Good afternoon. My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people. We 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 doesn't work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. Since early last year, the FOMC has significantly tightened the stance of monetary policy. Today, we took another step by raising our policy interest rate a quarter percentage point, and we are continuing to reduce our securities holdings at a brisk pace. We've covered a lot of ground, and the full effects of our tightening have yet to be felt. Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate. I'll have more to say about monetary policy after briefly reviewing economic developments. Recent indicators suggest that economic activity has been expanding at a moderate pace. Growth in consumer spending appears to have slowed from earlier in the year. Although activity in the housing sector has picked up somewhat, it remains well below levels of a year ago, largely reflecting higher mortgage rates. Higher interest rates and slower output growth also appear to be weighing on business fixed investment. The labor market remains very tight. Over the past three months, job gains averaged 244,000 jobs per month, a pace below that seen earlier in the year, but still a strong pace. The unemployment rate remains low at 3.6%. There are some continuing signs that supply and demand in the labor market are coming into better balance. The labor force participation rate has moved up since last year, particularly for individuals aged 25 to 54 years. Nominal wage growth has shown some signs of easing, and job vacancies have declined so far this year. While the jobs-to-workers gap has narrowed, labor 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 May, total PCE prices rose 3.8%. Excluding the volatile food and energy categories, core PCE prices rose 4.6%. In June, the 12-month change in the Consumer Price Index, or CPI, came in at 3.0%, and the change in the core CPI was 4.8%. Inflation has moderated somewhat since the middle of last year. Nonetheless, the process of getting inflation back down to 2% has a long way to go. 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 cost of essentials like food, housing, and transportation. We're highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning to 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 5.25%-5.5%. We are also continuing the process of significantly reducing our securities holdings. With today's action, we've raised our policy rate by 5.25 percentage points since early last year. We have been seeing the effects of our policy tightening on demand in the most interest rate-sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full effects of our ongoing monetary restraint to be realized, especially on inflation. In addition, the economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation. In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. We will continue to make our decisions meeting by meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks. We remain committed to bringing inflation back to our 2% goal and to keeping longer-term inflation expectations well anchored. Reducing inflation is likely to require a period of below-trend growth and some softening of 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, and I look forward to your questions. Steve? Mr. Chairman, thank you. You have, I think a couple times in your opening remarks, talked about this language, "In determining the extent of additional policy firming that may be appropriate." Should we take that to mean that additional hikes are likely on the way? Should we also believe that all future meetings, say, September and November, are live, or are you in a every other meeting mode? Thank you. We haven't made a decision to go to every other meeting. It's not something we've looked at. We're gonna be going meeting by meeting, and as we go into each meeting, we're going to be asking ourselves the same question. We haven't made any decisions about any future meetings, including the pace at which we'd consider hiking. We're gonna be assessing the need for further tightening that may be appropriate, you read the language, to return inflation to 2% over time. I would say that the intermeeting data came in broadly in line with expectations. Economic activity remained resilient, job creation remained strong, while cooling a bit, and the June CPI report actually came in a bit better than expectations for a change. The June CPI report, of course, was welcome, but it's only one report, one month's data. We hope that inflation will follow a lower path, as it will be consistent with the CPI reading, but we don't know that, and we're just gonna need to see more data. What are we gonna be looking at? Really, it will be the whole broader picture, starting with, we're looking for moderate growth, right? We're looking for, supply and demand through the economy coming into better balance, including, in particular, in the labor market. We'll be looking at inflation, and we'll be asking ourselves: Does this whole collection of data, do we assess it as suggesting that we need to raise rates further? If we make that conclusion, we will go ahead and raise rates. That's how we're thinking about the next meeting and, you know, how we're thinking about meetings going forward, potentially. You know, we're now mainly thinking about the next meeting. I will also say, since we're talking about it, between now and the September meeting, we get two more job reports, two more CPI reports. I think we have an ECI report coming later this week, which is Employment Compensation Index, and lots of data on