tv Federal Reserve Chair Powell News Conference CSPAN June 13, 2018 9:05pm-10:00pm EDT
>> following members beaches, the house continues to work on a number of opioid related bills. debate in there senate on the 2019 defense measure. on c-span3, president trump's pick to be u.s. ambassador to south korea. in the evening, house democrats and republicans face each other in the annual congressional baseball game at 7:00 eastern. afternoon, federal reserve chair announced another interest rate hike giving the hike to 2%. the new york times notes that the rate increase was the second seventh sincethe the end of the recession. the last time we talked to
percent was in 2000 and compared next, we show you the news conference where they made the announcement. good afternoon, thank you very much for being here. i know that a number of you will want to talk about the details of our announcement today and i'm happy to do that in a few minutes. because monetary policy effects everyone, i want to start with a plain english summary of how the economy is doing, my colleagues at the federal reserve are trying to do, and why. the main take away is that the economy is doing very well. most people want to find jobs are finding them and unemployment place in the low interest rates have been low for some it's as if the economy recovers from the financial crisis. for the past two years, we have
gradually raising interest rates and along the way, we have tried to explain the reasoning behind our decisions. in particular, we think that the turning interest rates to a more normal level visit best buy for the fed to sustain an environment in which american households and is is is constructive. today, we've taken another step in the process by raising our target range by a quarter of a percentage. a colleagues and i meet the times a year and take a fresh look time of what is happening in the economy and consider whether our policies need adjusting. we do not put interesting decisions on hold because the company can always evolve and unexpected ways. history has shown that movie it are tootes quickly or to subtly, can lead to better outcomes. we think the outcomes are likely to be better overall if you are
as clear as possible and what we are likely to do and what appeared to that end, we try to give a sense of expectations to how the economy will involve and health policies change. as chairman, i hope to foster a public conversation about what the fed is doing. one practical step in doing so, just to have a press conference like this after everyone a better meetings. we are going to do that in the beginning of january. that will give us more opportunities to explain our actions and to answer your questions. havingto point out that places many press conferences do not signal anything about the timing or pacing of registry changes. this is only about improving communications. will alsoues and i continue to issue our economic projections on the court schedule now, let me go into more details in the development of policy decision.
economic growth appears to have picked up in the third quarter largely reflecting household spending. business investment continues to grow slowly. the overall outlook for growth remains favorable. several factors support this assessment. fiscal policy is boosting the economy, ongoing job gains are raising incomes and confidence, foreign economies continue to expand, overall financial conditions remain. these observations are consistent with the projections that committee participants submitted for this meeting. the video production for the growth of real gdp is 2.8% this 2%r and 2.4% next year and in 2020. compare the production of march, this meeting growth paths as little change. in the labor market: job gains averaged 180 per month over the last three months, well above
the pace needed in the longer run to provide new jobs into the workforce. declinedloyment rate over the past two months and stood at 2.8% in may, its lowest level in nearly two decades. meanwhile, the labor force participation rate has been roughage unchanged since late 2013. hittinga positive sign, the aging of our nation is pretty don't pressure on the participation rates. we expect the job market to remain strong. as you can see in our summary, the median of projections for the unemployment rate stands at 6.3% in the fourth quarter this year and 3.5% over the next two years. a percentage point below the median estimate. this median is just a bit over for march. after many years of running below are 2% longer an
objective, inflation has recently moved closer to the level. overall consumer prices, as measured by the price index, increased 2% over the past 12 months. the index which includes positive energy and food, tents ofbe a better indicator future inflation, rose 1.8% over the same. . theation moved up in unusual the readings from last march, dropped out of the conclusions the recent punishment it has been encouraging the over many years of development, we did not want to declare victory. we want to ensure inflation remains near our symmetric 2% long-run goal on a sustained basis. our statement of long-run goals and monetary policy strategy, the committee would be concerned inflation were running low our 2% objective of course, many factors affect inflation.
