Today, and then he said he did not think they needed to do 50 basis points. That is one of the key questions wall street has had. How far do they go if they go on july 31 . Suggestions from jay powell suggest the center of the fed has not changed. They will closely monitor the data and act as appropriate, which is exactly what he said at his News Conference a week ago after the fed meeting. He said the economy is in pretty good shape, describes in the same way that he did with strong consumer spending, weak business spending, concerns about trade. Nothing new from powell in his remarks that would change the calculation. However, he will be taking questions from people at the council on Foreign Relations, so we may look for some elucidation there. Vonnie repeating again that the fed is weighing whether uncertainties call for using. Call for using. Call for easing. I was struck by what kathleen asked, bond buying in europe, and also japan. He made comparisons in some ways to both economies in question. He said it was not helpful in the case of japan to look for asset bubbles. Sounded like he was saying that is what is happening in the u. S. I would have thought that we did not want comparisons with japan. Mike you dont want to be japan. They have not been able to move the needle on inflation. There are concerns that we will be stuck with low inflation for a long time, and the fed may not be able to do any better than the bank of japan. The u. S. That rejects that idea and that is part of what they are doing. Vonnie lets get to the council on Foreign Relations and jay powell. Maximum employment and price stability, dual mandate. Then i will discuss the outlook for the u. S. Economy and Monetary Policy. I look forward to our discussion that will follow. We areour public review, seeking perspective from people across the nation and we are doing so through open Public Meetings that are live streamed on the internet. Let me share some of the thinking behind this review which is the first of its nature that we have undertaken. The fed is insulated from shortterm political pressures, what is often referred to as our independence. Congress chose to insulate the fed this way because it had seen the damage that often arises when policy bans to shortterm political interests. Central banks in major democracies around the world have similar independence. Along with this independence comes the obligation to explain clearly what we are doing and why we are doing it, so that the public and their elected representatives in congress can hold us accountable. But real accountability divans more of us than a clear explanation. We must listen. We must actively engage those who serve we served to understand how we can more effectively and faithfully use the powers theyve entrusted to us. That is why we are formally and publicly opening our decisionmaking to suggestions, scrutiny, and critique and with on a plummet low, the economy ouring, and inflation near symmetric 2 objective, this is a good time to undertake such a review. Another factor motivating the review is the challenges of Monetary Policymaking have changed in a fundamental way in recent years. Interest rates are lower than in the past and likely to remain so. The persistence of lower rates means that when the economy turns down, Interest Rates will more likely fall closer to zero, the effect of lower bound, elb, as we call it. Proximity to the yield be poses new problems to Central Banks and calls for new ideas. We hope to benefit from the best thinking on these issues. At the heart of our review are our fed listens events, which includes town hall style meetings in all 12 reserve bank districts. These meetings bring people together with wide ranging interests and expertise. We also want to benefit from the insights of leading economic researchers. We recently held a conference at the Federal Reserve bank of chicago that combined Research Presentations by top scholars with roundtable discussions among leaders of organizations that serve union workers, low and moderate income communities, small businesses, and people struggling to find work. We have been listening. What have we heard . Scholars at the chicago event offered a range of views on how well our Monetary Policy tools have effectively promoted our dual mandate paid we learn more about cuttingedge ways to measure job conditions. We heard the latest perspectives on what financial and trade links with the rest of the world mean for the conduct of Monetary Policy. On thed scholarly views interplay between Monetary Policy and Financial Stability. We heard a review of the clarity and efficacy of our communications. Like many others at the conference, i was particularly struck by two panels that included people that work every day in the and middle income communities. What we heard loud and clear was that todays tight labor markets means the benefits of this long recovery are now reaching these communities to a degree that has not been held for many years. We heard of companies, communities, and schools working together to bring employers the productive workers they need. We heard of employers working creatively to structure jobs so that employees can do those jobs while coping with the demands of family and life beyond the workplace. We heard that many people who in the past struggled stayed in the workplace are now getting a new opportunity to add a new and better chapters to their life stories. All of this underscores