that makes a big difference a little bit over time. and also in terms of what they decide to do on it. so we've got the pre market set up and. a dovish hold maybe might be the consensus maybe a cut or two. and as we just heard jim's between 0 and 1 cuts for the year brian. yeah. >> and right now let's get. >> to steve. >> liesman and the fed's decision and call on rates steve why does the federal reserve maintaining the funds rate in the range of four and a quarter to 4.5%? they did say that inflation remains elevated as it had last time. but they crossed out a line this time saying that inflation has made progress towards the 2% objective. 100% sure what that means. perhaps we'll ask powell about that. is that hawkish or just. getting rid of a tired old phrase? they say labor market conditions remain solid. they had said that they had eased, so they did an upgrade of the condition of the labor market. also noting that the unemployment rate has stabilized at a low level. the economy, as they said last time, is expanding at a solid pace. the committee is watching risk

on both sides of its dual mandate. the committee is, the statement says. the committee is still considering the extent and timing of additional adjustments. no hint as to when that might happen, or by how much, and no change to the balance sheet reduction plan. they'll keep reducing the balance sheet as they have been. as the statement has said in the past, it says they're prepared to adjust policy as appropriate. if risks emerge. and we have a unanimous decision with new voters for the new year. january 2025 is when they turn over. we have schmidt from kansas city, collins from boston, musallam from kansas city, and goolsbee from chicago. so a bit of a midwest contingent voting this time sans minneapolis. so back to you guys. very much a stage statement. >> not. >> much going on. and i don't know, brian, can i use the phrase i reserve the balance of my time and send it over to you? >> well, wait a. >> minute, steve. >> you can't just drop it. like. drop it like. >> it's hot. because i'm just going to tell you, steve, what. >> you. >> just said. i'm going to quote

steve liesman and steve liesman. labor markets are solid. inflation may get better considering a additional. timing of moves. >> this sounds like a steve. >> liesman quoting a fed. >> ahead of. >> a rate. >> hike. >> not a rate cut. you know, i guess so. >> i mean, i. >> don't i don't think that that they're they're at that point yet. brian, i think the idea that the labor market remains solid is a is it's a positive that powell and the fed have that allowed them to figure out which way they want to go with rates. but i still think there's an inference in the statement when they say, in considering the extent and timing of additional adjustments. and by the way, brian, you do add the important point here, which is that one of the keys that i've been saying to this meeting is, does powell affirm that with all the other things that are going on that you all are talking about in the last segment, tariffs and tax policy and all the other stuff, will he affirm that the direction of travel is still downward? that's really

important. is he still confident that inflation is moving towards the 2% target? those are the two monetary policy keys as i see them to the press conference. that's coming up. >> quickly, steve. >> just to. >> usually the big mover when we get the statement is also the projections, the dots as i won't call them. but we did not get those this meeting right, which makes this a little bit, you know, less for the market to kind of sink its teeth into. >> right. no dots. the dots come four times a year. four times a year. i have no problem saying dots if they want to fire me for saying dots. by the way, this is a little inside baseball, where we had an old boss who didn't like us to say the word dots. i don't actually know what the new policy is, but in any event, they come four times a year. there is one question, kelly. we might ask the chair, which is he did answer it one time and we said, hey, if you were do the dots now or the old dots still good. that might be an interesting question, though. i don't know that enough has changed now to ask him that question in terms of you would say, well, i think the two cuts are still something that the fed would more or less back.

remember, it was a close call last time. >> yeah. no, actually that would be a good question. would anything maybe change those projections? steve, thanks. let's turn back to the panel for more thoughts here. and maybe we'll go in reverse order. so jim, you know the ten year it's up like a couple of basis points. not a huge mover so far. what jumps out to you. >> so look i mean. effectively there's a long period. >> of. >> time between the next meeting. >> so the next fed meeting. >> is march 19th. we get a couple. >> of labor reports. we get a. >> couple of inflation data points. we have a new. >> president, new policies that are. >> coming through. i think the fed is. >> right to be pause. >> and be. >> is. really obscure as they possibly. >> can at this point. so what's really jumping out to me effectively is. >> how the fed. >> is thinking about the labor market. i think the inflation. >> component is. >> pretty well entrenched. >> it seems like it's relatively low. >> and stable and. >> and that's what i expect. but it's really the labor market. it's all of the adjustments. >> that we get. >> we get these q. >> e w. >> adjustments that always adjust. >> things down. >> so the. >> labor market may. >> not be as strong.

>> as the headline. >> numbers suggest. and i think. >> that's really. >> the. >> worry point for the fed is that they're just not. 100% certain on how strong the. >> labor market actually. >> is or is not. and that's going to make them. >> react to. >> to hiking or not. >> not. >> hiking, but cutting more. so than anything else. i don't. >> think a hike is in. >> the equation for this year. fair enough. >> jim and dave, i. >> was kind of making. >> a point because the commentary david has. been so positive. >> it's kind. >> of weird. >> that we're talking about rate cuts, and the fed has already cut rates when a lot of the rhetoric. around it is actually fairly good. that said, and. >> i don't want to drag politics. >> kicking and. >> screaming into this, we. >> try to avoid that. >> there's plenty. >> of other. >> channels that do it. >> but i think. >> steve's point was well taken, david, which is that if. >> we. >> don't know what the policies are ultimately going to be around inflation and jobs and immigration or whatever. >> isn't it much harder. >> for the fed to do their. >> job because. >> they kind of got to wait and see what some of these policies

