announce that there's no rate cut, right in we know there's not going to be a rate cut. there probably won't be any forward guidance per se, but that won't surprise the street. the street's only molding for just three rate cuts between now and the end of next year, december 2026. fed though, we know, is dealing with a lot including a pivot that really has caused them a rot of credibility -- cost them a lot of credibility. first we started with the shock and awe. they raised rates, had this massive hiking cycle that did not slow the economy. then, of course, rate cuts because they were worried about the labor market. well, guess what? no labor market issues now. inflation is their biggest concern. the 10-year yield continues to skyrocket after that first rate cut. you can see the red line there, it's never happened like this before9. let's go the washington, d.c. and edward lawrence. >> reporter: the federal reserve leaves rates unchanged now. it was a unanimous decision this time around on employment. the federal reserve made the big change in the statement say aing

the unemployment rate has stabilized at low levels, and that's a change from eased in the last statement, eased down. that may be a nod to them coming into full unemployment or full employment range where the federal reserve believes employment should be. the fed sees inflation somewhat elevated, however, the the fed sees risks to employment and inflation in balance as of right now according to the statement. the statement says the federal reserve sees economic activity expap banding at a solid pace. the statement says they continue to follow the data and this evolving economy. the committee says they remain committed to the 2% inflation target. the fed says it's ready to adjust monetary policy based on the risks they see coming in the economy should it e evolve. the fed also saying it will continue to roll off the balance sheet at preplanned rates and that is $35 billion in mortgage-backed securities per month and $25 billion in treasuries per month. the big headline, they leave rates unchanged. the current decision is unanimous here. but the fed saying the unemployment if rate has now

stabilized in that low area they believe it should be. charles? charles: edward, thank you so much, my friend. okay. we've got a lot to go over, so let's bring in qi research chief strategist danielle dimartino booth. i want the, first of all, get your initial thoughts on what edward just said and what we know so far. >> well, i think the biggest nod was to the fact -- the word stabilized, the fact that we have not seen the unemployment rate continue to increase. now we're going to have more onus yet on powell to explain that in his press conference because we have seen other measures of the labor market weaken. charles: if he's going to explain that, will he have to explain this? after the first fed if rate cut historically, rates go this way. this time around it's going this way -- the 10-year yield, rather. can anyone explain that? >> well, it is purely the risk premium which is not explainable. you cannot -- it's an inexplicable fact for because it's the not inflation expectations that are rising or

growth expectations that are rising. i think what the big takeaway should be is the fact that not just the unemployment rate has stabilized, but interest rates have come back down in the past few days. i it all started with governor christopher waller. charles: the fed came out with that 50 a basis point cut, and hen that last cut, it felt like every one of them just about said we were close, it was close. it felt like buyer's remorse. and they spent all month long sort of going over, okay, it's buyer's remorse. and before we're going if to proceed if with more caution, harker saying the same thing. we need to be dependent upon the incoming data. collins saying the start of thing, we -- sort of thing, we want to be gradual and patient. all of a sudden this fed that came out with a 50 basis point cut, they're saying, no, we need to see sustained progress. but waller, the most recent speaker, sounded a little bit like, no, march could still be in play. >> and it certainly could be because quietly at that press

conference powell and waller reiterated that the fed has a new inflation target that they're followinginging that is more market-based, more inflation data, including real rents instead of owner's-equivalent rent which is a bunch of hocus pocus in the model. that, once you put in that new rent index from the cleveland fed, ironically enough, that measure that a waller and powell have have cited is at 0.98% -- charles: that means rents are coming down a lot faster? >> yes. charles: okay. >> but the new gauge that they're following is more than one percentage point below the fed's 2% inflation target. charles: should they be following a new gauge for employment, for labor? >> their following a new gauge for inflation -- they're following a new gauge for inflation, and that's key because the biggest input, shelter, has come down hard. charles: it wasn't long ago the onus was on employment, the u3

number being 4.4, that was going to be their target. and, again, these numbers get revised so often -- >> they do. we with just had a big revision this morning. charles: i just don't understand. i don't get it. when talking about these rates and mortgages, now, of course the fed doesn't directly impact mortgages, but obviously, folks, you can see the parallel, right? fed if fund rates come down, mortgages usually ease up. but mortgage rates are really here, and at some point does the fed care about the housing market? young families buying a house? does the fed care about that? >> of course. the fed has to the care. they make policy for the public good, not for a few select individuals. and if whether you're talking about mortgage rates, credit card rates, auto loan rates for your average working american man and woman, they're still way too high. charles: all right. let's talk about this for a second. wall street thinks that that scare, that spike of the 10-year, that it's over. we can now see buyers are starting to really pick up here. this is jpmorgan, their clients are buying treasuries.

