WASHINGTON (MaceNews) – The Federal Reserve’s transcript of Wednesday’s news conference held by Fed Chair Jerome Powell following the meeting of the policy-setting Federal Open Market Committee follows:
CHAIRMAN POWELL: Good afternoon. Before discussing today’s meeting let me comment briefly on recent developments in the banking sector.
Conditions in that sector have broadly improved since early March and the US Banking system is sound and resilient. We will continue to monitor conditions in the sector. We are ghited to learning the right lessons from this episode and we will work to prevent these events from happening again. Last week we released Vice Chair for supervision Barr's review of Silicon Valley bank. The reviews findings underscore the need to address our rules and supervisory practices to make for a stronger and more resilient banking system and I'm confident we will do so.
From the perspective of monetary policy our focus remains squarely on our dual man tate to promote maximum employment and stable prices for the American people. My colleagues and I understand the hardship that high inflation is causing. And we remain strongly committed to bringing inflation back down to our 2% goal. Price stability is the responsibility of the Federal Reserve. Without price stability the economy does not work for anyone.
In particular without price stability we will not achieve a sustained period of strong labor market conditions that benefit all.
Today the FOMC raised its policy interest rate by a quarter percentage point. Since early last year we have raised interest rates by a photo tal of five percentage points.
We are also continuing to reduce our securities holdings. Looking ahead we will take a data dependent approach in determining additional policy affirming may be appropriate. I will have more to say after briefly reviewing economic developments.
The U.S. economy slowed significantly last year with real GDP rising at a below trend pace of 0.9%. The pace of economic growth in the first quarter of this year continued to be modest at 1.1%, despite a pickup in consumer spending. Activity in the housing sector remains weak, largely reflecting higher mortgage rates.
Higher interest rates and slower output growth appear to be weighing and business fixed investment. The labor market remains very tight. Over the first three months of year job gains averaged 345,000 jobs per month. The unemployment rate remained very low in March at 3.5%.
Even so, there are some signs that supply and demand in the labor market are coming back in to better balance. The labor force participation rate has moved up in recent months particularly for individuals aged 25 to 54 years. Nom minute nail wage growth has showed some signs of easing.
But overall maybe demand still substantially exceeds the supply of available workers. Inflation remains well above our longer run goal of 2%. Over the 12 months ending in March, total PCE prices rose 4.2%. Excluding the volatile food and energy food categories, rose 4.6%. Inflation has moderated somewhat since the middle of last year. Nonetheless inflation pressures continue to run high and process of getting inflation back down to 2% has a long way to go. Despite elevated inflation, longer term expectations appear well anchored as reflected in a broad range of surveys, households and businesses and forecasters.
The Fed's monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the American people. My colleagues and I are acutely aware that high inflation is a significant hardship, like food, housing and transportation.
We are highly attentive to the risks that high inflation poses to both sides of our mandate. And we are strongly committed to returning inflation to our 2% objective.
At today's meeting the committee raised the target range by a quarter percentage point. We're continuing the process of significantly reducing our securities holdings. With today's action we have raised interest rates by 5 percentage points in a little more than a year.
Particularly housing and investment. It will take time however for the full effects of monetary restraint to be realized, especially on inflation. In addition, the economy is likely to face further head winds because of tight credit conditions. They had been tightening in the last year or so. But the strains that emerge in the banking sector in March, result in tighter conditions. These tighter credit conditions are likely to weigh on economic activity, hiring and inflation. The extent of these effects remains uncertain: In light of these uncertain head winds along with monetary policy restraint we put in place our future policy actions will depend on how events unfold.
In determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take in to account the tightening of monetary policy, affects economic activity and inflation and economic and financial developments. We will make that determination meeting by meeting and the implications for the outlook for economic activity and inflation. We are prepared to do more if greater monetary policy restraint is warranted.
We remain committed to bringing inflation back do to our 2% goal and to keep our longer term inflation expectations well anchored. Reducing inflation is likely to require a period of below trend growth and softening of labor market conditions of restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. To conclude we understand that our actions affect communities, family and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions. Thanks. Gina.
Hi. Gina, New York Times. Thanks for taking our questions. I wonder if you should tell us that we should read the statement that the committee is prepared to pause interest rate increases in June and I wonder if the Fed staff has revised their Fed forecast from a mild recession and what their envisioning would look and feel like when it comes to the unemployment rate, for example.
