Other economic policies. His is almost an hour. Mr. Powell good afternoon veryone and welcome. My colleagues at the Federal Reserve and i are dedicated to serving the american people. We do this by steadfastly pursuing the goals that congress has given us, stable employment and we are committed to making the best decisions we can based on facts and objective analysis. Today, we decided to lower Interest Rates. We will keep the u. S. Economy strong in the face of notable developments and provide assurance against ongoing rifpks. The u. S. Economy has continued to perform well. We are into the 11th year of this expansion and the outlook remains stable. 2. 5 . Nomy grew at Household Spending supported by a job market and Consumer Confidence has been the key driver of growth. In contrast, Business Investment and exports have weakened and falling manufacturing output. The main reasons appear to be Slower Growth abroad, two sources of uncertainty we have been monitoring. Since the middle of last year, the global deproth has weakend in europe and china. A number of geo political risks including brexit remain un resolved and this is weighing on u. S. Investment and exports. Our business contacts have been telling us that the uncertainty has discouraged them. And in the Second Quarter and recent indicators point to continued softness. With Household Spending and supportive financial conditions we expect the economy to expand at a moderate rate. As seen from participants most recent expectations, the real g. D. P. Deproth is 2 this year and next before edging down to its value. The job market remains strong. The Unemployment Rate is at its low and job gains have remained solid. The pace of job gains has eased this year but we expected some slowing after last years strong pass pace. Participation in the labor force has been increasing. And wages have been rising for lowerpaying jobs. People who live and work in low and middleincome communities those who struggled to find work are adding chapters to their lives this underscores the importance of expanding the expansion so the job market reaches those left behind. We expect the job market to remain strong. The median for the scrun employment rate remains below 4 . Inflation continues to run below our 2 objective over the 123 months through july, it was 1. 4 and core inflation was 1. 6 . We still expect inflation to rise to 2 . The median is 2 in 2021. However, inflation and indicators of longer term expectations are at the lower end. And pose ongoing risks. These factors in conjunction with pressures have let us to shift our views about appropriate Monetary Policy toward a lower path towards the federal funds rate. Of course, this is the role of Monetary Policy to adjust Interest Rates to maintain a strong labor market and keep inflation near 2 . Todays decision to lower the quarter p to is appropriate in light of the Global Developments as well as muted inflation pressures. Since our last meeting, we have seen weakness abroad and insurgens and the imposition of additional tariffs. The fed has no role in form you lation of trade poll but we take into effect anything. The future course ofmon tower policy will fend on how the economy evolves. We have said that policy is not on a preset course and that is the case today. The baseline Economic Outlook remains positive. The projections shows that participants germly anticipate only modest changes in the federal fund rate over the next couple of years. Those views are merely forecasts and as always will evolve with the arrival of new information. Let me say a few words about our Monetary Policy operations. Funding pressures in money markets were elevated this week and the federal funds rates rose yesterday. While they are important for Market Participants, they have no implications for the Monetary Policy. This pressure emerged as funds flowed from the private sector to meet federal securities. These ter these we temporary operations were effected and we expect the federal funds rate to move back into the federal target range. We made an adjustment on the reserve balances setting it at 20 basis points. And in related action we adjusted the rate on the overnight repurchase facility. We will continue to monitor market developments and conduct operations as necessary to foster trading at rates within the target range. Consistent with our decision earlier this year to continue to implement policy policy, we will over time provide reserves so at frequent observations are not. We are committed to stable prices and the committee contemplates the target range and will continue to monitor the incoming information and will act as appropriate to expand the and inflation near its 2 objective. I will be happy to take your questions. Reporter associated press. Mr. Chairman, when you cut rates n july, you characterized as a midcycle adjustment, is that still your view of what is happening . Mr. Powell as you can see from the policy statement, we see a favorable Economic Outlook and strong labor market and 2 objective. That view is consistent with those of many other forecasters. As you can see, participants think these positive economic outcomes will be achieved with moderate adjustments. I pointed to two episodes in 1995 and 1998 of such an approach with successful in both of those instances. As our statement also highlights, there are risks to this positive outlook to trade developments and if the economy does turn down a more extensive sequence of rate cuts could be appropriate. Its not what we expect, but we would follow that path. In other words, as we say in our statement, we kill continue to monitor these developments and act as appropriate to help ensure that it remains on track. Reporter taking the statement, your opening remarks, im wondering what kind of message we should take from this. Is it safe to say there is an easing bias or not . Mr. Powell the idea of a bias is something that was a long time practice and we dont have that practice anymore. So i cant adopt it anymore. Ill explain