efforts to bring down high inflation. that would be a desirable result for the families, businesses and communities we serve while the task is not complete we made a good deal of progress toward that outcome thank you very much, and i look forward to our discussion. >> thank you, chair powell, for those remarks. you are not the only fed official giving a public speech today. your colleague gave remarks early today in uruguay about the importance of an independent central bank no particular reason, i'm sure, that that was the topic of the day.

we have a lot of students here today. i'm wondering if you could just explain in general why there is this bromide why it's important for the central bank to be politically independent. >> i would be glad to. let me say what we mean by independence first so what that really means is that the decisions that we make about monetary policy, about interest rates, cannot be reversed by any other part of the government except, of course, congress congress created the federal reserve by statute and can do what it wishes to do by statute, but our decisions are not reviewable by any other agency and we are charged to make those decisions with regard to the medium and longer term well being of the public that we serve. we're not thinking as we make our decisions about the well being of any political party or anything like that so we're just looking at the macro economics and doing the best we can. there's been a lot of research

about central bank independence, and what it shows is that central banks who are independent, meaning independent from the other parts of the government do a better job on inflation and that makes a lot of sense because, you know, we're thinking really just of getting inflation under control while keeping the labor market strong and not thinking of political factors which would, frankly, be a distraction to the already difficult work that we have to do the main job. so the academic research is globally by the way, a global trend for more than the past 50 years, advanced economies like the united states economy around the world all have central bank independence of one part or another, in one form or another. the other thing i'll add is that what comes with that on our part is an obligation to be highly transparent about what we do, to explain ourselves to the public, to congress. congress has oversight over the federal reserve in our system, so we spend a great deal of time talking to the oversight committees and the broader

congress in the house and senate explaining why we're doing what we're doing. i testified as a matter of statute two times of the year in the house and senate so that kind of gives us the accountability that we need to be democratically legitimate in a situation where we do have some independence. >> the macro economic conditions you described in your remarks sound tantalizing close to a soft landing you're not willing to declare victory yesterday. to what extent do you think the fact that the federal reserve is credibly independent is responsible for the good outcomes we've had so far? >> so the credibility is really everything in our work i think, as you know, inflation spiked globally all around the world as economies around the world reopened after the pandemic shut down and on the back of a lot of fiscal and monetary stimulus we saw a burst

of inflation all around the world. what happened is, we raised interest rates to bring that down, but the public had faith, you know, we mention inflation expectations many ways, surveys and based on market-based instruments, and they all kind of showed the same thing, the public all through all this, believed that we would get inflation down, that we would restore price stability, which we define as 2% inflation. that's ultimately the key to it. inflation is a social phenomenon if people believe that inflation will be higher than it probably will be. if they believe that inflation will come down, people who make and take prices and wages, they will make sure that it does come down it's absolutely critical that we be credible. part of that is we responded so forcely when it became clear that inflation needed a response from us. we were responding forcefully and we think that helped keep inflation expectations anchored

as we say. >> and then one last question. then we can move on, i promise there have been times in u.s. history when people look back and say that the fed was not seen as terribly independent what did we learn from those episodes in your view? >> well, if you go back to the period of the high inflation, which i'm old enough to remember -- it was during my college years -- and basically the public kind of lost faith that the fed would restore price stability. the cost was a decade of very high and very volatile inflation, quite difficult business conditions extremely difficult for people on a fixed income i think what that does, you may have felt it, if you're on a fixed income and prices go up 20%, you're in trouble right away inflation is worse for people at the lower end of thes income

spectrum so we've seen it here in the united states in the 1970s actually, and it's not a pretty picture. i think this is very widely, by the way, expect understood and supported. i've spent a lot of time on capitol hill and i think where it really matters on both sides of capitol hill, the straight and the house and both political parties, there's a broad understanding that an independent central bank is very important in just serving the public as best we can. we're not perfect. everyone makes mistakes but you'll get the best results if you have people focused on that task and separate from politics. >> thanks. a little bit more elaboration from what we heard last week at the press conference on this question in that press conference, you basically downplayed the impact of the election on fomc policy you said we needed to wait and see. but that does stand in contrast to how the fomc behaved in the