>> and they were just a hot minute ago -- charles: selling them. right. >> and now we've seen a major flip in positioning. charles: so is that, to you, does that suggest to you that that maybe the coast is career? >> i -- the is clear? in. >> i wouldn't say that necessarily as much as a there's a lot more uncertainty going forward about where this economy is headed. charles: so but why would wall street be buying? it's a dangerous guessing game -- >> it's not if wall street's starting to price n as waller said, a rate cut in march. instead of it just being two rate cuts -- charles: so you think there could be a rate cut in march? >> i absolutely do. you've got about a third of a probability of that going into this press conference. let's see what it is when we close today. charles: powell's going to be asked about president trump and tariffs. what do you anticipate him saying? >> luckily enough, the fed released their 2019 transcripts for the entire year today, charles, which goes through and blueprints how they handled tariffs back hen -- charles: but how do you handle a president that's calling you out, that says i know rates

better than you do, the fed is hurting the economy, they're hurting the agenda that the american public finish -- >> again, public affairs does not release an entire year of transcripts on the day the fed meets that blueprints how they handled tariffs in 2019 if powell's not going to fall back on that. and he's going to be asked about the balance sheet. charles: so you'll stick with me? >> absolutely. charles: this is boeing to be one heck of a press conference. of. >> i'm excited. charles: we're just moments away if comments from jay powell. of course, remember, this is the first fed meeting of 2025. it's extraordinarily important because the fed has pivoted, right? they had this dramatic rate cut, and it felt like we were going to have a series of rate cuts, and hen the all of a sudden they said, okay, we'll cut one more time. but as i started the show with, they cut and they had something of buyer's remorse. now, my next guest says the fact that they're not going to do anything could be intriguing because according to gabriela,

action is inaction. let's bring in gabriela santos. what does that mean? the inaction is action or action is in the inaction? >> there's still an active decision that was made today to pause the rate-cutting cycle and the hold rates steady. and i think part of it was communicated as the summer if jobs freakout had passed, the data's resilient. but i think it was also alluded at the december fomc meeting and the minutes that were released that there was also much more concern about upside risk to inflation related to policy developments out of d.c. and specifically tariffs. charles: okay. i'm going to ask you about that in a second. recently i saw some survey, they come out every day, that showed 40% of the respondents thought there could be a rate hike before the end of the year, right? we're starting to see this sort of news out here. rate hikes are back on the table. we're from an investing point of view, wall street point of view,

could wall street settle into a comfort zone where as long as the fed doesn't hike rates, they're okay in. >> i think for now that's where wall street is. it's a pause, but it's not quite the end of the rate-cutting cycle. there might be an expected two additional cuts, and even if it's just an end here where we are, i think that's very absorbed by wall street. equities can keep going higher, corporate credit spreads can stay tight. i think we really start pricing in rate hikes, that is a very different -- charles: right. that is game-changer. >> that is a huge game changer. not where we think we are on wall street. charles: i started with comments from fed officials. really everyone's cautious right now. and, again, you could feel a little buyer's remorse with that last rate cut. you already mentioned tariffs. you said, of course, they're data-dependent, and on fiscal policy, taxing and spending. this is stuff that plays out over time. are you suggesting the fed does nothing until hay get a clearer picture of all this stuff? >> i think they're being very

data-reactive the. and what they told the us at the december meeting is they're focus on jobs and inflation. they're also a going to be d.c. policy reactive, especially tariffs and especially what happens on capitol hill around taxes and spending and what that means for 2026 the in terms of growth and inflation. charles: let me switch to the market. bot to ask you your thoughts on deepseek because you wrote some good stuff on this, deep cooke a zeke in your portfolio -- deepseek. you said disruption's a feature of all of this. the next iteration of this theme is are -- where you want to be focused. value i'll valuations and expectations do matter. is that suggesting a lot of these stocks were or are priced for perfection? >> i think this is such an important point because what wasn't deepseek was the end of a.i. trade or the end of this this massive cap-x cycle that we're in related to a.i. but it was, an important part of

