---
title: '*The Federal Reserve FOMC Presser & Rate Decision | Kevin Warsh*'
source: 'https://youtube.com/watch?v=8he3tzwhVR4'
video_id: '8he3tzwhVR4'
date: 2026-06-30
duration_sec: 5633
---

# *The Federal Reserve FOMC Presser & Rate Decision | Kevin Warsh*

> Source: [*The Federal Reserve FOMC Presser & Rate Decision | Kevin Warsh*](https://youtube.com/watch?v=8he3tzwhVR4)

## Summary



## Transcript

All right. All right. All right. Welcome
back everyone to another Federal Reserve
meeting. Boy, it's uh it's been what,
like six weeks since we've done one of
these. Uh and uh you know, it's going to
be kind of interesting because this will
be the first one that we don't have good
old JPL for. It's almost like, you know,
it was bittersweet. When he had his last
meeting, we were kind of thinking, hey,
is he going to get a standing ovation?
He didn't get a standing ovation. He
didn't get applause, but he didn't get a
standing ovation. Yeah. So, it's going
to be interesting. We've got about um 90
seconds to go until we get the potential
um uh for you know a rate hike built
into the SCP. We don't actually think
we're going to get any kind of move
today uh on rate cut or rate hike.
Today's going to be all about the setup.
What are we going to get for uh rate
cuts in the future? A lot of people are
really worried about rate uh hikes in
the future. So, we'll see how that goes.
Uh, but uh, again, we're about 60
seconds away here from the summary of
economic projections coming out. As that
summary of economic projections comes
out, I'm going to go through all of the
details of the summary of economic
projections. I'll read them off the wire
services and uh, then we'll get into
some of the details. We'll make a bingo
board for the actual presser. Uh, we
will get that rate decision. Again,
we're not expecting a move, but we'll
get that rate decision in about 40
seconds. and uh expecting that hold uh
summary of economic projections is going
to be where the entertainment is and
then of course we'll get into bingo
board and you know what's war going to
say and all that good stuff. So uh we'll
find out uh what happens here and what
kind of uh what kind of new joy we get,
what kind of new phrases we get, what
kind of changes we get. I wouldn't be
surprised if Wars actually ends up
getting rid of the summary of economic
projections uh in general. Uh, and
honestly that wouldn't be that big of a
deal because even Jerome Powell had sort
of suggested getting rid of them in the
past. But, um, we shall see. We shall
see.
Uh, all right. Here we go. Okay. Federal
Reserve median view of Fed funds rate at
the end of 2026. 3.8. There it is.
That's one rate hike built in uh for the
end of 2026. End of 2028 back to 34. So,
basically, we're expecting to go up uh
one, at least one hike, potentially two
depending on how these votes play out.
Uh and then back down to where we are by
2028. So, a little bit of a hike is
being priced in. 25 basis points of
hikes priced in for 2026,
followed by 25 basis points of cuts in
27, and actually another 25 basis points
of cuts in 2028. Uh, we've got only 18
of 19 policy makers submitted
projections. I wouldn't be surprised if
Worsh was the one guy who's like, I'm
not doing projections. I bet you he's
the one. Uh, policy makers see 4.3%
unemployment rate at the end of 26
versus 4.4 in the March projections,
which means we're seeing uh the Fed
members start indicating the employment
market stabilizing. I've got um 2.2% on
GDP growth in 2026 versus 2.4 seen in
March. So a little bit of a write down
on GDP but nothing dramatic there. Job
gains have kept pace with the workforce.
Unemployment rate changed little.
Productivity growth capital investment
are strong. Uh Fed uh Fed in favor of
policy uh holding firm was uh unanimous.
So uh everybody voted for it. Uh the
committee reaffirmed policy of
maintaining ample reserves in the
banking system. Fine. Growth capital
investments are strong. activity
expanding at a solid pace despite
elevated uncertainty due to in part of
the Middle East. That's part of the
anticipation as well. Uh we have let's
see uh let's see Fed projections showing
PC inflation is not expected to return
to 2% target until 2028 unchanged from
the March projection. So basically a
slow sort of schlog down uh on
inflation. Uh waiting for let's see here
what else we have. Uh we've got uh okay
let's listen to Steve just for a moment
here while I pull up some docs.
>> Upgrade both core and headline PCE
inflation forecast to 3.6 from 3 2.7 uh
this year on headline and from 27 to 33
on core. The core remains elevated next
year. That might be important uh at 2
and a half%. So I'm recap capping here.
A unanimous vote a much shorter
>> Yeah. Their website actually does not
have the Oh, there it is. It just came
out. Project material. Okay. Play
>> stuff from the statement that was really
my opinion kind of worthless uh about
how the Fed will make its decisions. Um
and they also show a divided committee
when it comes to the outlook on rates.
Brian, back to you.
>> This statement is so short. It's
practically a tweet. I mean, this entire
statement is one sentence, then two
sentences, then two more.
>> Here it is. I got it. Here's the
statement. So, they've really reduced
this. Look at this. Uh the Fed Open
Market Committee approved the following
statement for release. The Fed decided
to maintain the target Fed funds rate uh
between 3 and 1 half to three and a
quarter uh following the Fed's dual
mandate of reffirmed ample reserves in
the banking system. Some uncertainty due
to the Middle East inflation uh elevated
relative to 2% goal. And you can see
this is a lot sharper or sorry shorter.
And that's part of Worsh's goals to stop
trying to overcommunicate is his opinion
that the Fed has been overcommunicating.
I wonder if this meeting is going to be
a lot shorter now. So unanimous hold.
Not a surprise that we got a unanimous
hold. Let's go look at the summary of
economic projections in detail now. All
right, here we go. So this is the actual
SCP here. All right, let's see what we
have here. We've got uh the unemployment
rate. You can see no concerns here about
the unemployment rate at all. This is
pretty much green. Honestly, it should
be green. Uh green across the board.
There's really nobody as far as the
averages here or the median uh
suggesting there would be any kind of
movement up on the unemployment rate.
Now, if I look at range,
excuse me, the highest uh estimate for
the unemployment rate I see is in 2026
and 7 at 4.6. But every single person
submitting a projection does not
actually see the unemployment rate going
up. Now, as far as inflation, we can see
the highest estimate for core PC is 3
1/2 4.1 on headline and that rapidly
goes down in 2026 to 28 to 30. Now, I
personally think that, you know, they'll
project this potential. Let's take a
look at the market here really quickly.
uh they'll project this 25 basis point
rate hike this year, but I think they
won't actually end up hiking this year.
Uh we did anticipate this morning that
they would price in uh a rate hike for
the year. I'm actually surprised the
market is reacting negatively to that
though because the bond market has
already been pricing in a rate hike this
year. So, a little bit surprising, but
the market is reacting negatively to
this number right here. So let's go
ahead and highlight this. Uh right there
you can see that increase of about 40
basis points. Uh bond market was already
pricing in one hike for 2026. Mark uh
QQQ
um did turn down on this release. Uh
WASH may downplay with talk though.
That's the big hope here is that WASH
comes out and ends up downplaying this
and then that's how the market can
actually end up going up today. But this
is u this really should not have been a
surprise but the market is acting like a
this is a surprise. Should not have been
a surprise. What's actually interesting
is that they only price in one hike and
then they go right back down. Uh market
was pricing in one hike for 2026 and one
hike for 2027. So two total. This
document is actually much more benign,
right? This document is saying uh this
document prices in 25 BP this year and
25 BP uh and and negative 25 BP next
year. So basically up and down that's
what you're pricing it. I actually don't
think that's going to happen because
that's kind of what they did in the 70s
where you went up and down a lot and you
made too many adjustments. Uh and Jerome
Powell is going to be really anti that.
Uh 1970s saw a lot of up and down
adjustments. Oh my goodness, stupid PDF
editor here does this. When I'm in the
middle of typing, it just freaks out. Uh
there we go. 1970 saw a lot of up and
down adjustments which uh contributed to
a lack of faith and confidence
uh in the Fed. They were basically
extremely responsive to you know random
whims of the market uh in the 70s. Uh so
a little bit surprising here. uh that uh
this is actually better than the market
had been pricing in yet the market is
selling off on that. Uh okay, maybe the
market was blind to what the bond market
was pricing in. In other words, the
stock market was blind to the bond
market's pricing. Possible. Uh it just
seems odd. Bond markets usually that uh
you know crystal ball if you will or or
like we talked about in the course
member live stream, the Lord of the
Rings palunteer.
I literally just saw the first um Lord
of the Rings of the trilogy. I'm like
one and a half movies deep. I gotta say
I totally understand why people are
totally in love with this. I'm really
excited. Like Tolken, what a bad. Uh but
anyway, uh so as we can see here, the uh
longer range, you actually do have
somebody who thinks that rates could go
as high as 4.4%.
That's like a 100 bases. Look at that.
Holy smokes. Hold on. Am I in the rates
here? Yeah, dude. Somebody's going mega
hawk. Look at this. In March, somebody
had a high of 3.6. That moved to 4.4.