your question. So we made one decision today and that decision was to lower the federal funds rate by a quarter. And we believe that is appropriate to promote our objectives and highly datadependent and the implications of decisions on the outlook and i would say we are not on a preset course. Thats how we are going to look at it. And look at economic data. The path ahead is clear and sometimes less so. We will be looking at meetingbymeeting and assess the appropriate stance and policy as we go. And as i said, we will act appropriately. Reporter just to follow up, you said the favorable outlook is predicated on financial conditions and the financial conditions are presented cailted on outlook for fed policy. Wouldnt that suggest that if you want those financial conditions and favorable outlook to come about, you should be inclined to cut . Mr. Powell what we are doing Going Forward depends on the flow of data and information. If you look at the things that we are monitoring, Global Growth and trade developments, Global Growth has continued to weaken. And it has weakend. And trade developments have been up and down and then up. They have been quite volatile. We have seen those risks more heightened and we will be watching it carefully and watching the u. S. Data and have o make an assessment as we go. Reporter wall street journal. I know you are trying to speak for the committee when you do these press conferences but the committee is divided at least about the outlook and the appropriate policy path. Some people think you need to wait and see the Consumer Market before acting more aggressively and some people think by the time that happens, you will need to do more aggressive action to arrest the downturn. Where do you stand on this . Mr. Powell well, let me screws say on the general point of diverse perspectives, you are right. And in my eight years with the fed and the direction is relatively clear. This is a difficult time of ifficult job and disparate perspectives. And i think that is nothing but healthy. And so i see a benefit of having the diverse perspective. Your question though is reporter the data is lagged especially when you have the risks on the horizons and the markets think they couldnt materialize more than what you and your colleagues are projecting. What are your own views about the tension between Risk Management and the idea of being data dependent . Eporter cnbc. What are your concerns about how the Federal Reserve operated through the liquidity crunch in markets . We talked to many traders who said the payment was known in advance and there were several reports of people pointing to september as a potential crunch time. U closed monday at the top end. Tuesday came along and there wasnt an operation until 9 00 and no one else until 4 00 in the afternoon. Was the fed listening to markets going back a year when there were plowouts in the overnight rate at the turn of the year . Are you concerned about how the new york fed operated through this . I would say i doubt that anyone is closer to and has more invested in carefully following the biffer of these markets. We were well aware of the tax payments and the settlement of the larmingest bond purchases. And we were very much waiting for that. But we didnt expect the response to that was stronger than we expected. It surprised Market Participants a lot, too. People were writing about this and publishing stories about this. But it was a stronger response certainly than we expected. So, no, im not concerned about that, to answer your question. I can go on how we are looking at that. As i mentioned, we dont see this as having any implications for a broader economy or Economic Outlook or ability to control rates. Earlier in the year after careful study over a period of years, the committee implemented Monetary Policy and a. M. Will reserves regime and we have been operating that in a full decade and it works well. The main hallmark is that we adjustments in our administered rates to keep the fed in the target range and designed specifically so we do not expect so Going Forward we will be market developments and assessing their implications for the appropriate level of reserves and we will be assessing of when it will be appropriate to resume the Balance Sheet and we will be revisiting this question and certainly at our next meeting. We talked to the large holders to assess what is their assessment and tried to assess and we put it out so the public can react to it. There is real uncertainty and certainly possible that we will need to resume the organize andic sheet. We will be looking at this carefully in the coming dation and taking it up in the next meeting. How much confidence do you have to estimate the real effects of trade uncertainty and if you have confidence in that paper it uld seem to suggest mr. Powell to provide a little context, economists do research all the time and high quality and their research and not a finding of the Federal Reserve board. Its by the way, they put it out for public review and see all of it. Their whole work is exposed to critique by the whole profession. Its a great tradition and what this particular piece of work did, it went after measuring trade policy through a couple of channels concerning tariffs. It looked deeply at the data to assess the effects on output. And answering your question, there is real uncertainty about these effects. 