economic activity. All of that information is going to inform our decision as we go into that meeting. I would say it is certainly possible that we would raise funds again at the September meeting, if the data warrant it, and I would also say it's possible that we would choose to hold steady at that meeting. We're gonna be making careful assessments, as I said, meeting by meeting. I'll close by saying we've raised the federal funds rate now by 525 basis points since March 2022. Monetary policy, we believe, is restrictive and is putting downward pressure on economic activity and inflation. If I could just briefly follow up on something you said there. You said the data in the intermeeting period, it broadly came in line with expectations. Does that mean there's unlikely to have been a change in the overwhelming outlook of the committee, that two more hikes are necessary? I'm just gonna go back to what I said. We'll, you know. That's the question. We have eight weeks now until the September meeting. All that data that I recited, we're gonna be looking at all that and making that assessment then. Really, we did have the one good reading, and of course, we welcome that, but it's just one reading, as everybody knows. You know, we've seen this before in the data. Many forecasts call for rates, for inflation to remain low, but we just don't know that until we see the data, so we'll be focusing on that. Jeanna. Thank you. Thanks for taking our questions, Chair Powell. Obviously, you upgraded the language around growth in the statement today. You know, we've seen the Barbie movie numbers. We've seen everyone going to Taylor Swift concerts this summer. It seems like the American consumer is in pretty good shape, and it does seem like growth is sort of picking back up a little bit, or at least you know, performing well this summer, is that a problem because it's inflationary, or is it good news because it suggests that a soft landing is more likely? Just how are you thinking about that sort of trajectory? Yeah. I would say it this way: The overall resilience of the economy, the fact that we've been able to achieve disinflation so far without any meaningful negative impact on the labor market, the strength of the economy overall, that's a good thing. It's good to see that, of course. It's also, you see consumer confidence coming up and things like that. That will support activity going forward. You're right, though. At the margin, stronger growth could lead, over time, to higher inflation, and that would require an appropriate response from monetary policy. We'll be watching that carefully and seeing how it evolves over time. Neil. Thanks, Chair Powell. Neil Irwin from Axios. As you referenced earlier, in the intermeeting period, soft CPI, jobs reports, still strong but moderating, JOLTS looks good. If you're data-dependent, why not pause again? Why not stay on hold? Why not take another meeting off, when the data was at least cutting in the direction you want to see? If you go back to what we're trying to do here, we're trying to achieve a stance of policy that's sufficiently restrictive to bring inflation down to 2%. At the last meeting, we wrote down our individual estimates of what that would take, the meaning of that was an additional 2 rate hikes. I would say we looked at the intermeeting data, as I mentioned, broadly consistent, not perfectly consistent, but broadly consistent with expectations, as a result, we went ahead and took another step. That's, you know, a labor market that continues to be strong, but gradually slowing. I mentioned that the inflation report was actually a little better than expected, but, you know, we're gonna be careful about taking too much signal from a single reading. You know, growth came in stronger than expected. That's how we look at it, and so we did take that step today. Nick Timiraos of The Wall Street Journal. Chair Powell, markets widely believe the median FOMC participants inflation forecast from June for the fourth quarter of this year will be too high, given autos and shelter, and that by September, that may warrant a downward revision in the inflation forecast of 20-30 basis points. Would that type of inflation progress be enough to hold rates steady from here, or do you need to see below-trend growth and decelerating labor income growth to be convinced that you've done enough? It's hard to pick the pieces apart and say, you know, how much of this and how much of that. You know, we'll be, we'll be looking at everything. You know, of course, we'll be looking to see whether the signal from June CPI is replicated or the opposite of replicated, or whether it's somewhere in the middle. We'll be looking at the growth data, we'll be looking at the labor market data very closely, of course, and making an overall judgment about that. It's, it's the totality of the data, I think, but with a particular focus on making progress on inflation. If I could follow up, last month, you said there were benefits to moderating the pace of increases because it would give you more information to make decisions. Would another CPI report, like the one we just had in June, allow you to at least maintain that slower pace and defer until the fall any decision on whether you need that second rate hike? I'm just gonna tell you again, what we're gonna do in September, we're gonna look at two additional job reports, two additional CPI reports, lots of activity data, and that's what we're gonna look at, and we're gonna make that decision then. That decision could mean another hike in September, or it could mean that we decide to maintain at that level. Again, the question we're gonna be asking ourselves