it was that reminder that a valuations and expectations matter. and last year you had seen a huge runup in everything that's needed for the digital and physical if build out of -- buildout of infrastructure. now there's some questioning around, well, are we maybe overpaying for that, overprojecting an adjustment, and that's why those were the areas that really tight on the chin on monday. so sizing's important, valuation's important, and investors are already on the next iteration of the a.i. theme. charles: i've got 30 seconds before i let you go here, and i want you to come back for the panel though. earnings, early in the earnings cycle, but optimism is off the charts. so far, so good. and companies that a had a beating are being rewarded so far. >> we're feeling good about earninginging season. we'll get a lot more today and later in the week with all the big ones, almost all the mag 7 this week. but we're feeling good. earnings are set to grow 1%. 12%. mentions of optimism, i think a lot related to this expectation of less regulation and more business-friendly environment.

charles: right. >> and lastly, i think the most important thing is a e minder that it's not just these tech companies growing earnings anymore, it's the rest of the market as well. financials had an amazing start -- charles: they kicked it off really, really nice. starbucks is acting today too. see you later on panel? >> see you later. charles: all right, let's stick with this because earnings are the other big, big store. they report after the close. tech stocks moving lower today. some of that's after yesterday's bounce, word that the trump administration considered curtailing some nvidia sales to china. and, by the way, those have been big bigtime sales from nvidia, we'll see. the other part of today's session is while tech is down, other parts of this market are higher including communication services. you know, it is not just about this deepseek thing, right? investors have to talk about the fact that, hey, earnings are rah really the mother's milk of all of this, and they'd better come out big for the mag 7 three of which report after the bell, so let's bring in danielle shea

shay -- danielle shay. thanks for joining us. i want to go through three names with you. i want the start with meta. first of all, folks, see this chart. st the absolutely, the chart is absolutely phenomenal. i've got it on the board here. it's breaking out. the chart is breaking out here really nicely on strong volume. it's been going up. this is what you call a work of art. this is absolutely beautiful. so if you're looking from if a technical point of view, it looks phenomenal. the earnings estimates are rising. this is what you want. three months ago the street was looking for 644, now 676. you want earnings estimates to be going higher. and then there's this, the history of the earnings, i don't have it in there, but they've done very, very well. where are you right now on this? are you long going in? >> charles, yes. i am a long meta. it's one of my larger positions. but i will caution investors here because, as you pointed out, this chart is absolutely beautiful, and the company has already rallied so far.

so when you're going into earnings on a new high like this, you have to expect that it could pull back even if they have a great report. so i'm not going to be adding right here, and i think that if you want to add, it's going to be the a much better opportunity after we end up getting a pullback on this stock. charles: all right. let's talk about microsoft for a moment because microsoft is almost the exact opposite. you can see here, folks, don't worry about whether they've beat. they always beat. they always beat. the reaction is what matters most, right in you can see most of the time the first day, particularly the last two quarters, they were down. the last four times they reported, a week later the stock was a lot lower. so that's not working in their favor. earnings estimates are coming down. remember, 323 to 310, that's not necessarily a good sign although it's a lower hurdle, right? and then there's the chart. it had a big swoon. it's been up here. it's curious here. where are you on microsoft? >> charles, i love microsoft. this is one of my largest positions in all my portfolios right now, and one of my

favorite things about this chart is the weekly chart. if you look at this chart, it's been consolidating for quite some time. it's pulled back, unlike meta, which means that it's a much better opportunity and a much better time to invest in the company. so i've been buying shares of microsoft, been buying the 2x etf, mpsu. i completely -- mfsu. it has been a inconsistent surrounding earning. half the time it's up, half the time it's down. but ultimately, we have a lot of catalysts with microsoft, potentially tiktok, of course, a.i., so i'm buying this thing. charles: all right, you're a buyer. we've got a minute to go, and we've got to get tesla in there. i just want to set it up for the audience, because this is intriguing. you've got to go back to 2022 when they reported, the stock got absolutely hammered, and since 9/11 it's been pretty intriguing -- since then it's been pretty intriguing. even though the company missed estimates, the stock went up. the last time they reported, they beat. the stock was up.

where are you on tesla? because if the earnings estimates are up, the chart has been pulling back here a little bit though though lately. >> charles, i like tesla, and i'm holding it. i'm not buying more right now because i do think that the macro situation situation is a little bit shaky. i wouldn't be surprised if tesla falls after earnings especially given all the price cuts over the course of the past two years. they've been problematic. you know, you have elon getting very political, so there have been a few issues. ultimately, i do like tesla, i'm holding it for the long term. i think the robots will be amazing and, ultimately, i'd loved to -- love to to see it about $500-600 a share. charles: to the recap, going into the close, you certainly -- meta, you would be a buyer or holder of met a into the close, microsoft but not tesla. >> yes, that's correct. charles: all right. danielle, great see you. thank you very much. >> thank you. charles: see you soon. hey, folks, a bill to audit the fed has been reintroduced.