CHAIRMAN POWELL: So taking your question, today was the raise the federal fund rate by 25 basis point. A decision on a pause was not made today. You will notice in the statement for March we had a sentence that said the committee anticipates that some additional policy firming may be appropriate. That sentence is not in the statement anymore. We took that out. Instead we are saying that in determining the extent to which policy affirming, the committee will take in to account certain factors. So that’s a meaningful change that we we’re no longer saying that we anticipate.
And so we will be driven by incoming data meeting by meeting and we will approach that question at the June meeting. So the staff's forecast, so let me say -- start by saying that that's not my own most likely case, which is really that the economy will continue to grow at a modest rate this year.
And I think that's -- so different people in the committee have different forecasts. That's my own assessment of the most likely path. It is independent of the forecasts of the participants. Which include the Governors and the reserve bank presidents. They are not influenced by what the Governors think. So it's actually good that the staff and individual participants can have different perspectives.
So broadly, the forecast was for a mild recession and by that I would characterize it as one in which the rise in unemployment is smaller than has been typical in modern recessions. I wouldn't want to characterize the staff's forecast for this meeting. But broadly similar to that. Rachel.
Thank you, chair Powell. Thanks for taking our questions. I’m wondering if you talk about the account of possible effects of a debt limit standoff. You said that the ceiling must be raised repeatedly. But do you see any economics effects of getting close to a default and what type of situation would that look like?
CHAIRMAN POWELL: I will say this. These are fiscal policy matters for starters. And therefore Congress and the administration for the elected part of the government to deal with. And they’re really — consigned to them. From our standpoint I would just say this, it is essential that the debt ceiling be raised in a timely way so that the U.S. Government can pay all of its bills when they’re due. A failure to do that would be unprecedented. We would be in an uncharted territoriant consequences to the U.S. economy could be highly uncertain and could be quite averse. I’ll just leave it there. We don’t give advice to either side. We just would point out that it’s very important that this be done. And that the other point I’ll make about that though is that no one should assume that the Fed can protect the economy from the potential short and long-term effects of a failure to pay our bills on time.
It's -- it would be so uncertain it is just as important that this -- we never get to a place where we're actually talking about or even having a situation where the U.S. Government is not paying its bills. And just to follow-up. Was discussion around the unsesh certainty of a possible standoff, did that affect the policy decision today?
CHAIRMAN POWELL: We talk about risks to the outlook. A number of people did raise that as a risk to the outlook. That wasn’t important in today’s monetary policy decision yet.
Steve.
Thank you. Steve, CNBC. Can you tell us what the Federal Reserve board did in the wake of that February presentation where you informed that Silicon Valley bank and other banks were experiencing interest rate risks? To make sure that banks are appropriately managing interest rate risk. And part three, do you think the separation principle that monetary policy and supervision can be handled with different tools? Thank you.
CHAIRMAN POWELL: The February 14th presentation I didn’t remember it very well and now I have gone back and looked at it very carefully. I did remember it. What it was was a general presentation. It was an informational briefing of the whole board, the entire board, I think all members were there. And it was about interest rate risk in the banks. And lots of data. And there was one page on Silicon Valley bank that talked about the amount of losses or mark to market losses they had in their portfolio. Nothing in that I recall about the risk of a bank run. So it was — I think the take-away they were going away to do an assessment, a vertical — so horizontal assessment of banks. It wasn’t — it wasn’t presented as an urgent or alarming situation. It was presented as an informational, nondecisional kind of a thing. And I thought it was a good presentation. And as I said did remember it.
In terms of what we're doing, of course, I think banks themselves are many, many banks are now attending to liquidity. And taking opportunity now really since the events of early March to build liquidity. And you asked about the separation principle, like so many things, it's very useful. But, you know, ultimately it has its limits. I mean I think in this particular case we have found that the monetary policy tools and the financial stability tools are not in conflict. They're working well together. We have used our financial stability tools to support banks through our lending facilities. We have been able to use our monetary tools to monitor price stability. (Off microphone).
I don’t mean to be argumentative but the staff report said SB has interest rate risk and it said banks with large unrealized losses face significantly safety and soundness risk. Why was that not alarming?