how important it is to sustain this expansion. The conference generated vibrant discussions. We heard we are doing many cangs well, we have much we improve, and there are different views about which is which. That this agreement is neither surprising nor unwelcome. The questions we are confronting about Monetary Policymaking and communication, particularly relating to the effect of lower bound, are difficult ones that have grown in urgency over the past two decades. That is why it is important we actively seek opinions, ideas, critiques from people throughout the economy to refine our understanding of how best to use the Monetary PolicyPowers Congress has granted to us. Beginning soon, the federal open Market Committee will devote time at our regular meetings to assess lessons from these events supported by analysis from staff. We will publicly report the conclusions of our discussions likely during the first half of next year. Anyonemeantime, interested in learning more can find information on the Federal Reserve board website. Longernow turn on the term issues that is the focus of our review to the nearterm outlook or the economy and Monetary Policy. So far this year, the economy has performed reasonably well. Solid fundamentals are supporting continued growth and strong job creation, keeping the Unemployment Rate near historic lows. Although inflation has been running someone below our symmetric 2 objective, we expected to pick up, supported jobolid growth and a strong market. Along with this favorable picture, we been mindful of ongoing crosscurrents including trade developments and concerns about Global Growth. When the fomc met at the start of may 8 weeks ago, tentative evidence suggested these crosscurrents were moderating and we saw no strong case for adjusting our policy rate. Since then, the picture has changed. The crosscurrents have reemerged with apparent progress on trade turned to greater uncertainty and with incoming data raising renewed concerns about the strength of the Global Economy. In business and agriculture report heightened concerns over trade developments. These concerns may have contributed to the drop in Business Confidence in recent surveys and may be starting to show in incoming data. For example, the limited Available Evidence we have suggest investment by businesses has slowed from the pace earlier this year. Against the backdrop of heightened uncertainty is, the baseline outlook of my fomc colleagues, like that of many other forecasters, remains favorable with unemployment remaining near historic lows, inflation expected to return to 2 over time, but at a slower pace than what we foresaw earlier this year. However, the risks to this payroll of baseline outlook, appear to have grown. Last week, my colleagues and i held a regular meeting to assess the stance of Monetary Policy. We did not change the setting for our main policy tool, target range for the federal funds rate, but we did make significant changes to our policy statement. Since the beginning of the year, we have been taking a patients dance for the need about making any policy change. We know state the committee will monitor the incoming information for an outlook and will act as appropriate to sustain the expansion with a strong labor market inflation near its symmetric 2 objective. And ition my colleagues are grappling with our whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation. Many fomc participants judge the case for somewhat more accommodative policy has strengthened. Are also mindful that Monetary Policy should not overreact to any individual data point or shortterm swing in sentiment. Doing so would that even more uncertainty to the outlook. Monitor theely implications of incoming information for the Economic Outlook and will act as appropriate to sustain the expansion. Thanks very much. [applause] so as you suggested last week in your press conference and again just now, it looks like cutting Interest Rates in the coming months is a strong possibility. Six months ago, you and your colleagues raised Interest Rates, and were expecting to do so again in 2019. What has changed in the six months, what do you know now that you did not know then . First of all, let me say thanks for being here. We had an fomc meeting, press conference last week. The things i say about Monetary Policy here today intend to be fully consistent with the message i delivered at that press conference. Today, and i,ues are tightly focused on our , andng of Monetary Policy getting it sent at the appropriate level two best fulfill our dual mandate objectives, as i mentioned. You asked what has changed. A lot has changed since december, including, for example, estimates of Global Growth or 2019 have come down substantially. In fact, quite a lot has changed since may 1, which is only eight weeks ago. At the meeting that ended on may 1, we had coming out of that meeting an excellent job report, very strong report that friday, we were looking at what tentative signs that the crosscurrents were abating. Tentative reports of progress toward reaching a trade deal with china. There was better data coming out of china, europe. All of that changed coming out of that meeting, beginning with the news that the trade negotiations with china had moved away from agreement and toward greater confrontation. I would just say, my colleagues and i still see a favorable outlook as the most likely outlook but we see the risks of that outlook have