It also says it will purchase additional treasury assets as part of an accommodative policy. It repeat language from previous statements, where it sol it will use the full range of tools to support the economy the statement says weak demand and oil prices are holding down inflation, but the path principally depends on the virus. It says it poses considerable risk to the mediumterm outlook. There were two dissets, from the dallas and minneapolis fed, differences in what they wanted. Capellan wanted more flexibility. Let me tell you about the outlook for gdp. They actually dramatically well, they were looking for a 6. 5 gdp decline, now looking for a 397 decline they were looking for nine and change, now looking for 7. 6. Ill go directly to the actual table here and put my glasses on, and tell you what it says here inflation they have upgraded from 0. 8 to 1 mounta. 2 there it is, folks the path of policy 0. 1 for 2020, 0. 1 for 2021 0. 1 for 2022, and drumroll, please, 0. 1 for 2023 the ample is four years of 0. 1 fed funds rate steve, have you ever seen the fed by so explicit with respect to inflation saying we are targeting above 2 for a substantial for some time i forget the words. Tyler, you are correct in asking me to underline the importance of this change. No, ive never seen it before. It is an historic moment, where the feds policy now is aimed at an inflation number that is above target its not just trying to hit two, its trying to hit a number above that i think david kelly and others in the market will be disappointed theyre aiming for a number above the 2 target in order to achieve average inflation. This is a moment that i didnt think i could see. Plus the idea that the policy outlook is for 0. 1 into 2023, and i do see four hikes now in the dot plot for 2023, but that means i believe 13 are at between zero and 0. 25. I dont how much more dovish you can get. David kellie said he expected them to continue cooing. David, this sounds like coo. Definitely. Its the right thing to do right now. Youre trying to keep longterm rates down youre trying to help the government stimulate the economy and support the economy. The irony is i would be willing to put actually keeping rates that low, because when you get to 2023, ifs economy has fully recovered or almost fully recovered, the idea that youre going to be able to keep rates that low with an inflation rate already above 2 i think is unreasonable youll see longtemple rates run up in some in some way theyre trying to convince the market theyre going to be dovish, but when the economy recovers, theyll have to change expectations meana, theyve had a heart time getting it to where they want it to, and get your reaction whether an above 2 inflation rate is achievable if so, how soon and what are the implications if any for gold weve only got bon 2 . So inflation generally has remained below the core target since the last crisis. As were going through this crisis, very unlikely we get close to that 2 range now, keep in mind this lower for longer in an environment where perhaps 2021 with he do get a recovery but globally could prove to be quite strong for riske assets Earnings Growth thus far, estimates are calling for plus 25 , really investors could be pushed out the spectrum. Thats a supportive backdrop gold, as you mentioned really does tend to follow the path of the dollars. Think we gold can hold up as well, given what Central Banks globally are doing markets are largely holding on to their gains lets go back to steve for more color here steve . I want to buttress the conversation that david kelly was having is how much mettle would the Federal Reserve have when the economy moves toward the goals they set out first of all, if you look at the inflation outlook, the fed actually never forecast that its going to meet its goal of inflation above 2 , at least not for a single year. The inflation run is 1. 2, 1. 7, 1. 8, so over this fouryear time period where the fed says its aiming above 2 , the actual forecast never actually gets there. David kelly asked this question about what the fed would do as the Unemployment Rate came down, it does have unemployment at 4 . This is the forecast, not a policy statement it does have unemployment at 4 at 2023. Does the fed hold the line at 0. 1 on the funds rate with a 4 Unemployment Rate . That would certainly by a major, major test of this idea of average inflation targeting here steve, i think thats a really interesting point if i could quickly bounce that off our guests david, let me go to you. What steve just said, even with the fed saying their policy is at an inflation enough by above market, its unclear whether the fed believe its going to get there. I dont think we truly appreciate just how much things have changed over the last year. Now what were doing is essentially monetizing theres another trillion at a running rate here. Regardless of who wins the next election, you could have deficits between 1. 5 and 2 trillion over the next two years. If you have that kind of stimulus and the government can do it essential for free, because the Federal Reserve is lending the money, that is very stimulative. I think people would be surprised at the ability of this fiscal stimulus to actually generate stronger growth and higher inflation we have plenty of people saying it could be absolutely be one outcome here with more on the markets reaction so far. So far this week weve had a normal what is called a drip, a tendency to move the couple days to move up its up about 1. 