Transcripts For CNBC Power Lunch 20240712

Were going to go back to steve as soon as we sort out the audio. The main information, 100 was the vote in favor of this decision as steve was just beginning to say, theysh no plans to raise Interest Rates through 2022, and said theyre committed to providing more support following shutdowns to contain the coronavirus. The dow is still down about 150 points we still have the tenyear treasury yield kind of drifting toward the lows of the session before the decision hit. Steve, let me bring you back in here im sorry. Well go back to steve in a moment were running through the tenyear troishry yield. Now just a mare john, is there more you would like to hear sorting through the statement . It looks like they have made a statement about continuing bond purchases at current levels i think thats a pretty big deal they had been tapering bond purchases, and i think what theyre signaling today is theyre not going to continue to taper that i think importantly theyre looking for bond purchases to help keep yields supports low. This is part of the accommodative message. I think theyre on their front foot here. From what ive seen, i think its better than the market was expecting in terms of more accommodative, so i think front foot in terms of accommodative moment policy. Thats appropriate, and i think thats my initial read again right now the dow is extending its decline somewhat, and the tenyear treasury moving up somewhat. Steve, as you can continue to comb through their move, what do you see . Yes, apologies for that i think number one was just said there, the fed projecting that rates will remain near zero through 2022, its going to boost the treasuries and Mortgage Holdings for market functioning purposes, and committed to using the if you range of tools one new notes, backing that up they project a 6 gdp decline. Thats the largest decline they have ever projected, far larger than the 2008 financial crisis it says the Public Health crisis will weigh on the Economic Activity, and its causing tremendous human and Economic Hardship the virus shutdown introduced sharp declines in product activity after 2020, the fed projections see the economy running quite a bit above trend in both to 21 and 2022 hopefully we have a chart here to show the gdp outlook and the change we already talked about the 6. 5 decline expected this year, 5 for 2021, followed by 3 1 2 or 2022 so what youre going to have is a sharp decline. Ill doen a air chart. A sharp decline in 2020, and then above trend for 2021 and 2022, all the while the fed is projecting it keeps a very low Interest Rate for the next i guess we might as well say 2 1 2 years at this point. And steve, even as youre talking the market has changed its mind now you have all of the three major averaging rallies. The s p is up by seven. Yeah, this is strong. What in particular makes it strong to you . You know, i dont want to kill a phrase here, but live by the dots and die by the dots in this case, the dots are giving life to animating, putting number around what the fed believes this combination of we see the economy improves, running above trend to get back there, but doing so with a very low funds rate the language in here is pretty strong, i would say, in terms of its commitment to remaining low, and ill read that language one more time, the economy has weathered recent events and on track to achieve the maximum employment and price stability goals. I think theres a discussion to be had here, folks, how far does the fed needs to get the Unemployment Rate . Is it 3 4 . 5 . If so, you can imagine a very long period of time of low Interest Rates, because remember, if we have that unemployment chart, ill just go to it here, the fed does not see it get back down through 2022, so now just think it through, if youre an investor here, if the fed wants to get down to trend Unemployment Rate, it doesnt see it getting there until 2022, that means low rates for a very long time, and if i was in the market, i would think that would be a reason to rally indeed thats what john bellows just told us, go ahead, ty what is the track record of the feds projections as are they good predictors not so good predictors theyre pretty good i tend to believe that growth will be stronger than its turned out to be, but also unemployment will stay higher. Its not bad, but to steves point, there is a very interesting message. They have the Unemployment Rate below 10 , so i would argue they have a vshaped recovery built in here. They have the Unemployment Rate down 5. 5 , but yes theres still only two members of the fomc participants who actually see anything other than a zero to 0. 25 . So theyre saying even if theres a strong recovery in 2022, they still wont move rates. Theyre going to thats a. And the one more hag to do with how let me let you just. You know, they have times when theyre lousy at predicting what theyre going to do, in part back shocks come along, and in part because they gets stuff wrong. The reason i wanted to respond to this question, tyler, whether or not theyre good at predicting the future, what i think the information is, is what the fed is thinking right now. That can change. They reserve the right to change these forecasts, and as any forecaster, they reserve the right to be wrong, but if you want to know what the fed is thinking right now i dont know that i would make a bet on two years of zero Interest Rates. I might make one for six months, maybe for a year right now, certainly if you dont get the inflation to come along, the fed is putting a number behind the commitment here. Then the next question that i think is probably