As appropriate to sustain the expansion of the fed sees longer run federal funds rate dropping from 2. 8 to 2. 5 . On inflation the fed closely monitoring inflation at it point. The forecast is for headline inflation to fall 1. 5 this year. The fed sees core inflation slipping to 1. 8 . Then in 2021 the fed sees a reversal, inflation rising back to 2 . On gdp the fed forecast as 2. 1 in 2019. The fed lowered outlook for unemployment this year to 3. 6 . The fed sees the labor market as strong right now but they say the rising economy at a moderate rate. Now the data shows that Consumer Spending picked up but Business Investment softened. Fed sees uncertain forecast of economy, jobs, ininflation. Very interesting statement but no rate cut today. Looking at one fed president or one fed vote away from a rate cut this year. Two fed votes away from two rate cuts this year. Back to you, charles. Charles edward lawrence, thank you very much thats a whole lot. Here to unpack it all, Danielle Dimartino booth, former investment banker carol roth, point bridge capital, maga Fund Founder Hal Lambert and Oxford Advisors managing partner, ted oakley. Danielle, let me start with you. One fomc member for one hike, two for two hikes, referring to the dot plot. Well get the official dot plot. That move, that changed, right . Did it change as dramatically as people anticipated . No, i do not think it did. The markets are celebrating one word is gone, goodbye patient. That was the very least that the fed could have done today was said theyre kind of finished being patient. This signals a higher sensitivity to data Going Forward. I think that will be applauded but this was a much more hawkish statement than i was anticipating. It was kind of bananas if you think about it. Then they said well cut rates next year. Then the year after well raise rates. I feel like they hedged every possible bet. Took outpatient. Were going to cut, going to raise, whatever you wanted to hear you heard a little piece of it but not everything. If you think what the markets are pricing, the markets priced in a 50 basis point rate cut. Charles thats this year. This year that the market already priced in. The fed is communicating to us they will be one and done, start hiking next year . Including in july. Everybody is thinking it will happen in july. Charles coming in today 82 of a chance of a rate hike next month. That doesnt change . I think that goes down. One whole rate cut this year, one hawkish dissent . Charles patience is out. Now during this q a im sure that the question will be, what data, right . Danielle referredded to the data that the fed will be data dependent on. What data . On one hand you do have strong consumer numbers. We heard edward talk about that. You have wage growth, job growth, slowing economy. Were near full employment. On other hand a weakening manufacturing, awful housing market. How do we juxtapose those and what takes precedence for the fed . Well it will be an Interesting Press conference i think. He will have to answer some of these questions. I think he confused the issue a little bit. He doesnt want to admit he made a mistake raising rates in december. That is clear. He wasnt going to cutrates today that would be admitted mistake he made in december. Here we are, were data dependent Going Forward. Thats great. Were always data dependent. Well look at Inflation Numbers one of the big things they look at is the gdp number. They think sustainable gdp should be 2. 1, 2. 2 level. It should be much higher. President trump thinks so. Economy thinks so. I think he is looking at gdp. Charles ted, one thing we know jay powell, im sorry. Go back to edward. He has gone through the report, he has more to share with us. Edward . Reporter very interesting. This is very divided fed. They give a nod to bond yields. In the statement the Federal Reserve is giving a nod to the fact bond yields are coming down with the data. Very interesting. James bullard as a dissent. That is the first dissent weve seen in long time. In fact the Federal Reserve has not cut rates since 2018. This has been a very long time. Obviously a lot of debate. The fed minutes coming out of this meeting should be very interesting to see the back and forth, who decided what and where. What we saw was Seven Members come significantly down on their votes for the fomc. This was a very, very divided fed in that room today. Charles talk about nod to the bond yields, did they give a nod to the inverted yield curve . That is not in here. They talked about a hint to the bond yields theyre watching this in the statement. They did not talk about the bond curve in this. One big may is inflation. Federal reserve obviously very concerned about inflation. Having 1. 5 as their estimate for this year, that is coming down even further. You know that alone could signal a rate cut. However, you know, you have this meeting here today, very divided among fed members. Charles ed, well come back to you in a moment. Ted, one thing crystal clear, jay powell is determined to keep expansion going. Because of that, were in unusual circumstances that we have expansion this long in the tooth, still have rates at this low of a level. Maybe going even lower. What do you make of all of that . Well, i think, charles, the problem he will have is in the next two to three quarters, in the market itself. Im talking about the stock market. I think numbers will be under pressure. And lets face it, they look a lot at market too. That is one of the things they probably misinterpret here. Unfortunately we felt like they were behind the curve the last nine month