december 26 meeting when half of committee participants according to the transcripts upgraded their economic forecasts based on expected changes to fiscal policy under a trump administration in particular a -- at a previous trifecta in which the republicans controlled both chambers of congress and the white house. you were, in fact, one of the policymakers who made changes to your forecast finding that the staff's assumptions around a tax cut was a reasonable place holder which gave you greater confidence in the outlook. does that approach seem reasonable in the current circumstances? that basically, you know, since the fomc has been starting to judge some downside risks to the growth outlook does the election and the results that we have today remove or at least substantial ply mitigate youn side risks to growth >> that's your question. so i think it's too early to reach judgments here i'll tell you why. staff -- the job of staff is to

go, you know, and be very nimble and make assessments in realtime like capital markets do. the markets are pricing in what policy changes will be made and what their effect on the economy will be. staff will do all of that. i think policymakers are going to wait longer to see what the actual effects will be and so for sure, at our december meeting, we'll be -- staff will present what we know, but the thing is we don't know what policies will be put in place. we know that policies new hampshire several areas will -- will change. we don't know how much we don't know over what timeframe. when it comes to fiscal policy it takes quite a long time to get a bill through congress and i think this year, what we're looking at is something that doesn't need to get done until the end of the year and, therefore, probably won't and won't have any economic effects this year but it will be

more '25 it will be 26 or 27 i think we have time to make assessments about what the net effects of policy changes will be on the economy before we react with policy. that's not to say we won't be doing quite a lot of analysis. the analysis we do is informed by the best research, the best thinking, the best experts and there's a lot of research on the effect of policy changes on the economy. we'll make those assessments, but i think we'll be careful about changing policy until we have a lot more certainty. >> you've spoken before about federal debt being at unsustainable levels and the consequences for growth. do we get to a point where deficits and debt get so high it makes your job harder essentially? it makes it harder for the fed to achieve its goals >> we're not at that point now i want to be clear we're not in any way taking into account

fiscal issues when we make our -- say it this way be, the debt issue is not an issue guiding us fiscal policy can affect the economy. you know, i -- first of all we do not have a role of supervising the elected branches that do fiscal policy. it's the other way around. we don't give them specific advice but as i have often said and my predecessors noted the u.s. federal government budget is on an unsustainable path. it's not that the debt we have is at an unsustainable level it's not we're on a pfts ath that's goin be sustainable we have a large deficit at a time when we're at full employment and i would say we know that we're going to need to address that, and it's going to be need to be done sooner than later. sooner is better than later. i leave it at that. >> in addition to the potential

long-term risks that higher deficits and debt present for growth, are there also risks to the functionality of the treasury market, you know, when shocks hit the market? if so, how far might the fed respond. >> the functioning is important, and it does function well. it's the most liquid and most important probably financial market in the world, one of the most important, and so, you know, we did see some -- at the beginning of the pandemic you may remember the treasury market lost function because normally it was normally in an emergency money flies into the treasury market but the pandemic was such an unusual event, people didn't want to own longer term securities they only wanted to own effectively cash we had to jump in and support that i think more broadly than that, it's just important that the treasury market remain well

regulated and, you know, that companies have an incentive to do intermediation in the treasury markets relatively low risk, very important for the economy, and it's important for the case. >> in the march 2020 episode, the fed had to step in as a lender of last resort. would the fed do that if there were similar disruptions in the initial issuance of treasuries that was in the secondary market as i recall? >> we're not a fiscal actor. that was a situation where we have a mandate that we share with other agencies to look after the financial stability. and part of that is if really important markets break down and they kind of all broke down at the beginning of the pandemic, they just stopped working, and so we set up a series of facilities to backstop hose

markets, but they actually didn't get used because just the fact that we had the facilities restored credibility and the market started working on their own. it was remarkable. so in the case of a -- of a financial stability event like that or the global financial crisis where really the whole global financial system was at risk given the failure of a number of large financial institutions around the world in those kinds of things we can use these emergency tools but they're not for every event. they're for financial stability events. >> you mentioned that it's a little bit too early to know what policy beyond the agreement of the fed would look like we don't know exactly what the fiscal picture will look like, but we know that tariffs are likely to go up, even if we don't know how much, if we don't know if it will be what was described on the campaign, and i'm wondering how you're thinking about that?