going to be asked in the press conference coming up, i will be interested to see how powell handles this, what is the number that would cause you to move on employment or unemployment. If the Unemployment Rate comes down faster than you expected, does that change the metric for the fed funds forecast kelley, indulge me one more i found myself thinking when they said theyll keep rates low to 2022, i found myself wondering whether the criticism that the fed go the when it accelerated and put rates back up higher, criticism across the political spectrum, most notably from the white house, i wonder if that playing into their thinking, well, were going to signal here were going to keep the rates doggone low for a long time do you want to jump in on that, mona i think Jerome Powell has been consistent in saying he is not at all suede by what the president or any external party really says. I do really think hes looking at the economy, see the potential softness and keep rates low because of that. You can see a scenario where youre pushed out the risk spectrum, and so thats something to think about, as we move forward as well, if indeed the fed and some of these consensus forecasts come to fruition i will say weve gotten one strong jobs report and with you data point does not make a trend, but if we get two or three similar reports, we have an interesting case to keep in mind as we go forward. You know, if i could, i think theres more of a positive spin on this, so the fed noted the financial conditions have improved, but they have also said theyre going to continue their bond purchases at the durant level in order to support financial conditions theyre saying, yes, they have improved, but we want them to keep improving we do not want to withdraw support theyre doing it now and through continued bond performs. I think thats a very dangerous game to play, with regard to the rest of washington i would argue this is the most expansive we have ever seen. Or for whatever, as the fed keeps up, theyll keep long rates low so maybe thats not as harmful, but if youre in a recovery, i do worry that it could end in disaster if we continue this i think thats a bit by design. Well, the way you get another fiscal package is you which encouraging more fiscal spending i do think thats in the back of their mind here. Theyre going to do their part i do think thats part of the design and part of the intend, it all goes in the same direction, which is the fed understands theyre very far from the mandates you said this could end dacts russly what does it mean by that . A quick thought. We need to maintain fed independence if you go years and years with the fed building up the Balance Sheet and supporting massive budget definite at this time, eventually you end up with some financial crisis im not talking about the next year or two, but down the road thats where youre headed there is no free lunch, right now the fed is paying for everybodys lunch. Power lunch theyre paying for right there. Folks. Thank you very much. Were glad we were able to resolved the audio problems there. Its a positive reaction, generally, bob yes, initially it was not, but the mark still believe whatever look at the s p 500. Actually the reaction was the other way. As you can all see, it reverses. Within five minutes we started to move to the up side, now about 20 points above where we were prior to 2 00 p. M. Eastern time theyre liking keeping rates low through 2022, particularly real estate was notably negative. Home builders in particular have rallied here late in the day they were down notably earlier banks not so much. You can think about that, rates low through 2022, maybe thats not so great they havent done much this morning. Theyve been weak the last couple days, remember the yield curve had been helping recently, but the tenyear used had been weaker, and its down again today here the yield curve is a little steeper than a month ago, so thats helped the banks overall. Theyve had a nice rally, but theyre still way out 27 off. I think the important thing near rates low through 2022, i also think they said buying bonds at least at the current rate. I thought maybe they would want to formal ice since the announcement, for the months so far its down darn close to 3 . So thats something you want to Pay Attention to as for jay powell and company, listen, im an old floor guy i just call it the way i see it. Its not something i would put my retirement account copiloting, but i think their assessments are on a bit on the pessimistic side, so its not shocking to me to see the stocks doing a bit better if you look at 10s, the first impulse was 76, so we kind of made a new low by half a basis point, popped up to 80, now right back to where it started the yield curve, bob is right, its hovering around 60 basis points on the fridays jobs number, it spiked up to 72 basis points, which is the steepest its been since february 2018. 