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FOMC Press Conference, October 28, 2026 — Transcript

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0:09Good day.
0:11This morning, the FOMC decided to
0:13maintain the target rate for the federal
0:16funds rate at 3 and 3/4 to 4%. In
0:19support of the Federal Reserve's dual
0:21mandate,
0:22economic activity is expanding at a
0:25strong pace. While uncertainty remains
0:29owing in part to geopolitical
0:31developments, domestic spending has been
0:33resilient,
0:35productivity growth is strong and
0:37capital investment robust.
0:40Job gains have kept pace with the
0:42workforce and the unemployment rate has
0:44changed little, but inflation remains
0:48elevated. The committee believes that
0:50the accumulation of more information
0:53will help it determine the policy stance
0:56appropriate to ensure a timely return of
1:00inflation to the 2% goal. The committee
1:03will deliver price stability.
1:05At each policy meeting, my colleagues
1:08and I assess the economy by looking out
1:10the window. It's what we call
1:12interrogating reality to gauge what's
1:15really going on. It is not a task that
1:18has grown easier. So what exactly do we
1:21observe?
1:23Economic growth has strengthened.
1:26The GDP increase in the first half of
1:29this year was revised up from an earlier
1:33estimate of 1.8% up to 2.4%.
1:37And the third quarter appears to have
1:39brought an even more rapid advance led
1:41by healthy consumer spending likely
1:44running above 3% growth. and business
1:47investment investment likely rising at
1:51about a double-digit pace. Capital
1:54expenditures are at a historically high
1:56share of GDP.
1:58High-tech investment is leading the
2:01acceleration, but there's also been a
2:03broadening in other categories, and
2:05these trends bear watching. What about
2:08the jobless rate? The jobless rate is
2:11lower than a year ago. And payroll
2:13growth is noticeably above last year's
2:16pace. The four-week moving average of
2:19unemployment insurance claims continues
2:22to run at the lowest level in
2:24generations.
2:26So on the employment side of the Fed's
2:27dual mandate, conditions are quite
2:30positive.
2:32And yet Americans of course are still
2:34dealing with inflation that has been
2:36running above the committee's objective
2:39for close to six years. It's our
2:42responsibility to get inflation down.
2:45That's the reason the FOMC's discussion
2:48over the last couple of days focused
2:50mainly on the price stability side of
2:52our remitt.
2:55Since our policy action in September, we
2:57have started to see some changes in
3:00financial and credit conditions. They
3:03have tightened for some businesses and
3:05households, much as we would expect.
3:08Market participants are becoming
3:10somewhat more discerning in their
3:11capital allocations.
3:13And while overall financial conditions
3:15are tighter, I'm unwilling and unable to
3:19call them tight. But broadly, these
3:23developments go in the direction of
3:25achieving a longer, more durable period
3:28of economic growth and price stability.
3:32Over the last couple of days, the
3:33committee had a good discussion of the
3:36changes in the economic and financial
3:37landscape that marked this intermedating
3:40period. We discussed geopolitical
3:42developments and fast-moving changes in
3:45technology. We observed but were not
3:49surprised that financial markets showed
3:52bouts of volatility and shifting
3:54correlations.
3:56So as we widen the frame to survey the
3:59broad economic and financial picture,
4:02real activity is clearly pointing in the
4:04right direction. That's good news. But
4:07inflation is too high. Energy and
4:10related prices have moved higher again
4:12in recent weeks. And our job is to
4:15ensure that relative price changes in
4:17some sectors do not broaden out across
4:21the economy and that inflation
4:23expectations remain as they are
4:26anchored.
4:27While these uncertainties are real,
4:29there's no lack of clarity in our
4:31purpose at the Fed.
4:34Since becoming chairman just five months
4:36ago, I've been honored to work with FOMC
4:39policymakers who are unambiguous in
4:42their commitment to stable prices. We've
4:45made clear our readiness to act as
4:47circumstances require and we have shown
4:50our willingness to act.
