Good afternoon. Before discussing today's meeting, let me briefly address recent developments in the banking sector. In the past two weeks, serious difficulties at a small number of banks have emerged. History has shown that isolated banking problems, if left unaddressed, can undermine confidence in healthy banks and threaten the ability of the banking system as a whole to play its vital role in supporting the savings and credit needs of households and businesses. That is why, in response to these events, the Federal Reserve, working with the Treasury Department and the FDIC, took decisive actions to protect the U.S. economy and to strengthen public confidence in our banking system. These actions demonstrate that all depositors' savings in the banking system are safe. With the support of the Treasury, the Federal Reserve Board created the Bank Term Funding Program to ensure that banks that hold safe and liquid assets can, if needed, borrow reserves against those assets at par. This program, along with our long-standing discount window, is effectively meeting the unusual funding needs that some banks have faced and makes clear that ample liquidity in the system is available. Our banking system is sound and resilient, with strong capital and liquidity. We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound. We are committed to learning the lessons from this episode and to work to prevent events like this from happening again. Turning to the broader economy and monetary policy, inflation remains too high, and the labor market continues to be very tight. 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 long of strong labor market conditions that benefit all. The U.S. economy slowed significantly last year, with real GDP rising at a below-trend pace of 0.9%. Consumer spending appears to have picked up this quarter, although some of that strength may reflect the effects of swings in the weather across the turn of the year. In contrast, activity in the housing sector remains weak, largely reflecting higher mortgage rates. Higher interest rates and slower output growth also appear to be weighing on business fixed investment. Committee participants generally expect subdued growth to continue. As shown in our summary of economic projections, the median projection for real GDP growth stands at just 0.4% this year and 1.2% next year, well below the median estimate of the longer-run normal growth rate. Nearly all participants see the risks to GDP growth as weighted to the downside. Yet the labor market remains extremely tight. Job gains have picked up in recent months, with employment rising by an average of 351,000 jobs per month over the last three months. The unemployment rate remained low in February, at 3.6%. The labor force participation rate has edged up in recent months, and wage growth has shown some signs of easing. However, with job vacancies still very high, labor demand substantially exceeds the supply of available workers. FOMC participants expect supply and demand conditions in the labor market to come into better balance over time, easing upward pressures on wages and prices. The median unemployment rate projection in the SEP rises to 4.5% at the end of this year and 4.6% at the end of next year. Inflation remains well above our longer-run goal of 2%. Over the 12 months ending in January, total PCE prices rose 5.4%, excluding the volatile food and energy categories. Excluding those, core PCE prices rose 4.7%. In February, the 12-month change in the CPI came in at 6%. The change in the core CPI was 5.5%. Inflation has moderated somewhat since the middle of last year, but the strength of these recent readings indicates that inflation pressures continue to run high. The median projection in the SEP for total PCE inflation is 3.3% for this year, 2.5% next year, and 2.1% in 2025. The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy. Despite elevated inflation, longer-term inflation expectations appear to remain well-anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. 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 imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing, and transportation. We are highly attentive to the risks that high inflation poses to both sides of our mandate. We are strongly committed to returning inflation to our 2% objective. At today's meeting, the Committee raised the target range for the federal funds rate by a quarter percentage point, bringing the target range to 4.75% to 5%. We are continuing the process of significantly reducing our securities holdings. Since our previous FOMC meeting, economic indicators have generally come in stronger than expected, demonstrating greater momentum in economic activity and inflation. We believe, however, that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes. It is too soon to determine the extent of these effects, and therefore too soon to tell how monetary policy should respond. As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate. We will closely monitor incoming data and carefully assess the actual and expected effects of tighter credit conditions on economic activity, the labor market, and inflation. Our policy decisions will reflect that assessment. In our SEP, each FOMC participant wrote down an appropriate path for the federal funds rate based on what that participant judges to be the most likely scenario going forward. If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 5.1% at the end of this year, 4.3% at the end of 2024, and 3.1% at the end of 2025. These are little changed from our December projections, reflecting offsetting factors. These projections are not a committee decision or plan. If the economy does not evolve as projected, the path for policy will adjust as appropriate to foster our maximum employment and price stability goals. We will continue to make our meeting decisions meeting by meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation. We remain committed to bringing inflation back down to our 2% goal and to keep longer-term inflation expectations well-anchored. Reducing inflation is likely to require a period of below-trend growth and some softening in labor market conditions. 