30year bonds theyve been the best in terms of buoyant yield, and of course if you look at what the fed may do with regard to the performs, they keep saying they dont want to control where the rates are, but want to keep rates moving in a liquid fashion tyler, back to you coming up, weve got much more on the fed decision and the economy and what needs toby done specifically to create more Economic Activity for africanamericans, as we rebound from the coronavirus we await the press conference, of course, from the fed chair Jerome Powell. Its about 12 minutes away right now. Well turn to that its a Virtual Press conference. Well rn ttuo it as soon as it starts stay with us our Retirement Plan with voya gives us confidence. Yeah, they help us with achievable steps along the way. So we can spend a bit now, knowing were prepared for the future. Surprise we renovated the guest room, so you can live with us. Oooh, well. Im good at my condo. Oh. I love her condo. Nana throws the best parties. Well planned, well invested, well protected. Voya. Be confident to and through retirement. Oh yeah, you going to place it . Not until im sure. Why dont you call Td Ameritrade for a strategy gut check . Whats that . You run it by an expert, you talk about the risk and potential profit and loss. Couldve used that before i hired my interior decorator. Voila maybe a couple throw pillows would help. Get a strategy gut check from our trade desk. For the overall percentage at accenture and in our leadership. It makes business sense to have diversity and more sense to have inclusion. The problem with not saying anything is you were implicitly allowing the you say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. Right now the Unemployment Rate is at more than 13 for africanamericans has jumped to the highest level in more than a decade at 16. 8 as we await fed chair powells news conference, we look at here is bill rogers, professor of Public Policy and former chief economist for the u. S. Labor department bill, good to see you again. We read the distressing numbers that youve provided in your note theres a wonderful story in this mornings depressing story in New York Times by ron leber, talking about the disparities in incomes, even more alarming is the disparity in net worth what specifically could the fed to to redress they discrepancies . The most obvious is how they conduct Monetary Policy. So, today listening to the announcement of what theyre going to do in their forecast for the future, basically what im hearing is from their standpoint, this is what theyre setting the speed limit of the economy to be. On the one hand it was positive to here theyre aiming to keep rates low in the 0 to 25 through 2022, and that will allow community that need to rebuild that were, say, hit by looting, that they could hopefully borrow and look at cheaper rates. It also just allows the economy to run for longer focusing on the Unemployment Rate is great, but we have to so lets the economy run the longer we can do that, to help her ensure a balanced recovery, a recovery that all americans experienced, a recovery where blacks dont have to wait ten years before their incomes, you know, retouch their incomes at the peak or start of the Great Recession the second thing they can do is on the lending market, all right, providing lowercost loans and opportunities, or even land grant institutions to defer maintenance because theyve been pushed back due to the pandemic. So its monetary policies, telling us what that speed will be, and if you look at that 4 Unemployment Rate, the 8 forecast, if you go by the rule of thumb that the black Unemployment Rate typically is around a 2 to 1 ratio, 8 Unemployment Rate, 10, 12 going forward. Bill, i have a quick question for first to be fired, but obvious when we get late in the cycles, the stock market is booming, everybody thinking the fed is helping the 1 , how do you change that narrative so that people say, hey, maybe the fed is trying to help these hardesthit minority communities . Well, it starts with research myself and seth carpenter, former fed economist back in the late 199 0s, we looked at and dd a study that was published in peerreviewed journals, and shows when the fed begins to tighten. They have this disparate impact. So where the Unemployment Rate fell tothe point and som work i did with richard freeman, we found that actually if you let that economy run as long as you can without inflation, you end up seeing the people who had the biggest gains in percentage terms coming from lower bases, but the other thing that has to happened with the fed setting the speed limit, we need the folks in the capitol, in the white house, they have to do more than just talk about more trickledown economics provides tax incent i was mr. Kudlow said nothing about making workplaces safe for consumers and for workers, but making sure they have the ppe, making sure they have the training and guidelines on how to prevent the virus from coming into the workplaces and creates another wave or a round of infection, which would then slow the economy down let me play the sound that we had yesterday, and then ill ask a question it needs to be brave, but you dont take it from where the federal minimum wage up to almost 20 an hour. You say help the worker. The worker is going back to work, okay thats the best thing we can do is put everybody back to work, but we cant have an inflation in retail and restaurants because of the labor costs that nobodys going to be able to go afford to buy anything in a retail store, or eat in a restaurant hi was citing a wage hike to 20 or thereabouts in berkeley, california he made the point you have a federal minimum wage that he thinking is too low, but state and local governments are setting their own minimums his point is interesting. Thats not what ive advocated they have advocated movements to 15 in reasonable increments such that you do, such is the job loss that hes thinking that you did. Also, right now, i think the way we provide wages and provide support, to people on main street who have had their hours cut, but through the heroes act and thats extending Unemployment Insurance which triggers you start to lower benefits or pull back once you see the economy recovering a second check, and then also one group thats going to need help for Unemployment Insurance, those are new college, High School Graduates