sen. grassley: c-span does not receive one penny of taxpayer dollars. >> and called on all television providers, including streaming services, to provide c-span as well. sen. klobuchar: we are at a different stage in our history, and a lot of people are seeing their news this way, so we need to expand it and make sure we are on all of those platforms as well as the ones we already are on. so thank you, again, to senator grassley for working with me to highlight c-span's critical role, and thanks to everyone who has had a hand in c-span's success. ♪ >> democracy. it is not just an idea, it's a process, a process shaped by leaders elected to the highest offices and entrusted to a select few to broaden its basic principles. it's where debates unfold, decisions are made, and the nation's course is charted. democracy in real time. this is your government at work.

this is c-span, giving you your democracy unfiltered. ♪ >> next, federal reserve chairman jerome powell announced that interest rates remain unchanged as uncertainty continues round president trump's tariffs and how they could impact inflation. his news conference is just under one hour. [indistinct conversations] pull out of the nuclear nonproliferation treaty. chair powell: good afternoon.

my colleagues and i remained squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the american people. despite elevated uncertainty of the economy is in a solid position. the unemployment rate remains low and the labor market is at or near maximum employment. inflation has come down a great deal but has been running somewhat above our 2% objective. in support of our goals, today the federal open market committee decided to leave our policy interest rate unchanged. we believe the current stance on monetary policy leaves us well-positioned to respond in a timely way to potential economic developments. i will have more to say on monetary policy after reviewing economic developments. following growth of 2.5% last year, gdp was reported to have edged down in the first corner reflecting swings in net exports

driven by businesses bringing in imports ahead of potential tariffs. this unusual swing has complicated gdp measurement. private domestic final purchases which excludes net exports and government spending grew at a solid 2.5% rate. we think pdfp while investment in equipment rebounded in the fourth quarter. surveys of households and businesses report a decline in sentiment over recent months and elevated uncertainty about the economic outlook, largely reflecting trade policy concerns. it remains to be seen how these developments might affect future spending. in our summary of economic projections, the median participant projects gdp to rise

1.4% this year and 1.6% next year. in the labor market, conditions have remained solid. payroll job gains averaged 135,000 per month. the unemployment rate at 4.2% remains low. wage growth has continued to moderate while still outpacing inflation. overall, a wide set of indicators suggests conditions of the labor market are broadly in balance and in line with maximum employment. the labor market is not a source of significant deflationary pressures. the median projection for the unemployment rate in the sep is 4.5% at the end of this year and next, a bit higher than projected in march. inflation has eased significantly from its highs in mid 2022 but somewhat elevated

compared to our 2% long-running goal. data indicate total pce prices rose 2.3% over 12 months. excluding the volatile food and energy categories, core pce prices rose 2.6%. near term of inflation expectations have moved up over recent months as reflected in market and survey-based measures. respondents to surveys point two tariffs as the driving factor. beyond the next year or so most measures of longer-term expectations remain consistent with our 2% inflation goal. the median projection in the sep for total pce inflation this year is 3%. somewhat higher than projected in march. the median inflation projection falls to 2.4% in 2026 and 2.1% in 2027.

our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the american people. at today's meeting the committee decided to maintain the target fund rate at 4.25% to 4.5% and continue to reduce the size of our balance sheet. we will continue to determine policy based on incoming data, the outlook in the balance of risks. changes to trade, immigration, policies continue to evolve. their effects on the economy remain uncertain. the effects of tariffs will depend on their ultimate level. expectations of that level and the related economic effects of a peak in april and have since declined. even so, -- increases are likely to weigh on economic activity. effects could be short-lived,

reflecting a one-time shift in the price level. it is also possible the inflationary effects could be more persistent. avoiding that outcome will depend on the size of the tariff effects and how long it takes them to pass into prices and ultimately keeping longer-term inflation expectations well anchored. our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase from becoming in ongoing inflation problem. we will balance our maximum employment and price stability mandates, keeping in mind we have priced ability to achieve long periods of labor market conditions that benefit all americans. we may find ourselves in a challenging scenario in which our dual mandate -- if that were to occur we would consider how far the economy is from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close.