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, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions. Thank you. Colby Smith with the Financial Times. How confident is the committee that the recent stress that we've seen, and you've alluded to, is contained at this point, and that deposit flight among mid-sized lenders in particular, has ceased? Thanks. I guess our view is that the banking system is sound and it's resilient. It's got strong capital and liquidity. We took powerful actions with Treasury and the FDIC, which demonstrate that all depositor savings are safe and that the banking system is safe. Deposit flows in the banking system have stabilized over the last week. The last thing I'll say is that we're undertaking a thorough internal review that will identify where we can strengthen supervision and regulation. Okay. Just a quick follow-up. I mean, given all of the stress and the uncertainty that you've also alluded to in the statement, how seriously was a pause considered, for this meeting? We considered, we did consider that in the days running up to the meeting. You see the decision that we made, which I'll say a couple things about. First, it was supported by a very strong consensus i 'll be happy to explain why. Really, it is that the intermeeting data on inflation and the labor market came in stronger than expected r eally, before the recent events, we were clearly on track to continue with ongoing rate hikes. In fact, as of a couple of weeks ago, it looked like we'd need to raise rates over the course of the year more than we'd expected at the time of the SEP in December, the time of the December meeting. We are committed to restoring price stability, and all of the evidence says that the public has confidence that we will do so, that we'll bring inflation down to 2% over time. It is important that we sustain that confidence with our actions as well as our words. We also assess, as I mentioned, that the events of the last two weeks are likely to result in some tightening of credit conditions for households and businesses, and thereby weigh on demand on the labor market and on inflation. Such a tightening in financial conditions would work in the same direction as rate tightening i n principle, as a matter of fact, you can think of it as being the equivalent of a rate hike or perhaps more than that. Of course, it's not possible to make that assessment today with any precision whatsoever. Our decision was to move ahead with a 25 basis point hike, and to change our guidance, as I mentioned, from ongoing hikes to, some policy firming may be appropriate. going forward, as I mentioned, in assessing the need for further hikes, we'll be focused, as always, on the incoming data and the evolving outlook, and in particular, on our assessment of the actual and expected effects of credit tightening. Mr. Chair, can you explain the difference between ongoing rate increases and firming? Does firming imply a rate increase per se, or could policy firm without you increasing rates? No, I think it's meant to refer to our policy rate. Really, I would focus on the words may and some, as opposed to ongoing. We clearly What we were doing there was taking on board trying to reflect the uncertainty about what will happen i mean, it's possible that.. This will turn out to have very modest effects t hese events will turn out to be very, very modest effects on the economy, in which case and inflation will continue to be strong, in which case the, you know, the path will look might look different. It's also possible that this potential tightening will contribute significant tightening in credit conditions over time. In principle, if that's, that means that monetary policy may have less work to do w e simply don't know. Do you have concerns that the hike you did today could further exacerbate the problem in the banks? No. I mean, we're with our monetary policy, we're really focused on macroeconomic outcomes. In particular, we're focused on this potential credit tightening and what can that produce in the way of tighter credit conditions. I think when we think about the situation of the banks, we're focused on our financial stability tools, in particular, our lending facilities, the debt, sorry, the discount window, and also the new facility. Nick Timiraos of The Wall Street Journal. Chair Powell, in your testimony two weeks ago, you had indicated you thought the terminal rate would be higher. Obviously, that was before the stress in the banking sector. I realize there's a lot of uncertainty, but Can you explain at all to what extent your forecasts or those of your colleagues or those of the board staff incorporated today a material tightening of credit availability because of the stress in the banking sector, or are you waiting to see it in