that will have difficulty once the economy gets back together and we have to surpass the growth, stronger growth, i think moving the minimum wage up is one way to help to have a prosperity that is shared. We may have to interrupt as we await chairman powell, but let me get a quick answer from you, does there need to be yet another stimulus package well, i think i indicated in my answer, i think yes along with what i mentioned in terms of Unemployment Insurance, i think you need to help out state and local governments. Im working here on the restart commission we had a Budget Briefing the other day. If we dont see dont mean to jump into this conversation, fed chair jay powell has taken the podium. In challenging time as the pandemic is causing tremendous hardship here in the United States and around the world. People have lost loved ones. Many millions have lost their jobs theres great uncertainty about the future at the Federal Reserve were strongly committed to using our tools do do whatever we can and as long as it takes to provide some relief, to ensure the recovery is as strong as possible and limit lasting damage to the economy. The most important response has come from our healthcare workers. On behalf the the Federal Reserve, let me express our sincere gratitude to the dedicated individuals who put themselves at risk day after day in service to others and our nation let me also thank the essential workers who have helped make our basket needs in these difficult times. The decline is likely to be the most severe on record. Even after the unexpectedly positive may employment report, nearly 20 million jobs have been lost on net since february, and its risen to 13. 3 . As was highlighted by the bureau of labor statistics, this figure likely understates the extent of unemployment accounting for the unusually large number of workers who reported as an employee but absent from their job, would raise the unxwloiismt rate by about three percentage points. The downturn has not fallen equally. In particular the rise of joblessness has been especially severe for lower wage workers, for women, and for africanamericans and hispanics. Some indicators suggest a modest rebound, such as Motor Vehicle sales and Retail Merchandise the unemployment edged down, as some workers returned to their jobs from temporary layoffs. With the easing of social distancing restrictions across the country, people are increasingly moving about, and many businesses are resuming operations to varying degrees. At the same time, many households have been receiving stimulus payments and unemployment benefits, which are supporting incomes and spending. Activity in many parts is yet to pick up, however, and put us far below earlier levels of more joan, despite the improvements seen, unemployment remain historically high. Inflation has fallen well below our 2 objective indicators much longerterm inflations have been fairly steady the extent of the downturn remain extraordinarily uncertain and will depend in large part on our success in containing the virus. We all want to get back to normal, but a full recovery is unlikely to occur until people are confident that its safe to reengage in a brought range of activity the severity of the downturn will be at the policy level to provide leaf and support when the crisis passes. The feds response is guided by our mandate to promote maximum employment, along with our responsibilities to promote the stability of the Financial System we are commit to do using our full range of tools to support the economy in this challenging time in march, we quickly lowered or policy interest ra i to near zero, where we expect to keep it until we are confident that the economy has weathered recent events and on track, and price stability goals. We also have been taking brought and forceful actions to force the flow of credit in the economy. Without access to credit, families could be forced to cut back on necessities, even lose their homes. Businesses could be forced to downside or close, resulting in further losses of jobs and incomes. Preserving the flow of credit is thus essential for mitigatings the damage to the economy. Since march, weve been purchasing sizable quantities of treasury and agency mortgagebacked security in order to support the smooth functioning of these markets or ongoing purchases have helped to restore orderly Market Conditions and have fostered more accommodative financial conditions, as market financialing has improved, we have gradually reduced the pace of these purchases to sustain smooth market functioning and thereby foster the effective transmission to broader financial conditions, we will increase or holdings of treasury and agency mortgagebacked security over the coming months at least at the current pace we will closely monitor developments and are prepared to adjust or plans as appropriate to support our goals for households, for businesses of all sizes, and for state and local governments, these programs benefit the economy by providing financing where not otherwise available. In addition, by serving as a backstop, the programs can increase the willingness of private lenders to extend credit many of these programs rely on emergency lending powers, available only in very unusual circumstances, such as these we find ourselves in today. We are deploying these lending powers to an unprecedented extent, from congress and from the treasury we will continue to use these powers forcefully, proactively and aggressively until we are confident that we are saully on the role to recovery when the time comes, after the crisis has passed, with we will put the emergency tools back in the