time, inflation may be above or below 2%. for example, the recent rise in oil prices will likely push inflation somewhat above 2% in coming months. that trend to terry development should have little to little consequence of the next two years. the median of to spend projections runs at 2.1% to 2020, relative to the march productions. today we took, another step in gradually scaling back monetary policy accommodations by raising the target range by a quarter percentage point bring it to one and three quarters. changes to ourme policy statement reflecting that policy normalization is proceeding probably as we expected. none of these changes, signals a change in our policy views. for example, we remove the language stating that, the
federal funds rate is likely to play for sometime below levels that are expected to prevail in the longer run. since i entered to us that language, the economy has strengthened and the fed has raised the rate to 2%. as we continue to know in our statement, we expect to make for the gradual increases in that rate as result, th econo evolves probably as we anticipate the federal funds rate will over the next year or so, the flow within the range of estimates within the normal longer level. therefore, now is an appropriate time to move in our statement. we continue to believe that a gradual footage for increasing the funds rate will best promote and expanded economic activity, strong labor market conditions, and inflation near our symmetric 2% goal. we are aware that raising rates slowly, may make the risks
tighten down the road. jeopardizing the economic expansion. if we raise interest rates to rapidly, the economy could weaken. approachttee schedule is reflected in participants ejections for the appropriate pets for the funds rate. the median projections for the funds rate is 2.4% at the entrance year, two .1% of the end of 2019, and 3.4% at the end of 2020. by 2020, the meeting rate is modestly above the on the let. these projections are very similar to those made in march. edgedgh, the median rate up, most participants did not provide protection. i will conclude by mentioning, two additional matters.
program for dissing her violence sheet, which began in october, is proceeding smoothly. an unexpected weakening in the outcome of this program will proceed on schedule and our balance sheet continues to shrink. as we have said, changing the target range is our primary means for adjusting the stands or monetary policy. finally, as discussed in the minutes of our main meeting, we are making a small technical adjustment and one of our tools for implementing monetary policy to keep the federal funds rate in the target range the light on the rate of excess reserves or the i/o you rate. topl now, we upset at the target range. in recent months, the federal funds rate has moved faster rate as short-term interest rates have risen more generally. to move the federal funds rate closer to the middle of the target range, we are now setting basis points above the upper end of the target range. this minor technical adjustment
has no bearing on the appropriate path of the federal funds rate for federal conditions. thank you for listening and i will be happy to take your questions. >> ila question about inflation? on reflection, i am curious if anything has happened since march that has changed your assessment of the risks of inflation increases? you mentioned fiscal policies, heading to growth, could you break that down a little bit further for us and say what affects the recent tax cuts are having on growth? >> i would not say anything has happened since march to really change the way i am thinking about inflation or the way the committee is inuvo inflation. we have seen that inflation moved very gradually up towards our 2% objective and part of that has been idiosyncratic
things dropping out from last march which were holding measured inflation down. for the is just the continue typing in the labor market and the economy is pushing inflation up. we continue to think that the committee thinks that we are just about at our 2% goal but as i mentioned, not ready to declare victory until resisting that overtime. -- until we sustain that overtime. there is a range of views on the committee and more broadly, a range of views among economists generally. i can say that the committee members and participants generally believed the physical tax cuts and spending changes, will provide meaningful support to demand. significant support to demand over the course of the next three years. is what assessable.
ply?oes that sup if you look for corporate tax ratesx, you will encourage greater investment. should drive productivity and drive input. i think the amounts and the timing of that coming in, are also quite uncertain. there's also the possibility that there would be more labor supply for more individual tax rates. again, it amounts to uncertainty. that is how the committee is generally thinking about policy. >> the fed is about four interest rate increases using ,he projections released today away from what may be considered a neutral fed funds rate. i wanted to as, how are you thinking about what to do once you get to neutral or under what conditions will you decide what
to get there, that it is ok to stop raising rates? under what conditions would you want to keep going? >> for many years, we have been far from stable prices and so the need for policy has been cleared. as the economy has strengthened and as we gradually raise interest rates, the question comes into view of how much longer will you need to be accommodating how we know at what point policy will be we know that we are getting closer to that neutral level but we do not have an excess sense of how that will be. the committee is discussing very actively the questions that you've raised. really, it boils down to what is up with it -- appropriate policy. we will be very carefully looking at incoming data and financial re-ask and on the
labor market. we have to acknowledge that there are always uncertainties are on the level of the natural rate of unemployment or what is the natural rate of interest. i think we will be guided by incoming data on the economy. we'll try to keep their minds open as we move forward. >> 2.1% above target for 2.5 years starts to feel like some of the alternate frameworks that have been discussed, price level targeting, trying to set expectations higher. how symmetric is to symmetric, was sort of for amateurs are you using on the front? objection,et for our is 2.2%.