5 thats fairly typical of the fed drip i think several people messaged me they like the modest upgrade to the economies, the estimate, thats a modest upgrade. I think traders like that. Always kind of like that were back down to where we essential started. No real steepening in the yield curve. Overall they pretty much got what they wanted guys, back to you. Lets also talk about this ipo today, snowflake would you connect its performance of these Software Names in year to the liquid in general that were seen people drawing a line from one to the other no, i would say the majority of the influence were seeing is because every company in america has to upgrade its software to deal with the fact that the country is moving more online. The companies were seeing coming, and the ones this week and the next couple weeks, we all address particular niches in the market they help manage them better, do Group Management better, project Software Management better theyre all niche players. Its not 120 that matters. People look at 120, everybody thought the open was 245 this has treaded between 232 and 319 people bought at 245 are under water. So watch the 245 number this had better close above 245, or a lot of people will be shaking their heads. If you have an allocation last night at 120, youre an institutional player, and youre at 250, 26 0, you have the option to said in thats a pretty tempting offer. Its traded 28 million shares. Thats the float in an hour and a half. Thats extraordinary normally its a good ipo if you trade 100 of the float after a full day in an hour and a half, its traded the full float. Wow, its a monster bob, thank you so much bob pisani Rick Santelli is also standing by and yesterday the market remains unimpressed. Thats because we havent seen inflation yet i think if we do and when we do, the market will not be as blase as we think. Twos, theyre a whisker under 14 basis point. Tens were at 666, and 30year bonds around fixed markets havent moved. I certainly do want to weigh in on this conventional wisdom that theyre advertising something, and oh, my goodness, this is so important, its never happened before, 2008 to 2015, seven years, credit crisis, seven years before we normalize rates from zero to 25 to the first rate hike by janet yellen in 2015, because the economy was truly dented how we come out of covid, if theres a vaccine . Nobody nose. If the fed could keep this rate at the same rate for three years. That is loss figureser getting smaller and smaller. We dont know how it will end. Policy will changes once we get on the other side of covid john bellows, let me come back to you. Your thoughts on what this fed just said basically. It would seem you dont bet against the fed and the fed is saying would have been your back im saying this with nervousness. I think the reason the fed did it today was precisely to tell you what the policy will be. I think the they did not wait for the all clear. Instead theyre telling you now what the policy will be at covid. The reason it will be easy, they need to address this unevenness. They have a broad and inclusive i think the i think the fed brought forward their announcement again, i take the other side with trip days mona, sum it up for us. I think this is a case of adopt fight the fed. We have low rates at least will be 2021 until we go ahead a tried and true recovery. In that backdrop, the effect comes front and center. Even gold as we mentioned everlyier, keep in mind we do have periods of volatility but those are walls of worry, so ill leave it at that. David will still around for final thoughts it was not you said, we love you, so come back next time. Well see you. Were about 13 minutes away from the press conference. We will talk to a former fed governor about t bheig problem he thinking the fed faces right now. Welcome back the fed just left rates unchanged, and indicated rate hikes wont be an issue until 2024 the dow is up 288 points, s p is up 21, even the nasdaq has turned positive. Lets talk about this all with frederick mishkin. Great to have you back can you hear me all right . I can hear you just fine. We had two dissentence today, one from capellan, the other from neil kashda are cashcari. It tells you theres disagreement, theyre not absolutely clear on whether theyre going, in a sense there has been a shift i very much welcome. Its something ive advocated, and i think theyre trying to sort out what that means this is an indicateth havent quite sorted it out. Heres the key, one of the big problems you have and of a need for more extensive policy, theyve already got the fed race down and basically its called effective lower value. So the question is how do you make sure you want to be stimulative. One way to do it is indicate when youve inflates lower for a short period of time, up to shoot above that. You want it to be arches, and that is key. What it means is when you have things you old way the doing things is bygones are bygones, whatever has happened in the past you dont worry and keep Interest Rates low. And make we can show this but rick, if thats all the case, why doesnt it think it actually cant they dont believe themselves theyd get we used to think, and the theory tells us if you create expectations, that youre going to do more, it will help, but in fact its very interesting when you look at the case in japan, they have changed their policy in major ways, starting in 2012, with abeanomics. Thats a challenge for the fed the issue is you have to do what youve got to do, you do the best you can, but if you notice, many officials have been talking about the government needs to do something. In a situation like this, the Monetary Policy will not bes effective. Were at this lower bound is this is when you need fiscal policy to kick in im. So where does that leave us then do you believe that their quantitative easing is causing distortions in the economy, or that its not making its way into the real economy . Or do you just think it needs to take more time to play out i think it does work, but the problem is, for example, its very effective in affecting financial markets. The stock market is much stronger than it otherwise would be because of those actions. In fact the stock markets near the highs before the coronavirus, thats actually important. The problem is that doesnt mean it has enough effect on the real economy. This is the difficulty that Central Banks theyre not all powerful they can affect assets prices, but the question is, is that enough to