4:53The information we receive over the
4:55coming period will help us determine
4:58where we want policy to be. And at every
5:01turn, good or bad, our job is to get
5:04monetary policy right. And that's
5:06exactly what we're doing. Now, with this
5:09objective in mind, we've decided on a
5:11change in our FOMC schedule starting
5:13next fall. We believe eight meetings per
5:17year is the right number for the FOMC.
5:20But in 2027, one meeting will focus
5:23exclusively on broad monetary policy
5:26strategy with neither a vote on the
5:28federal funds rate nor a policy
5:30statement anticipated. The rest will be
5:34regular FOMC policy setting meetings.
5:37And I expect that in 2028 we'll have two
5:40meetings dedicated to discussions of
5:42strategy and six for setting policy.
5:46Now what's the reasoning behind this
5:48change? To me it's quite
5:49straightforward.
5:51Getting policy right involves assessing
5:53near-term developments at timely,
5:56regular, and informationrich intervals.
6:00But it's equally important we reserve
6:03time and space as an intellectually
6:05diverse group for strategic
6:08deliberations for thinking a new about
6:10big questions looking out over longer
6:13time horizons focusing as I say on the
6:16left side of the decimal point. I
6:19believe the setting of the meeting
6:20schedule and agenda is more than some
6:23administrative detail. It's an
6:25institutional choice affecting the
6:28nature and the quality of our
6:29deliberations and ultimately the wisdom
6:32of our decisions.
6:35It's yet another change to get the
6:37conduct of monetary policy on the right
6:39track. I appreciate your attention this
6:42afternoon. Now my time is yours and I
6:44welcome your questions.
6:49>> Thank you. Colby Smith with the New York
6:50Times. There's been essentially no
6:53progress toward the 2% inflation target.
6:55The labor market remains stable as you
6:58suggested in your opening statement and
7:00most of your colleagues seem to be on
7:02board with raising rates in December. So
7:04why not just raise rates today?
7:07>> Um so it's a good question. I will say I
7:10read your stories the last day or two so
7:11I must admit I sort of saw saw that
7:13question coming. Um
7:16uh what I said in my prepared statement
7:19um was information coming in the coming
7:21period will help us tell us where we
7:23want to be but I suspect you want a
7:26little more than that. So let me let me
7:27give it a shot. Um ensuring price
7:30stability colby quashing inflation is
7:34not about some fixed in individual date
7:37on a calendar. Same way it's not about
7:40some isolated data point. If it were
7:44about those two things, this job would
7:46be easier and we wouldn't be suffering
7:48from nearly six years of inflation above
7:50target. So what's this about? It's about
7:54ensuring we have clear objectives and
7:56it's about a monetary policy strategy
7:59which might sound to your ear and others
8:01like a change from the last several
8:03years. So let me step back. Uh, in the 5
8:07months or so that I've been around,
8:09we've put in place what I describe as
8:12new monetary medicine. Well, what's been
8:15in that package of medicine? First thing
8:18we did when we showed up with my
8:20colleagues is we doubled down on the 2%
8:23inflation target. We said, "We own it.
8:27We're taking responsibility for it. And
8:29if you think that we're tolerating some
8:32inflation target somewhere in the twos,
8:33let us disabuse you of it." That was the
8:36first part of this new monetary
8:38medicine. Second part is we took
8:40responsibility. No anguish of central
8:42banking here. No blaming others. It's a
8:45third thing that we've done. We laid out
8:47for you and the world our framework. I
8:50did it in Jackson Hole uh was part of
8:52the discussion the last couple days is
8:53the framework that many of my colleagues
8:55Q2 as well. This is how we think about
8:58how monetary policy should work. These
9:01are the transmission mechanisms and this
9:02is how we're going to deliver. Then what
9:05do we do? We interrogate reality. We do
9:07that periodically. That's a very useful
9:09thing to do. But we don't just talk, we
9:12act. And so in September when we last
9:15met, we acted. We removed a dose of
9:18accommodation.
