Of course, so i think we are a long way from that. Digital currencies are in their infancy. So essentially, not too concerned about, you know, the Central Banks no longer being able to carry out Monetary Policy because of crypto currencies or digital currencies. You know, facebook, i believe, has made quite broad rounds around the world, really, with regulator regulators, supervisors and lots of people to discuss their plans and that certainly includes us. And its something we are looking at. We meet with a broad range of private sector firms all the time on Financial Technology and theres just a tremendous amount of innovation going on out there. The potential benefits here, there are also potential risks, particularly of a currency that could, you know, could potentially have large application. So i would echo what Governor Carney said which is we will wind up having quite High Expectations from a sort of safety and soundness and regulatory standpoint if they do decide to go forward with something. Reporter do you think the fed will be involved in regulating libra, then . You know, we dont have Plenary Authority over crypto currencies as such. They play into our world through Consumer Protection and Money Laundering and things like that. But i would say through international forums, you know, we have significant input into the Payment System and you know, as you know, play an Important Role in the Payment System here in the United States. Reporter thank you, chairman powell. I want to take you back to chicago and the review of your Monetary Policy strategy. Something interesting i think is developing is that outside experts are excited and like the idea of the fed shifting your inflation target up to 4 , around there, roughly, i guess. They think that that would, you know, help Monetary Policy and that theres no 2 is not sanctimonious or whatever, sacred. It seems like youve taken that off the table. I was wondering if you could discuss that. Have you taken it off the table and if so, why, and whats your thoughts on that . Thank you. We have said that we wouldnt look at raising the target rate for inflation. We did say that. And the reason is its become a global norm, 2 . Our statutory mandate is price stability and so we are actually taking we are looking at less radical ideas such as how to make the 2 inflation objective more credible. This gives me a chance to say a couple things about the review and chicago in particular, so its a new thing for us. Its something that i thought it was both appropriate and important for us to do. It will be a year long or even longer process, looking at our strategy tools and communications, and its meant to be a way to open ourselves up to let the sunshine in and have dialogue and criticism with the constituencies that we serve. We have a series of fed listens around the country at every reserve bank and we had an academic conference earlier this month with seven papers written and criticized and leading global experts, but i will just say again that the heart of the conference was the two panels with practitioners in low and moderate who live in low and moderate income communities and are part of those communities, and i think people were quite struck by their intervention which was really uniformly around how important maximum employment is and what it means in their communities. The idea being they havent had, you know, a bull market in these communities. They havent had just a booming economy. What they have is low unemployment, lots of social problems and just now, you have, you know, companies who want to hire and are bringing people, providing opportunities for people to come into the labor force to an extent not seen in quite a long time. And that is, i think, you know, for someone who does this work, that was very focusing and motivating, too. I think everybody thought, you know, that was really quite worth doing. There was some thought at the beginning that we should some people recommended that we just talk to, you know, econ ph. D. S about this but thats not what we chose to do. Were glad thats the choice we made. Reporter even those two panels that you just referenced, the people that spoke, when they were asked about 2 inflation or higher inflation, they kind of shrugged their shoulders. So is 4 inflation radical and to who . I dont think its i dont think its a practical alternative and ill tell you why. I think you see disinflationary pressures around the world. You see Central Banks having a hard time getting inflation up to their close to their objective. We have done better than other large Central Banks that are not, you know, open economies like the uk where you have big currency moves that move inflation around. But its quite challenging to get inflation, its been even with very high levels of resource utilization, inflation has been lingering and not getting back up to target in a sustained symmetric kind of a way. So saying youre going to go for 4 , i wonder how credible that would be. Reporter i have a question about the feds or i guess the Bank Regulators leverage lending guidance from 2013. As you know, the gao had a letter saying that they thought it was a rule, and it sort of went away but yet leveraged lending is a source of concern. You yourself have said that Credit Underwriting quality seems to be deteriorating somewhat lately, and that the fed has tools to supervise banks and to prevent leveraged lending from becoming too much of an issue. I want to know is the 2013 guidance still representative of the sort of feds thinking about leveraged lending, and does the fed have any intention to either issue like a leveraged lending rule or a new guidance that