are? well, that's right. >> and if you. >> sort of go back six months ago, i mean, a six months ago, you could have. >> said the unemployment. >> rate's going up, but maybe it's not a problem. inflation is coming down. but, you know, and maybe it's going to head towards 2%. now we've sort of settled into really very close to an equilibrium. but it's a hot equilibrium. we've got inflation a little bit above 2%. we've got an unemployment rate pretty low here. and then all the risk in terms of, you know, what do we do on tariffs? what do we do on immigration. what do we do on fiscal stimulus. all of that has a potential for lifting inflation. so from the fed's perspective they really don't want to cut here. i think the message is you know please don't expect a cut anytime soon from us here. because the last thing they want to do is have to hike rates or try to hike rates later on in the year if they feel like they've overdone it. so i think they'd really like to wait a while here before making their next move. stephanie. >> go ahead. >> yes. >> go ahead. i just wanted to add something very quickly. >> to that. >> which is that i think the trump administration is going to suffer a little bit from the lessons learned in the biden administration. i think if you

ask your average fed official, they'd say, maybe we should have responded a little more forcefully and change course, perhaps a little more quickly. when it came to the stimulus from the biden administration. so i think they'll be a little bit more on their toes about fiscal policy. now, some of the trump administration may see that as being hypocritical or whoever, but the fed is really good at fighting the last war, and that's one of the wars they'll be fighting, i think, which is this idea that we need to be on our toes when fiscal policy changes. >> so true. and i was stephanie, i don't know if the next question will be relevant to that or not, but i was going to say, what for you is the most important date? i mean, is it still jobs report? is it inflation, consumer confidence? what is or is it just like to steve's point, what comes out of the white house? >> yeah, i mean, of course what comes out of the white house is going to be quite important. granted, we might not get information on that right now, which is why the fed can't really react. and it makes sense for them to not do all that much from a data perspective, employment cost index this week is going to be. very important. to gauge to what extent the labor markets are inflationary or not. our base case is there not that inflationary right now,

but we are worried. about the pace of immigration really starting to tighten the labor market. and i think this. is not really widely discussed enough. if we if we really start to see 3.6 million visas roll off over the next. >> two. >> years, that's likely to tighten the labor market pretty substantially. and it's going to make the job for the. fed quite difficult. >> yeah. and i think. >> jim, listen. >> ultimately we. >> can get into these theoretical discussions because we don't know what's going to happen. but i do know this is that a lot of our viewers and listeners. >> care about. >> what happens to their 401. >> k's. >> their 529, their roth and other iras and their stock funds and whatever it may be, the. >> bond market. >> is kind. >> of. done its own thing, right? >> it's raised rates. >> even as. >> the fed has cut rates. so what. >> do. >> you and your team at morgan stanley see with rates and equities and bonds going forward? >> so it's. >> a really. >> good. question because effectively monetary policy. >> is no longer the only game in town. >> fiscal policy. >> is going to play a major role. >> this is. >> something that we all have to digest. we all have. >> to take on board, and we all have to.

>> incorporate into. >> our investment decision making process. >> what the trump administration is trying. >> to do. >> is have easier. >> fiscal policy. >> taxes. >> deregulation. >> things like that to. >> generate growth and also. keep inflation low. those three things don't. >> often hang together. >> so essentially what the trump administration is trying to do. is through deregulation, move some of. >> the. >> activity and business activity. >> more to. >> the mid-cap sector. >> so we still like the equity markets. >> we still think equities are a good. >> investment. >> but we think it's true. >> in the broader markets, more in the mid-cap. sectors where some of the deregulation and fiscal growth. >> policies might. >> have the biggest impact on bonds. we're relatively neutral. we don't we don't think there's. >> going to be a recession. >> so we think. default risks stay relatively low. we think you're going to get the coupon in bonds. but i don't think much more than that. so essentially it's really a balanced portfolio. but if you ask me, i'm a little bit more optimistic on the outcomes here. and i want to entertain. >> the possibility of an upside. >> so i'm a little bit more positive on the equity side. however it's more in the broader markets cyclicals, materials,

industrials, things of that nature. the mid-cap sector is more so than just large cap tech. >> i haven't heard so much excitement from mid-caps. i mean, maybe ever. but david, i was going to turn to you also as a wearing your strategist hat, one. >> of. >> the real world investing implications. >> well, i think it's. >> not about the economy. >> it really isn't. the economy is fine in terms of growth and jobs and profits and inflation. the real issue is that we've got some bubbly valuations here. we've got markets which are very concentrated, we've got portfolios which have drifted to be very concentrated. i mean a lot of people are have a portfolio which is much riskier than it was five years ago. and meanwhile we've got the potential for some of these administration policies to disrupt things. so i think people should really just don't look don't look at the economy, look at how you're positioned. are you basically in too risky a portfolio? all said, for the world of uncertainty that we have right now. >> i like risk. >> hey guys. >> it's the only way to. >> make money. >> for me. far be it for me to steal rick's thunder. i don't know if you have rick coming up, but it looks like yields are a touch higher. and i'll give brian the bingo award. they're

seeing this as a little bit hawkish. i think that's the way the bond market i'm trying to get a bead on the probabilities. it still looks like there's an odds on probability of that second cut in december, which is the thing that's been up and down, but just something worth watching. i got about five bips on the ten and maybe 4 or 5 on the on the two year as well. so it does look like the market is digesting. this is just a bit hawkish. >> yeah. it's because the statement steve, they removed the cooling of labor and the lack of improvement on inflation. so. >> right. exactly. >> they sort of see those ticks moving i guess against them. >> all right. >> everybody let's leave it there for right now. let's get out to rick for some more reaction in the bond market. we appreciate it steve stephanie jim karen david kelly as well. rick. you see this kind of back up in rates. what when we say hawkish it's so interesting to sit here at 211 eastern and a five basis point back up in rates can easily become a bloodbath. or we can just end up shaking it off in a couple of hours. which way do you think this one goes? >> well, i think i would