22 trillion economy to try to isolate the effects. But we do the best we can. And this piece of Research Found significant effects and that is consistent with a number of Research Projects that economists have undertaken and what we have been hearing in the beige book. We do feel that trade certainty is having a real effect. Weak exports, hard to quantify t precisely, though. Mr. Powell its hard to have rate expectations a year from now. The closer you get to the current day. But even then, knowing what the data will say and the way geo political events and other events are going to evolve, i would say there is a lot of uncertainty around that. Particularly, if you look at 2020, i think the use of this is individual participants write down their forecasts and how people are thinking about the likely path of the economy and the appropriate path for Monetary Policy in that individual persons thinking and that is a good thing to know. I would be very reluctant to look at hardened views or a prediction. Reporter there are a number of arguments in july for the reason of cutting rates. Have any of those gotten weaker or changed around the table in mr. Powell if you look at the u. S. Economy. The u. S. Economy has performed roughly as expected, roughly. Consumer spending at a healthy clip. I would say businesses and exports have weakened port and the labor market its still strong. So germly is the same. If you look at the Global Economy and has weakened further in the e. U. And china and policies have been a big move for marningts and sentment. I think that is what has happened over the intervening period and different people around the table from different perspectives as you obviously now. Mr. Powell if needed, during the sorts of things we did the last two days. That will be the tool that we use and the question will be then as we go through quarter how much learn more, of this really has to do with the level of reserves and well learn quite a lot in the next six weeks. Reporter politico. Another money market question. Banks have been pointing to liquidity rules having contributed to some of the what we have seen and capital rules as well. Are you looking at whether some tweaks toll liquidity ratio might help and also what is the status of the next funding ratio . Are you putting it out soon . Mr. Powell if we concluded that we needed to raise the level of required reserves for banks to meet the reserve, we would probably raise the reserves rather than lower the l. C. R. Thats not something we think right now. On the other hand, it might be that more reserves are needed and we are in a position to supply them. In the net Stable Funding ratio, we put it out for comment and got comments and we are looking at finalizing that in the relatively near future. Reporter in terms of the l. C. R. , there is talk about giving banks some room in times of stress to dip into their liquidity buffers. Mr. Powell we want banks to use their liquid witness buffers rather than pulling back from their clients, as a general rule. Reporter Edward Lawrence from fox business network. A month ago, you said there is no in the last few weeks have you figured to incorporate trade uncertainty into Monetary PolicyGoing Forward . You talked about uncertainty many times today. Mr. Powell my point was that trade policy is not the business of fed but congress and the administration. So what are we talking about . Anything that affects the achievement of our goals can in principle can be something that monetary principle should be taken into consideration. And trade policy is something that is weighinging on the outlook. I pointed out in recent remarks that the thing committee cant address really is what businesses would like, which is a settled road map for international trade. We cant do that. We dont have that tool. But we have a powerful tool that can counteract weakness. And we think our policy tools support Economic Activity through fairly well understood hannels by homes and other interestsensitive items by creating more financial conditions which supports spending. And also by boosting household and Business Confidence. I dont want to say our tools dont have an effect, they do. There is a piece of this that we cant really address. [inaudible question] mr. Powell there is a challenge. There is no simple answer. What it amounts to is this. What yous is probably the kind of volatility that is typical of an important complex, ongoing negotiation and i think what we need to do is try to look through volatility and react to the underlying forces, the underlying things that are happening that are relative to our mandate. We have nothing to do with setting trade policy or negotiating trade agreements. We are supposed to be reacting on behalf of the American Economy to support stable prices. We need to look through what is a volatile situation. That means not overreacting or underreacting. That is what we are trying to do. The outlook is positive in the face of these crosswinds we felt. So to some extent, i believe we are shifting on our stance and why the outlook has remained favorable. Reporter Bloomberg Radio and television. Fed fund trading shows that investors still think another rate cut is coming this year rment. On their behalf, what is going to guide fed policy to either pull them towards where the gut plot suggests no more mofts this year or keep them in place, are you reacting to data or reacting to what trade tweets might mean . Ould they watch for powells speeches . What is the federals reaction . What we are looking for through all of the data, all of the events that are going on around the world, we will be trading evolving events and looking at the forms of the u. S. Economy. And things that are affecting the outlook. Particularly the outlook. So all of those things in principle can affect the achievement of our goals. Unusual situation because the u. S. Economy itself, the largest part of it is nrl strong shape. The manufacturing part, less so. But overall, you see an economy that i think generally forecasts show growth coming in at 2 which is a good solid year. So the difference here is we have significant really risks to that outlook from not just the geo political events but slowing global trade growth. Something that we look at during the financial crisis and chose not to do this. We chose to do a lot of aggressive Forward Guidance and also large scale asset approach. Those were the two policy tools we used. We feel they worked fairly well and did not use negative rates and i think if we were to find rselves at some future date, again something we arent expecting, we would look at asset purchases. And