Someone really honked this meeting. Uh,
and if I look at the central tendency,
that should be gone. Uh, no, that moved
up as well. So, even on the central
tendency, you moved up to 3.9. So, uh,
let's write that down too here. Even on
central uh tendency we got two hikes. So
on central we got two hikes on median.
So median versus I guess average
probably. Uh we got uh we got one hike
over here. I mean that's pretty close.
This is 40 basis points. That's 50 basis
points. And uh somebody really hawkked
over here to pull up the range. That's
quite interesting. Let's uh let's look
at the GDP projection here. So change in
GDP pretty consistent at 2%. You don't
actually see much change in 27. There's
really nothing that's been changed here.
If you look at the range, you do have
somebody who thinks the market's
actually going to be running hot. And
that's probably the same person who's
coming in uh with this 4.4 rate. So uh
let's see here. Someone thinks GDP will
run hot.
There we go. Okay.
All right. So, uh let's see here then.
Let's look at the actual dots. They'll
give us a little bit more color on where
they are all placed. So,
this is the target range for the Fed
funds rate. you could see that that
trend down is still occurring, right? Uh
so the committee in general is still
committed to this idea of uh of a
downtrend uh in rates which is I think
appropriate. I actually have this
mindset and it's really actually partly
an investing thesis as well that by 2032
we'll see lower rates than ever before.
like will potentially be back to
negative interest rates uh in Europe and
maybe lower 30-year rates here in
America, which you know has some
benefits obviously for even companies
like, you know, Robin Hood now doing
mortgage referrals or SoFi now getting
into uh uh home lending. Their home
lending business, if you haven't been
paying attention to it, it's
understandable, but their home lending
business has actually been growing at
the fastest pace of all of their actual
lending products. Uh, and it's a
horrible time right now for home loans,
which makes SoFi somewhat interesting.
But, uh, as you can see here, this the
thickness is what moved. So, this
thickness
right here just shot up about one, but
you only have one knucklehead who's
really high at that 4.4 range. That's
only one dot. And we actually went from
uh, and this is 2027, so to be clear,
this is 2026. Uh, and you still have
that same knucklehead right here who's
sort of maintaining this this elevated
outlook. Most of the dogs uh are are
down here uh in the uh the mid3s to um
uh lower 3s range, especially when you
get into 2027.
So um
I don't know. I don't I don't see the
votes for a rate hike because I have 1 2
3 4 5 6 7 8 nine. Not all of them will
vote. One, two, three, four, five, six,
seven, eight, nine. I've got nine and
nine. We're 5050 honestly on a rate
hike. 5050 on dots for a rate hike. Uh
market was pricing in two. This is
better news than expected again. Uh now
again, we just need WSH to uh talk this
down.
Uh let's write that down. I now expect
WSH to talk down the um
the rate hike potential.
All right, good. So, we'll do some bingo
in just a moment. Uh let's see what we
have here. Distribution of participants.
That's fine. This we've got here a range
for GDP. Uh this is where we're going to
find the 2026.
Why don't I see the one GDP guy who's
going crazy with the the 4% in the
range? I don't know if they're just not
showing that. All right. Unemployment
rate,
you've only got one person expecting it
to go up to 4.6.
PCE inflation, most people are
relatively uh stable here around 3 and a
half, expecting that longer term to
return to 2%. Core PCE, same thing, 3.3.
so elevated for a while by 2027. See,
you know, this is, you know, with with
50% of the members not pricing in a
hike, you're still expecting this
decline in the next year. So with that's
important to write down with 50% of
members uh not pricing in a hike uh the
average of members still see and really
really the bulk right uh inflation core
getting down uh 1% over the next year
right if if you thought without rate or
without a rate hike we're not going to
get inflation down they're really
pricing in this roll over so this is a
rollover of tariffs, uh, Iran and, uh,
you know, possibly, uh, AI supply
shortages,
uh, sort of a a lapping of annual
inflation, if you will.
Okay. Very interesting. Uh,
somebody's calling this, it's going to
be the reverse vulkering. Well, yeah,
Vulkar, um, you know, basically jacked
up rates to crush the backs of, uh, the
back of inflation and restore Federal
Reserve credibility. basically put the
pants on. Uh yeah, I kind of I I I guess
you could call it reverse vulking cuz I
kind of think Wars will take the pants
off and be like, "We're good, baby.
Let's go stripping."
So, wow, look at that. The 725 bounce
right here within 47 cents of that 725
bounce. Uh I'm bullish on Warses
talking. I, you know, I'm I'm positive
on uh on on this actually being an
opportunity, a longerterm buying
opportunity. Uh, and I'm uh, you know,
we've been calling out uh, Robin Hood,
including this morning in our course
member liveream, which if you want to
join, we just, uh, we just, uh, we don't
have an expiration going on right now,
but you can always go to meet me.com. I
think you can use coupon code pope. But
this morning, we called out Robin Hood
uh, because the finance sector has
really started to uh, to pop off. And
look at Robin Hood's performance
intraday since our call out. We called
it out right here at $96.
And uh and it's up almost 12% right now,
11.75%.
Uh SoFi also up, but not as extreme as
Robin Hood right there off that 1771
level. Both uh both I think have quite a
bit of upside over the next uh few
months as well. But anyway, let's focus
on we're going to do some Fed bingo now.
So, we're going to put a bingo board
together and after we put this bingo
board together, we'll uh we'll get into
uh some of the other goodies. Okay,
let's see here. So,
oh, I forgot how to do this. There we
go. Uh, you know, if you ever want to
know how to, um, this is honestly just a
dumb idea. Um, did I do it? Yeah, I did
it. Okay. If you ever want to know how
to get used to doing custom characters
on your phone or like your iPad or
whatever, like the the yen symbol or the
euro or whatever, just change your
password to include some of those
freaking letters. Oh my gosh, you'll
learn it real fast.
But, uh, it also makes it really slow to
unlock your stuff. Uh, okay. So, I'm not
a fan of fourdigit passcodes while I
pull up our bingo board. I, uh, I'm a
big fan of like eight digits and letters
and all that kind of stuff on your
phone. I just feel like the phone's
pretty important. And, and most of us
have fourdigit passcodes. Uh, too easy
to see over your shoulder. All right, so
here we go. Bingo board. Popping that
in. Coming right up. Uh, so my play
here, this is my thesis, okay? I could
be wrong, but my thesis is we bottom at
7:25 and we're up from there. And uh,
why is this not inserting? Insert, you
fart.
And start.
Okay, well, whatever. We'll get to the
bottom of this. You know, maybe I could
just use an old one. Uh, that's not
convenient.
Anyway, I'll I'll get this set situated
in just a second. But um 725, I wouldn't
be surprised if that's the bottom and
we're up from here. Especially since I
think I wouldn't, you know, seeing how
short that statement is, I now wouldn't
be surprised if Kevin Worsh actually
ends up making this meeting very short.
Uh it just says something basic like uh
hey, you know, we are
uh I guess let's let's think about this
prediction in line with our bingo board.
So, uh, if I were Kevin Worsh, what
would I say? Uh, well, first thing I
would do is I'd probably, if it were me,
I'd probably walk out with like a Luigi
mug. I'd spawn one in.
That's the kind of Fed chair we need is
somebody who's going to come out with a
Luigi board or, you know, a Luigi um,
coffee mug. But anyway, if I were wars,
I'd probably say something to the effect
of uh inflation shock uh from mediumterm
uncertainty due to Iran is likely to
fade. Uh we have uh a deal is uh
imminent. Uh so I think he'll reference
the deal, right? I think that uh oil
prices are uh temporarily
uh prompting
higher headline inflation and some pass
through to core. Uh we expect that to
resume its downtrend
after uh the straight of four moves
reopens. This is uh going to sound very
Trumpian.
Sounds uh Trumpian, right? And then
we'll end up getting um something to the
effect of um goal is to uh remain
stable. That's a key word. Key word
right there. remain stable uh on policy
uh until there's a greater sign of a
data moving in either direction. Uh so
that if uh inflation does lap tariffs
last year and we see a uh drop in
inflation in Q3, Q4, uh we can uh resume
an easing bias, right? I think that
would be very bullish for markets and
understand too uh this would be bullish.
Think about the data we've been getting
right weekly data on Tuesday indicated
about I think we were about 102k jobs
per month on ADP. We had retail sales
smoked this morning. Uh so really good.
Uh even including or uh even excluding
gas and cars, right? You've got uh
obviously GDP is holding up, AI spent
holding up. Uh so, you know, oil prices
are coming down, rates are coming down,
riots uh rights, oil GDP. Let's go see
what the Atlanta Fed GDP is really
quickly. Uh because sometimes they
they'll reference this. We're at 3% over
here on the uh Atlanta GDP. Let's look
at Dallas trimmed mean as well.
Dallas trimmed mean is
so Dallas trimmed mean one month
inflation rate trimmed mean right here
we're over here at 25.