>> what matters for us is, we don't stand in judgment over these policies in any way. what matters for us to what extent will new policies have an effect on our mandate goals of maximum employment and price stability and do we need to change our policy because of these changes in order to chooev those goals? the answer is not obvious. so let's say that there will be some tariffs we have no idea what that's going to look like the other thing what about retaliation. that changes the picture in addition that's happening at a time when there could be fiscal policy supportive of the economy. what's the net effect? we don't take one piece of this. we're looking at the whole economy. in addition, this is way over $20 trillion economy, many, many things affect the economy all the time, it's not that common that changes in government policy have immediate effects in the achievement of our goals

that could be the case we will use our tools as we're supposed to do to foster the achievement of maximum employment and price stability that's what we do, what we always do and we'll do it here i'm just saying, it is -- we're going to be careful to better understand the net effects of these things as those things affect the achievement of our goals. >> if you look back to the previous round of trade wars under trump's first term, the fed staff prepared a report in the 2018 teal book where they basically talked about whether the fed should be looking through any price increases that result from tariffs, and assume that they're -- it's a one-time step up in prices as opposed to self-perpetuating inflation or not, and the staff said at the time that the fed should look through the tariffs so long as one you think it's going to be a one-time adjustment and not a series of adjustments and two as

long as inflation expectations are anchored it's not obvious that either of those conditions will hold the next time around right? back in 2018 we had had decades of very low inflation. now we've had a much more recent experience with higher inflation and as you point out, there could be a series of retaliations and tariffs and counter tariffs. so are the risks bigger this time that a price shock could feed into inflation? >> they're different we're in a different ways. the debt situation has changed substantially and you're right we're not -- you know, six years ago and such the inflation was really low and inflation expectations were low. now we're -- we've come way back down we're not back where we were it's a different situation inflation is still running above 2% we'll take all of that into account. i tell you, though, the answer isn't obvious until we see the

actual policies. even then it's not obvious i think we research judgement until we know -- reserve judgment until we know what we're talking about. i don't want to speculate, i don't want to guess. i think it's more important we wait and see what happens. >> last time around as you suggested, there were mixed consequences, mixed effects. as i recall during the previous trade wars the fed cut rates several times because there were consequences for growth and investment in confidence so how does the fed respond if higher tariffs result in both higher prices and slower growth? you have the tools to respond to that >> well, so you're absolutely right. so in -- when -- in 20 -- i guess it was 2019, we cut rate three times after there had been fiscal stimulus, tariffs, and so

it really was because the net effect of what was happening -- and what was happening around the world, too, there was global growth was really soft there was a feeling that the u.s. economy was softening and we cut rates three times i guess beginning mid year and that kind of worked. that restored confidence we felt at the end of 2019 we felt like that had worked and the situation was quite a good one. the pandemic arrived and none of it mattered. so that's the way it happened. that's exactly my point, though. you know, we didn't -- we had a meeting the prior december and briefed us on what might happen but what happened was something different. i don't want to talk about the pandemic i mean the way that played out, i don't think we started that year thinking it would be appropriate to cut rates three times. so we're -- just know we will do what we believe is the right thing. that's what we're always going

to do. i think it's important to reserve judgment and, you know, see how this plays out we don't even have -- we're still months away from a new administration, let alone knowing the real details of what's going to happen and being able to project what will be the net effects on the economy. >> another major factor in the economy in the past year or so you said is immigration. that immigration is a strong reason why supply and demand have become -- have gotten closer into alignment. in the past few months we've already seen decreases in immigration. what effect do you think that is likely to have on the macro economy in the near term >> so before i answer that, i do want to say that immigration is a question to be addressed by political authorities using such values as they deem appropriate. not -- we're just -- we're looking at macro economic effects and reporting on them. it's not a question of judging we don't have a view on the