the data before you incorporate that potential tightening into your forecasts? Y ou know, we've just come from an FOMC meeting, you know, the people who write the minutes will be very carefully counting, I'll tell you what I heard. What I heard was significant number of people saying that they anticipated there would be some tightening of credit conditions, that would really have the same effects as our policies do, that therefore they were including that in their assessment and that if that did turn out not to be the case, that in principle you'd need more rate hikes. Some people did reflect that in their, at, in their SEP forecasts. I think there may also just have been r emember, this is 12 days ago. You know, we're trying to assess something that just is so recent, and it's very difficult. December was a good place to start, and we wound up with very similar outcomes for December. It, you know, in a way, the early data in the first part, the first five weeks of the intermeeting period, pointed to stronger inflation and stronger labor markets, so that pointed to higher rates. This latter part kind of the possibility of credit conditions tightening really offset that effectively. To follow up, have you considered at all whether your primary tool, the funds rate, is going to be enough to sustain the kind of tighter financial conditions that you believe will be necessary without doing significant damage to the banking sector? Have you, for example, considered changing reserve requirements, selling assets out of the System Open Market Account, as a way to better achieve tighter financial conditions that don't accelerate deposit erosion, for example, from banks? You know, we know that we have other tools in effect n o w e think our monetary policy tool works. We think, you know, many banks, our rate hikes were well telegraphed to the market. Many banks have managed to handle them. Hi. Victoria Guida with POLITICO. I wanted to ask, you, along with the FDIC and the Treasury, the Fed Board decided to invoke the systemic risk exception, to allow uninsured depositors to be protected at these two banks. I was just wondering if you could speak to why that decision was made w as it purely a confidence issue, or was there a concern that there would be some sort of economic contagion or financial contagion from the failure of these banks? The issue was really not about those specific banks, but about the risk of a contagion to other banks and to the financial markets more broadly. That was the issue. Okay. Can you also, just to follow up, can you speak to the role that you will be playing in the Fed's internal investigation on its supervision and regulation? Vice Chair Barr is, of course, leading that review, he's responsible for it in his capacity as vice chair for supervision. We, I realized, you know, right away that there was gonna be a need for a review. I mean, the question we were all asking ourselves over that first weekend was, "How did this happen?" What we did was, early Monday morning we sat down and said, "Let's do this," and he's obviously gonna lead it in his capacity. You know, my role was to announce it, I get briefed on it, but I'm not involved in the work of it. Hi, Chair Powell. Howard Schneider from Reuters. I wanna go back to your February press conference. You mentioned the word disinflation, I believe, nine or 10 times, a process that you felt was, I forget the word you used, but gratefully underway or something like that. Is disinflation still occurring in the US today? Yes. I mean, what actually happened, Howard, was I got the question 12 times, so it's Maybe it's a feature, not a bug. Yeah, I absolutely the same, the story is intact. It's really three parts, right? Goods inflation's been coming down now for six months. It's proceeding more slowly than we would have liked, but it's certainly proceeding. Housing services is really a matter of time passing w e continue to see the new leases being signed at much lower levels of inflation, so that's 44% of the core PCE index where you've got a story that's ongoing. Where we didn't have in February and we still don't have now is a sign of progress in the non-housing, services sector, that is, you know, that's just something that will have to come through softening demand and perhaps some softening in labor market conditions w e don't see that yet, and that's of course 56% of the index. The story is pretty much the same. I will say that the inflation data that we got, to your point, really pointed to stronger inflation. If I could follow up on that. I was curious why you don't see more coming from the credit crunch, 'cause it seems to me that's like something that you'd actually welcome to a degree and expect. Are you not seeing more coming from that because you don't know, or because you just don't wanna have another round of wishful thinking? A It's really just a question of not knowing at this point. There's a great deal of literature on the connection between tighter credit conditions, economic activity, hiring, and inflation. Very large body of literature. The question is, how significant will this credit tightening be, and how sustainable will it be? That's the issue. We don't really see it yet. People are making estimates, you know, people are publishing estimates, but it's very kind of rule of thumb guesswork almost at this point. We think it's potentially quite real, and that argues for, you know, being alert a s we go forward, as we think about further rate