i dont think we would be using negative rates. By the way, we are in the middle of a Monetary Policy where we are looking through these questions and the strategy tools and communications and we expect that to be completed sometime round the middle of next year. L. A. Times. Ow much can you talk about the mechanism which the two rate cuts will affect the economy and to what extent will it offset the negative affects of trade uncertainty . Mr. Powell in terms of how our rate cuts will affect the real economy. Monetary policy works with long and variable lags. The real effects will be felt over time. But, you know, we think that lower Interest Rates will reduce interest burdens for borrowers and housing and durable goods and other things like cars, supports purchases of those. And higher asset prices, thats the models and the data shows that is another powerful channel. And there is a confidence channel. You see household and Business Confidence turn up when financial conditions become more acome dative. It isnt precisely the right tool for every single possible negative thing that can happen to the economy. But nonetheless, it broadly works and we are going to use the tool we have. And thats how we think it works and how we think its working. Reporter you said that the low Interest Rates are adding to or could create a bubble of consumer and corporate debt that could make it difficult for consumers to recover from the next recession or survive the next recession. Mr. Powell if you look at households, households are in very good shape. They got more income and they are in very good shape, much better shape they were in. E household sector as an aggregate matter is in very good shape. Doesnt mean that e is in good shape, but overall. The business sector, we have talked about a lot and studied a lot. And the situation there is that he level of debt relative to g. D. P. In the business sector is at a high level. However so is the size of the business sector. The business sector itself is not materially higher. There are a lot of hire Leveraged Companies and that happens when there arent downturns in our 11th year, you do get that phenomenon. That is something we are monitoring and our view is still is that is a real issue but what it represents a potential amply. Ire of a macroeconomic and itself create a shock. It is more of an amply fire. We take it seriously, though. And monitoring care tlly and actually looking substantial stable board is conducting a product to see where they are around the world. And we are trying to keep on top of it. Reporter im from marketwatch. You are saying the economy is doing well. But there is a sense with people that the economy is actually starting to slow now and people are more and more, there is talk about recession. And even the fed thinks the Downside Risks are on the horizon. Is the economy between now and the end of next year, do you think g. D. P. Is going to hold steady and the Unemployment Rate. How do you see the economy evolving over the next year . Mr. Powell we think the most likely case is for continued moderate deproth and continued strong labor market and 2 and that is widely shared among forecasters. The issue is more the risks to that. You have Downside Risks. Global effect will have but still, there is a sector of our economy ta is exposed to that. Trade policy uncertainty has an effect. So and you can see some weakness in the u. S. Economy because of all that. The job Monetary Policy is to adjust to ensure against the scroun side risks and support the economy in light of the existing weakness that we do see. We are not we dont see a recession or forecasting a recession but adjusting Monetary Policy to support what is the favorable outlook. Just to talk about the current situation. You saw a longterm rate move down a whole lot and retraced twothirds of that move in the space of two days. When there are changes material changes that are sustained for a period of time. Low . Are longterm rates there can be a signal about expectations about growth but there can be longterm premiums. It can be just that there is a large quapt of negative yielding and very low yielding debt around the yield and that is exerting pressure without having an independent signal. That is a signal of weak Global Growth and that would affect us. Global Capital Markets are quite integrated. We arent going to be dismissive about the yield curve. On the committee there is a range of views. Some are focused on the yield curve, others not so much. T watch it carefully and ask yourself a lot of questions as to why that is and how long it s sustained. Reporter dow jones news wires. You mentioned trade policy being a complex ongoing discussion. What is your rule for stopping as far as Interest Rate cuts go . You referred to this in the midcycle adjustment, the median dot suggests no more rate cuts, but if we get back and forth between the you as and china and trade policies remain heightend, under what circumstances do you say, we stop now . And secondly, as leader of this institution, have you felt the need to take any steps to boost like employee morale at a time that the president is constantly criticizing the fed . I mr. Powell its really going to be when we think we have done enough and our eyes are open. We cut rates twice and moved through the course of this year as i discussed and we see ourselves as taking actions to sustain the expansion and thereby achieve our goals. If you look at sort of the things that are happening in the economy. I personally see high value in sustaining the expansion because we are reaching this positive economy is reaching economies that havent been reached. There would be a great benefit to have that last as long as possible. I think we are watching carefully and there will be a time when we have done enough and there will come a time when the economy worsens. We dont know. The incoming data and evolving situation and thats what is going to guide us on that path. In terms of the morality of the institution, its very