right level of immigration that is for the voting public and their elected representatives. okay what we saw over 2023 and '24 was, you know, a surge in immigration, and also a surge in the labor force, and it certainly pushed up economic growth, and it may or may not have had some effect on getting labor market back into balance it will take time to understand that it made for a bigger economy you know, we're coming off the back of a severe labor shortage so there was room at that time for people to get work and, you know, they went to work at roughly the same level as nonimmigrants went to work that happened. then the rules changed, the prior -- the current administration, the biden administration, changed the rules a few months back and we've seen that come down. these are judgments that get to be made by elected people about

what the right thing for the country is as a whole not by us. you asked what the effects will be you will see there have been two supply side things that have been pushing up u.s. potential output and actual output one of them is just more workers and the other one is productivity and the more workers part of it is probably diminishing in its effects and won't be something pushing up overall output. at the same time the number of job openings has come way down it's not clear what the overall effect will be on them there's about one job opening for every unemployed person. in terms of productivity productivity is important. that's output per hour and if you think about it, higher outp hour is the only way for incomes to go up among the public. we've had a few years of higher productivity going back five years now. this is incredibly important and positive and hope it continues

and there's no reason why it can't. i will say, though, that over the past 50 years, if you look at it, if you have one or two or three years of high productivity, it tends to revert to the trend really quickly. because it tends to be driven by longer run things like evolving technology and evolving educational levels and things like that. you don't tend to get big increases of productivity that are sustained very often it's quite rare. it has happened. >> i do want to ask more questions about productivity but one follow on the immigration point. yeah, so economic growth is about the size of the workforce and how productive that workforce is i asked before about the consequences of decelerating immigration. what happens if the workforce actually shrinks as a result of, for example, mass deportations which may be in the offing >> i'm not comfortable

speculating on potential policies it's not our job to be a commentator. >> i'm not asking whether it's good or bad. i'm asking what does it mean if the workforce shrinks. >> we can do the arithmetic. if there are fewer workers, less work done. it gets too close to, you know -- i just -- i just don't want to go there this is getting me into political issues that i really once to stay as far away as i possibly can [ applause ] >>so all right let's talk about productivity. you're right that productivity has. above trend. i think eight out of the last nipe quarters gdp growth has been above trend because of productivity to what do you attribute that? >> this is something that people will be arguing about decades from now i will give you four or five candidates so one of them is that in the

pandemic, people started a lot of businesses. lot of businesses. that -- many of those fail fairly quickly and -- or don't -- turned out to matter but when a burst of activity in starting businesses, there tends empirically to be higher productivity many of these are technologically driven or the use of technology is pushed out into the society so that's one another is that unlike a lot of our -- for example, the european countries where they kept the labor force in place here, people had money from government transfers and also from forced savings, they couldn't travel or go to restaurants and they quit their jobs and they went and found other jobs and so there was this huge reallocation of people from jobs that they actually didn't want that much, to jobs they wanted more and that's a real -- we think that's a real factor in this in addition, given the tremendous labor shortages, a lot of time and effort went into

supplementing and, you know, people's technological capabilities in ways that substituted for labor. there was a lot of that. >> can you give an example of what you mean? >> sure. i mean just call centers you can now do call centers so they're much more automated and getting to a police where call centers will be done by, you know, by artificial intelligence probably but also just, you know, go to a fast food restaurant which, of course, i never do anymore at my age, but if you go to -- i'm told if you go to a fast food restaurant, you know a lot of that is -- i've seen this in airports actually you don't necessarily need somebody to take your order. you've got a nice menu, punch a screen and the food appears. and there was tremendous incentive to do that when there weren't any workers. you saw stores that didn't have very many people in them and that sort of thing that's an example that we saw. >> i don't think i heard you