consider it much more serious. and it's not how many basis points that were going up, in my opinion. it's where we have been holding. we've been holding 4.5%. we've been holding four and three quarters in a 30 year, and. >> there's a lot more. going on under the hood. >> let's look at an intraday of twos okay. you could see what it's doing. rates are moving up. but when you hook it into yesterday what this did was this put today's yields above yesterday's high yield. there's twos. now look at ten's same dynamic. look at a one day look at a two day look. >> at 30s. >> look at a one day look at a two day. this is significant. >> the dollar. >> index as you see had already traded. >> above. >> its previous day's highs. you know what we are going through right now is and i'm not sure what i like better when i reference it. are we in uncertainty pricing or are we in disruptive pricing? take your choice. and in either case, cnbc loves disruption. we have disruptor conferences, but it

seems as though this administration disrupting is a negative thing. it's viewed as negative. and when you look. >> at the. >> notion that everybody seems to bring forth is that all you need to do is change our target from 2% to two and a half or two and three quarters or 3%. it doesn't make a difference. >> i couldn't agree with. >> any statements. more than that, with the debt and deficit issues we have with the disruptive pricing that we have, should they move the goalposts? you know what's going to happen? >> in my opinion. >> the market will penalize them via. much higher interest rates. it's a bad idea, and we could. talk about it and. >> talk about it. >> but in the end, if they actually do. >> it. >> or a senior fed official actually voices it, my word would be. buckle up. >> well the market's already moving and yields are indeed moving up. they are moving higher. i think it was alan greenspan that said if you understand what i said i must have misspoke. rick. thank you

very much. >> all right. >> bob pisani i hope our fed panel. >> is gone because i'm. >> going. >> to say something really. really just inappropriate here. just if. >> you're. >> listening on the radio, turn the volume down. you don't want to hear this. >> which is that. >> bob i feel. >> like nvidia. >> right. >> now like the fed. we know. >> they're kind of on hold nvidia is not on hold. nvidia is down. >> what five 6%. there's a lot of fears around stuff. >> so we're not only watching the fed. and i think the press conference. >> is very. >> important coming up. >> but there's. >> a lot of. >> other stuff. >> happening under the hood that has nothing. >> to do. >> with the. >> fed that i think is. >> equally. >> if not more so important. >> right. >> now. >> including the. >> big rotation. >> we're. >> seeing today. i mean, before. >> this, there was more stocks. >> up than down. >> and i. >> agree, there's. >> obviously some money coming. >> out of nvidia. >> i just want to point. >> out that up. >> until a minute. >> or so. >> ago. >> the reaction. >> to. >> the stock end of this. >> was very, very modest. >> because i agree. >> with. >> steve's point. the fact that they left. >> out. >> the sentence. >> inflation has made progress toward the committee's 2% objective does.

>> strike me as. >> somewhat on the hawkish side. >> and remember. >> what you want here. >> i think david. >> said this earlier. >> you want the meeting to be boring, and boring would. >> be powell's insisting. >> that they are moving towards. >> the 2%. >> objective. >> and. >> any suggestion. >> that there's not going to. >> be any rate cuts, 1 or 2, or. >> that there might. >> even be a rate. >> hike that's certainly not. >> in the market. >> so there's your. >> your. >> big risk right now. >> the other risk, of course, is powell. >> could get. dragged into some. >> long discussion about tariffs. >> and what i call. >> the swamp. >> of tariffs. >> with powell. and that might. >> introduce, of course, the probability or the possibility. >> of some kind. >> of accidental volatility, as i like to call it. so there's your two. >> risks right now. >> other than that the. >> handoff for february. >> from the stock. >> perspective is terrific. >> we have. >> 3% gdp growth. >> we've got what. >> 20% of the earnings coming in. >> they're all better than expected. >> very high levels of beats that are out there. we are seeing a. >> terrific rotation. >> in january. >> cyclical stocks. >> like industrial and materials. >> are outperforming. >> health care is outperforming. >> even energy and financials. >> are outperforming.

>> tech is underperforming. there it is. how many years have we been waiting for this story. and it hasn't happened for more than a few days. now we're on the verge of an entire month with the s&p up 2.5%. led by cyclicals. and defensive stocks. that's about as good as it gets. and finally, i just want to point. out january is positive. what are we up 2.5%. >> so far brian on. >> the month. >> so you know the. >> old saying. >> goes january. >> so goes the year. >> there we are 2.5%. >> so he's going to powell's going to. >> get asked a lot. >> about the fact that. >> he left. >> out. >> this sentence. >> and there's. >> where it's. >> going to get very. >> very tricky right now. >> and i think i think the. september rate cut, the big half point cut, that kind of was a howitzer for it's a world war two artillery reference. the howitzer i think should get i hope will get more questions. bob pisani. >> thank you very much. >> well folks we are. >> just moments. >> away from that press conference. well maybe we'll get questions on all of this. right. what happened to that reference.

to inflation. >> was the rate cut in september. >> really necessary? >> why is the bond. market moving. >> this way? why am. >> i. >> asking so many rhetorical. >> questions heading into a commercial break on television? there's so many questions. >> call the team. it's called a tease. >> i hope it was good. >> we're back right after this. >> i had. >> eight utis in one year. >> this inspired me and. >> my partner spencer to launch uqora. >> uqora makes effective urinary tract. >> health products. it truly works miracles. >> the peace of mind. >> i've been looking for. >> go to uqora. >> com to learn more. >> the pop culture collectibles market is valued at over $5 billion, growing 9% annually. meet alliance entertainment, symbol agent on the nasdaq, a profitable global entertainment powerhouse with over $1.1 billion in annual revenue, executing on its growth strategy with the acquisition of handmade by robots, creators of limited edition collectibles from your favorite movies, tv shows, games