This one, you know, is a little bit more
volatile. Yeah, you can see the
six-month trimmed mean is up but not
that high, right? It's actually pretty
close to that that 2% level. uh if this
is a tool that you want to use, some
people don't. It's considered an
alternative measure of core inflation in
PCE calculated by staff at the Dallas
Fed. So, I actually wouldn't be
surprised to see him reference trim
mean. If you hear trim mean, it's
bullish, right? Uh referencing trimmed
uh Dallas Fed trimmed mean would be
bullish. Uh that inflation gauge is
closer to 2%.
Okay. So, let's take some of this and
jot it into
our um bingo board here and let's see
what we have. So,
uh and then feel free to mention some
bingo ideas uh as well. Let me know what
you think. Uh let's It's going to be a
little harder. Let's see if he honors
the purple tie and if he's on time. All
right.
Uh okay. Come on, buddy. Come on, Dad.
Okay.
Am I going to have to use my finger
here? Going on the iPad. All right. You
know, this is what happens when you get
a new fed chair. All the things that
used to work just start falling apart.
It's all coming to an end. There we go.
All right. No problem. No problem. We
can get through it. All right. There we
go. So, uh, let's see if we can pull it
off on time. Uh, should we go purple
tie? You know, it feels weird to say
purple tie, right? Feels a little weird
to say that purple tie.
I for some reason I think he's like I
picture him as coming out with like a
bunch of like messy papers. Uh comes out
with messy papers
versus some kind of like electronic
device, right? I I don't know why I
think that. Uh resume down. Okay. Um,
talks about deal talks about
Iran deal.
Mentions trimmed meanions
trimmed mean.
Okay. By the way, if you haven't tried
the uh stock AI app yet, uh that's
inside of the Meet Kevin app, there is a
free sample portion that you could use.
Uh all you have to do is download the
Meet Kevin app. It's totally free. So,
you just go uh type meet Kevin into the
Apple or Android app store and you could
get our data tab. You could get the
daily wealth, the videos tab, but you
could also get the pricing power portion
of the stock AI app, which is 1/4th of
the stock AAI app. Uh, and of course,
there's a lot more in there as well, but
it's kind of cool. Uh, and then there's
going to be some a new special feature
coming out within like the next 24
hours. We call it the Alpha Wire
service. That's going to blow people's
minds and I can't wait to show that off
to you. But that should be released
within the next uh hopefully 24 hours
here. We'll see. Uh but you can download
that app for free and uh uh we'll have a
uh free period as well where you could
use the alpha wire service. So you may
as well download the app. Okay. So uh
let's see. Uh mentions Tremine talks
about the Iran deal, comes out with
messy papers, purple tie on time. Uh we
think that uh he'll talk about oil
temporary, right? Oil
temporarily
uh temporaril
whatever
uh increasing inflation.
Oh, I think he'll talk about AI
deflation is coming. AI deflation
coming.
Uh, I also think he's going to want to
get rid of the SE. Uh, may
end SE
or make
it optional.
It's honestly pretty useless in my
opinion, and it does move the market,
but it's usually wrong.
Uh, Fed dual mandate. Yeah, sure. That'd
be an easy one. Dual mandate. I mean,
he's got to sound a little bit like the
traditional Fed hair, right? Dual
mandate. Uh, data dependent. Don't we
have a halo sound to that? Uh, I thought
I did.
>> Data dependent.
>> There we go.
All right.
What else do we have here? So, we've got
goal is to be stable on policy. I think
that's a big one. Stable on policy.
That's very bullish. stable on policy.
There we go. That would be quite
bullish.
Uh let's see here.
Inflation shock to fade.
We wrote that down too. Inflation
shocks. Come on.
To fade.
Okay. Uh we've got uh employment
employment improving.
and improving. Uh it would also be
useful if you said something like don't
want to stand in the way, right? Don't
uh want to send mixed signals
signals
by hiking
to cut. That would be huge if he said
that. And super bullish, right?
So, shows up in a red suit, says
somebody.
Uh okay.
So, let's see how yields are doing.
Yields right now, yields went up about
2.9 basis points. Interesting. Yeah,
this will set the tone. I agree. Uh,
let's see here.
Great message. Yeah. I don't know. It's
it's just the problem is it's it's only
a great messaging tool to the extent
that it's accurate. And frankly, it's uh
it's usually inaccurate. Yeah, I I do
wonder if the meeting will be shorter.
So, usually we have about an hour of
Powell, right? Uh so, uh let's say less
than 30 minutes,
30 minute meeting or it should be
presser
press
less than 30 men presser. Uh I think
that um easing bias will return
to return
and I think he'll say we've got to be
patient.
Uh economy is strong
is strong.
Let's see here.
Uh someone
Oh yeah, somebody asks about um
uh his his prior like
you know his history is asked
about being wrong on inflation before
inflation in the past. He thought
inflation would skyrocket.
That would be a great question if
somebody hit his record, right? which is
fine like you could change your opinion.
Uh labor market uh what about uh you
know lower rates could broaden
lower rates to broaden success.
That's a goal often of the Fed is if we
get rates down more people can
participate whether they're different
races or income levels or cultures or
you know whatever. That's usually a goal
of the Fed, sort of like a side goal is
increasing that participation
uh in in the wealth effect. So, let's
see here.
Yeah. No, I know. I I I the Lord of the
Rings thing. I know some people were
surprised by that, but yeah, I just
watched it and I was I was uh studying
uh I mean I just I just opened it up. I
just started this, too, cuz I I heard
you're supposed to watch the trilogy
first, but when it comes to the books,
you're supposed to start with The
Hobbit. So, I got The Hobbit. And uh I'm
a little deep in it, but uh yeah, right
now I'm learning about um Bilbo's
father, who built the most luxurious
rabbit hole for her, the mother.
I guess I'm not that deep. Anyway, okay,
we've got about a minute to go here. I'm
running out of things to say, so I got
four more things to say. Uh, let's uh
fill these in really quickly. Uh, let's
do
uh valuations elevated. I don't actually
think he say it won't say won't say
valuations uh elevated.
I think he'll say um housing
uh to strengthen on lower rates. I think
he's going to be pretty bullish on lower
rates. Uh then we'll have let's see
here. Uh
yen carry trade. I don't think so.
Dollar dominance. That's the way I would
put it. I like that. Dollar dominance
and uh maintain Fed independence. One
more. Maintain
Fed
independence.
And uh did we do purple tie? We did
purple tie already.
Uh
did we did it on time? Uh I'll I'll just
throw in the word uncertainty.
Uncertain time. All right. Ready? Let's
go.
>> Hear war in his first conference to know
what buzzwords might be for the future
or is it going to be the usual things
that it hints of?
>> Big red background of that guy. Let's
see if he's actually on time.
All right. Here he comes out with a
clown noise. No. Nose. Oh my gosh.
Not my job. Yeah, that's a famous uh
Apollo one. Reading from a laptop. Yeah,
maybe. Oh, there he is. Oh my gosh. He's
got no paper. He's got nothing.
>> And here comes new paper. Nothing. But
he's on time.
>> Good day.
>> Is that purple?
>> It's an honor, a true honor to be back
at the Federal Reserve.
>> It's blue.
>> And to take up this duty at a time of
such
>> consequence.
I've been especially heartened by the
warm welcome of old friends and new
colleagues both. And I've listened
closely to my fellow FOMC members for a
lot of new ideas, new thinking, and
genuine interest in moving the Fed
forward.
This week's FOMC meeting exemplified the
very best of the Fed's traditions.
Rigorous debate,
open-mindedness,
commitment to mission,
>> boring,
>> responsibility,
and accountability.
>> Does he have a teleprompter?
>> No.
>> In this business, they all add up to one
thing. Getting monetary policy right
as near to it as we can do. That is our
northstar.
>> All right. My colleagues and I are here
to serve our legislative remitt, which
you've heard us say before, price
stability and maximum employment. And
these objectives guided our business in
the meeting just concluded.
As you saw a few moments ago, the
committee decided to maintain the target
range for the Fed funds rate at 3 and a
half to three and 3/4%.
In support of the Fed's dual mandate.
No.
>> The committee also reaffirmed its policy
of maintaining ample reserves in the
banking system.
Economic activity is expanding at a
solid pace despite elevated uncertainty
that owes in part to the conflict in the
Middle East.
>> Yep.
>> Productivity go growth and capital
investment both strong.
Job gains have kept pace with the
workforce and the unemployment rate has
changed little.
We recognize that inflation has been
running well ahead of the Fed's
longstated inflation goal of 2%. That's
been going on for more than 5 years.
Persistently high prices are a burden
for the American people.
But the recent past need not be
prologue.
I am pleased to report that members of
the FOMC are unambiguous and unanimous.
This committee will deliver price
stability.
At any institution, a change in
leadership is a natural and timely
opportunity to reaffirm its mission, to
review current practices, and to
consider whether those practices best
meet our objectives.
My Fed colleagues and I will be working
in close collaboration to ask what
changes might improve the conduct of
monetary policy.
On that score, you might have already
noticed something, a difference in
today's policy statement. It's a bit
shorter, a bit simpler, and it dispenses
with some older language.