is less problematic, or is the plan to just kind of carry on with supervision as you are . So the 2013 guidance is not binding, and thats what came out of the gao review, but thats really the beginning of the story. You know, we have the authority we need to examine the banks for safety and soundness exposure so the first thing you start with as a Bank Supervisor is the risks that the banks are taking to themselves, through their portfolio, through the risks that theyre running, and the pipeline, the obligations that they have undertaken to underwrite deals, so we monitor that very carefully. So do the banks. And you see exposures that are much smaller than they were before the crisis and by the way, we test that regularly in the stress tests. We impose very large losses on those portfolios so we kind of have a sense of what that is, whereas before the crisis, there was a lot of lack of knowledge about what the losses would be. So thats where it starts for us, in supervision, the risks the banks are running, you know, running on their own books and to themselves and to each other. In that, i feel like that is in a good place but we never say Mission Accomplished on that. We will keep, you know, keep monitoring that carefully. Whats happened, though, is the papers now owned by marketbased vehicles, collateralized loan obligations, mutual funds and things like that, so we now have, you know, we have a good sense of domestically where that paper is. I think internationally, not as much, and the Financial Stability board is actually looking more carefully at that. And you know, we monitor those vehicles to see what they are and they are actually pretty stably funded in the sense theres no run risk but theres still Macro Economic risk. And this is something that we take very seriously and that the Financial StabilityOversight Council is looking at and we call it out as a Macro Economic risk but its not really a Financial Stability risk in the sense that it could undermine the ability of the Financial System to do its job of intervening in credit. Reporter is there any intention, is there any plan on the part of the fed or other regulators to sort of create any additional clarity and consistency, thats the other point of guidance, right, is to make sure everyone knows kind of what the supervisory expectations are for leveraged lending and for anything, for that matter, is anything else coming or is it just going to remain bilateral kind of conversations with banks . You know, i think the issue isnt that the banks dont understand what the rules are. The issue is that the risk isnt in the banks. Its out in those marketbased vehicles. So i dont, you know, i no longer am daytoday involved in this as i was before i took this job. But my sense is, though, that thats really not the problem. Im not saying its perfect, but i think we do understand what risks the banks are running and really, the question is how concerned should we be about Large Holdings by marketbased vehicles that i mentioned, and what risks do they present and we are very carefully assessing that. We continue to take all of these risks seriously. I gave a whole speech about this a few weeks ago. Reporter im just wondering if you could expand a little bit on the labor market. The statement noted that the labor market still remains strong but the may jobs report that we saw missed on estimates, but Unemployment Rate stayed at 3. 6 . Im wondering how you reconcile that with the fact we only got 3. 1 year over year wage growth in that report. What does that tell you about employment and by all standards, compared to say a month ago or a year ago, are we closer or farther away from full employment . Or maximum employment . You know, we have to be closer because more jobs are being created than people entering the labor force. The Unemployment Rate is lower, by just lots and lots of numbers, the labor market is in a good place. You mentioned wages. The level of wages is very consistent with what it should be in the sense that its approximately equal to inflation plus productivity increases on an hourly basis. So whats i guess a little surprising, though, is that you could reach these levels of unemployment, you know, long into a cycle, lets say, and not see even higher wages that are pushing up on inflation because wages at this level, even though they are growing at a healthy rate, at an appropriate rate, theyre not growing at a rate that would provide much upward thrust for inflation. So you know, we watch all of this very carefully and i think were very careful about not assuming that were, you know, that theres no more slack in the labor market. We have all lived through, you know, when i got to this we were in the 8 plus range and its just gone down and down and down. You havent seen wages picked up, you havent seen real signals that were at maximum employment. You have seen a tightening labor market. You know, if the surveys that i mention mentioned, they will all show the labor market has tightened but not overtightened. Reporter jean young with market news. I wanted to ask, did the fomc discuss the change to its Balance Sheet policy at this meeting, perhaps ending runoffs earlier than planned, and would the committee be inclined to do Something Like that if it lowers rates before september . So of course, we havent made any decisions yet. Balance sheet runoff is very close to the end of its planned life. I would say this. If we do provide more accommodation, again, we havent really addressed this, but if we do provide more accommodation, we will certainly keep in mind what we said earlier this year which is that we will always be willing to adjust Balance Sheet policy so that it serves our dual mandate objectives. Thank you very much. Liz breaking news. After speaking for just under 45 minutes to reporters who peppered Federal Reserve chief jay powell with questions on what was behind his decision to leave Interest Rates unchanged at 2. 