is the overall signal one that we need to do more, that we need to tighten further? If we get that signal, whenever we get it, then, and that's the collective judgment of the committee, then we'll move ahead. If we don't, you know, then, we'll have the option of maintaining policy at that level. It's, you know, it's really dependent so much on the data, and we just don't have it yet. Chris. Hi, Chris Rugaber at Associated Press. Consumer confidence in the economy is rising, likely in large part because of the declines in headline inflation. You also see wages are also rising faster than prices now, after trailing them for a long time. How much are Americans truly harmed by inflation at its current level, headline level of 3%? With that in mind, when do you put some weight back on the employment side of the dual mandate? I guess I'd say it this way, first, it is a good thing that headline inflation has come down so much because that's really what the public experiences. I would say that having headline inflation move down that much almost creates a... It will strengthen the broad sense that the public has, that inflation is coming down, which will, in turn, we hope, help inflation continue to move down. You are really, sorry, what your question was? Well, I mean, you've talked for many press conferences now about the harm created by inflation. Yeah ... how hard it is for people. How much of that are we still seeing with inflation now down at 3%? I guess I would put it this way. We, I'd say it this way: It's really a question of how do you balance the two risks, the risk of doing too much or doing too little. You know, I would say that, you know, we're coming to a place where there really are risks on both sides. It's hard to say exactly whether they're in balance or not, but as our stances become more restrictive, we, and inflation moderates, we do increasingly face that risk. You know, we need to see that inflation is durably down that far. We, you know, as you know, we think, and most economists think, that core inflation is actually a better signal of where, of where headline inflation is going, because headline inflation is affected greatly by volatile energy and food prices. We would want core inflation to be coming down because that's what we think is, Core is signaling where headline is gonna go in the future. Core inflation is still pretty elevated. You know, there's reason to think it can come down now, but it's still quite elevated, and so we think we need to stay on task, and we think we're gonna need to certainly hold policy at a restricted levels for some time, and we need to be prepared to raise further if we think that's appropriate. Well, if inflation were to, just a quick follow, if it stays at 3 or drops even a little bit more, I mean, how much of an increase in unemployment do you think is acceptable to get that last bit of inflation? People are talking about the potential difficulty of the last, so-called last mile of inflation. How much, again, how much unemployment do you think is justified to get down that last- it is... one point? It is a very positive thing that actually the unemployment rate is the same as it was when we lifted off in March of 2022, at 3.6%. That's a real blessing, and that we've been able to achieve some disinflation. We don't seek to, it's not that we're aiming to raise unemployment, but I would just say the historical record, we have to be honest about the historical record, which does suggest that when central banks go in and slow the economy to bring down inflation, the result tends to be some softening in labor market conditions. That is still the likely outcome here. You know, we hope that that's as little as possible. We have to be honest, that is the likely outcome. The worst outcome for everyone, of course, would be not to deal with inflation now, not get it done. Whatever the short-term social costs of getting inflation under control, the longer-term social costs of failing to do so are greater, and that the historical record is very, very clear on that. If you go through a period where inflation expectations are not anchored, inflation is volatile, it interferes with people's lives and with economic activity, and, you know, that's the thing we really need to avoid and will avoid. Go to Michael McKee. At this point, you say the policy is restrictive. All year long, we have seen growth surprise to the upside, unemployment to the downside, and inflation lately to the downside. I'm wondering, by definition, should you be restrictive enough right now under these conditions? Do you think you might need to do more? I'm curious about what you see as inflation dynamics now. Is the economy still moving in a direction where it creates more inflation? People talk about base effects and higher energy costs, and now we have some large labor settlements. Is the economy disinflating, and you're able to go back to the old Fed policy of opportunistic disinflation? I'll just say, again, the broader picture of what we want to see is we want to see easing of supply constraints, strengths, and normalization of pandemic-related distortions to demand and supply. We want to see economic growth running at moderate or modest levels to help ease inflationary pressures. We want to see continued restoration of supply and demand balance, particularly in the labor market, and all of that should lead to declining inflationary pressures. Now, what we see is, we see those pieces of the puzzle coming together, and we're seeing evidence of those things now. I would say that what our eyes are telling us is that policy has not been restrictive enough for long enough to have its full