That statement just gives you the facts
as best we can judge it. Absent also is
so-called forward guidance, which we
agreed was not well suited to the
current policy conjuncture.
This afternoon, you also received the
usual summary of economic projections.
It's been the practice of this committee
for participants to submit these
projections, and I have encouraged my
colleagues to continue to do so.
>> I, however, have refrained from offering
any projections of my own, consistent
with my long-held views on the SCP, at
least as currently structured.
>> Yep, he's the one who did.
>> In the medium projections, real GDP
rises at 2.2%. 2% this year, 2.3% next
year, and total PC inflation runs at
3.6% this year, 2.3% next year. The
unemployment rate stands at about 4.3%.
The median participant judges at the
appropriate federal funds rate to be at
3.8%
at the end of this year and 3.6 at the
end of next.
Let me turn now to a few words on a key
initiative that we're announcing today.
I'm appointing a task force in each of
five areas
>> that are central to the broad conduct of
monetary policy. First, Fed
communications.
Second, the Fed's balance sheet. Third,
our use and reliance on existing data
sources. Uhoh. Fourth, productivity and
jobs in an era of transformation. And
last, the Fed's inflation frameworks.
These subjects are timely,
consequential,
and in my view, worthy of a fresh look.
My colleagues and I discussed them with
energy and purpose over the last couple
of days. For each of these independent
task forces, I'm enlisting some of the
very best minds both inside and outside
the economics profession.
They will be supported by subject matter
specialists from our superb Fed staff.
And they'll have a straightforward
charge. Start with first principles,
ask hard questions,
examine current practice, consider
alternatives,
and ultimately propose next steps for
policymaker consideration.
Since last summer, my colleagues discuss
possible improvements in the form and
function of Fed communications.
This new task force will build on that
effort and I expect propose some
well-considered changes including to the
SCP I mentioned a few moments ago. Uh
the second task force, the one on
balance sheet policy, will review the
benefits and risks of the current ample
reserves regime and the composition of
the Fed's balance sheet. They will
assess alternative frameworks for the
conduct and operation of monetary
policy.
The third task force, the one on data,
will evaluate new information sources
and consider methodological changes to
improve data gathering with the aim of
giving policymakers more accurate,
relevant contemporaneous
and perhaps most important, actionable
information on the state of our economy.
Fourth, the task force on productivity
and jobs. It'll survey the pace, the
reach, the economic impact of new
general purpose technologies including
AI.
>> Oh,
>> and explore the implications for the for
the Fed in pursuit of our employment and
inflation mandates. Yeah, this is the
last AIDL argument that he's building in
>> that'll examine the drivers of inflation
first principles and weigh the full
range of ideas for delivering price
stability in a changing economy.
You'll hear quite a bit more about these
task forces and this overall initiative
in the coming weeks.
>> Enough for now to make a simple
statement.
>> Okay.
>> Each task force will serve an objective
shared by everyone in the system. shared
by everyone around that table that I sat
with over the last couple of days. A
Federal Reserve that is cleareyed about
its mission, fit for purpose, and
focused on the future. And with that, I
appreciate your attention. I'm happy to
take your questions.
>> He's actually doing questions.
>> Uh hi, Chairman Howard with Roers. Good
to see you again and and welcome back.
Um uh this is a lot to be putting in
motion uh so fast. What is the timeline?
uh you have in mind for for each of
these.
>> So um I think it'll depend on the task
force. It also depends on the urgency in
which we need clear answers. My
expectation I'm still in the business of
recruiting and finalizing them. My
expectation is the task forces will
begin work in the next couple of weeks
and we'll start to get some more
information from them, some more framing
of how they see things starting in the
fall and hopefully most if not all of
them concluding by year end.
>> And uh just specifically on the
inflation uh framework, uh you talk
about first principles. Does this
include a review of the 2% target
itself? Uh you've mentioned that things
to the right of the decimal point don't
matter. Nope.
>> Uh should this be starting from a
premise that
2% as a point estimate is is too strict?
>> Let me break that into two pieces. Uh
first on the inflation framework review,
their remitt is what are the drivers of
inflation? What's the Fed's
responsibility for inflation? In part,
how do we measure inflation? But that'll
overlap with my data group. uh on the 2%
inflation objective that is the Federal
Reserve's longheld objective of 2%.
You've heard me say before uh I tend to
focus on the left of the decimal point.
Well, the two is the left of the decimal
point. For now, zero is to the right. I
see no reason until we have
reestablished our commitment and ability
to deliver on the 2% inflation objective
to revisit that. So, that will be
outside the scope of what we're taking
on.
>> Stays firm on that. Good.
Colobby,
>> thank you so much. Colobby Smith with
the New York Times.
>> So they could transition to using
trimmed mean though and then you'd be a
lot closer to 2%, right? They could say,
"We're not going to use PCE anymore.
We're going to use P trim mean."
>> But looking at the SEP, the bulk of your
colleagues expect core PCE to run around
3.3% by year end and for the 2%
inflation target not to be reached until
2028. So, I'm curious how patient you
think the Fed can afford to be at this
juncture in terms of waiting for
one-time inflation waves to wash
through.
>> They could basically just use a
different formula and get inflation down
and then cut rates under the worst
regime is kind of what he's setting up.
That's actually kind of bullish.
>> Some action and raising rates.
>> Sure. So, quite a bit there. Let me let
me try to break that into pieces. First,
we have the capability and commitment to
deliver on our price stability objective
of 2%. That's exactly what we're going
to do. Um, that in the Fed's review of
its strategy over the last any number of
years in January, the Fed, including the
strategy that we're still bound by, the
Fed statement says that inflation is
primarily determined by monetary policy.
You bet it is. I've said for years
inflation's is a choice. You bet it is.
>> And today I'm announcing that this
committee unambiguously and unanimously
have decided we are going to deliver on
that. The rest of your questions sounded
like a encouragement for me to give
forward guidance. Uh we've dropped
forward guidance. Uh some along the
committee I think dropped it I suspect
from our discussion the last couple of
days because they said at this moment in
time it doesn't feel as though providing
forward guidance is right. Others have,
I'd say, different views and think as a
general proposition, forward guidance
isn't the business we should be in, but
that'll be taken up by the task force on
communications and my policymaker
uh colleagues. We're going to listen
hard to what the experts say and make
our own decision. Um, but I can't give
you any forward guidance about what
we're going to do next. The good news is
we'll be meeting in six weeks. So just
following up I guess on the current
policy settings then I am curious how
restrictive you think things are at the
current current moment given the flow of
data that we've seen and you know
forecasts that are coming down the
pipeline.
>> Yeah I I've heard characterizations both
inside and the Fed about that. I'll give
you my own. It's uneven. If I look at
the housing markets as one example,
uh Fed policy isn't the the single
determinant of the state of the housing
market, but broadly I would say there
Fed policy appears to be somewhat
restrictive. I would have a hard time uh
managing to say those words if I were to
see what's happening in financial
markets. So I'd say it's uneven.
>> That's perhaps a function of different
transmission mechanisms of monetary
policy. whether monetary policy is
coming from our interest rate tool or
our balance sheet tool. But the good
news, we have a task force on that too.
And the balance sheet task force will be
looking more at that subject.
>> Mike McKe,
>> you said you don't like uh forward
guidance. You dropped it from the
statement this time, but with the dot
plot, nine members suggested that they
want a rate increase by the end of the
year, and the markets have taken that as
forward guidance. So, what does this
mean in terms of how you guide the
markets and in terms of uh what the dot
plot's future is?
>> Um, I'm going to have to give you the
same answer I gave to to Miss Smith.
We've got a task force for that. Um,
I'll give you a little bit more.
>> Punt it all.
>> I reviewed the dot plots and when I saw
the
>> that's going to be this guy's new meme.
got a task force to answer that, but I'm
not going to answer it.
>> Kind of with the big erasers. Um, that's
to say that I think my colleagues around
the table when they submitted their dots
understand the world is changing quite
quickly and they didn't feel bound by
them 6 weeks from now or 6 days from now
and if in the event that their
circumstances change. Um, I'll note a
couple other things. What I heard around
the table was as they submitted their
modal forecasts, their modal forecasts
to be clear weren't this was more likely
than not. This was this was more likely
than their other scenarios. So I didn't
hear u tons of conviction. What I heard
was the kind of humility that I think we
should have. I did not submit a a dot.
For me, it's not helpful in the conduct
of policy. I suspect by year end as I
mentioned in my opening statements
there'll be a review about
communications broadly press conferences
dots uh meetings and the like
transcripts minutes this will be part of
that I don't want to prejudge the
outcomes there um but I'm pretty
open-minded about what they could be and
I was just incredibly impressed over the
last couple of days uh my colleagues
over the last two days and frankly over
the first three weeks I've been here,
they've been very open about changes.
Change isn't easy. Change is filled with
risk. But our number one goal is to get
monetary policy right. The way to get
monetary policy right is to deliver on
the remmit that Congress gave us to
deliver on price stability. And there
was uh no disagreement on any of those
points.