9:20So what are the signposts about how this
9:22new strategy is going? Inflation
9:24compensation as measured by swaps
9:26prices, many other measures. Inflation
9:28compensation is going in the right way.
9:31Uh inflation expectations. The world is
9:34quite unsettled.
9:36Um, if you'd say absent the Fed, what
9:39would have happened to expectations?
9:41They might have gone the wrong way.
9:42They've gone the right way, too. So, I
9:44feel good about those signposts. The
9:47period right in front of us is
9:50information rich. There is a lot that's
9:52happening uh in the world. My colleagues
9:55and I are keen to take notice of it. So,
9:58in this coming period, what do I think
10:00we're going to be able to do? we're
10:02going to be able to figure out what's
10:05the appropriate protocol as part of this
10:07package that we started deliver five
10:09months ago to deliver price stability.
10:12Uh I'm encouraged by the progress we've
10:14made in a short period of time. But if
10:16the crux of your question is you haven't
10:18delivered yet, you haven't achieved
10:20price stability, you're right about
10:21that, but we're working on it.
10:29>> Thank you, Chair Wars. Uh so if I could
10:32this statement says that the
10:34accumulation of more information will
10:35help the committee determine the policy
10:37stance appropriate to ensure a timely
10:39return of inflation to the 2% goal. Does
10:43that mean that the current level of the
10:44Fed funds rate might already be the
10:45right one?
10:49Well, um
10:51we've got to determine the appropriate
10:53protocol.
10:54Um, if you were listening next to me in
10:58that room the last couple of days, the
11:01overwhelming consensus, the overwhelming
11:03judgment is that what we've done in this
11:07monetary medicine starting to work some,
11:10but there's no firm conclusions. If we
11:12had a firm conclusion about the conduct
11:14of monetary policy, we'd announce it to
11:17much fanfare today. What we decided to
11:20do was to Col's question, take stock of
11:23where we are, evaluate what we're seeing
11:25out the window, ask ourselves whether
11:28the period right in front of us is
11:30likely to provide more clarity on the
11:32appropriate protocol. My judgment, the
11:35judgment of my overwhelming number of
11:36colleagues is that it would.
11:40>> Steve, please.
11:45>> Mr. chairman. Um before uh thanks for
11:47taking our questions. Before the uh the
11:49meeting, uh several uh members of the
11:52board and the committee went out and
11:54told us that it was going to take more
11:55time and that had a profound effect on
11:57the outlook for the for the funds rate.
11:59Were you involved in un in in uh
12:02discussing that message with them? And
12:04if you don't mind, I'm sorry, but a
12:06protocol question. What will be the
12:08disclosure, public disclosure on the
12:10meetings where you're not going to have
12:11a statement? So, two questions. I'm
12:12sorry.
12:13>> So, two questions. Did you not hear the
12:15one question rule?
12:16>> I I I did, but I thought there was like
12:18a protocol thing I could do.
12:19>> I would um that was like a parliamentary
12:21procedure question you were asking. That
12:23didn't count. Um I hesitate to indulge
12:26the second question. I fear what it
12:28would do. But let's let me see if I can
12:30do it and not have the slippery slope
12:32among us. Um your first question was
12:35about my colleagues. Um I've got 18
12:38quite independent colleagues. If you
12:40were inside that room the last couple of
12:41days, you would uh come to believe that
12:43to be true. Um, one way to test the
12:47independence of my colleagues is, I
12:49don't know if you've heard, Steve, but I
12:50don't submit a dot. I don't plan on
12:52submitting a dot, but the 18 of them do
12:55to suggest somehow that I am um some
12:59kind of uh all- knowing person sending
13:02messages out that that's not the
13:04committee of the FOMC that I know. Um
13:07these are serious, sober, responsible
13:09people. We had a serious sober
13:11discussion. Uh so that's the answer to
13:13that. On the parliamentary question,
13:14which doesn't count as a question, I'll
13:17just say this. Um we've made a decision
13:20that at that strategy meeting in 27 and
13:22the two strategy meetings in 28. I do
13:25not anticipate uh making any policy
13:27decision, putting out a policy
13:28statement. But what might we come out
13:31with? It's not obvious yet. There's more
13:33news to come on that. Uh the decision on
13:36the new format for the meetings is
13:38relatively new. Um it was a robust
13:42discussion over a couple of meetings of
13:43how to handle that as we get details of
13:46that which are still now not until next
13:48fall. We'll be prepared to share them
13:49with you
13:51>> Nicole.