actually get the economy moving we saw this happen during the financial crisis the fed did a lot of things that were very, very positive, but in fact we had a very, very slow recovery what the fed can do thats really important is it can prevent a financial crisis thats exactly what they did that was hugely important. Great that they did it, great they did it as quickly as they did once you do that everybody basically your power is limited. You have to recognize you may need more. Frederick, thank you for your time we appreciate it. My pleasure. Former governor of the Federal Reserve. In a few moments, we will head over to jay powell he will begin his News Conference at roughly half past the hour hell explain his decision to leave Interest Rates unchanged and target inflation slightly above the 2 number that theyve talked about for years we will take you to that press rsch it would be virtual, right after this short break and etfsde stocks for any amount you choose instead of buying by the share. All with no commissions. Stocks by the slice from fidelity. Get your slice today. [ engines revving ] its amazing to see them in the wild like th shhh. For those who were born to ride, theres progressive. Well spend a couple minutes more with david kelly, as we wait for fed chair powell. One of the interesting points is they could be effective in boosting asset prices. Higher asset prices help people who have assets. It doesnt do much, right, david, for people who dont have assets that leaves fiscal policy as the way to reach them. Am i incorrect or correct about that youre absolutely correct, and i think were turning a page after the election, particularly if we have a republican sweet or democratic sweep, i expect fiscal policy to go allout expansionary we have a temporary block on stimulus because of politician right now. That can help the average person and help the economy overall i think you will see that. The real problem for the Federal Reserve is to what extent they want to enable that forever. There is no limit to what washington will ultimately spent if the Federal Reserve wont act as a block if they plan to keep rates low forever, well get bigger and bigger deficits i think the other interesting things is they havent committed to qe for that long you could see a taper on bond purchases before they raise shortterm rates if they do that, theres some interesting implications in that, but overall i think well see a lot of fiscal over the next few years financed by a very dovish fed. Exactly. The fed is financing the borrowing that the federal government is doing, correct its really one pocket subsid e subsidizing the other pocket, i suppose. Its a dangerous game its darn close to what you caught debt monetization, where the federal government basically runs the Federal Reserve sorry to jump in chair powell is taking the podium here he is deliver the press conference the Federal Reserve, we are strongly committed to achieving the Monetary Policy goals that congress has given us max mustnmu employment and price stability since the pandemic we have taken forceful actions to provide relief in stability, to ensure the recovery will be as strong as possible, and to limit lasting damage to the economy. Today my colleagues on the federal open Market Committee and i made some important change to our policy statement, including an update to our guidance for the likely path of our policy Interest Rate guided by our new statement on longerrun goals and Monetary Policy strategy we announced a few weeks ago, these changes clarify our strong commitment over a longer time horizon before describing todays policy actions, let me briefly review recent economic developments Economic Activity has picked up from its depressed Second Quarter level, when much of the economy was shut down to stem the spread of the virus. With the reopening of many businesses and factories and fewer people withdrawing from social interactions, Household Spending looks to have recovered about three quarters of its earlier decline. Nonetheless, spending on services that typically require people to gather closely, including travel and hospitality is still quite weak. The recoveries in Household Spending also likely owes to federal stimulus payments an expanded Unemployment Benefits, which provided substantial and timely support to household incomes. Activity in the housing sector has returned to its level at the beginning of the year, and we are starting to see signs of an improvement in Business Investment the recovery has progressed more quickly than generally expected and forecast from fomc participants this year have been revised up since our june rumry projections. Even so, overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain in the labor market roughly half of the jobs lost in march and april have regained, as many people return to work. The Unemployment Rate declined, but remains elevated at 8. 4 as of august. Though we welcome this progress, we will not lose sight of the millions who remain out of work. Looking ahead, fomc project the the median projection is 7. 6 at the end of this year, 5. 5 next year and 4 by 2023. The economic downturn has not fallen equally on all americans, and those least able to shoulder the burden have been hardest hit. In particular the high level of joblessness has been especially severe for lower wage workers in the service sector, for women, and for africanamerican and for hispanics. This has created great uncertainty about the future its also left a significant imprint on inflation for some goods, include food, supply conrestaurants have led to notably higher prices, adding to the burden of those struggling with lost income. More broadly, however, weaker demand especially in sectors has held down consumer prices. Overall inflation is running well below our 2 longerrun objective. The median inflation projection rises from 1. 2 this year to 1. 7 next year, and reaches 2 in 2023. As the economy began its recovery, covid cases hospitalizations a