>> At the risk of uh possibly getting the
same answer about task forces uh
communications, uh what is your feeling
about these news conferences? Are you
going to continue one after every
meeting? Uh do you think find them
useful? Uh what is
>> We have a task force for that. We'll let
you know.
>> Communicate.
>> Well, this one's probably got another 15
or 20 minutes in it, so I don't want to
prejudge the outcome. Um
uh press conferences can be a very
useful way to communicate with
households, businesses, and more broadly
through using the likes of you. I had a
a great old mentor named George Schultz
and his mantra was press conferences are
useful, but when you have one, you want
to make sure you have something
important to say. Today, I think we had
something important to say about our
commitment to deliver on price
stability, our commitment to rethink
practices with an eye of moving the Fed
forward. And to give you and the
American people a sense that these
aren't idle thoughts, these are concrete
thoughts. That we're going to seek out
the best minds, both the best thinking
inside of the Federal Reserve, the best
people I know in business and economics
and the academy and technology and the
rest to share their views. That's what
we're going to be doing here, the
pursuit of truth. Uh I think we're going
to come up with some new and interesting
things. Um we made some changes today. I
expect more changes to come and uh and
some of those might well be worthy of a
press conference.
>> Chris Rabber.
>> Hi uh Chris Rugverber at Associated
Press. Thanks for uh taking our
questions. Um could you give us a sense
of how you see inflation more in the
long term? I know you may not want to
comment on the ups and downs, but is
this mainly driven by energy prices in
the Iran war at this point, or do you
have any concerns about underlying
inflation pressures in the economy?
Thank you.
>> So, I can't do much better than than the
committee just did, so let me let me
restate it. Inflation remains elevated
relative to the committee's 2% goal, in
part reflecting supply shocks that have
driven price increases in certain
sectors, including energy. That's
paragraph goes on to say but to be clear
the Fed will deliver price stability. My
own judgment is the committee spent
quite a bit of time not just in two days
but over iterations of a couple of
weeks. That's what we're prepared to say
about inflation but the commitment to
deliver is strong unanimous and
unambiguous and that's I think an
important message we've missed for five
years and uh and we're going to fix
that. Well, great. And then just on your
the data task force and everything else.
I mean, generally speaking, uh I think
people feel the feel the Fed looks at
everything already. Certainly that was
the sense from before.
>> Uh what's is there data that you feel is
not given enough weight? Uh I mean you
mentioned the trim mean in the past, but
again that's well known to certainly
most Fed members. So what is that task
force looking at and and what what might
be the I mean I know you don't want to
prejudge the outcome but are there
examples of data that you expect might
be given more weight. Thank you.
>> So you're answering my question so let
me say I don't want to prejudge the
outcome. I also don't want to say too
much about what they're going to do
because I still have a phone call or two
to make before I've nailed down the
people that are doing that. Um I'm
interested in what the outside experts
view is on the subject. I'll say this
generally um most of the data that
central bankers and other government
officials in the United States consume
come with old-fashioned survey methods.
>> Uh
>> uh a national accounts of the what the
US economy looks like that looks very
little like the US economy in 2026.
um survey methods that don't have
response rates that we need, asking
questions that might have been quite
applicable a generation ago that are
less applicable now. So even inside of
official statistics, I would be
open-minded if the task force and our
own best thinking had recommendations
how those official statistics can be
brought up to a standard of of our time
using new analytic methods. I'd also say
this, almost every private company CEO
that's running his or her business are
doing so with real time information that
isn't subject to much revision, right?
>> That is telling them what just happened
at that very moment. As you know, there
are normal long and variable lags in the
conduct of monetary policy. What we're
really interested in is what's happening
right now. What we're less interested in
is echoes of history. And you're hearing
from my answer that some of the data
that we receive that we're waiting on
the first Friday after the month the
payroll index or something else that
might be an echo of history that's quite
useful on its third revision. We need to
take those error bounds down because we
have to make hard decisions in real
time. I'm really open-minded that there
is a lot of new data sources that we can
learn from the private sector, from
reforms in the official sector, and new
analytic techniques that are far more
refined than asking a simple question
about whether something was core or
non-core.
>> Edward,
>> thanks. Welcome.
>> Did I just hear long palunteer?
So if you don't give a lot of ongoing
forward guidance, won't the markets have
more volatility and shouldn't Americans
have more access into what you're
thinking going forward?
>> Um, so I think financial markets
perform best when they react to incoming
data. I think they the financial markets
work less efficiently when they ask a
question, how will the Federal Reserve
react to that incoming information?
Um, the more that markets are paying
attention to what's happening in the
real economy, deciding what's good data
and what's less good data, the more
financial markets can price what they
believe is the most likely and what are
the tail risks. Financial market prices
are probably the most important source
of information to guide central bankers.
But when all the financial markets are
doing is reflecting back what we've
said, then we're taking the most
important source of information and
we're being blind to it. I'd like us to
create a system where those blinders
come off, where markets are following
data that they efficiently think is
reliable and they'll be watching data.
We'll be watching data. They'll come
with better information through market
prices to us. We can make more informed
decisions. But ultimately the goal that
I said at the outset, deliver on the
price stability objective that Congress
told us to do that we've got to get in
the business of doing. Yeah. If I could
take you in the meeting a little bit. Um
so your first meeting the the board
members seem fairly hawkish when you
listen to in general when you listen to
what they're saying. Was there any
discussion of a rate cut going forward
today?
>> Um
there was one proposal on the table.
There was no discussion of any other
proposals. Um the discussion on that
proposal I would say was quite limited.
The group was unanimous and unambiguous
on it. Um it has been the practice of of
this central bank and others to have a
range of alternatives. Um today we had
one I thought it furthered discussion
deepened it uh and made it clear what we
needed to do and how we needed to
deliver. I wouldn't prejudge what
happens in the future, but there was
only one big subject for us. We took it
on. We had a good family fight on it for
a couple of days and we ended up, I
think, in a better place.
>> Claire,
>> thanks a lot. Claire Jones, Financial
Times. um you know coming to this blind
reading this very nice short statement
that I think we've all appreciated in
the room um one might wonder why you
didn't raise rates today considering
what you're saying here um about the the
risks to
your mandate
>> waiting for the task force woman
>> I guess why not and what would you need
to see in order to get to that place um
and secondly on your task force
divorces. Are there any best practices
at other central banks that you'd
consider looking at? Thank you.
>> Yeah, I'm glad they're in the practice
of giving you two questions because my
answer to your first question was going
to be very curt. I've got nothing more
to say than the statement itself. And to
the point of the question I got before,
market reactions to what we say
unfiltered, I think is more helpful than
having delivered a statement at me than
improvising further upon it. Best
practices of task forces. Um, this is a
subject I've thought some about. I've
been on a task force or two in my life.
Um, best practice, find the best minds.
Um, ensure that the task forces have a
range of people both by backgrounds and
predispositions
so they too can have a bit of a family
fight. Um, make sure when you establish
a task force that the group that's going
to be the recipient of the information
feels as they've got some equities in
it, too. That's why we're looking for
haven't done the final roll call some of
the most significant talent we have in
the building and across the reserve
banks on each of these and in some sense
secunding them to this group for a
period of some number of months um so
that the leaders of the task force know
what the most uh analytical central bank
in the world thinks about that they can
reflect on it and a final best practice
we're not outsourcing decisions to
anybody um uh administrations past and
present, reserve banks have chosen a
group of 19 people around the table.
These will be our decisions. We can
agree to some of the recommendations,
disagree with others, have a good family
fight about it, but what comes from them
will, I hope and believe, make the
discussion we have internally better,
stronger,
um more of a dialectic so that we can
finally deliver.
>> This guy sounds like a politician. I
mean, you know, some of the stuff he's
saying I'm on board with. I don't know,
more real-time data. We got AI stuff,
but man, he sounds like a politician.
>> More tightening is needed. Would that be
your read on what the 2-year yield is
saying as well?
>> We were in such a good place. This is
why we don't do third questions, I
presume. I'm not going to offer any
commentary on market reaction over the
last uh 30 or 60 minutes. Um, what we've
given markets is a new chapter for the
central bank, some fresh thinking. What
we've given markets and households and
businesses, I think, is a commitment to
ask ourselves hard questions such that
we can deliver on the promises that
we've made before. Um, this is a lot of
change for financial markets to digest.
I wouldn't be particularly intrigued by
how they react in the first several
minutes or even first several days. What
I think is most important is that
financial markets and at least as
important households and businesses know
that this central bank will deliver on
price stability.
>> Brian,
>> hi there chairman worship. Brian Chung
with NBC News. Thank you for taking our
questions. So when you say that we've
dropped forward guidance for the lay
person, that might sound like the Fed's
going to say less or offer less insight
into where their borrowing costs might
go. So for the person that maybe you
might run into at the grocery store
where the price tags are rising at a
faster pace than their wages at the
moment, how would you explain it to
them? I don't know if task force might
be the answer there, but how would you
kind of communicate this era, this
chapter of the Fed?