for the time being we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance. in our sep, fomc participants wrote down an appropriate path for the federal funds rate based on what participant judges to be the most likely scenario going forward. the median participant projects the appropriate level of the federal funds rate would be 3.9% at the end of this year, the same as projected in march. it declines to 3.6% at the end of next year and 3.4% at the end of 2027, a little higher than the march projection. these individual forecasts are always subject to uncertainty and as i noted uncertainty is unusually elevated. these projections are not a committee decision.

at this meeting the committee continued discussions as part of our five year review of our monetary policy framework. we focused on issues related to assessing risks and uncertainty for monetary policy and implications for strategy and communications. are review includes outreach and public events involving a wide range of parties including fed events around the country in the research conference we held last month. we are open to new ideas and critical feedback and will take on lessons of the last five years in determining our findings. we intend to wrap up any modifications to our long-term goals and policy strategy by late summer. after that we will consider enhancements to our communications tools including the sep. the fed has been assigned to goals for monetary policy -- maximum employment and stable prices. we are committed to

supporting maximum employment and keeping longer-term inflation expectations well anchored. . our success in delivering these goals matters to all americans. we understand our actions affect communities, families and businesses across the country. everything we do is in service to our public mission and we at the fed will do everything we can to achieve maximum employment and price stability goals. thank you and i look forward to your questions. >> thank you. to what extent has the more limited impact from tariffs at this stage on inflation changed your view on what the ultimate economic file that will be from these policies, and the timing of when they will materialize in the data? chair powell: we have had three months of favorable inflations reading since the high readings of january and february and that is welcomed news. core services, housing and

non-housing, have been grinding down toward levels that are consistent with 2% inflation. that is the good news. goods inflation has moved up a bit. we expect as you point out, we do expect to see more of that over the summer. it takes some time for tariffs to work their way through the chain of distribution to the end consumer. a good example of that would be goods being sold at retailers today might have been imported several months ago before tariffs were imposed. we are beginning to see effects and we expect to see more over the coming months. we see price increases and some of the relevant categories like personal computers and audiovisual equipment that are attributable to tariff increases. we look at surveys of businesses and there are many of those -- you see a range of things. many companies do expect to put

all or some of the effective tariffs to the new person in the chain and ultimately to the consumer. today, the amount of the tariff effects, the size of the tariff effects, their duration are highly uncertain. that is why we think the appropriate thing to do is hold where we are as we learn more. we think our policy stance is in a good place. we are well-positioned to react. >> in terms of how we should interpret the rate cuts penciled into the sep, is this reflecting there is an expectation that underlying inflation will stable enough contained that it will allow the committee to move ahead with those cuts? is it about responding to a deterioration in economic activity? how should we make sense of the forecast? chair powell: you will see people generally expect inflation to go up and come back down. we cannot just assume that.

our job is to make sure that a one-time increase in inflation does not turn into an inflation problem. that will depend on the size of the effects, how long it takes for them to come in and ultimately keeping expectations anchored. >> hi. thanks. if you look at the right path starting in december 2 today and adjust over the time horizon, you have taken about a quarter point a year out of the projected path and ended with a higher rate in 2027. is that a result of a sense that tariffs will lead to more persistent inflation? why are you want a slower path? chair powell: i would focus most on the near term.

as you get out to the later years, it is hard for anybody to know where the economy is. you did not see people moving the longer-term rate in this meeting. those things are probably slow moving. if you look at what is happening, this is since march, slower growth, a .1 tick up in unemployment and inflation moving up by .3. it was a similar move from the december sep to march. you see the effects of tariffs. we learned in april, after the march meeting, substantially higher tariffs. since then, the estimates of where the tariffs will be have moved down, although still at an elevated level. we are adapting in real time. you see an accumulation of individual assessments. >> you said the statement that risks are diminished on that

front but the july drop dead date for the liberation day tariffs is still out there and unresolved. you have an exchange of missiles between two middle east adversaries. how can you justify saying risks are diminished? chair powell: we said uncertainty about the economic outlook has diminished. many surveys say that. that is a line from the teal book. [laughter] remember to check that. [laughter] if you think about it, tariffs uncertainty -- uncertainty really peaked in april and since then has come down. that is what that is acknowledging. it is diminished but still elevated. uncertainty. i think that is an accurate statement. >> thank you. associated press. there is an argument out there in favor of cutting rates more