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talk about easier investing. nate jones... lines things up... checks his fidelity app... looks to outside analysts to get a second opinion. nate likes what he sees... and he places the trade... talk about easier investing. dream office a reality. >> welcome back. >> to our power. >> lunch fed day special, and we are seeing some market moves this hour, in part because of what the fed just announced. it wasn't the actual decision. it was to some extent the fact they took some language out a little bit. hawkish dow's at a session low. we also have nvidia a big mover this afternoon on reports that the administration may tighten curbs on its sales to china. the company now saying they're ready to work with them on ai. let's bring in dom chou for more. dom to help kind of round up what's driving what here. yeah. so let's start with those nvidia shares on that recent roller coaster ride. it just continues. shares of the chip giant are just about session lows right now. as you can see they're off by about 6.5%. that yellow line by the

way is the 200 day moving average. as you can see we're just right now below it. so it represents one of those key chart levels. some traders are watching all of that as you point out on this bloomberg report, citing people familiar that the administration has discussed potential tightening of sales curbs for nvidia products to china. they did, though, say the report that the conversations are very preliminary, but it was enough to exacerbate an already down day. the general story in the chips trade does still remain mixed today as you can see there. broadcom taiwan semi are down while you see some gains in intel and amd. asml holding though continuing solid gains following a better than expected quarterly report and better than expected reads on future orders. and let's count things off with a check on the three of the magnificent seven that are actually reporting earnings today. microsoft meta platforms, tesla each. you can see they're just about lower to marginally lower. each of them reports after the bell. the options by the way market is currently

pricing in what could be a 4% up or down move in microsoft. on the heels of that report, a 7% move in shares of meta platforms and a 9% move in shares of tesla. so we could be seeing some possible fireworks. brian kelly for some of these reports. tesla is going to be a notable one to watch after the bell. i'll send things over to you. >> yeah, and. >> interest rates. >> as you. >> said dom. >> also move. >> these high valuation. >> and high multiple stocks. >> so if the fed moves interest rates interest rates may move those stocks. >> which then are big enough to move the whole market. i don't. >> know about you. >> my brain is exploding just thinking about it. >> dom, thank you very much. as we noted, folks, tom's brain never explodes. it's so big. >> all right. we are just moments away from jerome. >> powell's press conference. >> there's an empty lectern. that lectern is not saying anything. but when a human being walks into. >> it. >> he's. >> going to say a lot. >> watch out. >> watch out. >> watch out. >> watch out. >> we're back right after this. t-mobile's 5g network connects a hundred thousand delta employees

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advisors, chief economist, creator of the sam rule, a member of our fed panel. hope you're feeling well. claudia, it's great to have you here today especially. are people reading too much into the statement, do you think. >> we got to be real careful today not to make news out of what is not news, right? >> like we coming. >> into this, we knew. >> what's left. >> inflation like that's what's left that. >> we got good news. >> on the labor market. things have gotten better. and all. >> the. >> fed is doing is telling us that's where we're headed. so i don't i don't. >> think the. >> statement, the very. small changes made to the statement should come as a surprise or, or tell us something we didn't already know, like inflation is still somewhat elevated. >> so, you know, you're you're talking to a trading desk right now and it's, it's you know, it's like we're pounding stocks lower. we're sending rates higher. this is going to craft the narrative for the next six weeks. what do you want them to be thinking about. >> again? i think it's important in the press conference to take a deep breath. right. the fed, the actions of the fed. and this has been true for some time, and

it will absolutely be. >> true. >> for this year. it is driven by the data. we do not have the data that will decide when the next fed cut is. we just don't. and powell doesn't have it and he's not going to give it. so trying. to infer that. >> from what. >> he says. is just noise. so we. >> just. >> really need. >> to be careful about you know, we want to hear that information, but that just is not known yet. so be careful. >> yeah. >> claudia. here's and. >> it's brian sullivan here. >> here's the problem. i think the. >> federal reserve. >> has. >> as somebody who has gone. >> across this. >> great land. talking to people. >> the fed. >> has no control over a lot of the inflation that we. >> actually feel. >> i mean, they can't do anything about automobile insurance rates. they can't do anything about home insurance rates. i doubt they can do anything about health insurance or health care costs. right. we know that eggs are soaring because of avian flu. i just you get my point. >> is that. >> we can have inflation. >> data that. comes in red hot. >> and what. >> the heck is the fed going to do about anything that i. just

referenced? >> well. >> they they do. have levers to. >> pull on demand. i mean, that's how interest rates work, keeping them high so they can look at the sum total of inflation. but you're absolutely right. we've had some very specific kinds of cost push inflation. so eggs are an example a great example of this. where the fed does not have the precision to go at the root cause of that. and yet they can look at overall like is demand outpacing supply. and are we overheating. and i mean. >> we. >> don't see that right. like the last mile of inflation does not look like that. but you know they don't they don't have the magic wand. but they do. they do have the mandate and they have to keep whether or not it's the kind of inflation that they can fight really well, they have to keep at it until inflation comes down. so that means interest rates stay elevated. >> do you think. the risk this year, claudia, is more to the inflationary side or the contractionary side? granted, maybe it can be both. >> i think there's so much policy uncertainty within the fiscal and the trade policy

space. and honestly there you could see it going a lot of different directions with growth effects or with inflationary effects. i think inflation, if you're really interested in like what's the path of interest rates, what's the fed going to do? they're going to be just intensely focused on what happens with inflation. so those are risks that like in a fed space. but but more broadly in the economy, i think we just have a lot of unknowns in terms of what the economic policy outside of the fed is going to look like this year. and while it won't necessarily be the bottom falls out, it's so dramatic. it can still be disruptive. and we've come i mean, we're tired. we've had a long disruptive period. so to have more of that facing us is just it's kind of a dispiriting way to start the year. >> yeah. well, if the chair feels the way you feel, we'd expect him to kind of push against this and to use the market language, almost be dovish. but he tends to kind of reinforce the statement message cloudy. and sometimes he like i think he likes to upset markets. frankly sometimes. >> i don't think he comes out to