hikes, for us, we'll be paying attention to the actual and expected effects from that. Hi, Chair Powell. Jeanna Smialek with the New York Times t hank you for taking our questions. I wonder if you could talk a little bit, I know that you've got your internal review coming, but I wonder if you could talk a little bit about what you think happened with oversight at Silicon Valley Bank and whether this suggests that something about regulation and supervision needs to actually change going forward. I wonder, you know, how can the American people have confidence that there aren't other weaknesses out there in the banking system, given that this one got missed, as you noted? Let me say what I think happened, and then I'll come to the questions around supervision. At a basic level, Silicon Valley Bank management failed badly. They grew the bank very quickly t hey exposed the bank to significant liquidity risk and interest rate risk, didn't hedge that risk. We now know that supervisors saw these risks and intervened. We know that the public saw all this. We know that SVB experienced an unprecedentedly rapid and massive bank run. This is a very large group of connected depositors, concentrated group of connected depositors, in a very fast run, faster than the historical record would suggest. For our part, we're doing a review of supervision and regulation. My only interest is that we identify what went wrong here. How did this happen, is the question. What went wrong? Try to find that, we will find that, and then make an assessment of what are the right policies to put in place so that it doesn't happen again, and then implement those policies. It would be inappropriate for me at this stage to offer my views on what the answers might be. You know, I simply can't do that. Vice Chair Barr is leading this, and I think he's testifying next week. But that will be up to him. That's really where it is. You know, the review's gonna be thorough and transparent. It is clear to your, really to your last question, it's clear that we do need to strengthen supervision and regulation. I assume that, you know, there will be recommendations coming out of the report, and I plan on supporting them and supporting their implementation. Sorry, just, and the final point, you know, can we feel confident that these weaknesses don't exist elsewhere, given that they got missed at this bank? These are not weaknesses that are at all broadly through the banking system t his was a bank that was an outlier in terms of both its percentage of uninsured deposits and in terms of its holdings of duration risk. Again, supervisors did get in there, and they were, as you know, obviously, you know, they were on this issue, nonetheless, this still happened. That's really the nature of the interview, sorry, of the review, is to discover that. Michael McKee from Bloomberg, Radio and Television. You've been very consistent in saying that the Fed would be raising interest rates and then holding them there for quite some time. Following today's decision, the markets have now priced in, one more increase in May, and then every meeting the rest of this year, they're pricing in rate cuts. Are they getting this totally wrong from the Fed, or is there something different about the way, you're looking at it, given that you're now thinking that moves might be appropriate as opposed to ongoing? We published an SEP today, as you will have seen, and it shows that, basically participants expect, relatively slow growth, a gradual rebalancing of supply and demand in the labor market, with inflation moving down gradually. In that most likely case, if that happens, participants don't see rate cuts this year. They just don't. I would just say, as always, the path of the economy is uncertain, and policy's gonna reflect what actually happens rather than what we write down in the SEP t hat's not our baseline expectation. Well, if I could follow up and ask, as you look forward, into the rest of the year here, are you saying that, what you see and the 5.1% basically, consensus is based on being, it will be sufficiently restrictive? Or is it leavened by the idea of you don't know what's going to happen? In other words, what should people think about in terms of how the Fed thinks about how far it is from the terminal? It's going to depend. Remember, we're looking for purposes of our monetary policy tool, we're looking at what's happening among the banks, and asking, "Is there gonna be some tightening in credit conditions?" We're thinking about that as effectively doing the same thing that rate hikes do i n a way, that substitutes for rate hikes. The key is we have to have, policies need, gotta be tight enough to bring inflation down to 2% over time. It doesn't all have to come from rate hikes i t can come from, you know, from tighter credit conditions. That, we're looking at, and we're, it's highly uncertain how long this situation will be sustained or how significant any of those effects would be, so we're just gonna have to watch. In the meantime, You know, and obviously at the end of the day, we will do enough to bring inflation down to 2% n o one should doubt that. Let's go to Rachel Siegel. Hi, Chair Powell. Rachel Siegel from The Washington Post t hank you for taking our questions. I know we've talked a bit about how Silicon Valley Bank was unique to a certain sector of the economy, but there's also growing concern that there are financial stability risks from the commercial real estate market and