13:54>> Hi Nicole. Good with Barren. Thanks for
13:55taking my question. Um, in September you
13:58mentioned that the Fed has a role in
13:59sustaining the economic progress
14:01happening in America right now and in
14:02the rising opportunities that come with
14:04it. I'm wondering if you can expand on
14:06whether you see this as a mandate and
14:08how you intend to fulfill that mandate.
14:11>> So the mandate was given to us by
14:12Congress. The mandate was deliver stable
14:16prices and deliver full employment all
14:18in the context of of financial
14:21stability. Now, they gave us some other
14:22homework to do on supervision and
14:24regulation and payments, but I presume
14:26you're you're talking about monetary
14:27policy. So, what's the best thing we can
14:31do in this environment looking at our
14:33window to deliver on that remitt? Ensure
14:36stable prices. I mentioned, I think at a
14:38prior press conference, if you were
14:40trying to do the most harmed, the least
14:42welloff among us, you would let the last
14:45six years of inflation uh above the
14:48Fed's target, usually well above the
14:50Fed's target. You'd let that continue.
14:52So, that's the most important thing we
14:54can do as we look out the window. And
14:55that's what we plan to do. You probably
14:57heard me say this, we will deliver price
14:59stability. No ifs, ands, or buts, and
15:01that continues to be the case.
15:06Mer was
15:08>> Elanar Mueller was before wanted to ask
15:10you about the working groups when we can
15:12expect the reports to come up and if
15:14there is anything you can preview for us
15:16whether it's on AI or data or balance
15:18sheets.
15:19>> Sure. Um
15:22these five um task forces are hard at
15:26work. I have scarcely seen anything that
15:28would constitute a final report, but I
15:31have done some periodic check-ins with
15:33them and I am impressed by the rigor of
15:36the intellectual discussions, by the
15:38seriousness of the task that we've given
15:40them. Um, now some of the questions that
15:43I ask to kick off the reports, uh, they
15:46want to answer those and answer a whole
15:47range of other questions which might go
15:49to other task forces, but I'm impressed
15:52by what they're doing. Um, I gave them,
15:54like I told you, a a year-end deadline.
15:58I think some, but not all of the groups
16:00will probably hit their deadline and
16:02turn their homework in on time. But that
16:04just begins the process by which we're
16:06going to be consuming, which is
16:08intellectually serious work. That's a
16:11catalyst for us to think a new about
16:13productivity and jobs and an inflation
16:15framework and what's the best data to
16:18help us do our job. How to think about
16:20the balance sheet task force. Um these
16:23are huge intellectual investments that I
16:26think are going to bear fruits in the
16:28next policy conjuncture um unlikely to
16:32find their way into this policy
16:34conjuncture given the the important role
16:36as consumers of these ideas that my
16:38colleagues have. But I will have one
16:41small announcement. Um I previewed this
16:43when I was at an IMF meeting much to the
16:46chagrin of some of my colleagues around
16:48here. On November 16th, uh the
16:50productivity and jobs task force will be
16:52doing a field hearing um inviting a
16:55broad range of people who have strong
16:57views. What are the implications for
16:59jobs in the economy near-term,
17:01medium-term, long term? Is this a
17:03productivity miracle that's going to
17:05happen or will it happen slowly? Um, I
17:08know I for one am keenly interested in
17:11refining my own views on that question,
17:13but that task force decided they wanted
17:15to hear from more people as part of
17:17their undertaking. Uh, I plan at
17:20attending. I might have a few words to
17:22say at the outset of that conference. I
17:24expect the conference will go three four
17:26hours. It'll be pretty wonky stuff. I
17:28don't know how good the material will be
17:30for the likes of you and your
17:31colleagues, but it's a purpose to do a
17:34lot of listening for me to interrogate
17:36the reality in front of me. What do
17:39experts in their fields think about
17:40this? What are the implications for the
17:43dual mandate that I referenced to your
17:45colleague? Is this going to make it
17:47harder or easier for us to achieve price
17:50stability over the next several years?