desired effects. We intend, again, to keep policy restrictive until we're confident that inflation is coming down sustainably toward our 2% target, and we're prepared to further tighten, if that is appropriate. We think the process, you know, still probably has a long way to go. Do you think, under current conditions, you are restrictive enough, unless something changes? Well, I think we think, you know, today's rate hike was appropriate, and I think we're gonna be looking at the incoming data to inform our decision at the next meeting about is the incoming data telling us that we need to do more? If it does tell us that, collectively, if that's our view, then we will do more. Colby. Thank you. Colby Smith with the Financial Times. If September is, in fact, a live meeting, how does that square with the need for a more gradual tightening pace that you spoke of last month in explaining the rationale for holding the funds rate steady at the June meeting? A more gradual pace doesn't go immediately to every other meeting. It could be 2 out of 3 meetings, right? It just means if you're slowing down. The point really was to slow down the decision cycle as we get closer and closer to, we think, our destination. I wouldn't want to go automatically to every other meeting because I just don't think that's, we don't, I think it's not an environment where we want to provide a lot of forward guidance. There's a lot of uncertainty out there. We just want to keep moving at what we think is the right pace, and I do think it makes all the sense in the world to slow down as we now make these finely judged decisions. That's what we did. I think it's possible, I mentioned before, it's possible that we would move at consecutive meetings. We're not taking that off the table. We might not. It's really gonna depend on what the data tell us. That's the best we can do. We shouldn't assume that every other meeting is the lowest tightening frequency, let's say. It could be, you know, longer intervals in between as well. I think Look, I think we're gonna, we're gonna make a decision about the next meeting. We're gonna make a decision about the one after that. I think it'll sort itself out. Howard. Thanks. Howard Schneider with Reuters. Among your colleagues, there have been people who've said they feel that very little transmission has taken place so far from monetary policy into the economy, and there are those who feel, they say it's happened very fast this time, and it's kind of up to date. Where are you on that continuum? There's a long-running debate about the lags between changes in financial conditions and the response to those changes from economic activity and inflation, right? We know that in the modern era, financial conditions move in anticipation of our decisions, and that has clearly been the case in this cycle. In a sense, the clock starts earlier than it used to, but that doesn't necessarily change the process from that point on, and it's not clear that it has. We also, I'll tell you what we know and then what we don't know. We know that financial conditions affect economic activity and inflation with a lag that can be long and variable, or lags, plural, that can be long and variable. A lot of uncertainty around the length of the lags, and by the way, that's just one component of the broader uncertainty that we face. I'll tell you how I, how I think about this. First, the first thing to say is, we're determined to bring inflation down to 2% over time, and we will use our tools to do that. No one should doubt that. I would look at it this way, though, the real federal funds rate is now in meaningfully positive territory. If you take the nominal federal funds rate, subtract the mainstream estimate of near-term inflation expectations, you get a real federal funds rate that is well above most estimates of the longer-term neutral rate. I would say monetary policy is restrictive, more so after today's decision, meaning that it is putting downward pressure on economic activity and inflation. We'll keep monetary policy restrictive until we think it's not appropriate to do so. That's how I think about it. I mean, if I sum it up, I would say we've come a long way. We are resolutely committed to returning inflation to our 2% goal over time. Inflation repeatedly has proved stronger than we and other forecasters have expected, and at some point, that may change. We have to be ready to follow the data, and given how far we've come, we can afford to be a little patient, as well as resolute, as we let this unfold. On the, on the credit side, I'm wondering if you saw anything in the, in the latest SLOOS data that made you think you're getting a quantum of credit contraction beyond what you'd expect? The bank lending data really is, the growth rates-... edging down towards and below, heading below zero, which is usually, you know, a recession indicator. I guess the SLOOS will come out early next week, and I would just say it's broadly in condition, consistent with what you would expect. You've got lending conditions tight and getting a little tighter. You've got weak demand, you know, it gives a picture of pretty tight credit conditions in the economy. I think it's really hard to tease out whether how much of that is from this source or that source. I think what matters is the overall picture is of tight and tightening lending conditions, and that's what this SLOOS will say. Rachel. Hi, Chair Powell. Rachel Siegel from The Washington Post. Thanks for taking our questions. Could you break down the reasons why inflation has fallen, and what share of that credit you would give to factors that don't stem directly from rate hikes or that