immediately. inflation has continued to cool and is back at roughly 2% despite the tariffs. i want to ask about cracks in the job market with hirings lowering, concentrated in just a few industries. we have seen some housing data, including this morning, do you see any concerns that the economy is weakening and that is a reason to cut rates going forward? chair powell: we do of course monitor all of those things. if you look at the overall picture, what you are seeing is 4.2% unemployment and an economy that is growing at a rate that is hard to know given the unusual flows in the first quarter but it appears to be 1.5%, 2%, maybe better. sentiment has come off its low levels. it is still depressed. you can point to things -- the

housing market is a longer running problem and a short run problem. i do not think it is indicative -- the situation is we have a longer run shortage of housing. we also have high rates right now. the best thing we can do for the housing market is to restore price stability and understandable way and create a strong labor market. that is the best thing we can do for the housing market. you asked about the job market. look at labor force participation. look at wages. job creation. they are all at healthy levels. you could see a very slow to continue cooling but nothing that is trouble at this time. we watch it very carefully. overall, the current stance of monetary policy leaves us well-positioned to respond to economic developments for now. we will be watching the data carefully. >> just quickly, given there are

concerns inflation will rise but there is the alternate scenario that tariffs would create slow growth sufficiently and that would keep a lid on inflation, do you see odds of that scenario coming true? how many months of cool inflation would you need to see before that scenario is taking place? chair powell: this is very much the conversation we had today and yesterday. there are many combinations of scenarios where inflation does or does not prove to be at the levels we think or if the labor market does or does not soften. what you see people doing is looking ahead at a time of very high uncertainty and writing down what they think the most likely case is. nobody holds these rate pass with a great deal of conviction. they will be data dependent. you can make a case for any of the rate paths that you see in

the sep. we do this once a quarter. it is a hard thing to do, particularly at this time. if you see somebody writing down a rate path that involves cuts, that is them saying yes, we will get to a place where cuts will be appropriate. it could be a joint probability and a number of possible outcomes. remember how much uncertainty we face, though. >> thank you. >> i wonder if you could describe some scenarios. i am noticing the uncertainty levels in your forecast are very high. how'd you get to a place where you have the confidence in the outlook for inflation, growth, the unemployment rate, how many months does it take and what do you want to see in the data? chair powell: it is very hard to say when that will happen. we know the time will come.

it could come quickly. it could not come quickly. as long as the economy is solid and we are seeing the kind of labor market we have an reasonably decent growth, inflation moving down, we feel like the right thing to do is be where we are and learn more. we feel like we will learn a great deal more over the summer on tariffs. we had not expected them to show up much by now and they have not. we will see the extent to which they do over the coming months. that will inform our thinking. . in addition we will see how the labor market progresses. at some point it will become clear. i cannot tell you exactly when that will be. we will be watching the labor market carefully for signs of weakness and strength. and tariffs for signs of what will happen. there are many developments ahead in the near term on tariffs. we do not yet know with any confidence of where they will be.

we have an estimate. all estimates are pretty close together. but it is highly uncertain. >> you say estimate -- estimate of the impact of tariffs on core pce? chair powell: what you start with is what is the effective tariff rate overall? people are managing to that. the pass-through of tariffs consumer price inflation as a whole processe that is very uncertai. there are many parties in that chain. each one of those will try not to be the one to pay for the tariff. to gather -- or maybe one party will pay it all -- that process is hard to predict. we have not been through a situation like this and we have to be humble about our ability to forecast. we have to see some actual data. to make better decisions we would like to see data. we can do that because the

economy remains in solid condition. >> wall street journal. can you explain a little more the divergence we see in the dot plot, particularly around the 2025 projections? you have one group of officials putting down, others that are putting down more than one. i'm recognizing that could be difficult to summarize. is it a matter of having a different outlook or a different reaction function? a different commitment to defending against another inflation mistake? how did that play out over the last two days? chair powell: you are right. as is often the case we have a healthy diversity of views on the committee. we had strong support and broad agreement that we are in a good place.

i would point to two factors. parties have a diversity of forecasts and they do align with where their dots are. if you have a higher forecast you will be less likely to write down more cuts. as we see more data we will learn more about where inflation is heading. when it is time to look at normal -- resuming our normalization process the difference is it should be smaller. we will have seen national data. right now it is just a forecast. the first part is forecasting. second, people can look at the same data and evaluate risks differently. that includes the risk of higher inflation, the labor market, people will have different assessments of that risk. you put that in there, too. those are the two things i think that drive these things.