senator rand paul will be here to talk about why this is a game-changer. plus, of course, we're just moments away from fed chair jay powell taking the podium. it is going to be a rock and roll rest of the show. stick with us, we'll be right back. ♪ ♪ the club can't even handle me right now. ♪ watching you watching me, i go all out. ♪ the club can't even handle me right now ♪

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charles: all right, folks, the fomc announcing no rate cuts and no hikes. in a moment, of course, jay powell will hold the live press conference. wall street hanging on every word. markets, of course, hanging on every word. they will react. but it's main street that is in a no-win situation, perhaps. think about this, jay powell will end his prepared remarks with this statement, our success in delivering these goals meat matters to all americans. we understand that our actions affect communities, families and businesses across the country. everything we do is in service the our public mission. we at the fed will do everything we can to achieve our maximum employment and price stability goals, thank you and hook forward to your questions -- look forward to your questions. higher rates, guess what the? they've only helped corporations. net payments down in that orange line, but you and i as taxpayers, we're paying a trillion dollars a year on the debt that the government has. huge dividends going to all these rich folks, and they keep buying things. if if you're an investor, think about this: the world's greatest

investor ever, warren buffett, is sitting on the most cash he's had ever, $352 billion. why the isn't the greatest investor in the world investing? he doesn't have to. he's making tens of beings of -- billions of dollars from higher interest rates. but they haven't brought down home or auto insurance, rents. oh, by the way, egg prices? through the roof. coffee prices, through the roof. of there's nothing the fed can do about this, so i say maybe we should think about retooling the creature this -- from jekyll island and put it back together with main street as the focus. not banks or the ultra-wealthy. my next guest has introduced and reintroduced a bill to audit the fed. let's bring in senator rand paul from kentucky. thanks for joining me. >> thanks for having me. charles: am i going too far in saying blow the whole thing up and put it back together? [laughter] >> well, it's funny how conservatives are worried about prices and we know that price

controls are bad. if you put the price of bread or eggs too high or too low, you cause shortages or scarcity of goods or you cause surplus. same with money. if the government sets the price of money. many conservatives sort of lapse there, and they say, well, we need the federal reserve to set the price of money or interest rates. and in reality, probably interest rates are more important than any other price in the marketplace because their so diffusely attributable to everything we do in the marketplace. and that's why i think we should have less fed involvement in this. but when you talk about, you know, high interest rates, i think the one thing if you talk about real interest rates now, you know, interest, you know, minus the inflation rate, i think you're still talking about relatively low, if not negative interest rates. and there is a boom and inflationary pressure from all these new money is in the marketplace, so there's a question of whether the marketplace is overbid. things don't correct as well as they would if the interest rates were freely good luck what it --

fluctuating. so i think what you'd get is a quicker correction but less of a bubble but also less of a burst when it finally bursts. charles: so if there was the ability for congress or some other branch of government to actually audit the fed, what would they be able to do with the findings? >> well, it'd be a lookback, so it wouldn't be like, you know, simultaneous to the 24-hour cycle. so i don't think it would disturb investments or affect investments. but we'd be looking back over the previous year. we would know what the fed owns. i'd like to know does the fed buy usedded car loans? does the fed buy with, you know, bonds that are not of value? what kind of things does the fed own? the fed owns, what, $9 trillion worth of stuff. what are -- what is included in the fed's portfolio? if we need to know more precisely. and we do need to know, you know? once upon a time the dollar was backed by gold, now the dollar's backed by debt, but what is that debt comprised of?