25 to 2. 5 , the markets are now interpreting a rate cut is a sure thing for next month. July 5th fed funds futures, lets take a look, we have them now showing a 100 probability that the Federal Reserve will use its surgical instruments and cut Interest Rates by at least one quarter of a point at the next months policy meeting. That meeting will be on july 31st. But 100 probability of a cut next month. Now, even as powell spoke of strong jobs numbers and wage gains, he gave a strong underlying signal to the markets that he does see clouds on the horizon. The belief the fed will cut rates probably was most strongly underscored when powell said the fed will quote, act appropriately to sustain the economys expansion amid increasing uncertainties. Markets werent uncertain at all. Lets take a look. All three major indices hitting session highs shortly after the announcement and while off the peaks of the dow, the s p and nasdaq still higher than they were just before 2 00 p. M. When the announcement came out. Let us fire up the intraday chart. The basket of 30 bellwether names spiking immediately to gains of 104 points. Right now, we are still up a quarter of a percent or 73 points but s p and nasdaq, while all still higher, are off their earlier peaks. Treasurys gyrating wildly in the seconds following the report. This was really interesting. Yields which stood at 2. 08 right before the announcement, then moved higher as soon as jay powells announcement but then plummeted to 2. 04 and you can see right now, falling even lower to 2. 03 . By the way, that is the lowest we have seen since election day of 2016. All right. Rate cuts, the anticipation. We have the dollar pulling back at the decision as a risk on move prevails. What we see for the moment is the euro suddenly spiked against the u. S. Greenback. You know, when you see these kind of moves and you believe that theres going to be a rate cut, that is dollar negative. Lets go to the guys who have been in the room. In the past when the Federal Reserve made these decisions, two former Federal Reserve economists, bill lee and calvin schnorr. Bill, what jumped out at you at this meeting . They got rid of the word patient. Does that mean they are impatient . I dont think so, right . This is one of the best fed conferences i ever heard. Chair powell laid out exactly where the risks were, in the business sector, the trade sector, in the Global Economy. These are the places the fed is going to keep its eye on when he says we are going to monitor the situation and see what implications it has for the forecast because right now, they have lowered their inflation forecast but whats more interesting is they have lowered their long term Interest Rate outlook. They are telling the world we will have low cost of capital as far as the eye can see and now the key is can you have enough confidence, you business environment, business world, to get investment spending up because thats whats sagging. Thats the risk to the economy. I think thats where chair powell is focusing his attention. Liz calvin, what do you see . Do you see a risk to the economy or do you see that we have a relatively Strong Economy . He articulated that the job numbers have been very strong. Unemployment at a 45 to 50 year low. He also pointed out and this is something President Trump has pointed out, wage gains. He then added that we have seen Household Spending moving higher. Wheres the problem . And is it really focused on what perhaps participants in the manufacturing world are now looking at and that is a trade war that is protracted and starting to hurt . Todays fomc announcement very clearly shows that Interest Rate cuts are on the table for the next fomc meeting. But the fed has an interesting puzzle right now, and you need to understand the sharp difference inside the fed between data in hand on how the economy has been performing and what the outlook is for the future. This is a pretty sharp juncture because the data in hand show an economy thats growing at a moderate pace, it decelerated a little bit in terms of the labor market but is not showing any particular warning signs of a downturn. But the outlook has a lot of uncertainty. Chairman powell referred to it as uncertainty about the baseline, specifically talking about the uncertain effects of what a trade war could be. So in this environment, where you still see modern Economic Growth but most of the risks of the downside and inflation is below their target, it makes a lot of sense for the fed to be considering reducing the Interest Rates, the shortterm target for Interest Rates. Liz okay. Let us talk quickly about inflation and bill, im going to tell you that it really surprised me when he said we now, seeing the fed lower their inflation anticipation here, you know, as i look at that, everybody i talked to says boy, it sure feels like we are paying more for everything. Sure. It really depends upon which prices you look at. The overall price level is surely showing 1. 5 inflation but thats a mix of goods prices which are deflating, and prices we all pay in our day to day lives. Those are going up fairly rapidly. Domestic economy was doing very well. Its the Global Economy and the trading goods that suffer deflation. Whats on top of that, we have technology limiting price increases because the quality of goods starts going up and right now, the world is so competitive with goods prici