toolbox. I would stress these are lending power, not spending powers the fed cannot grant money, we can only cede programs or facilities with broadbased eligibility to make loans to solvent entities with the expectation that the loans will be repaid. Many borrowers will benefit, but for many others, getting a loan that may be different to remay may not be the answer. In these cases, direct fiscal report may be needed they have the power to, that and spend and have decisions where we should decide to have our resources. Direct support to these communities can make a critical difference and also at this meeting we continued our discussion of approaches for conducting Monetary Policy when the federal funds rate is at the lower bound. The measures we discussed included explicit forms of Forward Guidance and asset purchases. We used the tools in the aftermath, and they have become the standard part of our tool kit. We also reviewed the historical and foreign experience with targeting Interest Rates along the yield curve. Whether such an approach would usefully compliment or we will continue or discussions in upcoming meetings and evaluate or month tar policy assistants and communications as more information about the trajectory of the economy becomes available. We also resumed our regularly quarterly projection or the s. E. P. Its an input into our deliberations, now an outcome, and rather fomc participants write down their individual views of the most likely path for the economy conditioned on each participants view of appropriate Monetary Policy. We tabulate those submissions and publish them as the s. E. P. Given the unusual uncertainty, many see likely paths for the economy and its not possible to identify with confidence a single path as the most likely one. Nonetheless we believe that regular publication of the s. E. P. Provides a useful perspective on the way participants are assessing the path ahead but the june s. E. P. Shows a general expectations of an economic recovery beginning and lasting over the next couple years, supported by Interest Rates that remain at the current level near zero. Of course, my colleagues and i will continue to base or policy decision or full range and not on a particular forecast the Risk Management approach is the best way we can promote or maximum employment and price stability goals in these unusually uncertain circumstances. Finally, i want to acknowledge the tragic events that again have put the spotlight against on the pain of racial injustice. The Federal Reserve serves the entire nation. We operate in and are a part of many communities i speak for my colleagues when i say theres no place at the Federal Reserve for racism, and there should be no place for it in our Society Everyone deserves the opportunity to participate fully in our society and in our economy. These principles guide us in all we do from Monetary Policy to our focus on diversity and inclusion in our workplace and our work to assure fair access to credit across the country we will take this opportunity to renew our steadfast commitment to these principles. We understand our work touches families and everyone across the country. We are committed to using our fun range of tools to support the economy and to help assure the recovery from this difficult period will be as robust as possible thank you. I look forward to our questions. For the first question, nick amarose. Wall street journal, i want to ask about the economy projections. I realize these are more of an educated guess they suggest that a gap over the next two years, yet the committee did not take any steps today to reinforce your Forward Guidance so my questions are, first, what are you hoping to learn by wait, second how might that change your response third, how close is the committee to reaches a decision on whether yield caps might reinforce that guidance . First, i would say that we think that Monetary Policy today is currently well positioned to support the economy in this challenging time if we didnt think that, we would of course change our policy now, we lowered our policy race very quickly, and we want we will keep it there, until the economy is on track to keep the goals you can see that in a dot plot, as i think you pointed out, that overwhelmingly fomc participants expect as their baseline expectation, no rate increase at least through 2022, and if you look at surveys, marketplaces, et cetera, those also appropriately respect a long spell with rates at the cantive lower bound. Seco secondly, we also taken strong steps to support, and asset prices at a relatively high level. So for all those reasons, we feel like policy is now in a good place as we look ahead, we see the past ahead for the economy is highly uncertain, and continues to a certain degree on the path of the pandemic. At this meeting what we did, as i mentioned, we looked in some depth at Forward Guidance in asset purchases, looked carefully at those, and received a briefing on the historical experience well continue to look at that as more information about the trajectory of the economy becomes available. I would just say, in terms of what we are looking for, we up we expect to get a better understanding of the economys trajectory and how best to deploy those tools to achieve those goals. Thats what we are looking to achieve. As you can see, we are actively at work on that. Next, gina hi, achieve powell. Thank you for taking my question im the forecasts are pretty low and cross the forecast horizon do you think inflation coming years, why is policy appropriate now and why not you know at it currently, and as we talk a bit about what urgency were returning