remember, though, as i mentioned earlier, with uncertainty as elevated as it is, nobody holds these rate paths with one of conviction. that is really where it is. as the data come in, you should see the differences diminish. >> you have said the policy is in a good place in modestly restrictive. given all the uncertainty you talked about, price increases versus merchant compression, some of the softness chris talked about, why would it not be better to have rates at a more neutral setting as the economy heads into this period of high uncertainty? chair powell: if you look backward at the data that is what you would say. we have to be forward-looking. every outside forecaster in the fed is saying we expect meaningful inflation data to arrive in coming months.

a backward look would lead you to a neutral stance but we have to look at that and because the economy is still solid, we can take the time to actually see what will happen. there is a range of possibilities on how large the inflation effects will be. we will make smarter and better decisions if we just wait a couple of months for however long it takes to get a sense of what is going to be a pastor of inflation and what will be the effects on spending and hiring. >> michael mckee from bloomberg radio and television. your friend down at 1600 pennsylvania continues to lob insults in your direction. maybe now that the supreme court has carved out the fed from legal implications, whether this is just noise that the markets and everybody should ignore

until your term is up or whether you worried that it could lead to more pressure on confidence on wall street, on consumers about the outlook for the economy? chair powell: from my standpoint, it is not complicated. what everyone on the fomc wants is a solid american economy with a strong labor market. that is what we want with our policies. to be able to deliver that and respond how the data leads us. the economy has been resilient. we think we are in a good place on that. that is what matters. that is what matters to us. that is pretty much all that matters to us. >> i need to ask -- assuming you are not reappointed, would you stay on as governor? chair powell: i am not thinking about that. i am thinking about this. >> thanks, mr. chairman.

increasing, -- chair powell: with what picking up? >> workplace raids. chair powell: you are asking about immigration? >> yes. chair powell: i would not speculate on that. we do not comment on immigration policy. it is not ours to make or comment on. you see an unemployment rate that has been solid and at a low level, not really increasing. it has been well within the range of estimates. part of that is labor demand and labor supply are moving down at the same rate. labor demand is softening. labor supply is diminishing. the immigration numbers that we see are much lower than they were.

those two factors, supply and demand have captured the unemployment rate in a reasonably stable place. >> i wanted to follow up, if you could elaborate on the potential changes to the sep you said were part of the framework? chair powell: the framework has two tracts. the first is our policy framework. we said we would finish that and announce it by the end of the summer. we are well along in the process. we have had the meetings we need to have and we will now be going into discussions about specific changes to language. that is the framework part of it. the second part is our communications tools and practices. pardon me. that part comes next. that is what we will do in the meetings this fall. what we did at this meeting as

we prepared the ground for that. we had a meeting where we talk to the high level about a number of ideas. the sep is part of it. many, many other ideas. how do we think our communications can be improved? there are a number of ideas. it was a great conversation. we will look at those with staff , briefing and a lot of thought in the fall. when it comes to changing communications, i would only support things -- implement things that have broad support. you want to be really careful. i think our communications are well-received and not broken. more is not necessarily better. better is better. we will look for ways to do things that will improve the clarity of what we do for the benefit of the public. >> thanks, chair powell. cbs news.

you are famously known as the guy who makes decisions based on data rather than speculation. you said today the inflation data is in a good place. we do not know how tariffs will impact prices. i want to go back to when you cut rates in december and there was still the what if? of tariffs. what made you feel comfortable cutting then with inflation higher than it is today? chair powell: the forecast for inflation in december was 2.5%. core pce was 2.5%. a good inflation forecast. i think what we have learned is -- this was long before we had any idea of what the actual policies would be -- we learned tariffs would be substantially larger than forecasters thought. yet, our forecasts are not particularly different from

those well resourced forecasting operations. what we learned in april was substantially larger tariffs were coming and that would mean higher inflation. you saw 2.5% forecast in december, 2.8% in march and 3.1% now. it is .6% higher for 2025. that is a big part of the change. that is due to the effects of the tariffs. we do not know where they will land but it is pretty apparent they will land higher than outside forecasters were really guessing at the end of last year. >> my follow-up to that, consumers were looking for relief on rates when it comes to mortgages, car loans, small businesses want to take up more manageable loans. over the last five years prices have risen by 25%. it has been a rough road. what is the tipping point for the wait-and-see approach in