might be within your control at all, like easing supply chains and a drop in energy prices over the past year? Yeah. Interesting question. Let me start by saying that the inflation surge that we saw in the pandemic resulted from a collision of elevated demand and constrained supply, both of which followed from the unprecedented features of the pandemic and the response from fiscal and monetary policy. We've always expected that the disinflationary process would stem from both from the normalization of those broad pandemic-related supply and demand conditions and from restrictive monetary policy, which would help return the balance between supply and demand by restraining demand, and we think that's broadly what we're seeing. To go break it down a little further, of course, headline inflation has come down sharply from elevated levels as energy and food prices have come down, mostly due to reversal of the effects from the war in Ukraine. That's a good thing, and the public experiences that, as I mentioned earlier. For core inflation, I'd say there also there has been a role for most for both factors, both that I mentioned. Clearly, in for goods, normalization of supply conditions is playing an important role, as is the reversal, the beginning of the reversal of spending back into services and away from goods. Say, take autos as an example, the combination of an increase in sales and inventories, while vehicle inflation has decelerated, points to a substantial role for supply. There's also a role for demand, as, you know, the loans and things like that are more expensive, so they're both working there. Housing services inflation now starts to move down. Clearly, higher rates have slowed the housing market. you know, I would say monetary policy is working about as we expect, and we think it'll play an important role going forward, in particular in non-housing services, where really we think that's where the labor market will come in as a very important factor. We think both of those, both of those sources of disinflation are playing an important role. I see. Just to follow up, do you think that of those two sources, the core will rely more heavily on seeing an impact from rate hikes, or is there a more even split there, too? I think monetary policy is going to be important going forward because we're sort of reaping now the benefits of the reversal of some of the very specific pandemic things. We're seeing that with goods in particular, with supply chains and shortages moving, and we're seeing. I think going forward, monetary policy will be important, particularly in that, in the sector, in the non-housing services sector. Edward. Thank you, Chair Powell. First, let me compliment your tie, the choice of tie. Thanks for taking our questions. The Beige Book, it said, "Input cost pressures remain elevated for services firms but eased notably for manufacturing sector." Is that an indication that there's a wage inflation pressure, and how do you target in pressure on the wage inflation without pushing the economy into recession? Well, I think the, as it relates to goods, it's really an indication that supply chains and shortages are easing. What was the first part of it? Wage inflation, like how do you target wage inflation without pushing an economy into a recession? I don't think we're targeting wage inflation. I think what we're looking for is a broad cooling in labor market conditions. That's what we're seeing. Wages have actually been gradually moving down. They're still at levels that would be consistent over a long period of time with 2% inflation. Nonetheless, we're making progress there. By so many indicators, labor market demand is cooling. You can look at surveys by workers and businesses who see that. You can look at the quits rate normalizing. You can look at job openings coming down. You can look at just job creation in the establishment survey. You know, it's still at a high level, but it was at really an extraordinarily high level for most of the last 2 years. You see cooling, particularly in private sector, in the last, you know, in the last report. I think we see that, and it's happening at a gradual pace. That's actually not a bad thing in a sense, because it, if what we see is a labor market very strong demand for labor, which is really the engine of the economy, people are getting hired, many people going back to work, getting wages, spending money, and that's really what's driving the economy. That, it's gradually slowing. It's gradually cooling. That's a good prescription for getting where we want to get. Still, we see a push to raise minimum wage. We're seeing a lot of unions go on strike or threaten strike, and the common thing is they come out with agreements like big pay increases, like UPS, and we have the auto workers coming up. Are you concerned then about a trend of series of big unions, these contract pushing wage inflation, then? Not for us to comment on contract negotiations. Not our job, not our role. You know, we monitor these things, and we'll keep an eye on them, but really, that's something that's handled at that level. There's a large amount of people. Victoria? Hi, Victoria Guida with Politico. I wanted to ask about the SEP, which suggests that you would cut rates as overall and core PCE get to around or under 3%. I'm wondering, is the level of inflation, what's sort of important there as you think about getting to 2% and when you might start cutting rates, or is the speed at which inflation is falling also important? I think you'd take both into account. I think you'd take everything into account when you start cutting rates. It would depend on a wide range of