CHAIRMAN POWELL: I didn’t say it wasn’t alarming. They are pointing out something and they are on the case. I think they did — they mentioned that they had taken regulatory action, or supervisory action in the form of matters requiring attention. So I think that was also in the presentation. I think it was to say yes, this is a bank and there many other banks that are experiencing these things. And we’re on the case.
Thank you.
Victoria.
Hi. I wanted to ask — obviously with the recent bank turmoil we’ve seen multiple banks buy other banks. And I was just curious whether you think that further consolidation in the banking sector would increase or decrease financial stability and whether you have any concerns about the biggest bank in the U.S. getting even larger?
CHAIRMAN POWELL: So we certainly — I don’t have aagenda to further consolidate banks. There has been consol addition has been a factor in the US Banking industry. It goes back more than 30 years. When I was in the government a while back interest were 14,000 banks and there is now 4,000 and change. I have personally long felt that having small medium and large size banks is a great part of our banking system. You know, the community banks serve particular customers very well. Regional banks serve very important purposes. And the various kinds of GSEB do as well. I think it is healthy to have a range of different kinds of banking doing different things. I think that’s a positive thing. Is it a financial — so I would just say in terms of JP Morgan buying First Republic, the FDIC really runs the process of closing and selling a closed bank completely. That’s their role. I don’t have a comment on that process. There is an exception to the deposit cap for a failing bank. It was legitimate. The FDIC I believe is bound by law to take the bid that is the least cost bid. I assume that’s what they did.
Do you have any concerns about the fact they are getting larger in general?
CHAIRMAN POWELL: So I think it’s probably good policy that we don’t want the largest banks doing big acquisitions. That’s the policy. But this is an exception for a failing bank and I think it is a good outcome for the banking system. It would have been a good outcome for the banking system if one of the regional banks had bought this company. It could have been the outcome. We have to follow the law in our agencies and the law is it goes to the least cost bid.
Colby.
Thank you. With the financial times. At the March meeting you mentioned that tightening of credit conditions from the recent bank stress could be equal to one or more rate increases. So given developments since then how has your estimate changed?
CHAIRMAN POWELL: Yeah. I think I followed that up by saying it’s quite impossible to have a precise estimate words to that effect. But in principle that’s the idea. We have been raising interest rates and that raises the price of credit in a sense restricts credit in the economy working through the price mechanism. And when banks raise their credit standards that can also make credit tighten in a broadly similar way. It isn’t possible to make a kind of clean translation between one and the other although firms are trying that and we’re trying it. But ultimately we have to be honest and humble about our ability to make a precise assessment. It complicates the task of achieving a restrictive stance. But conceptually we think that interest rates, in principle we went have to raise rates quite as high as we would have if this had not happened. The extent of that is so hard to predict. We don’t know how large and how long they will take to be transmitted. That’s what we will be watching carefully to find out.
What does it suggest about the scope for the committee to pause rate increases as early as next month if the data remains strong, if it is having some kind of substitute effect.
CHAIRMAN POWELL: This is something that we have to factor in as we want to find ourselves. So I guess I would say it this way, the assessment of the extent to which additional policy firming may be appropriate is going to an ongoing one. Meeting by meeting and we’re going to be looking at the factors that I mentioned that are listed in the statement,, the obvious factors. That’s the way we’re going to be thinking about it. It does complicate. We have a broad understanding of monetary policy, credit tightening is a different thing. There is a lot of literature on that. But translating it in to rate hikes is uncertain. Let’s said it adds further uncertainty. We will be able to see what’s happening with credit conditions and happening with lending. There is a lot of data on that. And we will factor that in to our decision making.
Howard.
Howard. Thank you. So noting the statement dropped the reference to sufficiently restrictive, I was wondering given your baseline outlook whether you feel this current rate of 5 to 5 and a quarter percent is sufficiently restrictive?
CHAIRMAN POWELL: That’s an ongoing assessment. We are going to need data to accumulate. That would mean we think we’ve reached that point. It is not possible to say that with confidence now. Nonetheless you will know that the summary of economic projections from the March meeting showed that in — at that point in time, that the meeting participant thought that this was the appropriate level of the ultimate high level of rates. We don’t know that. We’ll revisit that at the June meeting. And we’re going to have to — before we really declare that I think we’re going to have to see data accumulating and, you know, make that as I mentioned it is an ongoing assessment.