terms of how much it will help versus when it hurts the american consumer? chair powell: the best thing tro restore -- the best thing we can do for the public we serve is restore price stability. and we will restore price stability meaning 2% inflation on a durable, sustainable basis. that and also maximum employment. if we restore those things that is the best thing and that is our goal. the best thing we can do for the american people for households and businesses, that is the ultimate thing that we can deliver. and they can make their decisions without having to think about inflation all the time. so in the meantime we have to keep rates high to get inflation all the way down. they are not very high, let's be honest. i would say policy is modestly restrictive. if you look at the economy it is not performing as though it were performing under very strict monetary policy. so i would say probably modestly restricted. and so what it will take his confidence that inflation is

coming down. i would say without tariffs, that confidence would be building because if you see what is happening with non-housing services and housing services which are the other two big pieces other than goods, those are coming down really nicely now. i think we have to learn a little more about tariffs. i do not know what the right way for ups to react will be. we cannot know how to react until we see the size of the effects. then we can start to make better judgments. that is what we are doing and i think we can take the time to do that because unemployment is 4.2%. wages are moving up. real wages are moving up at a healthy clip now. inflation is two point 3% headline inflation over a 12 month basis. so it is a good economy and a solid economy with decent growth. >> thank you. so, you are saying uncertainty has come down, the economy is moving at a solid place,

inflation has come down, and this is all moving in the right direction. so are you indicating here that americans should expect some sort of economic pain in the second half of the year? chair powell: i am not saying that at all. from our standpoint what i can say is that the u.s. economy is in solid shape, inflation has come down, unemployment rate remains 4.2%, real wages are moving up. job creation is not a healthy level. unemployment low. labor force participation is in a good place. what we are waiting for to reduce rates is to understand what will happen with the tariff inflation. there is a lot of uncertainty about that. every forecaster you can name who is a professional forecaster with adequate resources and forecasts for a living is forecasting -- everyone i know is forecasting a meaningful increase in inflation in the coming months from tariffs. because someone has to pay for

the tariffs and it will be someone in that chain i mentioned between manufacturer, the exporter, the importer, the retailer, somebody putting it into a good of some kind or just the consumer buying it. all through that chain people will be the ones trying to not pick up the costs but ultimately the cost of the tariff has to be paid and some of it will fall on the end consumer. we know that because that is what businesses say and the data says. so we know that is coming. we just want to see a little bit of that before we make judgments prematurely. >> a follow-up on that. you spent years talking about how you are data dependent. now you making decisions moving forward. doesn't the data you see today indicator should be a rate cut? chair powell: no. monetary policy has to be forward-looking. that is elementary. i always talk about the incoming data, the evolving outlook and

the balance of risks. we say that over and over again. it is always forward-looking. at the very beginning of the pandemic, we cut rates to zero immediately. nothing had happened we just knew it would be really bad. so we took very aggressive forward-looking because we knew things were going to be unusually difficult. so of course this is something we sort of know is coming, we just don't know the size of it. again, the economy seems to be in solid shape. the labor market is not crying out for a rate cut. businesses were in a bit of shock after april 2 but you talk to business people now there is a very different feeling that people are working their way through this and they understand how they are going to go. it feels much more positive and constructive than it did three months ago, let's say. again, we think our current stance of monetary policy is in a good place.

>> thank you. in february you told congress the fed is quote, overworked, maybe not overstaffed. then in a memo in may, you said you wanted to ensure the fed was quote, the right size. those two statements appear to be at odds with one another. can you explain what changed in the three months between no statements that made you decide that staff levels at the fed should decline? chair powell: i do not see them at all -- i was asked if the was overstaffed and i said no. i said as a pun, overworked but not overstaffed. people work extremely hard at the fed and i know they were carted bloomberg too. -- work hard at bloomberg too. we are careful stewards of public resources and sometimes you need to show that. there have been several times in our modern history where the fed has said we are going to do a

buyout, we are going to show the public and demonstrate that we are good stewards of public resources. so we thought, and i thought that this is a time -- our headcount has grown at about 1% per year. over the course of a couple of years we are doing a careful scrub of the board in all the reserve banks and we are going to find 10% of employees who can do something else, where we can streamline our operations and we think we can get there in a couple of years. we think we can do that. this is without taking risk to carrying out our critical missions. this is something you do very carefully, thoughtfully, and you do it again respecting we have critical missions to carry out. i have had a lot of experience in my prior careers with headcount reductions and things like that and this is how you do it professionally. you do it carefully and