we feel that that target has served the economy will. it, strongly committed to the committee is strongly committed to it. the barriers to making a material change that would be very high. we think that it is fundamental and it has worked. you ask about price level targeting of that sort of thing, there were some ideas that take cognizance of the fact that rates are lower when you are and the zero level balance that could put downward pressure on inflation and patience if you are going to be done that low and therefore, undermined the credibility of the 2% objection. if you're below target, you are well, if you're above target, the idea is to enhance the credibility of the 2% target. that has been written about for many years. it is not something that the committee has subject seriously.
-- looked into his. not something we have a calendaring. seriously.t >> over the weekend we saw some theous tensions and potential of further action against china right now. retaliatory action from major trading posts, how big of a wrist you can see this being to the united states economy and what kind of feedback are you getting in terms of corporate investments and tensions? >> i want to start by saying that congress has assigned us this very important job, stable prices, financial stability that we share with other agencies, congress has given us the authority over trade so i would not target --, specific trade actions.
i will say that we have broad andext round the country the reserve bank presidents in particular, have the fish have the. -- have that. concerns and trade policy are arising. see, you are being into reports of companies are in -- hiring. the economy is very strong. the labor market is very strong. growth is strong. we do not see it in the numbers. it is just not there. i would put it down as more of a risk. mr. chairman, you said that there is a difference of opinion among economists. looking at the longer run gdp growth rates where the members of the committee, there's not a lot of differences.
can, --g on how you counted, not a single member of the committee, including yourself, agrees to the economists at the white house that they can achieve long run sustained growth rates above or at 3% or higher. do you believe in the? -- in that? >> first of all, that is a reasonable range. there's so much uncertainty around us. the thing about fiscal policy is, you do not have thousands of incidents or big data in a way. you have only a few instances here. you have a lot of uncertainty about what the folks could be. they could be large. we held they are large. our approach is going to be watch and see. we hope that in fact, we get significant effects to potential
growth of a tax bill. we're just gone to the leniency. -- gong to have to wait and see. we're looking at a reasonable range of estimates and we are going to be waiting and seeing. you said earlier that it is too early to declare victory on inflation. i wanted to circle back on a question that was asked during the initial press conference what does the fed say in regards to the inflation target metric? has the committee giving any extra thought in terms of how comfortable it would be going higher than 2.1 or if it reaches 2.2 and how long? now that you are planning to hold the spring the press conferences, i a plan to explain
that to the american people that inflation is not overrunning? >> will be said in our statement of principles and monetary policy is that the committee would be concerned the inflation was to run consistently above or below 2%. that is what we mean by symmetric. we are looking at a equally on either side and it is a matter of it staying on either side. as i mentioned, later the summer, there's a good chance that headline and function will move above 2% because of oil prices. it seems to move inflation back and forth. we acknowledge that, we understand that, if inflation were to consistently run above or below 2%, we would be using our tools to be moving inflation into the direction of the target we do understand we do not have the ability to precisely hit the targets we expect that inflation will be above or below average is that that is happening on a
symmetric basis. at this meeting, you fight the fund rate, you change the pot to move from three to four and he took out a sentence that you have been using for years about how long rates might stay low. he say that none of the signals a change in policy is -- use. is the fed giving into tighter policy? the economy is continuing to make progress. the economy has strengthened so much since i have joined the fed in 2012. even over the last couple years. the economy is in a very different place. unemployment was at 10%. it is a 3.8% now i'm moving lower. the decision that you see today is another sign that the u.s. economy is in great shape.