17:52What are the implications for jobs
17:54medium and long-term, but near-term,
17:56too? So, we're going to explore those um
17:58largely in the public realm on November
18:0116th. I look forward to seeing you
18:02there.
18:04>> James Rosen,
18:06>> thank you so much. Uh thank you, Mr.
18:08Chairman. James Rosen with Newsmax. You
18:10spoke of interrogating reality. Since
18:13reality is a no-show here today, I'm
18:14going to satisfy myself with
18:16interrogating you. Um you spoke earlier
18:18in your remarks here today about how
18:20your colleagues are serious and sober
18:22people who are committed to price
18:24stability. In an event in the Oval
18:26Office on October 7 of this year,
18:28President Trump said, and I quote,
18:29"Kevin is great, but Kevin's one vote
18:32out of a board with numerous people that
18:34were put on by Obama and Biden and a
18:37couple by me. So, you have a board that
18:39would like to see the country do badly
18:41in my opinion." Do you agree with those
18:43comments?
18:44>> So, James, I appreciate the question.
18:46I'm not going to be responding to uh to
18:49quotes from public officials. Um what I
18:52can tell you is my experience in five
18:54months here. We just came out of a heck
18:57of a family fight. Uh serious sober
19:00discussion. I think we came to uh the
19:03right policy decision for this moment
19:06and I'm honored to be here and honored
19:08to be the chairman of this group.
19:14>> Chairman Wel Sakapuro with Bloomberg
19:16News. Um so the economy is strong.
19:19inflation is well above 2%. You're
19:22saying inflation expectations are going
19:24the right way, but surveys show that
19:26households expect inflation to remain
19:28above the Fed's uh goal and not just for
19:30the short term using a hike today aren't
19:34waiting for more data. I haven't really
19:36heard the clear arguments as to that
19:38decision. So do you worry that to with
19:41today's decision households may not
19:43believe your pledge to bring down
19:46inflation clearly and at sufficient
19:48speed and instead will read this
19:50decision of holding rates steady as a
19:52sign that the central bank has in fact a
19:54soft inflation target.
19:56>> Yeah. So what I can do is tell you
19:58there's no soft inflation target.
20:00There's no implicit inflation target.
20:03There's a target of price stability and
20:04it's 2% as measured by PCE. Um, it took
20:09six years to for inflation to uh have
20:13the effect on consumers that you
20:15reference, but I would say this, um,
20:19when consumers interrogate reality, they
20:22look outside their window, too. They go
20:24to the gas station, too, and they see
20:26that prices are up. I am the not going
20:29to be the guy who says that oil prices
20:32haven't gone up, and when they fill up
20:33their tank, they don't see it. And so
20:35inflation's gone up in expectations in
20:38the very near term because they're doing
20:40what we're doing, interrogating reality.
20:43But if you look out over the horizon, if
20:45you look at most, but not all, measures,
20:48what you see is u households,
20:52businesses, financial markets, they have
20:54the confidence that they should have
20:56that this central bank will deliver
20:58price stability.
21:01>> Edward Lawrence
21:05Thank you, Mr. Chairman. Edward Lawrence
21:06for Fox Business. Um, so do you see a
21:08direct line correlation between uh oil
21:11prices and the inflation we're seeing in
21:12the United States? And if so, how fast
21:14could inflation fall or react to falling
21:16oil prices?