aaa, aa, a, dd, what ises the debt the fed owns? and i don't think we know as precisely as we could as if we were to get an audit. charles: i want to ask you about president trump kicking up a hornets' nest, hey, if federal workers don't want to come back, we'll buy you out. i love the idea, particularly because it seems like the media hates it. what are your thoughts? >> we have a $2 trillion deficit annually. we need to do everything. we need to throw everything at the problem, everything and anything the president can do to try the downsize government, he should. the opposite extreme happened under biden. they started signing contracts the try to have 5-year contracts to prevent them from being fired and to prevent them from coming back to work. so everything they can possibly do to reduce the size and scope of government, we have to do. but they're going to have to do that that and some, because realize two-thirds of spent spending is entitlements, and nobody's yet talking about into it with elements. a third of the government we

vote on in the budget is called discretionary, half of that's military, and all the hawks in my caucus are trying to bust the budget on military right now. so we have no work on entitlements, wassing the budget on military -- busting the budget on military. there's only 16% of the budget they're looking at, and it's not enough to get anywhere near balancing the budget with. so i'm for doing more, i'm for looking at every dollar spent. and anything they can do that's disruptive, go on and do it. we ought to try to reduce the federal work por. charles: i want to ask you quickly about deepseek. i know you're a big fan of competition, you don't like a lot of meddling. but it feels like there's some shenanigans, word out moments ago that maybe the trump administration will restrict some additional sales from nvidia. how would you handle a situation like that is? >> laissez-faire, leave them alone. leave all contracts alone. don't tell nippon steel they can't can't buy u.s. steel. don't tell jetblue they can't merge with spirit because with, guess what?

spirit went bankrupt and 13,000 jobs were lost. i don't want to see that happen to u.s. steel, i don't want to see the government involved in transactions or mergers. the only antitrust or merger action that should ever occur is if you have proof that a merger has cause, not will cause, but has caused manipulation of the price where the consumer is losing. the consumer model. big is not bad. and rarely, if ever, can you prove that a company actually controls price in an upward fashion. so i'd say laissez-faire. let's get the government out of business. charles: all right. senator paul, thank you so much. always appreciate it when you come on, especially on fed day. thanks a lot. >> thank you. charles: all righty. i want to bring back in danielle dimartino booth and gabriela santos. ladies, it's so interesting, because jay powell is between a rock and a hard place in two ways. i think the dual mandate, obviously, from time to time causes headaches. but now there's serious pressure on him, gabriela. president trump, he might actually post something on

social media during the next 30 minutes. i know the fed says it doesn't bother them, but they're human, right? >> i'm sure they are human, but i'm sure they're also very focused on the dual mandate. and as chair powell said a couple of meetings ago, i think don't guess, assume or speculate, and they really focus on both sides of the mandate. but what was a bit confusing to the market was then at the december meeting, kind of explicitly calling out d.c. policy -- charles: right. >> -- as something that would shape their action this year. i think the way to square that circle is to say they won't be proactive about implementing policy based on potential policy, but they will very much monitor the impact on tear forecasts on both sides of the mandate going forward. charles: see, this is the part that bothers me, right? if first of all, i don't know, you have an army of ph.d.s, right, and you have history on your side and all these tools on your side, and yet, to your point, i think the reactive fed, being reactive to the data that's going to be revised later

and markets have to pay a price for that. i just feel like there's got to be a better way. then assuming, making assumptions. okay, let's say over the weekend those tariffs go into place existence mexico and canada can. what -- against mexico and qanta do. wouldn't they have to wait to see what the impact will be? >> they will because in the 2018-2019 episode, it took a good 12 months before we saw those tariffs show up in goods inflation. and it depends on what the composition of the tariffs are going to be, if they're targeted. is scott bessent, treasury secretary, as he's said. they can't be reactive the something that they don't see in front of them. but what we're seeing in bond yields is the fear of a repeat of what happened after those tariffs were imposed. but, of course, that involved sending americans trillions of dollars in cash as well -- charles: well, that was from covid though. >> right. but one followed -- no. again, the transcripts came out today, and they were talking about the u.s. economy falling into roadway session in 2019

because -- recession in 2019 because trade had fallen. chas charles despite those tariffs, the stock market had -- the only reason the stock market was anti at all was because of anxiety about the fed, not tariffs. so i feel like this fear-mongering of it all is worrisome to me as an investor. >> i think what we're seeing play out in this reactiveness of the fed the data, to policy, is that bond yields have stayed very volatile. equity market volatility's really low, but interest rate -- >> who do you trust the most, the bond market or the stock market right now? >> i think they're looking in slightly different things, in a way as they should. the stock market is looking at very strong earning, season, recovery in other parts of the market, focusing on deregulation and higher confidence is filtering through to the abandonment line are already whereas i think the bond market through higher real yields is pricing in more uncertainty about the impact of this policy. and it's pricing in higher deficits and more debt issuance.