mention in that response anything about genretive ai. i'm wondering do you think that that could be part of a new era of productivity acceleration >> you know, artificial intelligence pre-generative ai is used all the time by big companies and modest sized companies and it's having an effect on companies. generative ai is in the early stages and the companies and banks in particular that we deal with are not really using it yet. they're not really deploying it yet. they're aware of the risks in it, but over time, i mean you can find -- you can find estimates from credible organizations that generative ai will create a burst of productivity, a large burst of productivity in the next decade. you also find skeptics, you know, very credible skeptics who

think that's overdone. the history has been that, you know, there's innovation, there's technology, it doesn't show up in the productivity statistics at all and then shows up a lot but much later. it's usually later and bigger than we expect that may be the case here. because this really is an extraordinary set of developments the ability to replace a lot of work that's currently done by humans including well-educated humans, is obvious >> how does that influence your thinking about monetary policy >> you know, it really doesn't in the short term. we keep extremely close tabs on the labor force. if you think about it monetary policy is trying to move -- trying to keep the economy at maximum employment and price stability. trying to use our tools to do that and that's a -- you're thinking two or three years out, the kind of things that drive longer run productivity and that matter for the longer run are really not

tools in our hands the best thing we can do for that, for technological evolution, is to create macro economic price stability by which i mean price stability and a good, strong, stable labor market so that people don't have to worry about volatile or high, and that's the most we can do. >> you mentioned a lot of financial institutions you regulate or oversee are also experimenting with these new technologies ai. given that so much ai is not explainable, sort of a black box a lot of the time engineers and others cannot explain how it came to the decision it did, does that make it harder to regulate in the sense that there might be blind spots for certain kinds of systemic risks, right, if banks don't necessarily know how they're coming to the decisions that they're coming to and there could be some hurting that may not be obvious.

>> it does -- raises that question, many questions like that i would say the good news is, in terms of the institutions we supervise, we understand that, but they understand it very well i think people are treating ai very carefully and they're not just loosening it, at least among the regulated banks, not loosening it on their customers and problems they face they're being careful and thoughtful, we believe, or at least i believe, about how they implement it doing lots of work but keeping it carefully under wraps and not deploying it so much yet in their business working, you know, everyone's working to understand the technology, where it's going, what it's capable of, what the risks are, and, you know, you mentioned that it's making decisions and we often don't know why it made -- makes these decisions. how do you -- it could have --

how do you get after things like discriminatory outcomes in lending if you don't know why it's making those decisions. it's going to be, you know, challenging, but i would say we're well aware of that and so are the banks. >> you have a five-year strategic review coming up how has your experience over the last five years made you reevaluate, if at all, the strategy adopted in 2020 >> you know, we -- we had a strategic review and we have a document called our statement on longer run goals and monetary policy strategy. it's one page. the type is getting really small so i think we're going to go to two pages next time. >> that was the era for a long time after the globally financial crisis rates around the world were incredibly low. for example, major european countries, their longer term debt was yielding negative 30

basis points how do you understand that rates were very, very low in the economy and that's a problem for central banks because we can't cut rates meaningfully below zero and cutting rates is what we do to support the economy we like having significantly positive interest rates like we do now all right. what we did is, we said -- there was a whole literature how you deal with in monetary policy how you deal with having interest rates stuck at the -- at zero in effect and you can't cut you're stuck can't upport the economy a trap where growth is low, inflation is low, unemployment is high and can't get out of it without fiscal policy. there was a lot of research done it and we took a vanilla approach to that i won't go into all the details but a makeup strategy so we would promise to let inflation run a little bit high if it were running too low. and the thought was if people

believed that you'll do that, that's credible, inflation won't run low. that's all we did. four months after we announced the pandemic hit and inflation a year after that came up, so the change -- 20 years of low inflation ended sort of four months or a year and four months after we did the framework the question we'll be asking in this framework five years later is really it revolves around how do we think about the problem of zero lower bound now now that interest rates are substantially higher than they were, substantially higher, is that going to be a -- so the question you're asking is, do we -- review the framework every five years, shouldn't we change the framework to reflect that interest rates are higher now so that some of the changes we made are probably not necessarily or in any case shouldn't be the base case anymore. they might be a case that we have that remedy at the -- handy, but at the same time the