increased. We are very mindful of those risks and are prepared to use our policy is to support activity as needed. One way of reading the shifts in bond yields since december would be this the fed over tightened, you raised rates too much last year, that is point on future growth expectations. Did you make a mistake raising four times over 100 basis point last year . I go back to may 1, and the committee is looking at the performance in the first half of the year. Pretty positive picture, keeping in line with expectations. The committee thought our policy stance was appropriate, as of that date, may 1. Coming out of that meeting, a very strong jobs report. It really looks like the policy stance was appropriate. Things have changed since. The global risk picture has changed really just in the last six to eight weeks. It is around trade developments and concerns about Global Growth. Our focus is looking forward through the windshield at what the right setting is for Monetary PolicyGoing Forward to achieve our goals. Emphasize a lot of the shifts in markets, Economic Data have happened recently since may 1. I gather the reason you did not actually cut rates last week is you want to see confirmation of these trends for pulling the trigger. What would have to happen before you change the direction you are going . Chair powell we are not looking at any one particular thing, monitoring the full range of developments on Economic Data, Political Developments and such. The question we are going to be asking ourselves is whether these uncertain is will continue to weigh on the outlook. I think with reading Financial Market data, that is always market data, always a challenge to know how to react. That is something that every central bank aces consistently. A lot of the movement in the Economic Data have been startled. Ism, manufacturing indexes. How much do you interpret this as a risk to the real economy in the u. S. . That is the question. If you look at the real economy data, consumer is very solid. That makes a ton of sense. Low unemployment, high confidence readings still, wages moving up. You have surveys that show businesses think it is hard to find good workers, workers think that jobs are plentiful. This is a good time for consumers and spending data has been strong. You havehappened is seen weakness in manufacturing really around the world. We can talk about that. That is a story we are seeing consistently around the world. Again, we are looking at the overall situation, one to see more, frankly. Some of these developments happened in the second half of the last in a meeting. Intervening period. Its important not to react in the short term two things that may be shortterm. That is the data side, there is the market side. Longerterm, median term yields have fallen in the last few weeks. Always attention for central bankers in how much you dont want to overreact to move that might be random volatility in markets. You also dont want to under react and miss out on signs the Economic Outlook is changing. Can you discuss the conceptual issue of overreacting are under reacting to market moves, and how that applies to this circumstance . Chair powell how to incorporate Financial Conditions into Monetary Policy is one that Central Banks face all the time. Matterse, anything that for the achievement of the dual. Andate should matter for us that is true of Financial Conditions and many other things. Conditions, our policy works through Financial Conditions. In addition, Financial Markets can be thought of as an aggregator of the views of Market Participants about the future. You are going to learn a lot about listening to them. But what we always say is, we dont react to anyone it is not one thing but the broad range of Financial Conditions and we look for sustained changes. We try to look through shortterm changes. Of course, sometimes Financial Markets can be quite prescient about evolving risks. Other times they can be excessively optimistic. They can look through excessively exuberant, ignore risks. We have to use some judgment and some experience in looking at Financial Market development over time to decide what to react to. The principle we articulate is we are looking for changes in Financial Conditions that could affect the achievement of our dual mandate goals. Those tend to be broad changes in Financial Conditions that are sustained for a period of time. That is part of why our thinking was to wait and see. So much of what happened happened in a few weeks before the last meeting. I want to ask a lot about i were that you and your colleagues have used a lot, normalization. It seems like there has been a desire to return to what were more historically normal levels of Interest Rates, the size of the balance sheet. Considering we are in a world where all Central Banks are stuck near the zero bound, have been for a long time, is that a mistake . What does normalization mean in a world where we are trapped in this low rate around the world . Chair powell it is clear for now, and probably for some time, what we think of the neutral rate of interest has fallen significantly in the wake of the financial crisis, by as much as two or three Percentage Points. Neither pushing up nor pushing down, neither restraining or supporting Economic Activity. Sort of a neutral rate. Federal openthe Market Committee range between 2. 5 and 3 in nominal rates. The way, means by that seems to be true around the world. The forces that have be