21:18>> So, I don't want to engage in
21:19hypotheticals, but I can look out look
21:21at our window and see what's happened.
21:23Um there'd been a stable correlation
21:28between oil prices as they've moved up
21:30this year generally and interest rates,
21:34not the interest rates that we control,
21:36but interest rates set in the market.
21:38That correlation has been quite strong
21:41until very recently. We've seen oil
21:44prices continue to move up largely due
21:47to geopolitical events. We've seen crack
21:51spreads between oil and refined products
21:53continue to stay elevated. But what's
21:55happened? Interest rates have rolled
21:58over to the downside. Um
22:01I not a Wall Street newsletter. I'm just
22:03telling you when I look out the window
22:05over the last uh several months, that is
22:07what we've seen. To the extent that oil
22:11prices were to move lower, again
22:14probably due to geopolitical events,
22:17that's something that we're going to
22:18have to interrogate. What are the
22:19effects on the Fed's dual mandate? What
22:23are the effects on financial market
22:24prices? And what are we going to do
22:26about it? But that's a hypothetical. And
22:28in fact, if we look at financial market
22:31prices
22:32um uh futures prices for oil, they've
22:36moved up over the course of the last
22:38several weeks. And I can't help but take
22:39note of that, too.
22:42>> Claire,
22:46>> thank you. Cla Jones, Financial Times.
22:48Um, much of the growth that we're seeing
22:51in the US economy now and quite a bit of
22:53the inflation too is coming from the AI
22:57boom. There's quite a lively debate as
22:59to whether or not, you know, this is a
23:02part of the economy that's sensitive to
23:04interest rates in the same way as say
23:06housing. I'd love to get your sense of,
23:10you know, do rate rates need to rise
23:13more given that so much of the US
23:14economy now is about AI than it
23:17otherwise would if say, you know,
23:19housing was a bigger part of the story.
23:21Thank you.
23:21>> Uh, thank you, Claire. So, there was a
23:24narrative for quite a while, maybe even
23:27in this room over the course of the last
23:29several press conferences.
23:31Well, they're going to raise rates or
23:33talking about raising rates, but it's
23:35not going to have any effect on AI
23:37because the returns that investors are
23:39expecting are so different. Um, I was
23:42skeptical of that view. Interest rates
23:45get in the cracks. Interest rates affect
23:48directly or indirectly
23:50um almost everything. And what have we
23:53seen uh since early September? what
23:57we've seen inside of the uh technology
24:01complex
24:03uh outside of the technology complex
24:06um whether you pronounce it AI or SI
24:09Claire is up to you um what have you
24:12seen interest rates have had an effect
24:14you see market participants that are
24:17discriminating
24:19between the kinds of investments they
24:21want to make you've seen credit spreads
24:24for certain assets widen out gap out for
24:27others you've seen some tightening in
24:29financial conditions but not
24:30significantly. So on the thrust of your
24:33question of
24:35uh with respect to the new technology
24:37and this investment surge, do interest
24:40rates matter? I believe they do and I
24:42don't believe that they're somehow
24:43divorced from the rest of the economy.
24:46Secondly, I'll just say this. Um it is
24:49convenient to say that the strength of
24:51the economy is all about this uh new
24:55technology wave. In fact, if we look at
24:58the data really including data from the
25:00last meeting till this, the capex story
25:04is not just robust, not just strong, but
25:07it is broadening. And so if you want to
25:09tell the story somehow that this is
25:12strength we're seeing only in narrow
25:14pockets, that's a much harder story to
25:16tell now than it would have been several
25:18quarters ago.
25:20>> Elizabeth Schultzy on the back.