and i think they will still behind until they finally just squares in front of their face they have to do something. Charles behind the curve with respect to by hiking rates . Well, both. They hiked too far, two times too far. But on the other hand they seem to be particularly cognizant how they look or something. There is something about the way they do things which, you know, if you know youve erred possibly, look at the bond markets in december, you would come back the other way but i think now what has to happen, they will be driven to the wall by this. Charles carol, that dovetails with the notion that maybe jay powell is cognizant of President Trumps constant criticism. And that is now influencing action at the fed. Could that be possible . I think one of the things we want, we want a fed that is independent. We dont want him charles were not saying we dont want that but do we have that . The concern is that he could be influenced in the opposite direction, the more trump pushes on him, he want to show his independence. So he might actually delay doing something that he might do otherwise because he doesnt want to feel like it is being pushed from the president to show his independence. So i actually feel like constant discussion around this is very counterproductive. Charles that would be bananas though. This is one of the most important jobs in the world. Were in bananas world. Former vicechair Stanley Fischer came out over the weekend, somebody on the committee for the time that jay powell was on the board, cale out in an interview over the weaken that said he didnt necessarily think the fed would have raised rates in december were it not for the public scrutiny and public beratement on trumps part. If you think about that for a second, charles, making policy in spite of the president . That is not the feds job. The fed has to be apolitical and independent in Monetary Policy making. You cannot do what is wrong for the economy to show you will be strong against the white house. Charles hal, what do you make of that . You manage money in this environment. You have the maga fund. What about the idea fed is standing up to the white house regardless of the outcome . I think chairman powell needs a thicker skin or different job. He doesnt need to prove himself right versus trump, create a sort of a spectacle. He needs to focus on what he is doing and his job. It makes it tough. Think about people in november and december, loss money selling during that time because fed made mistakes, they made mistakes from not just fed rate hikes perspective but statements they made publicly, were bigtime mistakes and cost people money. Thats not right. That is unfortunate. Charles no doubt that october 3rd comment from jay powell sent the market tumbling. We barely recovered just in the nick of time. This market now has been all over the place. Stocks initially jumping. Want to see what happened on the floor, what they make of all of it. Gerri willis the word patient is out. The market reacted to that. Now were pulling back a little bit. Thats right. That is exactly what the market wanted to hear. They wanted the word patient out. They wanted to know the fed would move quickly when it wanted to move. So interesting there. You saw markets pop up. The dow up 65. Now it is up only 41. This is what the markets expected, telling me all this week. Gerri were not expecting a rate cut. Expecting a rate cut possibly at july. They are happy with the act appropriately wording. That makes a lot of sense. One of the traders said Something Interesting to me. Nothing will happen with the fed until after the meeting with the president and president of china, xi. Nothing happens before that. They want to see how that works out as well. What happens there. Even the Federal Reserve is waiting for bated breath with that meeting. Traders here say listen for the press conference. In previous fed meetings, the Real Movement in stocks came during the press conference. That is when jay powell will be forced to speak directly to reporters and answer their questions directly. What do we hear . Core inflation, nothing to speak of, labor market strong. Business investment softened. The guys down here knew this full well. Exactly what they expected. However they want to see two more rate cuts in balance of the year. They think that will happen. That is certainly baked into the market. Well watch market movements during the press conference, back to you if there is news. Thank you. Charles gerri, thank you very much. We want to go back to Danielle Dimartino booth, carol roth, hallam better and ted oakley. This is what frustration at the fed is, after all the work, inability to take inflation to the target has to be extraordinarily frustrating. You worked there. You understand it. Powell expressed frustration. This is driving force for potential rate cuts that i dont think gets talked about enough. We dont have enough time if we had the full hour to talk about how broken the inflation metric they follow is. Housing prices have not been going up at 3 plus percent. They have been going up at five. Medicare, medicare reimbursement rates, in core pce, that is not what were spending on at all, our dedoublingables are going up. That is beside the point. They took the core inflation target up, up to 1. 