A follow-up on credit. Could you give us a sense of what the Sluce survey indicated? I think it was 40, 45% of banks tightening credit as of last survey. What did this one show and how did that weigh in to your deliberations?
CHAIRMAN POWELL: We’re going to release the results of the Sluce on May 8. The Sluces broadly consistent with how you see it and what we are seeing from other sources. You will have seen the beige book and listened to the various earning calls. Mid-sized banks some of them have been tightening their lending standards. Banking data will show that lending has continued to slow but the pace has slowed since the last half of next year.
Let’s go to Nick.
Nick, Wall Street Journal. Slow down the pace of increases was to give yourself time to study the effects of those moves. After the bank failures in March as you have discussed the Fed staff projected a recession starting later this year. So my question is why it was necessary to raise interest rates today or put differently if the whole point of slowing down the pace was to see the effects of your moves and now you have for the last two meetings been seeing the effects of those moves, why did the committee feel it was necessary to keep moving?
CHAIRMAN POWELL: Well, we — the reason is that we — again with our monetary policy, we’re trying to reach and then stay at a — for an extended period a level of policy, a policy stance that sufficiently restrictive to bring inflation down 2% over time. That’s what we are trying to do with our tool. I think slowing down was the right move. I think it is its’ enabled to see more data and it will continue to do so. So, you know, we really, you know, we always have to balance the risk of not doing enough. And not getting inflation under control against the risk of maybe slowing down economic activity too much. And we thought that this rate hike along with the meaningful change in our policy statement was the right way to balance that.
And just a follow-up, you know, you said in response to Howard’s question you’ll need data to accumulate if this is a sufficiently restrictive stance. Does that data need to accumulate or could it accumulate over a longer period than a six week intermeeting cycle?
CHAIRMAN POWELL: Yes. As I mentioned I would just say that this assessment will be an ongoing one. You can’t with economic data you can’t — you have seen — take inflation. Look back. We have seen inflation come down. Move back up two or three times since March of 2021. So I think you’re going to want to see that, you know, that a few months of data will persuade you that you have got this right kind of thing. We have the luxury, we have raised 500 basis points. I think that policy is tight. I think real rates are probably that you can calculate them many different ways. But one way is to look at the nominal rate and subtract a reasonable estimate of one year. You have 2% real rates. That’s meaningful above what many people would assess as, you know, the neutral rates. So policy is tight. And you see that in interest sensitive activities. And you also begin to see it more and more in other activities. And if you put the — you put the credit tightening on top of that and the QT that’s ongoing, I think you feel like, you know, we’re — we may not be far off. Possibly even at that level.
Edward.
Thank you very much chair Powell. Edward law Lawrence with Fox business. Would it be okay for you for a prolonged period of 3% inflation and hoping for some outside event to move down to 2% target?
CHAIRMAN POWELL: Look I think we’re always going to have 2% as our target. We are going to be focusing on getting there.
With a prolonged 3%?
CHAIRMAN POWELL: Let me just say that’s not what we’re looking for. We’re looking for inflation to go down to 2%. Ultimately we’re not looking to get to 3% and then drop our tools. We have a goal of getting to 2%. We think it is going to take some time. We don’t think it will be a smooth process. And, you know, I think we’re going to need to stay at this for a while.
How does the other side of the mandate, the job side once you get to 3% going from 3 to 2, how does the other side balance?
CHAIRMAN POWELL: They will both equal. You have a labor market that’s extraordinarily tight. You have 1.6 job openings for every unemployed person. We do see some evidence of softening in labor market conditions. Overall you are near a 50 year low in unemployment wages. You all would have seen the wage number from late last week, whenever it was. And it’s a couple of percentage points both what would be consistent with 2% inflation over time. So we do see some softening. We see new labor supply coming in. The labor market is very, very strong. Whereas inflation is running high. Well above our goal. And right now we need to be focusing on bringing inflation down. Unfortunately we have been able to do that so far without unemployment going up.
Matt.