back to the 2 target . The policy stance is appropriate. Remember, we are using our emergency lending tools to an unprecedented extent we have asset purchases, and weve now said we wont go lower than this, but prepared to adjust as appropriate. So all of our tools are in use in a strong way. So what were waiting for is to learn more i think actually, if you look at the may employment report, its a pretty good probably the biggest data surprise that anybody can remember its a pretty good illustration of just how uncertain these times are. The economy is reopening were going to learn a whole lot about the path of the economy in the next incoming months, so thats what were looking for. In terms of inflation, you will know that we had a 128month expansion, and we never did quite get inflation back to 2 on a me rick, sustained basis. We got close the last couple years, but we never quite got there. So i think we have to be humble about our ability to move inflation up, particularly when unemployment will be above most estimates of the natural rate for certainly above the median in our s. E. P. Well past through the end of 2022. So i think were in the right place now. We are looking carefully, as we learn more and better understand the path of the economy, we will be assessing what is the best way to deploy all of our tools to achieve our goals i will say the main employment report was a welcome surprise, but i think we have to be honest, its a long road, well more than 20 Million People displayed in the labor market thank you mr. Chairman if i could understand how the phet might react, i think i dont understand how you might react if things come out better than expected, kind of a variance on these other questions. How far is the commitment to lower Interest Rates if things ends up better, do you keep with these lower Interest Rates . And were it specific that you have in mind, for example, unemployment or inflation thats animating what are those numbers that you are looking for that might cause you to change out the policy i would say, you know, we just had a period of unemployment, as you know, that was in the well below 4 , hanging around 3. 5 that lasted two years, during that period of time we sought a lot of great things happening in the labor market we didnt see any problems with price inflation. So i would say, you know, we would be looking to get inflation back up, we would be prepared to tolerate welcome in fact not tolerate, but welcome very low readings on unemployment, just based on what we saw in the last expansion so, you know, were not thinking about raising rates. Were not even thinking about thinking about raising rates what we are thinking about is providing support for this economy. We do think this will take some time i think most forecasters believe that it would be great if we got a bunch more months of job creation like that notwithstanding that, as i mentioned, theres just a lot much people who are unemployed it seems quite likely there will be a Significant Group even after after the a lot of strong growth, and well be providing strong accommodation for that. Thank very much, chair powell there have been plenty of comparison with the Great Depression of the 1930s. Is that scenario, that more dire and were looking at a more traditional and sudden recession. Are you at all concerned that Strong Performance of the stock market in the last few weeks is disconnected from the economic reality . I think that the Great Depression is a good example or likely outcome, or a model for whats happening here at all i really dont. Here at all. I dont. Theres so many fundamental differences. First the response has been so fast and so forceful the origin was quite different this was an economy in a healthy place. Every economy has longer running challenges, that includes our economy, notwithstanding 50year low and not thinking it could continue thats different from what was happening at the time the depression started the Financial System in much better shape, much better capitalized. Its not the right model i would say were learning every month that passes, were seeing more, learning more every few months well learn what the story will be well see significant data about the opening of the economy, reopening of the economy i would say assuming that the disease remains or becomes pretty much under control, i think what you see is a very weak second quarter, historically weak, and expansion that builds momentum over time people will just probably a little gradually to some of the activities that involve getting together in large groups and close quarters those will be the harder parts of the economy to recover. Ultimately we do see a full recovery over time thats really what i think im personally seeing. You could see significant job growth in coming months as people return to their jobs but youre still going to face probably an extended period where it will be different for many people to find work thats what you see in many, many forecasts at this point that doesnt mean its right but thats a brought expectation, certainly not the depression forecast thank you, chris, from the Associated Press in the projection you didnt change fed policymakers didnt change their forecast for long run unemployment, so that suggests that all of you so far dont see prospects for longterm damage still, what kind of data are you looking at here to gauge the potential for longer term hits to the economy even as we have some of these even as we have may jobs report we have at the same time people return from temporary layoff, there could still be permanent job losses. What kind of data are you looking at to ganl