things. When people are writing down rate cuts next year, you know, it just is a sense that inflation is coming down, and we're comfortable that it's coming down, and it's time to start cutting rates. I think. I mean, there's a lot of uncertainty between what happens, you know, in the next meeting cycle, let alone the next year, let alone the year after that. It's hard to say exactly what happens there, what's motivating people. If it's sort of stubbornly in maybe the high twos, you wouldn't necessarily cut rates? I'm not saying that at all. I'm not giving you any numerical guidance around that. I'm saying we'd be comfortable cutting rates when we're comfortable cutting rates, and that won't be this year, I don't think. It would be. You know, many people wrote down rate cuts for next year. I think the median was several for next year, and that's just gonna be a judgment that we have to make then, a full year from now. It'll be about how confident we are that inflation is, in fact, coming down to our 2% goal. Steve. A good part of Wall Street has become more confident that the Fed is gonna be able to engineer a soft landing, and they've reduced their forecast for a recession. I'm wondering if the staff has changed its view on the likelihood of a recession being likely, and if you personally have changed your view in terms of becoming more confident that you can achieve a soft landing? It has been my view, consistently, that we do have a shot, and my base case is that we will be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses that we've seen in some past, in some past instances, many past instances of tightening that look like ours. That's been my view. That's still my view. I think, you know, that that's sort of consistent with what I see today. But it's a long way from assured, and, you know, we have a lot left to go to see that happen. The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession. I just want to note that it's that our staff produces its own forecast, which is independent of the forecast that we, as FOMC participants, produce. Having an independent staff forecast, as well as the individual participant forecast, is really a strength of our, of our process. There's just a lot of, I think, constructive diversity of opinion that helps us make, help informs our deliberations, helps us make, I hope, better decisions. Is the reason for optimism that inflation has come down and you still have a strong labor market? I mean, does that add to the optimism? I wouldn't use the term optimism about this yet. I would say, though, that there's a pathway, and yes, that's a good way to think about it. We've seen so far the beginnings of disinflation without any real costs in the labor market, and that's a really good thing. I would just also say the historical record suggests that there's very likely to be some softening of labor market conditions. Consistent with having a soft landing, you would have some softening in labor market conditions, and that's still likely as we go forward with this process. It's a good thing to date that we haven't really seen that. We've seen softening through other, not through unemployment, not through higher unemployment. We've seen softening through, you know, job openings coming down part of the way back to more normal levels, the quits rate, so people are not quitting as much. We've seen participation, people coming in, and so labor supply has improved, which has lowered the temperature in the labor market, which was quite overheated, you know, going back a year or so. We're seeing that kind of cooling, and that's very healthy, and, you know, we hope it continues. Jeff. Thank you, Mr. Chairman. Jeff Cox from CNBC.com. You and other Fed officials in the past have suggested that you don't need to keep hiking until inflation hits 2%, that, as long as you see continued progress. I'm wondering, how close do you need to get with the inflation numbers coming down? How many months of data do you need to see that will, that will give you sufficient confidence? You know, how far does this fight need to go before you're willing to kind of declare victory on it? The, the idea that we would keep hiking until inflation gets to 2%, it would be a prescription of going way past the target. That's clearly not the appropriate way to think about it. In effect, if you look at our forecasts, we, the median participant, and again, these are forecasting out years, so take them with a grain of salt, but people are cutting rates next year because, you know, the federal funds rate is at a restrictive level now. If we see inflation coming down credibly, sustainably, then we don't need to be at a restrictive level anymore. We can, you know, we can move back to a neutral level, and then below a neutral level at a certain point. I think we would, you know, we, of course, would be very careful about that. We'd really want to be sure that inflation is coming down in a sustainable level. It's hard. I'm not gonna try to make a numerical assessment of when and where that would be, but that's the way I would think about it, is, you'd stop raising long before you got to 2% inflation, and you'd start cutting before you got to 2% inflation, too. We don't see ourselves getting to 2% inflation until, you know, all the way back to 2, until 2025 or so. Jennifer. Thank you, Chair Powell. Jennifer Schonberger with Yahoo Finance. It's been over four months since a handful of regional banks, including Silicon Valley Bank, failed. When you look at credit conditions now, given Banc of California's acquisition of PacWest, does this acquisition suggest the full impact has not been felt? Are you comfortable saying