charles: powell will be up in less than a minute. danielle, what do you expect to hear? what would you like to hear. >> this. >> i'd like to hear why he thinks the progress has been stalled on making progress on inflation unless he's going to throw out the baby with the bath water and steamroll his closest confidant, christopher waller. that's what it's going to take for powell to not flip-flop again after what he said a at the december fomc. if he's going to back up these comments that we're in the -- that were in the statement. we're going to have to see. charles: you look at a lot of labor data that, do you think it's as strong as the the board is saying? >> the retracement many tech prices yesterday, and yet bond yields did not go up at all was because the jobs hard to get metric was so so bad that the it implied using a one-factor simple regression. we're talking about 896 months of data. the fed officials today completely dismissed as well as the butter-death adjustment that came out -- birth-death

adjustment that came out at 10:00 this morning that said payrolls had been oversated by 57,000 a month. they're dismissing all of the data right now. charles: gabriela -- you know what? hold that thought. by the way, folks, we'll chime in from time to time as the markets move. >> my colleagues and i remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of if 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 remain 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 above 2%. bolstered by resilient consumer spending. investment in equipment and intangibles appears of 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 of the 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 4.31% in -- 4.1% in december remains low. nominal wage growth has eased

over the past year, and the jocks to workers -- jobs to the workers gap has narrowed. a wide set of indicators suggests 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 many 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 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 if maximum employment and stable prices for the american people.

if we see the risks to achieving our employment and inflation if 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 4.25-4.5%. we know that this 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. in 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 if on any preset course. as the economy involves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. president economy remains strong and inflation does not continue to move sustain by 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 5-year 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 that onboard 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 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. >> [inaudible] >> reporter: chairman, steve liesman from cnbc. mr. chairman, at a event many davos -- the davos anyway, the president said he'll demand that interest rates drop immediately. so i guess i a -- have a three-part question. has the president done this? has he made that demand? secondly, what is your response to that and, third, what effect, if any, does a president making these kind of remarks have on policy? thank you. >> three questions. >> [inaudible] >> i'm seeing it really as one question though. so i'm not going to have 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 to 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 to we best serve the public. >> reporter: [inaudible] communicated this demand finish. >> i've had no contact. thanks. >> nick. >> reporter: nick timiraos, "wall street journal." chair powell, you and several of your colleagues said a around the time of the last meeting that your policy stance was meaningfully restrict the we've. given economic and financial market developments since then, how has your confidence changes in -- changed in an assessment that a 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 a 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 and housing and you look at our goals there. we're seeing the economy move towards 2% inflation and has moved largely to maximum employment. so we literally look at the 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 1000 basis points concern 100 basis points less restrictive, and for that reason we're going to be focusing on seeing real progress on inflation or some weakness in the labor market 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 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 goals. we want, policy to be restrictive enough to continue to foster further progress toward our 2% inflation goal. at the same time, we don't need to see further weakening in the labor market to aa chief that goal, and that's kind of what we've been doing. the labor market has been broadly stable, the unemployment rate has been broad ifly stable now for six months. conditions seem to be broadly in balance. and i'd say you look at a the last couple of inflation readings, and you see -- we don't overreact to with to good readings or two bad readings. but nonetheless, the last couple of readings have are suggested more positive readings. so i think we're -- i think policy's well positioned. >> colby from "the new york times". >> reporter: colby smith with the new york times. chair powell, how should we interpret the removal of the line from the statement that inflation the has made progress towards the 2% goal? is that no longer the case?

>> no. so let me -- if you just look at the first paragraph, we did a little bit of language clean-up there. we took out a reference to since earlier in the year as it related to the labor market, and we just chose the shorten that sentence. again, i mean, if you look at the sort of intervening data, it was good. and there was another inflation reading, i guess, just before the december meeting. so we got two good readings in a row. again, we're not going to overinterpret two good or two bad meetings, but this was not meant to take a signal. you can take away from all of in that we remain committed to achieving our 2 inflation goal sustainably. >> reporter: to follow up, we've seen inflation expectations across a number of measures rise sharply which has in part been linked to tariff concern, but there's also been this encouraging data that you mentioned in terms of cpi and rent indices. how would you characterize concerns about upside risk 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 is where it really matters x. those 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 w. i e don't know -- we don't know what will happen with tariffs or, with immigration, with fiscal policy and with regulatory policy. we're only just beginning to seg to see much. and i think we need to let those policies be articulated before we can even begin to make a. [applause] if, assessment of -- applause -- a plausible assessment. this is no different than any other set of policy changes at the beginning of an administration. we'll patiently watch and understand and, you know, kind of not be in a hurry to get to a