>> If I told somebody in the milk aisle
that I had a task force for that, I
think that would be doing a very poor
job. So I appreciate it. Um, if I saw
somebody in the grocery store, what I
would say to them is that we cannot have
a very significant effect on particular
prices. The price of oil in the markets
today or even the the the price of a
dozen eggs um that does not have first
order consequences to what we're doing.
But we do have a really important job
there and it's to make sure that those
changes in oil or beef or eggs or milk
don't broaden in the economy. Don't have
second and third order effects. That's
our job. That's our commitment. That's
our capability and we're going to
deliver on it. And then is the Fed's
relationship with the uh Treasury also
under review? There was the normal uh
breakfast meetings with the Treasury
Secretary. Is that something you intend
to continue doing? And have you had
conversations with the president since
you're swearing it? So on the president,
I I don't have anything for you. Um with
respect to the Treasury Secretary, he
has been posting pictures of our
breakfast. So I don't think I can I
don't think I can and deny that. The
long tradition at the central bank is
that the Fed chairman and the Treasury
Secretary meet weekly. Uh I think we've
pulled off three of those so far. I
believe he's overseas this week, so this
will be the exception to the rule. Uh I
think they're very useful discussions.
um the central bank's
uh objectives and our roles and
responsibilities are quite delineated
from the fiscal authorities and in my
view monetary policy is independent in
the conduct of what we do but that
doesn't mean we're not interested in
what's happening with the fiscal
authorities the way I think about it is
this central bank needs to have a wide
lens but a narrow remmit we need to be
quite interested what's happening in the
world um I won't be breaking any news
here to suggest I'm quite interested
what's happening in the Middle East.
That does have some some effect on our
day job. It doesn't mean it's our
responsibility, but I think we're going
to keep a wide lens and my meetings with
Secretary Besson to this point have
helped widen that aperture. So, we're
aware of things that could affect our
day job even if it isn't.
>> Steve
>> Steve Leeman, CNBC. Mr. Chair, thank
you, Mr. Chairman. Thank you for taking
my question. Um, you had said in the um
before uh you became chairman that you
thought productivity was a reason why
the Federal Reserve could lower interest
rates. Do you still believe that to be
the case?
>> So the committee had a discussion of
productivity today. AI came up. The way
I thought about it before and socialized
with the group is that artificial
intelligence, the latest generation of
general purpose technology,
is perhaps as important a change in the
economy and business and households that
we've had in my adult lifetime. It is
filled with both a huge opportunity and
with risks. I take both of those very
seriously. Um, you may have heard me say
before that AI is shorthand perhaps for
American ingenuity. That doesn't mean
that it's going to be easy. That
certainly doesn't mean it's not going to
be disruptive. But over the long term,
my conviction, and I heard quite a bit
of support for this around the committee
today, is the United States is a winner
as we go down this. The United States is
ultimately going to be better off in
that. Now to bring that back to the
conduct of policy, timing, scale,
speed, implications for output and
employment. Um it's one of the things we
have a task force to do.
>> If you don't mind a followup from the
other side, which is that when you look
at the strong job growth that's out
there, the elevated inflation, GDP seems
to be going pretty good and the stock
market seems to be soaring. Do you look
around this economy and see the funds
rate being restrictive?
So um that's your second question. I'm
going to give the same answer that I
gave before. I'd say as I think about
the conduct of policy, what matters is
what's the effect of policy. Not what do
we say, but what happens? And the best
way I can describe is it's uneven. I do
see some restrictiveness in things like
housing. It's hard to use those same
words uh anywhere else. I'll just make
one other point. Um you talked about uh
one of our dual mandates in the
employment side.
I don't believe that we have a cruel
choice. I don't share the view that was
expressed a few generations ago that
Federal Reserve chairman show up at a
podium like this and say you got to
choose and uh you're going to have to
decide whether you're willing to
tolerate higher inflation to put more
people at work. I don't believe in that.
What I believe is if we do our job, we
can make strong growth,
low prices, and strong employment
mutually compatible. And so what you
heard from the committee today is we've
got some work to do on the price
stability front.
>> Nick,
>> thank you. Nick Timos with Wall Street
Journal. There it is.
>> Chairman Worsh, you've said repeatedly
credibility uh is earned by delivering.
If credibility requires delivering, the
move would be to tighten or at least to
threaten to. Now, you didn't do that
today. Why not?
>> Um,
that judgment you expressed was not
expressed by any of the 19 people around
the table. Um, we'll be meeting in 6
weeks. We'll take up the issue again.
>> And, and if I could ask about AI, the
buildout is generating enormous demand
right now. Capex, data centers, power.
Uh, the productivity payoff may be
further out. So in your judgment today,
is AI adding more to demand or to
supply?
>> It's a good question. Um,
at the central bank in an economics
profession, what we spend most of our
time doing is counting demand. It's
easier. We can see it. We can count it.
We can check it. We can revise it. Um,
what we do though is we infer supply.
You'll notice in the second paragraph of
what one of your colleagues described as
a very short statement, we have a
sentence on the demand side and a
sentence about the same length on the
supply side. They're both important.
Just because we can count one better
than the other doesn't mean we're going
to favor one more than the other. With
respect to AI and the growth of data
centers and infrastructure around it,
we're counting the demand side and it is
no doubt showing up in GDP figures.
We can be less certain when we infer the
timing and extent of the growth in the
supply side. It may well be an intuition
the supply side is going to expand, but
it'll take longer. I just describe it
this way. There's a race between supply
and demand. Milton Freriedman says that
the only thing we know about economics
is that there's a supply line and a
demand line they ultimately cross. When
they cross and what are the implications
for policy, the good news for you is we
have a task force for that.
>> Andrew,
>> uh thanks, Mr. Chairman. Um uh it
sounded like uh on the task force on
data that that you were looking at
overhauling or completely overhauling
the system of national accounts, the way
the government minds the economy. Is
that your ambition?
>> Um, in a word, no. Uh, in a few words,
uh, much of this data gathering happens
in other government agencies to which we
owe a tremendous amount of respect,
tremendous amount of difference. But if
in the course of this we come up with
recommendations
which Fed staff have already begun to
develop about things that they could be
doing to help inform us as policy
makers. We're not going to hesitate.
Again, I don't want to try to uh
delineate the four corners of the
research of the task force on data, but
I do think there will be a review of
official statistics and at least as
important a view of bringing the best
practices from the private sector and
new analytical tools made possible by AI
so we can forge these into a fabric that
gives us better real-time information.
And so, as I mentioned before, when
we're making decisions, we're making
decisions that we'd say are real
contemporaneous data, not data that we
call contemporaneous. That's really an
echo of history.
>> Child's here.
>> Okay. Um, thanks. Uh, the other question
I wanted to ask is uh related to the the
building renovations. Are you
considering any changes to the
renovations, the projects um just in
light of the fact that they became kind
of a political football in the last
year?
>> I heard something about that. Um
uh I don't think I'm breaking any news,
but my view when you show up at a new
institution, you should go meet with the
inspector general just as a matter of
good practice. Um it's a practice that I
hope to continue. I've had one meeting
with the inspector general and he told
me what I believe the world knows, which
he'll be coming out with a report on the
building and the building projects at
some point later this summer. Um, and
uh, I'll be interested in reading the
report. From my perspective, with a
forward-looking glance, is there
anything that we can be doing or should
be doing from this moment until the
completion of the project to do what we
can to be good stewards of taxpayer
money and to make sure that the we're
delivering on the the promises that we
made. Uh, some more work to do. You
might not be surprised in the first few
weeks. I've been somewhat preoccupied on
other matters, but I promised it to to
get to the full breath of the Fed's uh
tasks in the weeks ahead.
>> Victoria,
>> hi Victoria Guido with Politico. Um, so
I know that you did not submit a
forecast, but you are the person who is
authorized to speak on behalf of the
FOMC. So I'm wondering if you could tell
us in the SCP um the increase in the
expectations for inflation. Is that all
because of the Iran war? What was the
discussion around what the expectations
for inflation being higher and and also
potentially growth being slower? So um
my read of what I heard in the room
reflected I must admit in the SCPs is
half of my colleagues thought the policy
rate given all those developments should
be at this level or lower between now
and your end and the other half thought
higher. Um that 19th voter was me and I
didn't submit one. Um there's a range of
views on the questions of of uh first
and second round effects. Uh no
resolution or conviction, but we'll be
meeting again in 6 weeks. I think we're
going to know more then and I think that
my colleagues are very attentive to
incoming developments between now and
then.
>> And can I just quick follow up on the
SCP? You said that you're still
encouraging your your your fellow
committee members to submit forecasts
even if you're not doing it. So what do
you think is the benefit of them doing
it even if you don't?