base case should be more like a traditional reaction function where you don't promise and overshoot you just target inflation. we haven't made any decisions but those are the questions we'll be asking. >> you mentioned the prospect of long-term rates being higher you said many times plane times when asked by journalists, among others, about how we know when we fit the neutral rate we know it by its works, right, which almost sounds like [ inaudible ] or something how long does it take to evaluate whether you have we've hit it when do we know? like how -- if there are lags between the time that we hit the neutral rate and that we can see it in its works, does that increase the risk for policy errors >> let me just take a second and explain. we move interest rates up and down but what is high and what is low you know, compared to what is the question

you have to have an estimate of something that's kind of neutral, something that a level of interest rates that's neither pushing the economy up, supporting it or dragging it down, which would be higher restrictive policy we fully acknowledge there's no sort of either theoretical or empirical way to arrive at an estimate of what the neutral rate is that you can have a lot of confidence in so, what does that argue for it argues for moving carefully in our current situation we're -- we feel like our policy is restrictive we can't say exactly how restrictive it is. it's weighing on economic activity and lending, hiring and all that because the economy was overheated and now it's cooling down and it's moved pretty much as we had hoped it would we've had a gradual cooling in the labor market, inflation has come down a lotnd at labor market is not quite stabilized, but it's in a good place it's actually worked very well

so we've started the process of cutting rates and moving back down towards neutral i think the right way to find that level is carefully and patiently. you don't want to move too quickly. you may have to move quickly because if the labor market were to begin to deteriorate in a serious way, we would want to get ahead of that. we're not seeing that. so i think what it tells you, as katherine pointed out, we think that policy works with long and variable lags to quote milton freeman. it does have effects on economic activity, hiring and all that, with long and variable lags and makes it that much more difficult to know how far to go. i think in this situation what it calls for us is to move carefully and as we sort of reach the range of or get near the plausible range of neutral levels, it may be the case that we slow the pace of what we're doing just to increase the chances that we get this right you know, we're navigating between, as i mentioned in my

remarks, the risk we move too quickly, too slowly. we want to go down the middle to get it just right providing support for the labor market but bringing and helping and enabling inflation to come down. going a little slower if the data will let us go a little slower seems like the smart thing to do. >> you say interest rates are still restrictive right now, but if you look at the -- like cpi numbers that came out recently or today's ppi numbers core cpi is over 3 mrs. i think when i looked the one month rate is higher than the three month rate which is higher than the 12-month rate the economy booming, the market is on fire core ppi came in above expectations today this as formations are up. why are we cutting rates it seems like the economy is doing pretty well. >> the economy is doing very well an that's a great thing we've welcomed that. but look at the labor market so what we've seen is, a lot of the great things we've seen has

been because of the expanding supply side. unemployment moved up from 3.4 to 4.1 by a significant number of indicators it's still cooling. our mandate is not for growth. it's for maximum employment or place stability. but on the inflation data, so we do see inflation continuing on that bumpy path i mentioned, today's reading was slightly more of an upward bump that within we had expected the broader trend if you look back over the last 18 months we think that's still intact and going to tear this report apart and look at the details. you'll get another report before the december meeting another labor report we'll get the final numbers for october by the end of this month. we'll look at that and make our assessment we believe policy is restrictive and i would oint to the labor market you know, it's not clear how restrictive it is. that's a fair point. we're well aware of that and

mindful -- risks we go too far too fast and the risks we don't go far enough. it seems like we're where we need to be i feel like the u.s. economy is in a good place and our policy is in a really good place. we've got a lot of space to cut rates if the economy weakens in the meantime we can take the process of reducing rates and we can be careful about that and that's what we're planning to do >> i know we're short on time so one last question. there has been an idea floated to announce who will succeed you as fed chair in order to possibly exert more influence over monetary policy, a sort of shadow share idea. your term on the fed's board runs until january 2028. beyond your term as chair which ends in may of 2026 under what circumstances, if any, would you consider remaining on the fed's board after your term as chair