make big reactions. and frankly today like trying to keep things as calm as possible and stay away from some fairly politically charged topics which i'm sure he'll, he'll be getting about the administration, trump administration policy and fed independence. so i mean, i think today will be, you know, try and play it play it cool. but he does need to the fed when powell speaks he speaks for the federal open market committee. so you know he needs to convey the concerns that come from the committee. and you know again at this point with where the data is, where we, you know, where the economy is being concerned about inflation first and foremost like that. i mean, that's that's an appropriate that's what i imagine we'll hear. >> from him. what you just said is so. >> well, there you know what? >> we'll save. >> it for the next segment. >> it's going to be really important. >> here's jay powell. >> good afternoon. >> my colleagues. >> and i. >> remain squarely focused on achieving our. >> dual mandate goals of. >> maximum employment and stable prices. >> for the benefit of the american people. the economy is

strong. >> pardon me. >> is strong. overall and. >> has made. >> significant progress toward our goals over the past. >> two years. >> labor market conditions. >> have cooled. >> from their formerly overheated. state and. >> remains solid. >> inflation has moved much closer to our 2% longer. >> run goal. >> though it remains somewhat. elevated in support of our goals today, the federal open market committee decided to leave our policy interest rate unchanged and to continue to reduce our. >> securities holdings. >> i'll have more to say about monetary policy. after briefly reviewing economic. >> developments, recent indicators. >> suggest that economic activity has. >> continued to expand at a solid pace. >> for 2024. >> as a. >> whole, gdp looks. >> to have risen. >> risen above. >> 2%. >> bolstered by resilient consumer. >> spending. >> investment in equipment and intangibles. >> appears to. >> have slowed in the fourth quarter, but was.

>> strong for the year overall. following weakness. >> in the middle of last year. activity in the housing sector seems. >> to have stabilized in the labor market. conditions remain solid. >> payroll job. >> gains averaged. >> 170,000 per month over the past three. >> months. >> following earlier increases. the unemployment rate has. >> stabilized since the middle. >> of last year, and at 4.1% in december, remains low. nominal wage growth. >> has eased. >> over the past year, and the jobs to workers gap has narrowed. overall, a wide set of indicators suggest that conditions in the labor market are. >> broadly in balance. >> the labor market is not a source of significant inflationary pressures. inflation has. eased significantly. >> over the past two years. >> but remains somewhat elevated relative to our 2% longer. >> run goal. estimates based on the consumer price index and other data indicate that total pce prices rose 2.6% over.

>> the. >> 12 months ending in december, and that excluding the volatile food and energy categories, core pce prices rose 2.8%. longer term inflation expectations appear to remain well anchored. as reflected in a broad, broad range of surveys of households. businesses and forecasters, as well as measures from financial markets. our monetary policy actions are guided by our dual mandate to promote maximum employment and stable. prices for the american people. we see the risks to achieving our employment and inflation goals as being roughly in balance, and we are attentive to the risks on both sides. >> of our. >> mandate. >> over the course of. >> our three. >> previous meetings, we lowered our policy. >> rate by. >> a full percentage point from its peak. that recalibration of our policy stance was appropriate in light of the progress on inflation and the rebalancing in the labor. >> market. >> with our policy stance significantly less restrictive

than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance. at today's meeting, the committee decided to maintain the target range for the federal funds rate at four and a quarter to 4.5%. we know that reducing policy restraint too fast or too much could hinder progress on inflation. at the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment. and considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will assess incoming data, the evolving outlook and the balance. >> of risks. >> we're not on any preset course. >> as the. >> economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. if the economy remains, economy remains strong and inflation does not continue to move sustainably toward 2%,

we can maintain policy restraint for longer. if the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can ease policy accordingly. policy is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual. >> mandate. >> as we previously announced our five year review, review of our monetary policy framework is taking place this year. at this meeting, the committee began its discussions by reviewing the context and outcomes of our previous review that concluded in 2020, as well as the experiences of other central banks. in conducting reviews. our review will again include outreach and public events involving a wide range of parties, including fed listens, events around the country and a research conference in may. throughout this process, we will be open to new ideas and critical feedback, and we will take on board lessons of the last five years in determining our findings. we intend to wrap

up the review by late summer. i would note that the committee's 2% longer run inflation goal will be retained, and will not be a focus of the review. the fed has been assigned two goals for monetary policy maximum employment and. stable prices. we remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal and keeping longer run inflation expectations well anchored. our success in delivering on these goals matters to all americans. 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. >> i look forward to your questions, steve. >> mr. chairman, steve liesman from cnbc. mr. chairman, at a event in davos or from two

davos. anyway the president said he'll demand that interest rates drop immediately. so i guess i have a three part question. has the president done this to you as he made that demand? secondly, what is your response to that. and third, what effect, if anything, if any, does a president making these kind of remarks have on policy? thank you. three questions. >> i'm seeing seeing it really as one question though. so i'm not going to have i'm not going to have any any response or comment whatsoever on what the president said. it's not appropriate for me to do so. the public should be confident that we will continue to do our work, as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work. and that's how we best serve the public. >> can you. just comment on whether he's physically communicated this demand to you? >> i've had no contact. >> thanks, nick. nick timiraos.