that we've seen most of the ripple effects that may have occurred at this point, and how does this play into your outlook for policy? I don't want to comment on any particular merger proposal, but I will say, things have settled down for sure out there. Deposit flows have stabilized, capital and liquidity remain strong, aggregate bank lending was stable quarter-over-quarter, and is up significantly year-over-year. Banking sector profits generally are coming in strong this quarter, and overall, the banking system remains strong and resilient. Of course, we're still watching, you know, the situation carefully and monitoring, you know, monitoring conditions in the banking sector. In terms of the actual effect on... If you think of a particular set of banks that were affected because of their size and business model and things like that were more affected by the turmoil in March than others, it's very hard, as I mentioned, it's very hard to sort of tease out the effects on this very large economy of ours from them tightening. They may be tightening a little bit more, probably are, than other banks. The SLOOS has been telling us for more than a year that banking conditions are tightening. That process is ongoing, and that will restrain economic growth. I think we have to take a step back from. I can't separate those anymore. I think basically, we're just looking at the overall picture, which is one of tightening credit conditions, and that's going to restrain economic activity. It is restraining economic activity. That's how I would look at it. How is that informing your outlook for setting policy? I think that goes, that is an expected result of tightening interest rate policy, is that bank credit conditions would, bank lending conditions would tighten as well. The question is: Is it more effective this time because of what happened in May? I just don't think we know that. I think we're looking at the current data in GDP, and we're seeing strong spending, we're seeing a strong economy, and it's made us confident that we can go ahead and raise interest rates now for the third time since the March events. It seems like the economy is weathering this well, but of course, we're watching it carefully and expect to continue to do that. Megan. Hi, Chair Powell. Thanks for taking our questions. Megan Cassella with Barron's. I wondered on wages, if you were at all concerned about any inflationary impact of wages now outpacing inflation, which is likely contributing to the boost in consumer sentiment and the continued strength of the consumer that we've been seeing? Wages in excess of inflation means real wages are positive. Again, that's a great thing. Of course, we want that. We want people to have real wages, but we want wages to be going up at a level that's consistent with 2% inflation over time. As I mentioned, nominal wages have been coming down gradually, and that's what we want to see. We expect to see more of that. That's just more of what's consistent over a longer period of time. We don't really think that wages were an important cause of inflation in the first year or so of the outbreak, but I would say that wages are probably an important issue going forward. Labor market conditions, broadly, are going to be an important part of getting inflation back down, and that's why we think we need some further, softening in labor market conditions. This goes sort of to the balance of risks question, but you mentioned at the start how you're keeping an eye on consumer activity and whether there might be some sort of a rebound there. I'm curious what the Fed's explanation would be to families if further interest rate hikes start to hit the labor market, start to, you know, drive that sentiment back down. What's the message there of why you continue to keep rates elevated or to raise them? Well, you know, we have a job assigned to us by Congress to get inflation under control. We think the single most important thing we can do to benefit those very families, especially families at the lower end of the income spectrum, is to get inflation sustainably under control and restore price stability. We think that is the most important thing we can do now, and we're determined to do that. I would just point out that the people who are the most hurt by inflation right away are people who are on a low fixed income, who. You know, when you're talking about travel, I mean, or, you know, transportation costs, heating costs, clothing, food, things like that, those if you're just making it through each month on your paycheck and prices go up, you're in trouble right away. Even middle class people have some resources and can absorb inflation. People, the people in the lower end of the income spectrum have a harder time doing that. We need to get this done, you know, the record is clear that if we take too long or if we don't succeed, that the pain will only be greater. That's how I would explain what we're doing. Simon. Thank you, Chair Powell. Simon Rabinovitch with The Economist. You had said last month that this meeting this week was going to be a live one. In the event, the market had assigned a, you know, a roughly 99% probability to the rate move that you announced today. The decision was, of course, unanimous, and the statement was basically unchanged from last month. May I ask, you know, to what extent was the meeting actually a live one? Was there ever any doubt over the past 2 days about what the decision was actually going to be? Well, I mean, you could. Was there doubt? Look, I would say there's a range of views on the committee, and when you see the minutes in three weeks, you'll see that. There's a range of views