25:24>> Thanks so much. Elizabeth Schelsey with
25:26ABC News. As you know, the midterm
25:28elections are in six days. Did the
25:29midterms factor into the Fed's decision
25:31to stay on hold? And if not, how can you
25:34assure the American public that politics
25:36were not at play here? So, um, politics
25:41played no role in the decision. I just
25:44spent two days with my colleagues, uh,
25:46upstairs. I didn't hear an utterance
25:49about politics. I didn't hear a
25:50reference to, uh, uh, politics,
25:54elections, what's happening in the next
25:56week or so. I didn't hear anything about
25:58it. Um, and I don't believe it had any
26:02role in the decision, not just for me,
26:04but my colleagues around the room. But I
26:07will say it's an informationrich
26:09interval in the coming period um having
26:12nothing to do with politics.
26:16>> Chris Rabber.
26:19>> Hi. Thank you. Uh Chris Rueer at
26:21Associated Press. I know you don't like
26:23the statement of economic projections,
26:24but uh last month they did uh your
26:27colleagues pencled in another rate hike
26:29for this year. And so could you give us
26:31your sense from this meeting whether you
26:34still see widespread support for another
26:36hike this year around the table? Thank
26:38you.
26:39>> So the blackout period for them ends I
26:41think on Friday or at some point over
26:43the weekend. So they they might they
26:44might indulge you in in that discussion.
26:47Um I don't believe in forward guidance
26:51absent exigent circumstances absent a
26:54crisis. I have to give that caveat
26:56because um in the darkest days of the
26:592008 financial crisis um in part using
27:04um some literature and thinking from a
27:06very recent Nobel Prize winner that kind
27:08of forward guidance is actually quite
27:10helpful. But in normal ordinary times
27:12especially times where the underlying
27:14real economy is this strong I don't
27:17believe in it. I don't favor it. I also
27:20don't believe in prejudging meetings.
27:22Um, a lot of things can happen. Uh, so
27:25I'm not going to be able to to uh share
27:28with you my musings about what happens
27:30when this group gets together uh six
27:32weeks from now. But my judgment is that
27:36we might learn a lot and like in my
27:38response to Col's question um will be I
27:42think better positioned to determine
27:45uh the right policy decision and the
27:48stance of policy.
27:50Sang Lee.
27:53>> Hi, my name is Tang Lee from the Korean
27:55Economic Daily newspaper. I got a
27:57question as a foreign press. You have
28:00spoken several times about the
28:01possibility of the Fed shrinking its
28:04balance sheet further. If that plan
28:07moves forward later, how would you avoid
28:10the disrupting foreign official holders
28:12of treasuries or dollar funding markets
28:14abroad like South Korea and Japan?
28:17>> So, thank you for your question. Um,
28:20first off, I would say I pay probably
28:23more attention to the Korean economy
28:25than you might think because when I'm
28:27looking at um, uh, the feed stocks
28:30effectively for this new surge in
28:32technology, a lot of it's coming from
28:34Japan and Korea, some from Singapore.
28:37So, I'm particularly interested in in
28:40what's happening in the Korean economy,
28:41usually because it's telling me what's
28:43what's on planes and ships coming this
28:45way. Um, secondly, I should say that uh
28:48your new uh central bank governor is
28:50someone I've known for 20 years uh and
28:53is a very talented guy and a good
28:55friend. So, I'm glad he's in that post.
28:58Um he and I met actually about uh 20
29:02years ago amid the global financial
29:04crisis as it would come to be known and
29:07I remember this is a generation ago
29:09discussions with him about the use of
29:11the balance sheet in exigent
29:13circumstances like we had then at this
29:16point the balance sheet is uh solely
29:19within the four walls of the balance
29:21sheet task force now I have checked in
29:23with them full disclosure they're
29:25working away and comparing their best
29:27thoughts
29:28Um, and I think the conclusions they
29:30come to, the recommendations they come
29:32to will be fed into the FOMC probably
29:36early in the first quarter, but don't
29:38hold me exactly to that timing. And um,
29:41and uh, if we decide to make changes in
29:44the balance sheet, it'll be after a
29:47serious consideration of their proposals
29:49and their recommendations. I think it is
29:52unlikely to have any material effect on
29:54this policy conjuncture, but it's a
29:57question we should get to the bottom to
29:58and I look forward to doing it with the
30:00help of the outside task force.