growth is strong. labor markets are strong. revelations are close to target. -- inflation is close to target. for many years, we have seen interest rates held below to support economic activity. as we get closer to our statutory goals, we should normalize policy. that is what we have consistently been doing for some years now. can you give us an update on wages. i would finally going to see that wage growth of this year? wages have been gradually moving up earlier in the recovery there are many other wage measures. just to generalize, wages have
moved gradually of the date of -- of into the 2%. , think it is fair to say that some of us, i certainly would have expected wages to react more to the unemployment that we offend. -- have had. part of that can be explained by the productivity which is something we've talked about in the committee and elsewhere. we had anticipated and many people have been since , everywhere wes go, we hear about labor shortages. it is a pimple -- dick bove zzle and- bit of a pu frankly there is a lot to like about low unemployment. one of the things as you will is that people who want to
get jobs, will not want to -- be able to get jobs. you'll see people at the margins of the labor force, having an opportunity to get back to work. society benefits from a there are a lot of things to our role is to make sure maximum employment happens in price stability and financial stability, which is what we are raising rates. accept it is an overshoot before both of those before the next policy? >> you mentioned that unemployment moved down and inflation moved up by truly small amounts. if you look at the summary of
economic projections, things are moving by a semi-tick between now and march. i think we take a longer run view that we are shooting for 2% inflation, inflation around 2%. it will be above or below. we didn't overreact to inflation being under 2%, we want over react to it being over 2%. we are using our tools to move inflation in the direction of the target if it moves away from it persistently. youerms of unemployment, have to acknowledge that no one really knows with certainty what the level of the natural rate of unemployment is, the rate sustainable over a long period of time. the rate has probably declined as the population has become more educated, and older, they
have more unemployment rates. we have to be learning as we go, we have to look at data, and inform by what is coming in. at the last press conference, estimates by members of the committee have moved down by a full percentage point since maybe 2012, as unemployment has dropped and inflation hasn't reacted. i can't give you a precise number. we will be very much informed by the coming data. this uncertainty, the fact that we live in it, is why we have been gradually raising rates. we are not waiting for inflation to show up, we are moving gradually and trying to navigate between two risks. one will be inflation doesn't get back to target, the other is moving too slowly, and we have too much inflation.
and we have to race quickly. -- we have to raise quickly. that can also have an outcome. >> i have a couple of questions about the interest the fed pays in excess reserves. you mentioned that ioer was 20 basis points, that was a draft of the effect that funds rate and the target range. do you think that will resolve the issue, or might there be further action required by the committee to continue lowering ioer relative to the midpoint of the range? further, was their discussion among the committee today about what is causing that? is it purely technical, perhaps related to build issuance -- bill issuance? is it telling you something about the level of scarcity and truly excess bank reserves?
the important thing that we want the fellow funds rate to trade in the target. that's the idea. ioer is the principal tool in which we will make sure that happens. as we have said in our basic documents, we will adjust the use of our tools as appropriate. we don't expect to have to do this often or again, but we are not sure. if we have to do it again, we will. don't expect it to happen. we're looking carefully at that. we don't know with any precision, no one does. you can't run experiments with one effect and not the other. onre's a lot of probability the idea of high bill supply leads to higher repo costs, higher market rates, the federal
run -- fund rate is pulled up towards i/o we are -- ioer. we will just have to be watching and learning. what we need is to have the federal funds rate trade in the range. that's what this minor technical adjustment of colleges. -- accomplishes. with the numbers we are looking at, you talked about people getting jobs, the wages increasing, are we seeing with the fiscal policy, a fundamental shift in the economy? lower natural unemployment, as well as rate of natural unemployment, lower inflation? >> your first question, we think the natural rate of unemployment is lower. we do believe it has moved down over a long period of time. we don't think the natural rate of unemployment -- it's not one
of the variables that moves around a lot. bytends to be grim and slow-moving variables like the education level, population, functioning of the labor market. it may have moved down on a cyclical basis lower as the economy gets higher. back,ing is, if you look there have been studies done and real-time estimates of natural unemployment having uncertainty bands, which are quite wide. we have to remember that and be guided by the incoming data. you ask about inflation, we look at the 2% inflation objective as something that central banks, the fed really control. we have to be strongly committed to achieving that using our tools to do it. in recent years, the dominant force has been dis-inflationary, pushing down on inflation.