Hi. Matt with Bloomberg news. At least half of Fed officials projections did imply or seem to imply that a recession was in their baseline forecast as well given the strong first quarter GDP tracking estimates. And so I’m just wondering if you could kind of elaborate why you are optimistic that a recession could be avoided given that’s the Fed’s staff forecast and the broader committee’s forecast as well. And also, of course, most private sector forecasters.
CHAIRMAN POWELL: I know what’s printed in the summary of economic projections. I don’t think that you can deduce exactly what you said about what participants think because you don’t know what they were thinking for first quarter GDP at that point. They could have been thinking about a fairly low number. I will just say I continue to think that it’s possible that this time is really different. And the reason is there is just so much excess demand in the labor market. The unemployment rate is 3 and a half percent. Pretty much where it was, lower than when we started. Job openings are very, very high. We see by surveys and much evidence that conditions are cooling gradually. It wasn’t supposed to be possible for job openings to decline by as much as they have declined with our unemployment going up. There is no promises in this. But it just seems to me that it is possible that we can continue to have a cooling in the labor market without having the big increases in unemployment that have gone with many prior episodes. Now that would be against history. I fully appreciate that. That would be against the pattern. But I do think that this — that the situation in the labor market with so much excess demand yet wages — we just had them moving down. Wage increases have been moving down. That’s a good sign. Down to a more sustainable level. I think it is still possible.
I think, you know, the case of avoiding a recession is in my view more likely than that of having a recession. But it's not that the case of having a recession -- I don't rule that out either. It's possible that we will have what I hope would be a mild recession. The committee also said in March that wage growth was still well above. Do you see that as well? And could you explain how you come to that judgment?
CHAIRMAN POWELL: Sure. We look at a range of wage measures. And then that’s a nominal. So you assume that wages should be included to productivity plus inflation. You can look at the employment compensation index, Atlanta wage tracker, compensation per hour. And you can look at what they would have to run at over a long period of time for — for that to be consistent with 2% inflation. They can deviate. Corporate margins can go up and down. If there is a feature of long expansions where they do go down. Where labor gets a bigger share towards later in recession, sorry in expansion. So yeah, you know, and we calculate those. You have to take the precision with a degree of salt. But I would say that what they will show is that if the — if wages are running at 5%, 3% is closer to where they need to be. Wage increases closer to 3% roughly is what it would take to get to be consistent with inflation over a longer period of time. By the way I don’t want — I do not think that wages are a principal driver of inflation. They tend to move together and it is very hard to say what’s causing what. I never said that wages are really the principal driver because I don’t think that’s really right.
Great. Chris with Associated Press. You mentioned profit margins. Those have expanded, did expand sharply during this inflationary. While this are some signs they are starting to decline, many economists, seeing some pull back. So speaking of causes of inflation do you see expanded profit margins as a driver of high prices?
CHAIRMAN POWELL: Higher profits and higher margins is what happens when you have an imbalance between supply and demand. We have been in a situation in many parts of the economy where supply has been fixed or not flexible enough. And so, you know, the way the market clears is through higher prices. So to get — I think as goods pipelines have gotten, you know, back to normal, so that we don’t have the long waits and shortages and that kind of thing, I think you will see inflation come down and you will see corporate margins coming down as a result of return of full competition where there is enough supply to meet demand. And then it is — then you are really back to full competition. That would be the dynamic I would expect.
Michael.
Michael from Bloomberg radio and television. Can you tell us something about what your policy reaction function is? Your policy framework is going forward when you look at the economy at the next meeting are you looking at incoming data which is by definition backward looking? Are you going to be forecasting what you think is going to happen? Are you ruling out the rate cuts that the market has priced in?
CHAIRMAN POWELL: I didn’t catch the last part.
Markets have priced in, rate cuts by the end of the year. Do you rule that out?
CHAIRMAN POWELL: We look at a combination of data and forecasts. Of course, the whole idea is to create a good forecast based on what you see in the data. We’re always looking at both. And it will of course it will be the obvious things. It will be readings on inflation. Readings on wages, on economic growth, on the labor market. And all of those many things. I think a particular focus for us going — now over the past six, seven weeks now and going forward is going to be what’s happening with credit tightening or small and medium sized banks tightening credit standards. And is that having an effect on loans, on lending.