>> the wall. >> street journal. >> chair powell, you. >> and several of your colleagues. >> said around. >> the time. >> of the last. meeting that your policy stance was meaningfully restrictive given economic. >> and. >> financial market developments since then. >> how has your. confidence changed. >> in an. >> assessment that says interest. >> rates are meaningfully restrictive? >> i don't think that my assessment really has changed. i mean, a couple of things have happened. we've gotten more strong data, but we've also seen rates move up at the long end, which could represent a tightening in financial conditions. i think if we look back over the past year or so, we can see that policy is restrictive. if you look at the effect of high rates on interest sensitive spending, for example, in housing, and if you look at the achievement of our goal variables, we're seeing the economy move toward 2% inflation. and has moved largely to maximum employment. so we really look at the at the at the at movement toward the goal variables to make that assessment. now policy is meaningfully less restrictive

than it was before we began to cut it's 100 basis points, less restrictive. and for that reason, you know, we're going to be focusing on seeing real progress on inflation or alternatively, some weakness in the labor market before we before we consider making adjustments. >> if i. >> could follow up. does the. economy here. >> warrant meaningfully. >> restrictive interest rates? and would you. >> judge interest. >> rates to still. >> be meaningfully. >> restrictive if you were to lower. >> them by another quarter point? >> so i think our policy stance is very well calibrated, as i mentioned, to balance the achievement of our two of our two goals, we want to policy to be restrictive enough to continue to foster further, further progress toward our 2% inflation goal. at the same time, we don't need to see further weakening in the labor market to achieve that goal. and that's kind of what we've been getting. the labor market has really been broadly stable. the unemployment rate has been broadly stable now for six months. conditions seem to be

broadly in balance. and i'd say look at the last couple of inflation readings. and you see we don't we don't overreact to two good readings or two bad readings. but nonetheless, the last couple of readings have suggested, you know, more positive readings. so i think we're i think policy is, well, well positioned. >> colby from the new york times. >> colby smith with the new york times chair. powell. >> how should we. >> interpret the. >> removal of the. >> line. from the. >> statement that inflation. >> has made progress towards the. >> 2% goal? is that. >> no longer the case? >> no. >> so let me look. if you just look at the first paragraph, we did a little bit of language cleanup there. we took out a reference to since earlier in the year as it related to the labor market. and we just chose to shorten that sentence again. i mean, if you look at the sort of inner meeting data was good and there was another inflation reading, i guess, just before the december meeting. so we've got two, two good readings in a row that are consistent with 2% inflation. again, we're not going to overinterpret too good

or too bad readings. but this was not meant to send a signal other than this. you know, you can take away from. all this that we remain committed to achieving our 2% inflation goal sustainably. >> and just to follow up, we've. >> seen inflation. >> expectations across. >> a number of. >> measures rise sharply, which. >> has in part been linked to tariff concerns. but there's also been this encouraging data that you mentioned in terms. of cpi and rent indices. so how. >> would you characterize. concerns about upside. >> risks to. >> inflation across the committee, especially those tied to policies related to the. >> trump administration? >> well, i'd say. you see expectations moving up a little bit at the short end, but not at the longer end, which where it really matters. and those could be related to could be related to what you mentioned. some of the new policies, i think, where the committee is very much in the mode of waiting to see what policies are enacted, and we don't know what will happen with with tariffs, with immigration, with fiscal policy and with

regulatory policy. we're only just beginning to see actually are not really beginning to see much. and i think we need to we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be. so we're going to be watching carefully and as we always do, this is no different than any other set of policy changes at the beginning of an administration. we'll patiently watch and understand and, and, you know, kind of not be in a hurry to, to get to a place of understanding what our policy response should be until we see how it plays out. >> michael. >> michael mckee from bloomberg television. >> and radio, you and your colleagues normally conditioned. >> future policy. >> moves with the phrase, if the economy develops as we anticipate, is it fair to say that since there's a lot unknown about what this administration's. >> fiscal policies. >> are actually going to be, that you don't have a medium to

long term economic forecast that you can have confidence in, or if. >> that's. >> not true, can you lay out what you think is going to happen in the economy, how you see it developing? >> well, at all times, at all times, forecasts are conditional at a minimum on just a set of expectations. and they're highly uncertain in both directions. we know that economic forecasting is really difficult beyond just a month or two out. so in the current situation there's probably some elevated uncertainty because of, you know, significant policy shifts in those four areas that i mentioned, tariffs and tariffs, immigration, fiscal policy and regulatory policy. so there's probably some additional uncertainty. but that should be passing. we should go through that. and then we'll be back to the regular amount of uncertainty. so you know what what forecasters are doing not just us but everybody is doing is they've got sort of just a

set of assumptions about what might happen, but they're really kind of in the nature of a placeholder and meaning, you know, plausible could be, but honestly, you wouldn't stand behind it because you just don't know. and so you're just you're just on hold waiting to see what comes down. you know, it's a very large economy and policy is affected at the margin. but we'll you know, we're going to wait and see. >> if i can follow. >> up the idea that you feel the economy, that policy is restrictive, suggests. >> that the. >> fed in general wants to continue to lower interest rates. >> so when you look at. >> the data that you are dependent on, are. >> you looking. >> for data that tell you that you can cut or data that will tell you you should hold, you. >> know, we're we're looking it's more the other way. the way the way it works is we are looking at the data to guide us in what we should do. and, you know, that's what we do. and right now we feel like we're in a very good place. policy is

well positioned. the economy is in quite a good place actually as well. and what what we do expect is to see further progress on inflation. and, you know, as i mentioned, as we see that, or if we were to see weakening in the labor market that could foster, we could then be in a position of making further adjustments. but right now we don't see that. and we see things as in a really good place for policy and for the economy. and so we feel like we don't need to be in a hurry to, to make any adjustments. >> howard schneider with reuters, thank you very much. in 2021, at a central bank conference, you said, quote, throughout my career, in both public and private sectors, i've seen that the best and most successful organizations are often the ones that have a strong and persistent commitment to diversity and inclusion. these organizations consistently attract the best talent by investing in and retaining a world class workforce. question.

first question is do you still believe that, and if so, how do you intend to put that belief into practice while remaining consistent with the recent executive order prohibiting diversity and inclusion efforts? >> so let me say yes in answer to your first question, but to the second question, i want to say this. we are like others. we're reviewing the orders and the associated details as they're made available. and as has been our practice over many administrations, we are working to align our policies with the executive orders as appropriate and consistent with applicable law. and i want to add that i'm not going to have anything more specific for you today on this whole set of issues. >> well, if i could just follow up quickly on that. i'm wondering how you're getting that to be consistent with the dodd-frank laws, stipulations about maintaining an office of minority and women's inclusion. >> so i did i did mention consistent with applicable law, right. >> which is government.