we have been pushing back up. all those years we were growing up, it was the opposite. inflation was too high and central banks were constantly pushing down. it is important that inflation not fall below 2%, that inflation expectations remain anchored at 2%. the implications of inflation below 2% are you are closer to zero lower bound, meaning the fed has less room to cut, it will spend more time there and we won't be able to the job assigned by our citizens. >> you moved the median unemployment forecast for 2020 to 3.5%. au are only forecasting moderate overshoot on the fed funds rate beyond your longer run value. how will you get unemployment from 3.5% tot he 4.5% rate?
>> i would emphasize that we are learning about the real location of the natural rate of unemployment as we go. moved down by more than a full percentage point since 2012. it is not just getting the rate up for it -- rate up. you are still seeing inflation very close to target. will is no sense inflation take off or move unexpectedly quickly from these levels, even if the unemployment remains low. it is important to know the unemployment rate forecast go with the inflation forecast and rate forecast. each person is submitting appropriate monetary policy that fits with that person's assessment.
they are generally to support maximum employment and stable prices around 2%. if we got inflation was going to take off, we would show higher rates, but that's not what we think will happen. would the longer run unemployment rate not be lower and closer to the 2020 number? >> it may be. we may find that out. the best estimate we have over the longer run is all vote -- there is a range of views. the uncertainty bands are not quite a full percentage point on either side, but three quarters of a percent. it is very possible. attached totoo these variables. we have to be practical about the way we think about these things. we do that by being grounded in the data and what we see happening in the economy.
i have a couple of regulatory questions. capitalountercyclical effort, what are the chances that it will have to be used in the next couple of years? my second question is there has been a lot of talk in congress about the ability for banks to serve marijuana businesses. do you think they should be able to serve those businesses in states where marijuana is legal? >> the countercyclical capital buffer gives us the ability to raise capital on institutions when financial stability on abilities are meaningfully above normal. that is a possibility. i wouldn't look at today's financial stability landscape and say that risks are meaningfully above normal. i would say they are roughly at normal. households are in good shape. they have paid down their debt,
incomes are rising, households are not really a concern. banks are highly capitalized, that's not a concern. there is some concern with asset prices in a couple of pockets. if you bake it all in, you generally see financial vulnerabilities as moderate. could that change in a couple of years? it could. you also asked about marijuana businesses. this is a very difficult area. we have state laws that permit the use of marijuana, and federal law still doesn't, so it puts federally chartered banks in difficult situations. it would be great if that could be clarified. it puts the supervisor in a very difficult position. it has not our mandate, nothing to do with marijuana. we would love to see it clarified.
>> since before you were chairman of the fed, you were chair of the supervisory committee and laid down a regulatory division of agenda that has been pretty consistent, there has been guidance on governors, changes to the stress tests -- not changes, but clarification on the modeling. and the changes to the enhanced supplemental leverage ratio. the fed has also proposed changes to the volcker rule, and changes to the stress test with the stress capital buffer. of there any new frontiers regulatory changes that you are envisioning? are you kind of done for the time being? what else can we expect from the fed?