And, you know, so we can begin to assess how that fits in with monetary policy. That will be an important thing. I just -- we'll be looking at everything. It's again I would just point out we've raised rates by 5 percentage points. We are shrinking the balance sheet and now we have credit conditions tightening not just in the normal way but perhaps a little bit more due to what's happened.
And we have to factor all of that in and make our assessment of, you know, of whether our policy stance is sufficiently restrictive. And we have to do that in a world that policy works with long and variable legs. This is challenging. But we will make our best assessment and that's what we'll be thinking. What about the idea of rate cuts?
CHAIRMAN POWELL: Yeah. So we on-the committee have a view that inflation is going to come down not so quickly. It will take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates. We won’t cut rates. If you have a different forecast and markets are — have been from time to time pricing in quite rapid reductions in inflation we would factor that. That’s not our forecast. The history of the last two years has been very much that inflation moves down. In you look at nonhousing services, it really hasn’t moved much. And it is quite stable. And so we think we’ll have to demand — demand will have to weaken a little bit and labor market conditions will have to soften a bit more to begin to see progress there. In that world it wouldn’t be appropriate for us to cut rates.
Courtney.
Courtney brown from Axios. I’m curious how you view the role of overnight reverse repo facility? Do you think it is contributing by making it more attractive for money market funds to compete can banks for deposits? Did they discuss any changes to the structure of the facility or do you see that being put on the table in the future?
CHAIRMAN POWELL: Sure. We looked at that very carefully. It is not contributing. It hasn’t been growing. What happened in the — when there was a big deposit flows that have stabilized now. Institutional investors took their uninsured deposits and put them in money market funds and bought peaP for the federal home banks. Over the course of maybe the last year, retail investors had been gradual as they do in err tightening cycle. They have been moving their deposits in to higher yielding. So that’s a gradual process that is quite natural and happens during a tightening cycle. What was unusual was the institutional investors moving their uninsured deposits and spreading them around. It doesn’t seem to have had any affect overall on the overnight repo facility. That’s there to help us keep rates where they are supposed to be. And it is serving that purpose very well.
Sara.
Sara, CBC news. I want to go back to the debt ceiling for a moment. But can you just speak towards what the impact of a default would mean for Americans across the country, the markets and borrowing?
CHAIRMAN POWELL: Yes. I would just say it’s — I don’t really think we should — shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It shouldn’t be a thing. And again I would just say — no one should assume that the Fed can protect the economy and financial system and our reputation from the damage that such an event might inflict.
Scott.
Sh thanks Mr. Chairman. Scott. In his report last week Vice Chair Barr identified a couple of factors that he thought contributed to the supervisory lapses at Silicon Valley bank. A policy change in 2019 to exempt all but the biggest banks from scrutiny and a cultural shift from less aggressive oversight. You were here in 2019. Do you share that view? And what would it take to get the stronger oversight in the release?
CHAIRMAN POWELL: I didn’t take part creating the report or the work. I find it persuasive. A very large, a large bank, a large bank failed quite suddenly. And unexpectedly in a way that threatened to spread contagion in to the financial system. The only thing that I’m focused on is to understand what went wrong. What happened and identify what we need to do to address that. Some of that is — it may just have been technology evolving. We have to keep up with all of that. Some of it may be our policy us and supervisory and regulatory. Whatever. What our job is now is to identify those things and implement them. And that’s kind of the only thing I care about. I feel I’m accountable to do everything I can to make sure that happens.
Evan.
Thank you. Evan with M and I market news. Are we in the early stage or nearing the end stage of the banking turmoil among regional banks? . And secondly do you still have a bias to tighten rates? Is that what the statement is saying?
CHAIRMAN POWELL: So I guess I would — I guess I would say it this way, there were three large banks really from the very beginning that were at the heart of the stress that we saw in early March, the severe period of stress. Those have now all been resolved and all depositors have been protected. Resolution and sale of First Republic is an important step toward drawing a line under that period of severe stress. I also think that we are very focused on what’s happening with credit availability. Particularly, you know, with what you saw in the beige book and you see in the Sluce is medium sized, small and medium-sized banks are feeling that they need to tighten credit standards, what’s going to be the economic effect of that. We will continue to very carefully monitor what’s going on in the banking system. And we’ll factor that assessment in to our decisions in an important way going forward.
Greg.