>> elizabeth. >> thank you so much. elizabeth schultz with abc news. >> just to follow. >> up on. >> steve's question. >> what reassurance. >> can you give. the american public that the fed will continue to operate independent. of politics under this administration? >> you know, as i've said countless times over the years, this is this is who we are. this is what we do. we study the data. we analyze how it will affect the outlook and the balance of risks. and we use our tools to try to, given our best understanding, our best thinking, try to achieve our goals. that's what we do. that's always what we do. don't look for us to do anything else. and that's, you know, lots of research shows that's the that's the best way for a central bank to operate. that will give us the best possible chance to achieve these goals for the benefit of the american people. that's always what we're going to do, and people should have confidence in that. as i as i said a few minutes ago. >> you've said. >> that the. >> fed is in wait and see mode based on the policies. >> that. >> come out of this administration. >> has the fed.

>> started to model what. >> policies like. >> mass deportations, changes in immigration policy specifically. >> would look. like for the. >> workforce and for inflation. >> so one of the things our staff does is they they look at a range of possible outcomes. and, and they tend to go from really good to really bad. and that, you know, it's one of the best things that they do. and in each teal book, you can look at the five year old teal books and see their alternative simulations. so that's what they do. it'll be a baseline and then they'll show 6 or 7 alternative scenarios, including really good ones and not so good ones. and what those do is they spark, you know, the policymakers to sort of think and understand about the, you know, the uncertainties that surround this. so yes, we the staff does that and we we're all well aware that there are that the range of possibilities is always broad and not not just now, but always. and you have to it's hard to be open to just how, how, how broad the possibilities are for an

economy. you know, no one saw the pandemic coming. and it was, you know, it changed everything. so things happen and but yes, we do we do do that. but it's, it's, it's one thing to do that, to make assessments about what might happen and begin to think about what you might do in that case. but you don't act until you until you see much more than we see now. >> catarina. >> catarina saraiva. >> bloomberg news. you know, last month you talked about a future rate cut as being pretty, you know, significantly predicated on more progress in inflation with the characterization of the labor market. in the statement today, would you say that that's even more so the case now? >> i'd say it's the same. you know, we want to see, you know, further progress on inflation. and, you know, the story is there. it's we're just going to

have to see the data. at the end of the day, it comes down to 12 month inflation because that takes out the seasonality issues that may exist. and you know, we're just going to need to see that. we think that we think we see the pathway for that to happen. one one example a key example is that you now do see owners equivalent rent and, you know, housing services the way it's calculated for pce. you see that coming down pretty steadily now. and that's the that's the place where most of the remaining gap is. in addition, a big part of the overrun, as you will know, was from non-market services, which don't tend to send much signal. so you can look through all that and think, okay, that then we seem to be set up for further progress. but being seem to set up for it is one thing, having it is another. so we're going to want to see further, further progress on inflation. remember we're not you know, we're we're under 2%, but our goal is 2%. and we do mean to get back sustainably to 2%. >> and in terms of the labor market, i mean, how is that

broadly, you know, you said a broad set of indicators show that it's in pretty solid place. was there broad agreement on that? there's been a few underlying indicators that are showing perhaps some weakness, a low hiring rate, you know, workers reporting that it's increasingly difficult to find a job is that of concern to the committee. >> so you're right. i mean, we look at, of course, a very broad range. so it starts with unemployment. sorry with yeah. with the unemployment rate, employment participation, wages, job quits. are people quitting that kind of thing. the ratio of vacancies to unemployed. we look at all those things and you put your finger though on. it's a low it's a low hiring environment. so if you have a job it's all it's all good. but if you if you have to find a job, the job finding rate, the hiring rates have come down. and that's that's more typical of a, you know, let's say let's say that the unemployment that the that the labor market is at a sustainable level. it's not overheated anymore. we don't

think we need it to cool off anymore. we do watch it extremely carefully. it's one of our two goal variables. but yeah, i'd say we watch those things quite carefully. but nonetheless, overall, look at the aggregate data in the labor market. it does seem to the labor market does seem to be pretty stable and broadly in balance, when you've got an unemployment rate that is that has been pretty stable now for a full half year. >> edward. >> thank you. >> thank you, mr. chairman. >> edward lawrence with. >> fox business on employment. >> now you said. >> there's a broad range of possibilities. but last september you said, quote, we understand that there's been quite an influx across the borders. and that. >> has actually. >> been one of the things that's allowed unemployment rate to rise now that the flow of. >> the. border has. >> slowed and we're seeing deportations, how do you expect the unemployment rate to react? >> you know, so what's happening is that the flows across the border have decreased very significantly. and there's every reason to expect that to

continue. and so but job creation has come down a bit too. so, you know, if those two things come down together that, that, that that sort of can be a reason for the unemployment rate to stabilize. in other words, the break even rate as as population growth slows the break even rate that you need in new jobs to make to make jobs for, for workers declines as well. so that seems to be something about what's happening. you do see a very a very flat unemployment rate at a time when you see significant declines. >> i want to ask you about fed employment. >> i know. >> that tax money is not used here, but elon musk alleges. >> that the fed. >> is, quote. absurdly overstaffed. we've seen the executive branch push to. reduce the federal workforce. i just want to get your reaction. >> you know. we run a very careful budget process. we're we're fully aware that that, you know, we owe the we owe that to the public. and we believe we do that. and i've got no further comment than that. thanks.