loans that will begin to roll over later this year and next, and that smaller regional banks also disproportionately hold those loans. Is there a risk that could mimic the kind of what we saw with SVB to banks that disproportionately are focused on commercial real estate? You know, we're well aware of the concentrations people have in commercial real estate. I really don't think it's comparable to this. The banking system is strong. It is sound. It is resilient. It's well-capitalized. I really don't see that as at all analogous to this. One other question. Would you be open to an independent investigation separate from the Fed's probe? I welcome. It's 100% certainty that there will be independent investigations and outside investigations and all that. I welcome. When a bank fails, there are investigations, and of course, we welcome that. Edward. Thank you, Mr. Chairman. Edward Lawrence from FOX Business. Inflation has been rather sticky, do you need help from the fiscal side to get inflation down faster? We don't assume that. We don't give advice to the fiscal authorities. We assume that. We take fiscal policy as it comes to our front door, stick it in our model along with a million other things. We have responsibility for price stability. The Federal Reserve has responsibility for that. Nothing is gonna change that. We will get inflation down to 2% in time. If I could follow on that, but they're working. The spending that's happened is working against what you are doing, right? It's prolonging inflation? You know, You have to look at the impulse from spending because spending was, of course, tremendously high during the pandemic, and then as the pandemic programs rolled off, spending actually came down t he sort of fiscal impulse is actually not what's driving inflation right now. It was, it was at the beginning perhaps part of what was driving inflation, but that's not really the story now. Let's go to Neil Irwin. Hi, Chair Powell. Neil Irwin with Axios. Two questions about aspects of the government's response on Silicon Valley Bank two weekends ago. First, why is this new bank funding facility done under Section 13(3) authority as opposed to expansion of the discount window, changing the terms of the discount window that's been around a long time? Second, can you discuss the Fed's role in the FDIC guarantee of uninsured depositors and why there's $143 billion on your balance sheets last week, supporting that deposit guarantee? Sure. Section 13(3) seemed like the right. We have a little more flexibility under Section 13(3) w e've done quite a lot under the discount window as well. We needed to do a special facility that was designed a certain way, so we did it under 13(3). Really no magic to that. It's only available in unusual and exigent circumstances, and it has to meet certain requirements, but it seemed to be the right place. We, with the FDIC, we're lending to the. In effect, we're lending to the bridge bank. That's where the funds came from, and it's a loan that's 100% guaranteed by the FDIC, so there's no risk in it for us. Thank you. Chris Rugaber at Associated Press. The SEP suggests one more rate hike, as does the change in the language in the statement, which suggests that you're perhaps nearing the end of a cycle of rate hikes. Do you feel, though, that if inflation remains high, you'll be able to resume additional hikes as needed, or have you somewhat tied your hands here with these signals about rate hikes coming to an end? Thank you. No, absolutely not. No. If we need to raise rates higher, we will. I think for now, though, we, as I've mentioned, we see the likelihood of credit tightening w e know that that can have, you know, an effect on the macroeconomy, on demand, on labor market, on inflation, and we're gonna be watching to see what that is. We'll also be watching at what's happening with inflation and in the labor market. We'll be watching all those things. Of course, we will eventually get to tight enough policy to bring inflation down to 2%. We'll find ourselves at that place. Hi, Chair Powell. Thanks for taking the question. Kyle Campbell with American Banker. I have a couple questions about the balance sheet. First of all, I'm curious at what point the financial supports that the Fed is extending through the discount window and through its enhanced lending facility might be at odds with the objective of reducing the balance sheet. I'm also curious what your thoughts are on the not just the availability of reserves, but the distribution of them throughout the banking system, and at what point you might be concerned about it being scarce for certain banks. People think of QE and QT in different ways, let me be clear about how I'm thinking about these recent developments. Recent liquidity provision that has increased the size of our balance sheet, but the intent and the effects of it are very different from when we expand our balance sheet through purchases of longer-term securities. Large-scale purchases of long-term securities are really meant to alter the stance of policy by pushing down, pushing up the price and down the rates, longer-term rates, which supports demand through channels we understand fairly well. The balance sheet expansion is really temporary lending to banks to meet those special liquidity demands created by the recent tensions. It's not intended to directly alter the stance of monetary policy. We do believe that it's working. It's having its intended effect of bolstering confidence