-- it is al docket full docket. we are having a board meeting tomorrow on this single cap rate limit provision. we also have quite a lot of work aspromulgate rules after 2155 -- s 2155. we have to think about how we would reach below the threshold superviseand financial stability risks below that level. net stable funding ratio is other to be done. there is a lot of work to do. if i can take this opportunity to say that the financial system all but failed 10 years ago, it went to work for 10 years to strengthen -- we went to work for 10 years to strengthen it. stress testing, resolution planning, we want to keep all of that. we want to make it even more
effective and efficient. we want to tailor those regulations for institutions for the strongest provisions to apply to the most systemically important solutions. we are looking to enhance that structure. we are finding a lot we can do in the way of tailoring regulations for the smaller less systematically important institutions. you said at the beginning of your press conference that you plan to be more plainspoken. i want you to know what you would say to workers who are worried that these passive rate hikes you have laid out will undercut wage growth. they are just starting to see. >> the economy is in great shape. if you look at household surveys, confidence is high. in businesses, confidence is high. if you survey workers about the
job market, they will say it is a good environment to find jobs. businesses say that workers are scarce. we have a really solid economy on our hands here. we are trying to conduct monetary policy in a way that will sustain that expansion, keep the labor market strong, and keep inflation at 2%. that's really what we are trying to do. i would say i like the results so far. we have been very careful not to tighten to quickly. we have been patient, i think the patients has gone through, and it continues to. we continue to move much faster, but i'm glad we didn't. at this time, we continue on the gradual pace, it continues to seem like the right thing. if we get a sense the economy is
reacting badly, we will react to that. >> david harrison. where do you see the neutral interest rate? do you see it inching up because of the recent stimulus measures? how will you know when we are getting close to the neutral point? 2%,nflation stays around and doesn't go above for a while, d.c. exceeding the neutral point --do you see it exceeding the neutral point? >> i would point to a range of 2.25 percentich is to 3.25%. that is a range of estimates of a neutral rate of interest. we do understand there is high uncertainty. , which is a full
percentage point away from where fed fund will trade after today's decision. you ask is the neutral rate moving up because of fiscal policy? yes. there should be in effect if you have increased deficit, that should put upward pressure on a few tents. they were estimating these things as one of the unreserved -- unobserved variables. we shouldn't speak about it with precision or confidence. that should put upward pressure on it. how will we know? you have to look at inflation. you have to look at all of the indicators in the economy, inflation, unemployment, the job market. inflation is really important. it is worth noting that the last two business cycles didn't end with high inflation, they ended with financial instability. that's what we have to keep our eye on.
>> have you talked about when the fed is going to remove or change the word accommodative, that described the monetary policy for all must 10 years? could this change in the vocabulary make the markets nervous? some options to know how you will go down the road? >> that is something that we discuss. language. all of the we have made a significant number of changes at this meeting. statement,ts in the then the economy changes. we are -- our approach to policy has not changed. as i mentioned earlier, for a long time, the economy has
needed to mandate policy. as we have recovered, we have raised rates. we will be in a place relatively soon when -- assuming we stay on this path, when interest rates will be in the zone of what forms the participants think is roughly neutral. it would no longer be accurate for us to say the committee thinks that policy is accommodated. we know it is coming, we don't think it is here yet, but it is certainly coming. i think the market will understand that. the real message is that you are getting close to the neutral rate. it is a characterization about where policy is, it is not a statement that should upset the markets. we will discuss it carefully in meetings and communicate about it.
>> would you explain on your ,iews on the downside risks especially in regard to trade issues? -- many keyand allies of the u.s. are concerned that the u.s. may decentralize the feelings of the international liberal order. the u.s. has created an built-up for our environment. very negative a economic implication for the global economy, as well as the u.s. economy. can i have your views? >> as i mentioned earlier, i'm
committed to staying in our lane on things. we have very important jobs assigned to us by congress, maximum employment, stable prices, trade is explicitly assigned to the executive branch by congress and not to us. we don't seek to play a role in trade policy, we're not at that table. those powers and decisions are given to others. we want to stick to what we do. as i mentioned earlier, we do hear from our business contacts, which are extensive in the u.s. i just mentioned what those are. there is concern that trade changes could be disruptive. we don't see it in the numbers, we see a very strong economy across much of the fronts. it has not reached everyone, but most people who want a job can find what.