high. We are unified and doing the best job we can serving the american people. Reporter im from the american banker. There is an investigation of bank of america. I wonder if the fed is investigating this and given the pending order against wells fargoo that these banks are too big to manage . I saw the headline this morning. I dont have anything for you on that. I will say about wells fargo, there were quite wide breakdowns in Risk Management that resulted in mistreatment of consumers that was quite harmful to the consumers and to the image of the institution. I have no idea whats happened t bank of america. The central bank has been exploring the far reaches of whats possible for Monetary Policy, even going so far as to make rates negative in some cases with mixed results. Meanwhile, fiscal and regulatory and trade policy are pursuing their open separate courses. As you and your colleagues do this Monetary Policy framework review, do you ever consider the imitations of Monetary Policy . Should you be more explicit of what Monetary Policy can and cannot do in this environment . Mr. Powell we try to be clear about that. T really, i think our job is to use our tools as best we can to do the jobs that congress has asigned us, which is to achieve maximum employment and fiscal authorities who are the ones that created us, advice to do their job. We keep that at a high level. And at a high level, yes, i would say and i said before that its really fiscal policy that is more powerful and has much more to do with fiscal policy can do those things that will increase the longer growth rate of the United States by improving productivity and Labor Force Participation and the skills and aptitudes of workers. That comes from the private sectors and things that can be done with fiscal policy. Over the long run, we cant really effect the potential deproth rate of the United States. Its not a function of Monetary Policy but other things sm i try to be clear about that. And so, but ultimately, fiscal authorities will do what they deem appropriate. [inaudible] reporter bbc news. Mr. Trum has been a vocal critic of your colleagues and calling you boneheads and called you a terrible communicator. How do you respond to these . Mr. Powell i dont. Im not going to change my practice here today of not responding to addressing comments made by elected officials. I will just say i continue to believe that the independence of the Federal Reserve has served the public real over time and my colleagues will conduct Monetary Policy without regard to political considerations. We will base it on facts and objective analysis in pursuing our goals and thats all i have o say on it. Reports reporter falling yields up until the beginning of this month and the liquidity crunch that we saw. Doe the fed have concerns over the impact of u. S. Debt in is that a conversation you have with secretary treasury mnuchin to address the challenges down the road with that type of heavy interest globally . That is treasurys job and congress job. How much to spend and how to finance it and none of that calls for advice from the fed. We take fiscal policy to our work. That doesnt stop from saying that we think its important that the u. S. Fiscal picture return to a sustainable footing and right now its not and that has been the case for a long time and something we will have to address and good time to do it is when the economy is strong. We limit ourselves to highlevel statements like that. Reporter washington post. Mr. Chairman, in your view, is there any risk to the United States having much higher Interest Rates than europe and japan and other parts of the world . Is there any risk to the Global Economy . Mr. Powell i guess i would say it this way, global Capital Markets are highly integrated and our rates are long rates are definitely pulled down by the very, very low rates that are abroad. And the way i would characterize it is this. The low rates abroad are assign expectation. Low growth and you know, just kind of a lack of policy space to move against or ideas about how to break out of that. There are implications for us. In a world where economies and financial marget are integrated, that matters. That is going to pull down u. S. Rates and u. S. Financial conditions can tighten because of that. I think we put all of that and goes into our thinking and modes and we do understand how the International Sector interfaces and we take that into account in setting our u. S. Policy. Thank you very much. [captions Copyright National cable satellite corp. 2019] captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org heres a look at our prime time schedule. Starting at 8 00 p. M. Eastern, the House Gun Violence Prevention Task force and the impact of gun violence. At 9 00 eastern, a hearing on the Mental Health on Migrant Children and 8 00 p. M. On cspan 3, testimony from Young Leaders ol combatting climate change. Cranch espns washington journal. Coming up thursday morning, California Republican congressman, tom mcclintock, shares the latest on the Committee Investigation on President Trump and gregory meeks, dem rat of new york discusses policy towards iran. And a political scientist discusses the need for Multi Party Democracy in the u. S. Watch cspans washington jourm on thursday morning. Join the discussion. I tell Bernie Sanders voters i defy. Because you dont. I defy to say you have more access to health care because you dont. Defy you to say you support poor kids than i do. We have different solutions. Her life in government and politics as president of the Heritage Foundation sunday night t 8 00 p. M. Eastern on sunday. Ext, Smithsonian Institution outlines his priorities. He spoke earlier today before the House Administration committee for an hour. I understand the Ranking Member is on his way and since we have kind of a tight schedule and we have a quorum, ill start and give his Opening Statement here he is now. Ms. Lofgren the committee will come to order and want to welcome everyone on this hearing of