about what we should do at this meeting and what we should do at the next meeting, and it's a process that we go through. Many times when we go into a meeting, the decision is not, you know, fundamentally in doubt. Nonetheless, we have the meeting, and some meetings are, you know, less uncertain than others, and I'll just leave it at that. Let's go to Evan. Thank you, Chair Powell. Financial conditions have been loosening at a fairly steady clip in recent weeks, the dollar, the stock market, et cetera. What does that mean for the Fed in being sure that inflation will come down to target? We monitor, of course, financial conditions, broad financial conditions. You're right, it's the dollar and equities, but, and, you know, we're of course, very focused on rates and our own policy. You know, we're going to use our policy tools to, working through financial conditions to get inflation under control. The implication is, you know, we will do what it takes to get inflation down, and in principle, that could mean that if financial conditions get looser, we have to do more. What tends to happen, though, is financial conditions get in and out of alignment with what we're doing, and ultimately, over time, we get where we need to go. If I could also ask, about the SEP from June? Mm-hmm ... that showed rate cuts. Do you expect the Fed to cut nominal rates next year while also continuing QT? That could happen. The question is, you know, is that consistent with... If you think about both of them as normalization, imagine it's a world where things are okay and it's time to bring rates down from what are restrictive levels to more normal levels. Normalization in the case of the balance sheet would be to reduce QT, so, or to continue it. You know, you depending on where you are in the cycle. They're two independent things, and, you know, the, really the active tool of monetary policy is rates. You can imagine circumstances in which it would be appropriate to have them working in what might be seen to be just different ways, but that wouldn't be the case. Let's go to Kyle. Thanks, Chair Powell. Kyle Campbell with American Banker. I have a question about the discount window. I'm wondering if since the bank failures of the spring, if you've seen signs that banks have taken more steps to be proactive in assuring that they're ready to use that facility if they need to? If you have any sort of thoughts on whether policies might be appropriate for making sure that banks sort of test regularly to show that they are prepared to use it. Thanks. That's a very important thing, yes, and yes to both sides of that. You know, yes, banks are now working to see that they are ready to use the discount window, and we are strongly encouraging them to do that, banks broadly. We did find, as you know, during the events of March and that, you know, that it's a little clunkier. It can be a little clunkier and not as quick as it needs to be sometimes. Why not be in a situation where you're just much more ready in case you need to access the discount window? Let's go to Mark Hamrick. Mr. Chairman, Mark Hamrick with Bankrate. You've talked in the past about getting the housing market back into better balance, excuse me, and also that the market might have bottomed. Where do you see that situation and balance, or lack thereof, right now, particularly with the restrained, constrained inventory of existing homes that might otherwise be coming onto market at a time when existing homeowners are reluctant to move? Of course, all that happening with the 30-year fixed rate mortgage still around 7% on the heels of Fed tightening, and with what you're talking about, tightening industry lending standards. Are we getting closer to balance or farther away? What's your sense? I think we've got a ways to go to get back to balance, really, for the reasons that you talked about. With existing homes, you know, there are many people who have low-rate mortgages, whereas they might wanna sell in a normal, situation, they're not going to because they have so much value in their mortgage, which means that supply of existing homes is really, really tight, which is keeping prices up. On the other hand, there's, you know, there's a lot of supply coming online now, and there are people coming in. A lot of the buyers are, you know, first-time buyers coming in buying at, you know, with these, you know, with these relatively elevated mortgage rates. I think this will take some time to work through. More hopefully, more supply comes online, and, you know, we work through it. We're still living through the, you know, the aftermath of the pandemic. We'll go to Nancy for the last question. Hi, Chair Powell. Nancy Marshall-Genzer with Marketplace. Russia has pulled out of an agreement allowing shipments of grain safe passage through the Black Sea, and alternative routes at this point could be closed off. just wondering, how could that contribute to higher food prices and inflation generally, and how closely are you watching that? We are watching it, of course, very closely. You're right, the withdrawal from the Black Sea Grain Initiative does raise concerns about global food security, particularly for poorer countries that import a large share of their food. Grain prices did go up on this news, but they remain well below their peaks of last spring, and the moves that we've seen so far, I would say, are not expected to make a significant contribution to U.S. inflation. Of course, we will be watching that situation carefully. You don't think it would have a big effect on Fed policy at this point? You wouldn't say so, looking at what we know now. Thank you. Thanks very much. Thank you.