we know there are people who have not felt the recession yet, but it is a good economy. >> about financial conditions, which worries you more? warnings that rising short-term rates, or bringing the yield curve closer to inversion or the fact that long rates have risen points nearly 20 basis below their recent high? how do you account for the fact that long rates have been so slow to rise? and a look at the inflation outlook, as well. >> let me mention the yield curve. the yield curve is something people are talking about a lot, including fomc participants. you have a range of views, we
will continue to talk about it. it is one of many things. that discussion is really about what is appropriate policy. how do we think about policy as we approach the neutral rate? how do we understand what the neutral rate is? what are the consequences of being above or below? that's what people are talking about. we know why the yield curve is flattening, we are raising federal funds rate. it makes sense that the short end would come up. the harder question is what is happening with long rates? there are many things that move long rates around. there is embedded expectation of the path of short rates, the term premium, which has been very low by historical standards. arguments are made that a flatter yield curve has less of a singular embedded in it. what we saw most recently was risk on risk off.
in a risk off environment, people want to own u.s. treasuries, we see treasury prices go up and rate prices go down. ultimately, what we really care about is the appropriate stance of policy. thee may be a signal in long-term rate about what is the neutral rate. that is why people are paying attention to the yield curve. >> companies are buying back their shares at a record rate, corporate debt is up, consumer debt is rising, are we in a credit bubble? is that something you are worried about? household, youat do not see excess credit growth, you don't see high levels of credit going out. it is not so much household. that's where the problems were before the kreiner -- financial
crisis, particularly among household and mortgages. when you take banks, their leverage is significantly lower, the capital is higher. when you ask about nonfinancial corporate, that's where leverage is at levels that are high relative to industry. -- history. that's something we are watching very carefully. i don't think we see it -- i think there are a range of views. we are watching nonfinancial corporate's. households are in good shape. that is important, because that's where we got into trouble before. it has all been around property and housing. we take some soft from that. -- we take some solace in that. referenced the fact that the fed doesn't have much when rates and inflation are low. have you thought about your move
to raise interest rates as partly responding to the economy, partly giving yourself room to navigate and the invaluable -- inevitable future recession? do you think that has played a part in your outcome for policy decisions, or just purely based on what the economy is doing? >> it doesn't play any part in my thinking, i will tell you why. if you raise rates to quickly, you increase the likelihood of recession. , theest thing you can do incentives run in the other direction, if you are worried about going back to the lower bound, and risk management would suggest that you go slower in raising rates. that is likely to be a more sustainable strategy further away from the zero lower bound. we are far enough away that the risks are unbalanced. we're just looking at the economy and what it needs, and how we sustain the expansion to
keep the labor markets strong and try to keep inflation near 2%. -- you talked about wage growth and the basic message to workers. how confident are you that wh we do see stock buybacks and the like, that workers will get ther as well? wage hikes in the near term and foreseeable future? have the tools to control if companies choose to -- companies in our system are free to do what they can, what they need to do once they have made profits and have cash to distribute. they can distributed to shareholders, buybacks, pay their workers. we don't play a role in those decisions. the part that we focus on is maximum employment. that is our mandate. -- we view maximum
employment as the national sustainable level of employment. it is not so much that it will cause the economy to overheat. i think we have been committed to that, we take that very seriously. , when labor markets are strong and companies are hiring, we should see higher wages. we don't really have the tools that will address the distribution of profits. journal,'s washington live every day with news and policy issues that impact you. morning, thursday michigan republican congressman fred upton discusses combating the opry at epidemic. then north carolina democratic councilman david price will join
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led the progressive side down. john mccain felt his party was not living up to what he believed the republican party should be. he was willing to say so. >> watch afterwards sunday night at 9:00 eastern on c-span twos book tv. of the scottish national party walked out of the house of commons during prime minister theresa may's weekly question time. the move followed a dispute between chamber leaders and snp westminster leader over the brexit impact on scotland. next, we show you that and the full session from the house of commons. it runs about one hour and 15 minutes.