that potential impact. This is an important risk and not the risk for the next few months but the risk over time of lasting damage to the productive capacity of the United States, typically in two forms one through extended periods of unemployment people lose contact with the labor force, they get out of touch with the skills they need and they have a hard time getting back in. Its very damaging to peoples lives and working lives and lowers it. It can increase unemployment but workforce unemployment, have people dropping out of the labor force when we need them in the labor force working. The other piece is businesses, a shock like this that comes in. Its like a Natural Disaster you wouldnt want a lot of perfectly good businesses, small or mediumsized businesses this might not have resources to sustain them to go out of business permanently in a situation like this where really there was no reason for it of course, businesses are going to go in and out and they are going to fail in capitalism. Thats a healthy thing, something that has to happen, but this is different. Those are the things weve been worried about. Youre right, though, we didnt change our longer run timt of potential growth or of the Unemployment Rate. Thats, i would say in my thinking, the reason i didnt change mine, i think we can avoid much of that, most of that even we do that with measures that keep people in their homes, that support hiring, that support growth, that avoid unnecessary avoidable business unvol vaesols something short of 25 Million People have been displaced, even after the good may unemployment report what were trying to do is create an environment you have a best chance to go back to their old job or get a new job thats kind of the most important part of the exercise its hopeful at this point to say that we wont have longer run damage to the economy and these numbers wont change so i think its way too early to be changing longer run these are not meant to be short run numbers. They are longer run assessments. I have not changed mine, and im hopeful i wont have to change it gash, chair powell. Im struggling with two things im hoping you can provide clarity on, the ongoing Bond Buying Program you say that its needed to continue the 134509 functioning of markets i guess most of us arent seeing stability in markets right now so if you could kind of give us some clarity of what youre seeing that needs to continue to be smooth of a that level and that pace. You were talking about fed concerns about small to Mediumsized Companies going out of business during this. I guess the main street lending, when do you think loans will start happening. Do you think two months away has hurt the chances of some companies surviving. There have been gains in market function, although not fully back to where you would they were in february before the pandemic arrived we dont take those gains for granted. This is a highly fluid situation. Were not taking those for granted. In addition as i pointed out in my statement, those purchases clearly supporting highly accommodative financial conditions and thats a good thing. Thats why were doing that. Turning quickly to main street i would say what weve done on main street to a greater degree, weve listened to feedback weve been out repeatedly for feedback in trying to create a much more difficult product than the other facilities i think this last set of changes weve made have actually been very positive for the facility i think its better able to achieve its goals. So weve used the time well, i think. We are now in the final runup to starting the facility whenever we did it, in the last few days, we lowered the minimum loan size and maximum. We limited and stretched out payment schedule significantly so borrowers will get twoyear del delay until they have to make principle and one year on interest we had been hearing from borrowers and lenders, putting them through the facility. The next step will to be register lenners at that time loans can be made shortly after that the facility will be up the facilities loans can be sold 95 of the loans across the board can be sold. All of that should happen quickly now. I do think this has been a challenging project but i think weve come to a better place by the way, were going to adapt further and thats true of all of our facilities. These are unique theres no playbook here you have to draw this up an then try it out weve been very willing to adapt and well continue to be matt from bloomberg. Hello, chair powell bookberg news. There was piecemeal forbearance measures put in place in various jurisdiction and Mortgage Market to prevent banks from foreclosing on debts amid widespread financial hard spreads during the pandemic. With many of those expiring and many businesses and households still in dire financial straits, im wondering if any consider to the fed regulatory forbearance or other regulatory measures to prevent businesses from going under just because they cant meet those payments. There have, of course, been twees to the Paycheck Protection Program on the physical side to address this but i wanted to ask you about things to do on the regulatory side as well. Thank you. We can make changes to Bank Regulation and supervision i dont know we have the ability to make changes, for example, in mortgage payments, if thats what youre thinking or credit card payments. Thats something that could be legislate indochiive or banks, s on the part of the banks our role to encourage it those arent decisions we have any Legal Authority to make. By the way, we have encouraged those decisions. I hope thats responsive of your question scott, npr. Thank you, mr