thoughtfully with a lot of planning and you do it over time. i think the fed will be fine. i think no one will notice any decline in our ability to carry out our missions. i think it is just us wanting to demonstrate to the public that we are actually good stewards of their resources. we are effectively wiping out 10 years of headcount growth with this. we wanted to show that we are good stewards. >> how is progress? chair powell: we are just at the very beginning. we are doing a buyout program. we are going to hit that goal. many organizations find that they can do this. you don't want to do it every year for anything but you can do it at intervals. and you wind up not interfering with your ability to perform your jobs. >> chair powell, the financial times. as you are no doubt aware the

senate finance committee has tabled its version of the reconciliation bill this week and i was wondering if you could tell me a little bit about the tenor of their debate at the fomc over the past few days on fiscal policy and the degree to which that influences people's projections for 2026 and beyond. thank you. chair powell: so, we don't sit around and debate or really discuss. we take fiscal policy as fully exogenous. so, we actually really didn't talk about the bill or the contents of it. it is still evolving. when it gets closer -- remember also, we have a very large economy and the effects will be at the margin. i expect they may already be in but they will begin in the next meeting when we can ask them that but it is not a major thing. it is nothing that we discuss.

it may have been mentioned as something coming in but we don't know the outcome yet so it is hard to be real specific. >> thanks. there have been cutbacks and economic subsistence collections alessi weeks, worries long-running problems around funding and response rates may be getting worse. how much is this concern on your radar and how much confidence do you have at the gauges you are watching are reliable right now? chair powell: two things. one, the data we get right now, i am not concerned we cannot do our jobs. that is not the point. the point is that we are starting to see layoffs and important gatherers of data are saying that they are having to cut back on the size of their surveys and that will lead to more volatility in the surveys. i think we should take a step

back. from our standpoint and i think the standpoints of everyone, having really good data on the state of the economy at any given time is a huge public good. it doesn't help the fed it helps the government, congress, the executive branch, and it helps businesses. they need to know what is going on in the economy. the united states has been a leader for many years and this whole project of measuring and understanding what is happening in our very large and dynamic economy. and i hate to see us cutting back on that because it is a real benefit the general public that people in all kinds of jobs have the best possible understanding of what is happening in the economy and ends what is likely to happen. it is very hard to measure what is going on in the u.s. economy. it is really remarkable how many things you need to understand the estimate u.s. gdp. very difficult.

it is so important that we get it right. i just would say it is not a place -- i would not want to keep investing in that for the good of the general public. >> hi. you are conducting this monetary policy strategy framework review. but next year we are supposed to have a new fed chair and i am wondering if that affects it all the way that you are approaching this. how do you ensure that this framework will actually be durable? chair powell: you know, the framework document goes back to 2012. and it is the committee's document. it is not like we are going to event -- invent a brand-new way to do things. so it should not depend on who the chair is it should depend on what is happening in the economy and what the committee wants to do.

so it is not really tied to any particular chair. we use to renew it every year. now we do it every five years. i've never heard anyone raise this issue that a new chair might want to come in and go in a completely different direction. i really do not think that is right but that will not be up for me to decide. >> is that affecting it all your consulting? chair powell: not at all. not in any way. >> thank you. relatively low gas prices this year have helped drive down inflation in recent reports but that trend is starting to reverse given the crisis in the middle east. how are you thinking about how the israel/iran conflict will impact the economy, especially inflation? and what lessons were learned during the 2022 period where the

russia/ukraine were sent oil and gas prices skyrocketing? chair powell: of course we are watching like everybody else is what is going on. i don't really have any comment on that. it is possible we will see higher energy prices. what has tended to happens when there is turmoil in the middle east you will see a spike in oil prices but it tends to come down. those things don't generally tend to have lasting effects on inflation all of course in the 1970's they famously did because you had a series of very large shocks. but we have not seen anything like that now. the u.s. economy is far less dependent on foreign oil then it was back in the 1970's. >> a quick follow-up. i have to ask about artificial intelligence. some technology executives have been warning that ai could wipe out a large chunk of entry-level jobs and significantly increase the unemployment rate. i'm wondering how concerned you