ends as eckles did. >> i would just say, i -- i'll certain serve to the end of my chair term that's really all i've decided and all i'm thinking about we're focused just on getting the job done from the american people that's enough of a job for us to do we're focused on that. >> well, thank you so much, chair powell i appreciate it. thank you all for attending. >> thank you we now have some closing remarks from president logan >> okay. that was fed chair powell down in dallas today. his first remarks since his news conference of one week ago in which today the fed chair said the following largely sticking to the script of last week

described the labor market in, quote, solid condition, remarkably good is how he said the performance of the economy is by far, and he underscored those words by far the best of the major economies of the world. sees pce at 2.3% inflation coming down to target with the caveat he said at a bumpy path that's alluding to the stickiness readings we've gotten as of late and careful about their decisions moving forward they're going to be data dependent. we remain resolute in pursuing the dual mandate wouldn't get into politics at all around the election. he did underscore why he thinks the fed needs to be independent, why that is so important he said, quote, credibility is everything he was asked if the results of the election does mitigate any of the downside risk to the economic assumptions of the fed in which he said it was simply too early to say

on the issue of tariffs he did note the possibility of retaliation in which he said, quote, would change the picture of how maybe the impacts there would be as i suggested really when asked about going any deeper into the political picture he did avoid that and he did get a little bit of a round of applause on one of those notes. at the end there you just heard that he said he will serve until the end of his chair term which is mid next year, declined to speculate on what he would do after all of that. senior economics reporter steve liesman is back with us. i said this was sticking to script is that how you sensed it as well >> not exactly, scott. i thought that he did say a bunch of things he said last week, but i thought he emphasized a little bit more the idea that things are maybe going to move more slowly than the market thinks. the market did react, scott. even if it was the same similar

language, market if you look at what happened to the probabilities we're at 75% for december now, we're down to 61 look at what's happened if you want to see what's happened to march as well where the next cut was baked in i believe it's now and also take a look at the two-year which spiked up on this. you're right, he did not talk about politics, but you can see that it's on his mind. you can see it has the clear potential to affect policy and create, perhaps, a certain, again, slowness in how the fed responds cuts rates. the direction we talked about earlier the pace is very much up in debate and an issue for what the next administration does, how quickly they do it, how clear it is, what the impacts are going to be of what they do. >> your points are well taken. my point the words may be similar to what we heard a week ago but the emphasis perhaps a little more hawkish, your point is well taken how the market has

reacted. senior markets commentator mike santoli, virtus joe terranova at post nine. that was your reaction, short end of the curve move. >> absolutely. shorter term yields up, curve flattening out again the stock market just feeling that pressure around the edges in a day that was already kind of just taking profits further and trying to reassess adds more suspense the fed is in a good spot operating from a position of strength but it does mean less cloudy how far we have. >> it comes on a day where the market was in need of a little bit of a correction. we introduce now that there is going to be a pause at some point early in 2025. i think pace is now back in play we're worried how quick are we going. are we jogging, running? i think, you know, the response in the market dollar higher, small caps lower makes sense. >> it was interesting on the debt issue, on an unsustainable

path, but it's not at an unsustainable level now. i thought that was an interesting nuance. >> he does generally frame it in that fashion yes. the economy [ inaudible ] stocks will be red. we talked about what's happenine talked about it in the bottom market. and in "overtime" lauren and john will certainly do that and i will see you tomorrow. [ bell ringing ] that bell marks the end of regulation, the closing bell at the new york stock exchange, the global semiconductor alliance doing the honors at the nasdaq, pulling back today especially in the last hour with nearly every s&p 500 sector lower, small caps falling more than 1%. chair powell says the fed doesn't need to be in a hurry to cut rates. that is the scorecard on wall street, but winners stay late, welcome to "closing bell overtime". >> coming up on today's show, you can't miss interview with bitcoin