place of understanding with what our policy response should be until we see how it plays out. >> [inaudible] >> reporter: michael mckee from from bloomberg television and radio. you and your colleagues normally condition future policy moves with the phrase, "economy develops as we anticipate. is it fair to say 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, immigration, fiscal policy and regulatory policy. so there's probably some additional uncertainty. but that should be passing. western go through that, and then -- we should go through that, and then we'll be back to the regular amount of to uncertainty. what forecasters are doing is even's got sort of a set of assumptions about what might happen, but they're really in the nature of a placeholder meaning, you know, plausible could be but, honestly, you wouldn't sand behind it because you just don't know. you're just on hold waiting to see what comes down. you know, it's a very large economy, and policy's affected at the par ginful we're going to wait and see. >> reporter: if i could follow up, the idea that you feel the economy -- that policy is restrictive suggests at 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 day that that -- data that that tell you you can cut or data that will tell you you should hold? >> you know, we're -- [laughter] we're looking -- it's more -- 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 many a very good place. policy's well positioned, the economy's in quite a good place, actually, as well. and 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. right now we don't see that 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 the make any adjustments.

>> [inaudible] >> reporter: 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 equipment to diversity and inclusion. these organizations consistently attract the best talent by investing in and retaining a world class work force. 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, reviewing the orders and the associated details as they're made available. and as has been our practice over many administrations, we are working the 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. >> reporter: well, if i could e just follow up quickly on that, i'm wondering how you're getting that to be consistent with the dodd-frank law stipulations about maintaining an office of minority and women's inclusion? >> so i did, i did mention consistent with applicable law, right? >> reporter: [inaudible] if. >> elizabeth. >> reporter: thanks very much, elizabeth -- [inaudible] follow up on steve's question. what reassurance can you give the american public that the fed if will continue to operate independent of politics under this administration? >> you know, as i've said countless times over the years, 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 give it

our best understanding, our best thinking to try and achieve our goals. that's what we do, that's always what we do. don't look for us to do anything else. and lots of research shows that's the best way for a central -- charles: all right, folks, jay powell taking questions. i want to jump in here for a moment, bring back danielle dimartino and gabriela santos. i would say maybe 70% of the questions were goading or attempting to goad powell, powell versus trump policies. the very first question out the gate, we got a question on dei. i can't believe it. of course, that kind of pissed him off a little bit. and the last question we were just listening to, independence of politics. i thought there'd be with a good time to chime in and see, danielle, the statement. early on that seemed to be the story. >> it did. carls charles the statement was interpreted to be hawkish, but you're saying, no, if you listen to powell, he's not hawkish. >> he said we've had two good inflation reports in a row, and he said not to read too much into the statement and bond yields --

charles: but he knows we're going to read into the statement. the fed knows that. >> the fed may know we're going to read into the statement, but, charles, every single word in the statement can take one or two hours per concern in the meeting. every single word, which means he has to find a consensus. they provide them with three or four different statement options, and this whole committee has to decide on what every single word is going to say. he just talked down the statement himself with his own views. charles: gabriela, when he started, the s&p was at 6014, we're at 6048, but it looks like heir waiting, the markets are still waiting for that moment, that spark, right? not sure where to go. we know a lot of times the last hour of trading can be nuts. what are you seeing so far? >> it can be. and i do think this is a fairly, shall we say, boring fed meeting, and i do think the -- charles: he doused it pretty good at the beginning. >> he did. he got back to to it's about

policy, not politics, and he talked down the perhaps hawkish tone that the statement had on inflation. he went even further, being pretty dovish on inflation. the labor market is not a source of inflation pressure. he said long run inflation expectations are well anchored. yet there are cheerily different views within the -- clearly different views within the committee -- charles: on a scale of 1-5, is march back on the table, gabriela, in your mind. >> i do not think so is. they're reactive to policy, and april 1st is an important deadline for review of trade policy. we might get tariff information which, clearly, members of the committee -- charles: you think it might be in play, no? >> i do. i think he is going to truly be data-dependent as opposed the being swayed by old politics which he said about 30 different ways. if we see jobs are hard to get type of reports, i think march -- charles: and the revisions, they were major revisions that -- >> 57,000 per month that that