Thank you. Greg from Market Watch. I just wondered if you have done any reflection on your own actions during this crisis in leading up to it over the last — since you have been fed Chairman. I think you have heard you say a couple of times that you defer to the Vice Chair for supervision. Do you think that was the right way to go about this? Yep. Do you have comments on that?
CHAIRMAN POWELL: Sure. Let me say first of all I have been chair of the board for five plus years now and I fully recognize that we made mistakes. I think we have learned some new things as well and we need to do better. As I mentioned I thought the report was unflinching and appropriately so. I welcome it and I agree and will support those recommendations. And I do feel that I’m personally accountable to do what I can to foster measures that will address the problems.
So on the Vice Chair for supervision, you know, the place to start is the statutory role which is quite unusual. The Vice Chair shall de -- develop policy recommendations for the board, and shall oversee the supervision and regulation of such firms.
So this is Congress establishing a four-year term for someone else on the board who gets to set the agenda for supervision and regulation for the Board of Governors. Congress wanted that person to be -- to have political accountability for developing that agenda. The way it has worked in practice for me, is I have had a good working relationship. I give my counsel my input privately, and I offer that. And I have good conversations and I try to contribute constructively. I respect the authority that Congress has deferred on that person.
Including working with Vice Chair Barr and his predecessor. And I think that's the way it is supposed to work and that's appropriate. I believe that's what the law requires. And, you know, but it isn't -- I wouldn't say it is a matter of complete deference. It is more I have a -- I have a role in presenting my views and discussing having an intelligent discussion about what's going on and why. And, you know, that's my input. But ultimately that person does get to set the agenda and gets to take things to the Board of Governors. And in supervision has sole authority over supervision. Just wondered if you had any regrets. Any decisions that you maybe regret now in light of what’s happened?
CHAIRMAN POWELL: I have had a few. Sure. I mean, you know, who doesn’t look back and think that you could have done things differently. Honestly you don’t get to do that. My focus is you control the controllable. As one of my great mentors control the controllable. What we control now is make a fair assessment and learn the right lessons and figure out the fixes and implement them. And I think that Vice Chair Barr’s report is a first step in that and we have to follow through.
Hi. Megan with Behrens. Did the possibility of pausing come up at this meeting at and how seriously was that considered? Was there any initial concerns about raising rates again?
CHAIRMAN POWELL: Support for the 25 basis point point rate increase was very strong across the board. I would say there are a number of people and you will see this in the minutes. I don’t want to try to do the head count in realtime. But people did talk about pausing but not so much at this meeting. I mean there is a sense that, you know, we’re much closer to the end of this than to the beginning. That, you know, as I mentioned, if you add up all the tightening that’s going on through various channels we feel like we’re getting close or maybe even there.
But then again that's going to be an ongoing assessment. And we're going to be looking at those factors that we listed and to determine whether there is more to do. Curious, how to interpret that and the changes to the statement. Is the bar higher now to raise rates at the next meeting or would a strong jobs report or inflation be enough to push the Fed to tighten again?
CHAIRMAN POWELL: I couldn’t really say. I think we — look I think we’ve moved a long way fairly quickly and I think we can afford to look at the data. And make a careful assessment.
We will go to Nancy for the last question.
Hi. Nancy marshal again with marketplace. You mentioned a few times about the lessons that you learned from the banking crisis. That you learned the right lessons. What are those lessons?
CHAIRMAN POWELL: I would start with something that’s changed really. Which is this — the run on Silicon Valley bank was out of keeping with the speed of runs through history. And that now needs to be reflected in some — in some way in regulation and in supervision. We note — now that we know it is possible, I think we didn’t know — no one thought that was possible. No one — I’m not aware of anybody thinking this could happen quite so quickly. So I think that will play through. I am — it will be up to Vice Chair Barr to really take the lead in designing the ways to address that. But I think that’s one thing.
I guess I would just say that. You know, we're going to obviously we're going to revisit. It is pretty clear to me anyways that we need to strengthen both supervision and regulations for banks of this size and I'm thinking that we are on track to do that as well. Specific with stress testing or looking at banks that have specific concentrations in specific parts of the economy?
CHAIRMAN POWELL: That’s what Vice Chair Barr’s role is and he will take the role on that.
Thank you.
CHAIRMAN POWELL: Thank you.
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