>> Uh that's the commitment that the FOMC
made and it's a commitment that I hope
we live up to. Commitment we made was to
deliver price stability. I expect us to
live up to it by the time we get to the
end of this year. As I mentioned, I
wouldn't be surprised if there was a new
communications framework. There were
some changes. The SCP, that's a
committee discussion, a robust
discussion. I think we'll have it. I
believe we're going to come to a better
mix of communications to
um deliver on what we've promised, but I
wouldn't want to prejudge what those
are. But between now and then, I would
continue to expect colleagues to submit
their SEPs. Um some of them uh I think
believe that the practice is currently
structured is okay but I heard a lot of
interest in real reform generally about
all these topics. Uh you didn't ask it
but I'll answer. It was a it was a
pretty gracious couple of days and it's
been a pretty
uh warm few weeks. The institution wants
to figure out how we can do better. the
institutions going back to first
principles and I'm encouraged that what
we've done in the statement what we're
thinking about doing with respect to the
SCP that instinct towards a new chapter
is a real one and by the end of the year
I hope we can put some points on the
board both in form and in substance of
delivering
>> going to end up for the last question
>> last question you Mr. chairman current
Bloomberg News. Could you guide us
through please some of the principles
that guide your own reaction function
and tell us a little bit about kind of
conditions that you think when the Fed
should respond?
>> Um it's going to be a very
unsatisfactory answer to the final
question.
The Federal Reserve
uh has a lot of responsibilities not
just in monetary policy but in
supervision and regulation, consumer
affairs and payments.
My own view is our credibility comes
from delivering on what we're saying
we're going to do across everything we
do. Um I've devoted more time in my
first three weeks to monetary policy
than all those things. But the more we
deliver on our promises as good
supervisors and good regulators, the
more benefit we get, the more
credibility enhancement we have in
monetary policy. When we deliver on our
price stability objectives, which we
will, uh, the American people will feel
as though the hardships that they've
been living through in part because of
inflation the last 5 years are in the
rearview mirror and that credibility
will have dividends uh, dividends across
what we do. and the institution will
come to press conferences like this
always with an impetus to reform always
with an impetus to to do better but
we're going to put some points on the
board and Mr. had strong labor data in
recent months. How would you sum up the
labor data labor market right now? Do
you see it as stable as a potentially a
source of inflation? Thank you.
>> Yeah. So, so the committee
uh if I were to try to capture how the
committee thought about it, the
committee thought that the labor markets
were stable. There were some people
around the committee who thought that it
was trending better than that.
Uh trends matter more than data points.
uh what's happening over three or six
months matters more than any one data
point any one data release and I'd say
the jobs data has been moving in a good
direction. If I heard one other thing
around that subject over the course of
the last couple of days what I heard was
that strong productivityled growth is
not something that we fear but something
we embrace. Thank you all very much. M
five 3 2
>> Okay. Well, there you have it. We have a
new fed chair. And boy oh boy, he uh
he's pretty dry,
man. JP was fun. This guy, I don't know.
All right, let's do a review of what the
heck is uh going on here. Uh dang, Robin
Hood's up 12 and a half% right now.
That's crazy. That was uh one of our
calls this morning in the alpha report.
Uh thank you everybody who's a member
over there at mekevin.com. But for now,
let's focus on what we just got. Uh so
let's get into it. Uh here we go.
Take a sip of this coffee, too.
Well, we just got a new Jerome Powell
dude. Except this guy is dry like
sandpaper. He sounds like a politician.
We're probably stuck with the guy for
two four-year terms. So, eight years.
Eight years of this. And boy, every
freaking question that he gets as it's
almost like he's trying to train the
media to not ask him. His responses are
either I don't give forward guidance.
Ask the task force. Actually, you can.
The task force will let you know. He's
This is going to be weird, but let me
just start with what I think he's doing.
and then we'll get into some more of
what he said because there's a lot of
reading between the lines you have to do
with this guy. So, let me give you the
bottom line first because I respect your
time. Bottom line, bullish.
Why? Cuz this guy is probably going to
change which measure of inflation they
use. I think they're going to dump PCE
inflation and I think they'll end up
using something like the Dallas Fed
trimmed mean inflation, which if you
look at this, you could actually see
right now it's sitting at 2.55%.
It's been falling pretty stably. I mean,
yes, we've got ups and downs like the
stock market, but the trend is clearly
down here. And if you look at the actual
trim mean chart and you get into some of
the details of it here, the one-mon
level is at that 2.55 level. six-month
level at 2.3. So, you're actually almost
there at 2%. And if you come in and your
task force says, you know, we should be
using a different measure of inflation.
And then you swap to something like trim
mean now you can magically say, hey,
look at this. We have officially reached
2% inflation. Guess what, boys and
girls? It's time for rate cuts. That's
my take with what he's doing with rates.
Now he indicates that he's essentially
setting up five different task forces.
One on communications, one on the
balance sheet, one on data sources, one
on productivity and jobs, and one on
inflation. I think the inflation task
force will end up measuring inflation in
a different way. That'll make his job
easier because the productivity and jobs
one is going to take into account quote
implications from AI. That's a fancy way
of saying exactly what he's been
forecasting that he thinks artificial
intelligence is deflationary, increases
labor force productivity, and therefore
we could lower rates while facing
disinflation from AI, and we don't
actually have to worry about inflation.
Now, a lot of people are going to be
really pissed about that because he
comes out and he's literally like, I'm
not really worried about the price of
eggs or price of beef. I'm worried about
broader measures of inflation and
specifically utilizing real time data.
Now, that's something else. I mean, I
basically heard him say, "Long
Palunteer, boys and girls." And I'll
tell you, I just watched the first of
the Lord of the Rings trilogy and I
learned what a palunteer was that all
steaming bald at communicating crystal
ball. It's not really crystal, it's more
clear, but anyway, kind of cool. I
actually agree with this. Basically,
Kevin Worsh came out and said, "Look,
why are we worried about jobs data that
comes out at the beginning of every
month, but it's not actually useful to
us until the third revision?" So,
basically, you know, 3 months later, why
don't we actually use real time data and
then incorporate AI with that data? And
so AI and other real-time sources of
data can actually tell us what's
happening in the economy in real time
rather than relying on the these old
reports that are subject to a lot of
revisions and are subject to really low
response rates. He's not wrong about
this. Postcoid the response rates
plummeted for the job survey for the
jobs the uh opening and labor turnover
survey. All of these have gotten reamed
in response rates and so the surveys
aren't as useful as they used to be. A
lot of the surveys are getting filled in
sort of backfilled in with estimates or
assumptions, seasonal adjustments. So
he's not wrong. I actually kind of
support the idea of using more updated
me like tools to determine what's going
on with the economy. For example, you
know, that could be based on earnings.
It could be based on guidance from CEOs.
It could be based on actual hiring. Like
even the Jolt survey includes a lot of
job openings that aren't actually really
open anymore. They're just like
forgotten listings on online hiring
websites when you could probably use AI
to measure the delta, right? change of
job openings month-to-month much faster
by analyzing big data probably using
software like Palanteer frankly uh and
uh and and analyzing month-to-month
changes as opposed to these aggregates
that could be full of old data. So, I
don't know that I'm making assumptions
on some of those components, but I'm
building in what he said, which was we
want better sources of data from the
private market. We want uh information
that is real- time information. We want
to use artificial intelligence. We don't
want to give forward guidance and then
the economy freaks out to what we're
saying. In fairness here, I thought that
Kevin Walsh was going to uh talk down
the risk of rate hikes. The most he
really said about rate hikes was eh half
the people are telling me they want rate
hikes, half say they don't want rate
hikes. Okay, fine. which let's look at
what's actually happening in the bond
market and what's happening with the
odds of rate hikes and you'll kind of
see why the market is reacting the way
it is. Just a quick note this morning we
shouted out Robin Hood as potentially
being a part of the next sector to get a
lot of momentum and since our shout out
the stock is up 12 freaking%. We shouted
this out at $96. It's trading at $108
right now. Now, we've done some more
fundamental analysis on it as well. Uh
over in the Meet Kevin app for course
members, major Meet Kevin stock AI
update came out uh last week for course
members. You could get a free sample as
well. Uh we're coming out with the alpha
wire service within the next 24 hours
for course members. And so, of course,
we'll be raising the price again. But
for now, you could use coupon code pope.