>> chris. >> chris rugaber and associated. >> press president trump has. >> said he will lower. >> inflation by reducing gas and energy costs. >> do you see such. >> costs as a particular driver of inflation, and would lowering them have a dramatic effect? >> chris, i'm not going to i'm not going to react or discuss anything that that any elected politician might say. so i'll give you a mulligan. >> okay. >> thank you. >> well. >> nearly two weeks ago, the fed said it was withdrawing from the network for greening the financial system. even as, you know, even as we have significant wildfires in los angeles doing billions of dollars in damage. and of course, the nfs, as you know, is a group to talk about how the financial system could address climate change. many commentators did see the timing as political. why did you leave that organization? can you explain that decision? >> sure. i'd be. >> glad to. >> so we considered this, you know, really at length, and we did decide to withdraw from the nfs. and really the reason is that the, the, the work that the

nfs does has broadened very significantly. think about nature related risks and biodiversity and things like that. in addition, the work of the nfs is, is in, in significant part intended to and this is a quote, mobilize mainstream finance to support the transition toward a sustainable economy. so we joined to get the benefit of understanding what other central banks were doing and seeing research and things like that. i think this is just way beyond any plausible mandate that you could attribute to the fed. and so we have a quite narrow role as i as i said many times, and i think that that the activities of the nfs are not a good fit for the fed, given our current mandate and authority. so, you know, i just think it was time to acknowledge that, you know, the process, this process dates back. thinking about it dates back a couple of years. i made the decision to bring this to the board, you know, some months ago. it just it just the process

just took time to get here. and this is when, this is when we, we got it and voted on it. so and i'm aware of how it can look. but it was really not driven by politics. it was driven by kind of the disconnect between the work of the nfs and our mandate. other central banks have different mandates and belong to the nfs. we have no no criticism of them, but it just isn't. it's not right for the fed. >> andrew. >> thanks. andrew ackerman with the washington post. i'm wondering if you could. >> talk more about. >> what further progress. >> would look. >> like for consumers. >> well, 2% inflation down to inflation, down to 2% sustainably is what we're trying to achieve. you know, we're we're somewhat above that, as you know. and you know we want to see, you know, cereal readings that suggest that we're making further progress on inflation. that's what we want to see. and consumers will will will pick that up, of course, in the things that they buy at the

grocery store, at the store. >> the other thing i. >> wanted to ask was just. >> how. >> far away you think. >> you are from neutral. >> yeah. you can't know with any precision, of course, as i like to say that you know, that you know, the neutral rate by its works. so i think, you know, at 4.3%, we're, we're above pretty much everyone on the committee's estimates of the longer run neutral. i think our eyes are telling us that our policy is having the effects on the economy. that's really the question we ask. you know, you can consult models, empirical models, theoretical models. you really have to just look out the window and see how your how your policy rate is affecting the economy. and i think we see that it's having meaningful effects in bringing inflation under control. it has helped bring the labor market into balance as well. so that's what we think. i would say we're meaningfully above it. i am i have no illusion that that anyone knows

precisely how much that is. and but, you know, not knowing that and having cut 100 basis points means that it's appropriate that we that we not be in a hurry to make further adjustments. >> victoria. >> victoria. guido with politico. >> so as a general. >> matter, when. >> it. >> comes to executive. orders and omb. >> memos. >> do those always apply to. >> the feds? sometimes. >> never. >> or do you. >> just often. >> voluntarily comply? >> what is what is the legality there. >> so it's been it's been our practice, as i mentioned, to work to align our policies to those that are mentioned in the executive orders. and that's i'm just going to leave it at that. as i mentioned, i'm not going to i'm not going to go any deeper than that or get into any deeper into this set of issues today. >> clare. >> clare jones from the financial. >> times i'm two questions, if

i. >> may. >> on tariffs. first of all, we've seen global. trade wars before. >> notably in. >> 2019 last time around. >> but then. >> we were in. >> a very different. >> place on. >> both inflation. >> and growth. if we see tariffs of. >> the same sort of. >> magnitude that we. >> got then, which i know is. >> big, if what. >> do you think might be different this time around? >> and secondly. >> tiff macklem said there was no doubt that. >> the. threat of. >> tariffs was a big. driver of the cut by the bank of canada today. >> what sort. >> of information would the fed need. to see. on tariffs. before it was willing to take. such a. >> preemptive move? thank you. >> sorry. >> what sort of information would. >> you need to see. >> on tariffs? would you. >> need to see a. >> strategy. actual implementation. >> actual movement. >> of inflation. >> expectations before you're actually. >> willing to change. >> the path of monetary. >> policy on the basis. >> of it.

>> yeah. >> so we. just so first of all, i think things are a little different now. we've just come through a high inflation period. and you can argue that both ways. you can you can say that companies have figured out that they do like to raise prices. but but we also hear a lot from companies these days that consumers have really had it with price increases. and so i don't know how that shakes out. nonetheless, you're coming through a situation where we're not quite back to 2% and that that's just different. in addition, you know, the trade, the kind of footprint of trade is has changed a lot as trade has now spread around. you know, it's not as concentrated in china as it was. there's a lot more manufacturing. they've moved to mexico and other places. so there are differences. and i just think the range of possibilities is very, very wide. we just don't know. and i don't want to start speculating as tempting as it is, because we really don't know. and we didn't know, by the way, in 2000 and i guess 18,