are if at all about the threat ai poses to employment. chair powell: this is the question. the question really is will ai be more augmenting labor or replacing labor. we all see those announcements including one today. i would not over read a couple of data points. ai should be creating jobs at the same time. it may be doing both. anyone who has done any work with ai will have been a little bit stunned at how capable it is. it is just a different thing. i think this is something that certainly has transformational potential and probably we are in the very early stages of it. they say what you are seeing now compared to what we will see in two years will be very different and even more effective. it is very hard to know. of course there are optimists who feel it will make everybody

much more productive and there are those who think it is going to replace an awful lot of jobs right across the income spectrum. white collar, blue-collar. i just don't know. we don't have a house view on that but this is going to be a very important question for some time. >> thank you. i was wondering if you could step back a little bit, chair powell. there is a spate of articles and a lot of op-ed's now in the newspapers saying that the u.s. economy in the global economy is going through this profound change. akin to the end of the bretton woods era in the 1970's. don't you owe the american people some sort of explanation for what we are going through? i noticed earlier this month when you talked about bretton woods a little bit and said the

fed staff had to change how the dollar was impact in the economy. are we going through something like that now? are you having to change how you do monetary policy? is that fundamentally change underway? chair powell: it is certainly a time of real change. from a geopolitical standpoint but from a trade standpoint, from an immigration standpoint. see this not just here but everywhere. there is quite a lot going on. it does not change the way we do monetary policy in the near term and it does not change our objectives or what we need to do. these things are not really are issues, they are issues for elected governments. but there is no question it is a time of real change and very hard to see where that goes. there have been many things written about how you will be a more inflationary time. that is possible. it is not guaranteed.

ai could cut in a very different direction and make people much more productive and push in the other direction. i don't know. you are right, but our focus is a much more practical one and that is how do we keep inflation low and employment high in the near term. that is really what we are about. >> hello. what is the view about the growing amount of slack in the job market including the softening of payrolls, the forecast of a modest rise in the unemployment rate, and the ability of workers to demand wage hikes were not in this environment where you have inflation surge? chair powell: you don't really see unemployment going up. you don't see increased slack really. you are at 4.2% unemployment.

for many years that was an extremely low level. it happens to have come up off an even lower level. 4.2 percent is probably at the low-end of estimates of the longer run natural rate of unemployment. i guess i would not agree with that. in terms of wages, real wages after inflation have been moving up more than was consistent with 2% inflation. it is still moving up at a healthy clip and i think much more consistent with 2% inflation given a reasonable assessment of trend productivity. so it is a pretty good labor market. you are right that the level of job creation has come down but so has the supply of workers and the new supply. you have seen the unemployment rate remain pretty stable at 4.2 percent. it has been as high as 4.3%.

so it is a pretty good labor market. the more concerning thing is there are not a lot of laughs but not a lot of job creation. if you are out of work it is hard to find a job but very few people are being laid off at this point. that is in equilibrium we watch a very carefully because if there were to be significant layoffs and the job finding rate would remain the slow you would at increasing unemployment fairly quickly. but that really has not happened. so the u.s. economy has defined all sorts of forecasts for it to weaken over the last three years and has been remarkable to see again and again when people think it is going to weaken out. eventually it will but we are not seeing signs of it not. -- of it now. >> hi. there has been a lot of talk about cuts. i wanted to ask, why do you

think there are no forecasts for rates to rise or even to stay where they are next year, given that the projection for inflation is to rise to 3% and there is some skepticism over whether the price hikes will be a one-time event? chair powell: there are a number of people on the committee wrote down no cuts this year but some cuts next year. look, people are writing down there most likely path. they are not saying there is zero possibility of other things. really, think of it as the least unlikely path. in a situation like this where uncertainty is very high. again, people write down their rate paths and they do not have a really high conviction that this is exactly what is going to happen over the next two years. no one feels that way about their rate path. what would you write down? it is not easy to do that with confidence. i would just say it that way.

we don't rule things in or out. certainly a hike is not the base case at all. it is not something people are writing down. but in the meantime we do the best we can with these forecasts and i think they are representative of the different forecasts and different reaction functions that people on the committee have. so thank you very much. thanks. [captions copyright national cable satellite corp. 2025] [captioning performed by the national captioning inst >> get c-span wherever you are. our mobile app puts you at the center of democracy. live and on-demand. keep up with events with live streams of floor proceedings and hearings from the u.s. congress. campaigns and more, from the world of politics all at your fingertips. catch the latest episode of washington journal. find schedule information.

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