in the banking system, thereby forestalling what might otherwise have been an abrupt and outsized tightening in financial conditions t hat's working. In terms of the distribution of reserves, we don't see ourselves as running into reserve shortages. We think that our, you know, our program of allowing our balance sheet to run off predictably and passively is working. Of course, we're always prepared to change that if that changes, but we don't see any evidence that that's changed. Hi, Chair. Catarina Saraiva with Bloomberg News. The minutes of the January, February meeting, the last meeting, indicate that you discussed the possibility of runs on non-bank financial institutions and the impact of large unrealized losses on bank portfolios. Can you talk a little bit more about that discussion, kind of what was talked about, in light of that? Why didn't the Fed, you know, do anything about that at that point to ultimately prevent, you know, what happened this month? I mean, to be honest, I don't recall the specifics of that. It's been it's quite an interesting seven weeks. I will tell you though that we have there have been presentations about interest rate risk. I mean, it's been in all the newspapers. It's not a surprise that there are institutions that have had unhedged long positions in long-duration securities that have lost value as longer-term rates have gone up due to our rate increases t hat's not a surprise. I think as you know, as is now in the public record, the supervisory team was apparently engaged, very much engaged with the bank repeatedly and was escalating. You know, nonetheless, what happened happened t hat's really the purpose of one way to think about the review that Vice Chair Barr is conducting, is to try to understand how that happened and try to understand how we can do better and what policies we need to change i mean, one thing is- -the speed of the-- I'll come back to that t he speed of the run, it's very different from what we've seen in the past, and it does kind of suggest that there's a need for possible you know, regulatory and supervisory changes just because supervision and regulation need to keep up with what's happening in the world. Can you confirm whether or not the Board knew about these escalations by the examiners in San Francisco? I, We'll have to come back to you on that. Yeah, I don't know. Simon Rabinovitch with The Economist. Thank you very much. Chair Powell, you've stated twice today that all depositors' savings in the banking system are safe. Are you saying that de facto deposit insurance covers all savings? Shouldn't Congress have a say in that? Just by way of example, if a bank with less than $1 billion in assets failed, are you promising to bail out all of its depositors? Thanks. I'm not saying anything more than I'm saying. What I'm saying is you've seen that we have the tools to protect depositors when there's a threat of serious harm to the economy or to the financial system, and we're prepared to use those tools. I think depositors should assume that their deposits are safe. Let's go to Greg Robb. Thank you, Chair Powell. Greg Robb from MarketWatch. I was wondering if you could give us a little bit more color. You gave just a little bit of color. You said during the first week of the Silicon Valley weekend, you said the question you guys asked was, how did this happen, when you saw Silicon Valley Bank. I was wondering if you could go to the Credit Suisse merger. I mean, wasn't that the big gorilla in the room? Didn't you breathe a sigh of relief when that merger happened? Thanks. Sure. You know, that was really the Swiss government. We, of course, were following it over the course of the weekend, and we were engaged with their authorities in the way that you would expect, all the ways that you would expect. It seems to have been a positive outcome in the sense that the transaction was agreed to, and it has been, the markets have accepted it. It seems to have gone well, and I think there was a concern that it might not go well. Coming into the middle of this week, yes, I would say that has gone well so far. Nicole. Hi. Thank you, Chair Powell. Nicole Goodkind with CNN Business. In the summary of economic projections, the FOMC sees the unemployment rate increasing to 4.5% this year. I'm wondering how you anticipate, preventing this from snowballing while using the admittedly blunt tools at your disposal. That's an estimate, of what will happen as demand slows and as conditions soften in the labor market. It's a highly uncertain estimate. I mean, I, there's really. We have to bring inflation down to 2%. The costs of bringing it down, there are real costs to bringing it down to 2%, but the costs of failing are much higher. If you read your history, as you, I'm sure you have. You can see that. If the central bank doesn't get inflation back in place, make sure that inflation expectations remain anchored, you can have a long series of years where inflation is high and volatile and it's hard to invest capital i t's hard for an economy to perform well. We're looking to avoid that and, you know, and to get back to where we need to be, back to where we were for a quarter century, and get there as quickly as we can. Historically, it's hard. Use the mic, please. Yes, sir. Historically, it's been hard to contain unemployment, and the question is, do you worry about some sort of snowball effect, and how do you factor that into your projections and your thoughts? Well, it depends on whether