they imputed incorrectly that they then took out of april, may and june of 2024. these are huge revisions that the fed's having to contend with, and it's very difficult to make policy this way. charles: ladies, thank you both. let's go back to jay powell and the fomc question and answer period. >> remember, we're not -- you know we're under 2%, but our goal is 2%, and we do need to get back sustainably to 2%. >> reporter: and in terms of the labor market, i mean, how -- is that that broadly, you know, you said a broad set of indicators show that it's in a 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, start with, you know, the understood employment rate, employment if 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 hiring environment. so if you have a job, it's all good. but if you have to find a job, the job-finding rate to hiring rates have come down, and that's for typical of a, let's say the unemployment at the labor market is at a sustainable level. it's not overheated anymore. we don't think we need it to the cool off anymore. it's one of our two goal variables, but, yeah, i'd say we watch those things quite square through. -- carefully. nonetheless, overall look at a the aggregate data in the labor market. it 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 a year. >> edward. >> reporter: thank you. thank you, mr. chairman.

edward lawrence with fox business. on employment, 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 flow across the border has 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 sort of can be a reason for the unemployment rate the stabilize. in other words, the break-other than rate as population growth slows, the break-even rate that you need in new jobs to make, to make jobs for workers declines as well. so that seems to be something ab what's happening. you do see a very flat if

unemployment rate at a time when you've seen significant declines. >> reporter: 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 work force. i just want to get your reaction. >> you know, we run a very careful budget process. we're fully aware that, you know, we owe that that to the public, and we believe that we do that. i've got no further comment than that. thanks. >> chris. >> reporter: chris -- at associated press. president trump has a 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? enter i'm not going to react or discuss anything that any elected politician might say. so i'll give you a mulligan. [laughter] >> reporter: thank you. nearly two weeks ago, the fed said it was withdrawing from the

if network for greening the financial system even as we have significant wildfires in los angeles doing billions of dollars in damage, and of course, the ngfs, as owe 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 that organization? can you explain that decision? >> sure, i'd be glad to. so we considered this really at length, and we kid decide to withdraw from the ngfs, and really the reason is the work that the ngfs the does has broadened very significantly. nature-related risks and biodiversity, things like that. in addition, the work of the ngfs is 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 aticket to the -- attribute to the fed. so we have a quite narrow role as i've said many times, and i think that the activities of the ngfs is 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 with, 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, the process just took time to to get here, and this is when we got it and voted on it. i'm aware of how it can look i but it was not driven by politics. it was driven by the disconnect of the work and our mandate. other central banks have different mandates that gong to the ngfs. we have to no criticism of them, but it just isn't, it's in the right for the fed. >> andrew. >> reporter: 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 2% sustainably is what we're trying to achieve. you know, we're somewhat above that, as you know, and, you know, or we want to see, you know, serial readings that suggest that we're making further progress on inflation. that's what we want to see. and consumers will pick that up, of course, in the things that they buy at the brosly store, at the store -- grocery store, at the store. >> reporter: the other thing i wanted to ask is how far you think you are away from neutral. >> yeah. you can't know with any if precision, of course. as i like to say, you know the neutral rate by its works. so i think, you know, at 4.3 we're above pretty much everyone on the chief's estimates of the -- committee's the estimates of the longer run neutral. i think our eyes are telling us that our policy is

i think our eyes are telling us the policy is having the effect on the economy. you can consult models, theoretical models. we have to look at the window and see how your policy rate is affecting the economy and it is having meaningful effects in bringing inflation under control. it helped bring the labor market in as well. that is what we think, we are meaningfully above is to. i have no illusion anyone knows precisely what that is but not knowing that and having cut 100 basis points means it is appropriate we not make further adjustments. >> so as a general matter when it comes to executive orders and omb memos do those always

apply or do you often voluntarily comply? >> it is our practice as i mentioned to work to align our policies to those mentioned in the executive orders. i'm not going to go any deeper than that or get into deeper this set of issues today. >> the financial times, two questions on tariffs. first of all, we have seen global trade wars before, 2019 last time around. we read then in a different place with inflation and growth. the same magnitude we got back then, what do you think might be different this time around?

secondly, there was no doubt the threat of tariffs the they drive the bank of canada today, what sorts of information with the fed need to see on tariffs before such a preemptive move, what information would you need to see on tariffs? would you need a strategy, actual implementation, inflation expectations before you are willing to admit the path of military policy on the basis of it? >> things are different. we've come through high inflation period and you can argue that both ways, companies figure out they like to raise prices but we hear a lot from companies these days that consumers had it with price increases. coming through a situation we are not back to 2% is different. in addition, the footprint