Uh that's mostly because the Pope gave
me a nod while I was wearing the
Reinvest shirt in Barcelona a few days
ago. You could see that on X. But
anyway, join and get all nine courses,
every trade alert, every private live
stream, every alpha report, allin-one
membership over at meetke.com. Okay, for
now though, uh in addition to awesome
shoutouts, let's focus on what's not so
awesome, and that is that we only have a
20% chance right now of actually staying
stable by the end of the year on the CME
futures market. This is bad. We've
literally gone from about a 55% chance
of a rate hike by the end of the year to
an 80% chance of a rate hike by the end
of the year. This is why markets are
pissed off. In my opinion, they are
wrong. They are absolutely wrong. And
I'll show you why in just a moment. By
July 28th, markets are pricing in only a
17% chance that we will be stable or
lower, which is, you know, an 83% chance
that we're going to get a hike or
multiple rate hikes by July 27th uh of
2027 or sorry, July 28th of 2027. This
is wrong in my opinion. But looking at
the bond market, you could actually see
the bond market is really plummeting the
odds of a shock from policy. We can see
the 102 yield curve has dumped today
about nine basis points, which is a
massive plummet. The chart has
absolutely crashed on this, which is
actually bullish for the economy. Now,
why is this happening? It's happening
because the 2-year yield is rising
slightly and the 10-year yield is rising
more. You can see the 2-year right now
is sitting up about 14 bips. And if I
jump over to the 10year, I want to say
it's up somewhere around uh 34. Let's go
here. Come on. Come on. Come on. There
it is. Oh, 4.7 or 0.047 I should say. So
4.7 bips versus here about actually wow
14. No, you've actually come up quite a
lot on the 2-year. So, that's actually
very interesting. This is this is the
market responding heavily to this idea
that uh hey, all right, it sounds like
we're going to get hikes. It's the same
thing you see over here on the CME watch
group. But that is not what the summary
of economic projections is actually
forecasting. This is why I think the
market is wrong to assume we're going to
get rate hikes this year. First of all,
I think Kevin Worsh is going to change
the definition of inflation and
therefore we won't need rate hikes
because we'll magically be at 2%. I
think that's coming. But even beyond
that assumption, look at the summary of
economic projections. With 50% of the
staff not pricing at a rate hike, the
average of Fed staffers still sees
inflation going from 3.3 to 3.4 all the
way down to 2.3 to 2.4. That is a 1%
decline as we roll over from tariffs,
Iran, and AI supply shortages, a lapping
of annual inflation. There's a 1%
decline is being priced in without a
guaranteed rate hike here. So, I'm I'm
sort of surprised that the market is
believing that, you know, Kevin Worsh
just implied there's going to be a rate
hike. I don't see that at all. In fact,
I could see here you've got one
knucklehead who thinks rates should be
at 4.4%.
Uh, five think there should be two
hikes, one think there should be one
hike. This is for 2026. But the vast,
you know, the bulk of people right here
are at a hold. And I think the bias is
going to be towards holding and waiting
because you don't want to repeat what
happened in the 1970s. In the 1970s, we
saw a lot of up and down adjustments
that actually contributed to a lot of a
lack of faith or confidence in the
Federal Reserve and ended up getting us
Paul Vulkar to sort of put the pants
back on at the Fed. No sign here that
the unemployment rate has any issues. In
fact, Kevin Worsh himself mentioned that
he is hearing a lot about how stable the
unemployment market or the employment
market, the jobs market is right now.
Uh, it also should not have been a
surprise that the summary of economic
projections implied a rate hike over
here. The market did turn down as soon
as we got this. That shouldn't have been
a surprise. We've already been pricing
in a rate hike all year long. So, I was
surprised the market did go down after
this because we've already known the
bond market was pricing in one hike rate
hike for 2026. In fact, at one point it
was pricing in a rate hike for 2026 and
a rate hike for 2027. Bond market
actually still is. But the summary of
economic projections is pricing in a
rate hike for 2026 and a rate cut for
2027.
It's up 25 basis points this year and
down 25 basis points this year. Now,
somebody did or next year. Uh, somebody
did hawk this meeting a lot. Somebody
actually thinks the rate should be up
almost one full percent. But that's only
one person at the Fed. That's that one
dot, that one knucklehead who's really
hawkish right now. And it's not Kevin
Worsh because Kevin Worsh didn't fill
out any projections at all. He abstained
from filling out anything. Uh their
statement was also substantially
shorter. They've removed essentially all
forms of forward guidance. Uh and I hate
to say it, but the market's revisiting
the 725 support line. We bounced off of
it earlier when we got the statement. We
are falling into the close which
unfortunately does mean that triple
leveraged funds are likely to come out
and also sell into the close as SpaceX
is likely to have its first red day
here. I am bearish uh SpaceX long-term
even though I hold SpaceX. Uh once we
get to July and we start getting
lockups, I think a lot of people are
going to be running for the exit on it
and I think there'll be better chances
and better opportunities to buy SpaceX.
Uh we are looking for new sectoral
leadership could end up continuing to be
finance especially after that boost we
saw at Robin Hood today. SoFi might be
another beneficiary of that, especially
with their home lending sector really
exploding. But really long term here, so
ignoring kind of shorter term moves in
the market. Long-term, Kevin Walsh
really came out here and suggested we're
going to have a lot of changes. That if
you look at the housing market, Federal
Reserve policy is restrictive. If you
look at the stock market, it's not. He
thinks that inflation is a choice, but
they don't have major urgency right now.
that they have the luxury of time right
now to sit down and sort of reanalyze
how they want to put data together.
Whether they're going to have press
conferences or not depends on whether
they have an announcement to make or
some kind of press conference to give.
He thinks that press conferences should
really be reserved for when you have
something useful to say. So, there is a
potential future where we get fewer
press conferences with Kevin Borch. We
get a different inflation regime that
suggests, oh, inflation's actually good.
He's probably going to push rates down
over his term. I actually expect we'll
have lower rates than ever before by
2032. This is a mindset that I've had
for the last four years. And I think
that'll that'll be true. And I think
he's going to use essentially more
real-time data, potentially
incorporating AI data to guide the Fed
on where they should be with policy.
Obviously, there's some risks with that.
We've never had AIEL data controlling
Fed policy or at least advising Fed
policy. So, it's going to be interesting
to see how all this plays out. But I
think the bias here is hold until we
get, you know, a new explanation for the
economy and then probably cut. Today,
though, markets are really pricing in a
lot of rate hikes, right? I mean, this
this is very aggressive. You've got uh
probably two to even three, maybe even
four rate hikes priced in over here
going through the summer of 2027. And
again, you go to the end of the year,
you're pricing in one to two hikes with
an equal chance, basically a one-/ird
chance for each of them of a rate hike
by the end of the year. I personally
think this is totally wrong and it makes
me bullish because I think money is made
when people are not looking at certain
stocks. I think in 2022 when I was
loading up on Nvidia, which ended up
being a 10x in my portfolio, made
millions of dollars. I was really
grateful for that. Everybody was making
fun of me for buying chips then. It's
kind of like, you know, today it's
really unpopular to buy certain stocks
that are printing money that are really
cheap in their valuation and they're
cheap at the same time as the market is
pricing in rate hikes when I think we're
actually more likely to get rate cuts.
Now, we'll see. I could be wrong.
Obviously, you know, that's what makes
us human after all. But if you want to
see exactly what I'm investing in,
consider joining us over at mekevin.com.
You could use that coupon code pope. Uh
the reason again that pope is because uh
we actually got that nod from the pope
over here which I was really happy
about. I was wearing the reinvest polo
and uh yeah gotta say it's uh it's it's
kind of cool. Uh was not expect people
wait hours to see the pope and then we
got the nod right there. How sick is
that?
So uh somebody told me it's it's um not
blasphemous to say the pope likes you or
gives you a nod. Only if you use God in
that reference. So that that was good.
Uh but anyway, that gives us a little
bit of a uh breakdown of what's going on
uh with uh Kevin Walsh. I I will say
he's a little bit boring, a little bit
of a politician. I uh expect a lot of
changes to come from the Federal
Reserve, but I think that they will bias
down. And again, if you look at the
summary of economic projections, you
could even see that bias down on rates
here. Uh and I think they're going to
repel from that noisiness of, you know,
oh, we're going to hike and then we're
going to cut. I think that's a terrible
idea. And in fact, I think one of the
most powerful comments that I heard was
Kevin Worsh was asked, hey, you know,
was there like a consensus from the
committee? And the consensus was that
there is no consensus. He in fact called
everybody pretty humble and uh, you
know, pretty willing to listen to other
commentary and potentially even change
their minds. Uh, and so there was no
overbearing push towards one direction
or another, which is very consistent
with my belief that we're likely to do
nothing until we get a cut. The market
is totally mispricing that in my
opinion, which creates a long-term
buying opportunity. So, yes, that makes
me bullish. Probably sitting somewhere
around an 8.3 on the bare bull scale
right now, which, you know, was pretty
elevated. Um, certainly not desiring
rushing into debt. I'm not a big fan of
debt uh because I do think that uh there
you know the next time we have a
recession whenever that comes it will be
one of the worst and Kevin Worsh will
actually contribute it contribute to it
being bad. He'll cut rates to zero but
he won't print money like the other guys
like a Paul Vulkar or Janet Yellen or
Jerome Powell. He won't print money like
them or at least he'll try to resist
from that. I think that his task force
will also advise just that which uh is
is unfortunately bearish for a
recessionary period which makes me very
uninterested in debt. But with that
said, uh overall I'm optimistic here. I
I I hate to say that I like what I heard
because I'm tired of hearing task force.
I am excited though about hearing, hey,
we're going to update like how we
collect data and how we analyze data.
Honestly, it's long been needed. So,
we'll see what they come up with, but
respect for trying because I agree that
that the data is quite dated. Anyway,
there you go. Thanks so much for being
here. I always appreciate you watching.
Uh, consider sharing. Subscribe to the
video or the channel. Feel free to
follow me on XMEK or on Instagram at
realme Kevinev. I try to post there
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and use that coupon code pope.