30:02>> Nick,
30:08>> Nick Tarosa of the Wall Street Journal.
30:10Chairman Wars, I I want to follow up on
30:12your answer to Claire's question. As the
30:14AI investment boom becomes more
30:16dependent on external financing, does
30:19that make aggregate demand more
30:22sensitive to interest rates than it was
30:25before? And and related to that, when
30:27when you removed a dose of accommodation
30:30last month, did you see about what you
30:32bargain for?
30:33>> So you gave me two questions and neither
30:35of them were ahead of any sort of
30:37parliamentary out. So you're giving me
30:39the opportunity to choose choose choose
30:41which of those. Fair enough. Um um so
30:46I'll answer your second question. Um
30:49when we removed a dose of accommodation
30:52I don't know six weeks ago uh we don't
30:55have perfect s foresight on what
30:57financial markets are going to do with
30:58it but broadly I would say the effects
31:02on financial markets on financial market
31:04conditions broadly were with consistent
31:07with my expectations.
31:10Uh Howard Schneider
31:14Howard Schneider with Reuters. Thank
31:15you, Chairman Worsh. I'm I'm going to
31:17take Nick's first question then.
31:18>> Okay. Give it to me again. I don't
31:20remember.
31:20>> No. Well, it's about aggregate demand
31:22and the components of inflation. Uh a
31:25lot of your colleagues have said they
31:26felt the investment boom in AI was now
31:28adding a strong demand component to
31:31inflation and this was a handoff from
31:33the supply side. Uh concerns that might
31:35be expected to fade over time. How much
31:38do you think demand is adding to
31:40inflation right now? Uh and how
31:42sensitive will that be to uh Fed Fed
31:45control?
31:46>> Good, good, good, good, good pickup of
31:48that. Good team effort. Um
31:51so, so I'd say this. Um the only things
31:55we really know in economics and supply
31:57and demand cross are measures of the
32:00size and the shape of the aggregate
32:03demand curve is imperfect.
32:05Broadly, what I heard in the room the
32:07last couple of days is consistent with
32:08my own views, which is the economy is
32:11strong. I didn't try to sugarcoat that
32:13in the first part of my statement. The
32:16economy has been marked up for the first
32:18three quarters. The economy is pointing
32:20in the right direction. Is the economy
32:22running too hot? Is the economy running
32:26too strong? Um, that isn't the judgment
32:29of most of my colleagues. Part of it is
32:32we never know what potential growth
32:34really is. Howard um my judgment is we
32:37have seen an improvement in
32:39productivity.
32:41We can't measure it precisely. I think
32:43most of that change in productivity
32:45preedes everything we're talking about
32:48um super intelligence but productivity
32:51has been moving higher in the economy
32:53however imperfectly measured I think for
32:56a couple of years and so economic growth
32:59is higher but that doesn't tell me that
33:01economic growth is somehow causing
33:03inflation and making our job harder but
33:07we'll be continuing to look at those
33:08issues uh the goal in my view and you've
33:11heard me say this before isn't to throw
33:14sand in the gears of the economy and
33:16throw people out of work. I don't think
33:18we have to do that. The dominant means
33:20in which this policy is going to be put
33:22into practice is we are tightening
33:24financial conditions. They've tightened
33:26a bit since we uh met last time. That
33:30isn't something that we're uncomfortable
33:31with. That tells me that policy is
33:33working and I think we can do that and
33:35make the economy more durable, have it
33:38last longer, and still achieve stable
33:41prices. Okay, we'll go to Victoria for
33:43the last question.
33:47>> Hi, Chair Walsh. Um, Victoria Guido with
33:50Politico. I wanted to ask next week is
33:52uh a hearing at the White House on Lisa
33:55Cook's future and allegations that have
33:57been made against her. Are you
33:59personally or the Fed as an institution
34:01going to be involved at all in those
34:02proceedings? Uh,
34:04>> not to my knowledge.
34:07>> Thank you. Thank you guys.

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