we. Recessions tend to be nonlinear, and so they're very hard to model y ou know, the models all work in a kind of linear way. If you have more of this, you get more of that. When a recession happens, the reactions tend to be nonlinear. We don't know whether that'll happen this time. We don't know. If so, we don't know how significant it will be. You know, we're very focused on getting inflation down, and because we know in the longer run that that is the thing that will most benefit the people we serve. That's how we can have. You know, we've had very strong labor markets through these long expansions that we've had. Four of the five longest, or three of the four longest expansions in U.S. history have been really since the high inflation period. The reason was inflation wasn't forcing the central bank to come in and stop an incipient or, you know, an expansion. You can have very, very long expansions without high inflation w e had several of those. They're very good for people. You see late in expansion. You see low unemployment. You see the benefits of wages going to people at the lower end of the wage spectrum i t's just a place that we should try to get back to. Jean. Hi, Chair Powell. Jean Yung with Market News. I just wanted to ask, with all the events of the past two weeks, do you still see a possibility of a soft landing? For the U.S. economy? You know, it's too early to say really whether these events have had much of an effect. I, it's hard for me to see how they would've helped the possibility, but I guess I would just say it's too early to say whether there really have been changes in that y ou know, the question will be how long this period is sustained. The longer it's sustained, then the greater will be the likely declines in or tightening in credit standards, credit availability. We'll just have to see i do still think, though, that there's a pathway to that. I think that pathway still exists and, you know, we're certainly trying to find it. Hi, Chair Powell. Nancy Marshall-Genzer with Marketplace. Just wondering how many financial institutions have been issued Matters Requiring Attention or Matters Requiring Immediate Attention citations at this point? How many? I don't know. Those are serious. Those are serious regulatory, in particular Immediate Attention t hat's. I guess there were six of them. Getting to the seriousness of it, how are you gonna ensure that banks comply with these citations, take them seriously? How will you enforce them? That is a great question, and is right in the heart of what the review we'll be doing under Vice Chair Barr's leadership. That's, I think that's where, that's what you think about. You know, what can we do to make sure. Again, that's not for me to answer today. You have specific thoughts on that? Well, I, see, if I did, I wouldn't share them because I really, you know, this review's going on and, you know, I want nothing other than us to find out what happened and why, figure out what we can do to do better, and then implement those changes t hat's all I want i t's, for me to be giving you my half-formed or partially informed thoughts. You know, it just isn't appropriate t here's a real serious review going on with people from all over the Federal Reserve System who are not connected to this, you know, to this work, not connected to this bank. Under, again, Vice Chair Barr's leadership, and I'm confident that it will produce a satisfactory result. Okay. We'll go to Jennifer for the last question. Thank you, Chair Powell. Jennifer Schonberger with Yahoo Finance. Curious, how do you view financial conditions right now? If credit becomes expensive enough, choking off growth, as you said you're watching for, would that situation warrant a rate cut? What situation would warrant a rate cut? Have the bank failures prompted any discussion around changing the implementation of the balance sheet runoff? Thank you. We haven't really talked about changing the balance sheet, implementation. That's not something we've discussed yet. As I mentioned, we're always willing to change that if we conclude that it's appropriate, but we're really not seeing any signs there. Sorry, the question before that was, just give me a. Curious, how you view financial conditions now. Yeah. Okay. Okay. If credit were to tighten enough, if that would prompt a rate cut. Financial conditions seem to have tightened, and probably by more than the traditional indexes say, because those traditional indexes are focused a lot on rates and equities, and they don't necessarily capture lending conditions. We think that, though t here are other measures which if they're focused on, you know, bank lending conditions and things like that, they show some more tightening. The question for us, though, is how significant will that be and how, you know, what will be the extent of it, and what will be the duration of it? Then, you know, once you have, once you know that, there's a fair amount of research about how that, with broad uncertainty bands, how that works its way into the economy over what period of time. You know, so we're, we'll be looking to see the first part of that l ike, how serious is this, and how, does it look like it's gonna be sustained? If it is, you know, it could easily have a significant macroeconomic effect, and we would factor that into our, into our policy decisions. [unaudible] I mentioned with rate cuts, rate cuts are not in our base case. you know, that's all I have to say. Thank you very much.