8 . They still believe low inflation is transitory. That would explain some of the hawkishness in the statement. They dont think that home price declines are going to be nationwide as they were during the last crisis. I think they will be proven wrong on this. That inflation will not be as they measured will not be transitory. Charles disappointing housing numbers yesterday. This morning. Charles the last 5g dp reports we had negative, seven of the last eight quarters, housing gearly a problem there. I dont know how they see that being transitory although we have different ways measuring that word. Carol, give me two seconds. I will add one sentence when it comes to housing, during the last profits recession of 2015, 2016, residential investment was increasing. So we dont have the tailwind right now. I will be the lone dissenter here and defend jay powell, what he did in december. Yellen, if you go back she missed a number of opportunity to hike. We were way behind the curve. Reality were not in a high Interest Rate environment. We all agree that the economy is doing well. You cant say that the economy is doing well and that we need to have rate cuts at the same time. That is insane. Charles my theory on that though this is a different fed. That no longer, if im reading powell the way i have read him he is not going to go traditionally wait for the house to be on fire. In other words they will be lowering rates even during a good economy. Clarida keeps saying that, brainard keeps saying that. Powell wont say that. Charles clarida seems to say that, make unconventional tools, to make them conventional. Powell says our goal to sustain the expansion, not let it fall apart but sustain it. He does not want recession on his watch. Well, no he doesnt. I think one of the things i was bothered by last week, the week before in chicago was he mentioned about the zero bound. That is sort of looking he doesnt have far to go here, going 2 1 2 down to zero, you get there quickly. I think problem he had, at least for us, when he came in, he said hey well take this thing back to normal. That didnt happen at all. Soon as he had weakness he cut and ran. Im not certain we know exactly which way he will go but i think he walks the fence on everything right now. Charles let me ask you, risk to outlook, theyre always saying they will be cognizant, watching risk to outlook. Im not sure, we have minutes here. I have been going through them completely if they directly talked about the tariff situation, the trade war right now. But obviously that has got to be how are they factoring that in, do you think . I think theyre looking at that pretty closely. I think theyre looking at that pretty closely, charles. We have got the g20 meeting coming up. There will be some headlines out of it. There wont be a deal at. G20. I dont think that happens. Can they get things back on track. I honestly dont think well get a chinese trade deal before 2020. The chinese made a calculated decision to see if President Trump wins reelection. I think what powell is looking at. If we dont have a trade deal i think probabilities of him cutting rates goes up. I think what is the market is also pricing in. Charles what if they, hal, split the middle, to borrow your phrase, were back on track . There is no deal but the niceties are back. Theyre communicating and theyre meeting, it feels like were heading towards a deal, how does the fed respond to that . I think the fed will became data dependent. The bond market is telling them you need to cut rates. They will take that into account obviously with all the data they continue to look back on daily basis. If the chinese drag this out some more and keep it boeing well be all sitting here in limbo. The fed will kind be in the same position. I would guess chairman powell will be asked about it at press conference as well. Charles lets take a moment, danielle, carol, hal, ted. Federal reserve no rate cut, interesting language, sending mixed signals. If Jerome Powells goal was to set the record straight he has a lot of work to do. Remember he will hold a news conference. Well be right back and preview it. The panel will weigh in as well. Well be right back. Play it cool and escape heartburn fast with new tums chewy bites cooling sensation. Tum tum tum tums i kept putting it off. T get what was i thinking . Ago. On. Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Charles the fed leaving its key Interest Rate unchanged but signaling it is prepare to start cutting rate to sustain our economic expansion. The markets popping initially pretty big on the news. The dow was up 100 points mainly because the fed took out the word patient. As we await jay powell. I want to bring in my panel, Danielle Dimartino both, carl roth and john loans ski and fox businesss jennifer schoenberger. Jennifer, let me start with you. You have had a chance to go through this. What are the differences between the last fomc and what we got from them today . Charles, this this is clearly divided fed. Theyre seeing no Interest Rate cuts this year. But theyre very close, one member away coming down one Interest Rate cut this year, and two members away from consensus coming back down to two Interest Rate cuts this year. Clearly some twigs there. They want to watch and see the economy. I notice what is interesting in the statement they said that the job market, characterize that still as solid. They did acknowledge there is moderation in the economy. So i think it will be very important to watch fed chair powell in the press conference. While the fed erred on the side of doveish based on the statement, the fed chair will have to reinforce that the fed is willing to cut rates if the Economic Outlook deteriorate also saying that things right now look okay. Charles jennifer, thank you very, very much. John, i want to go to you on this because, so they did change for next year gdp is now 2 . Prior they had 1. 9 . The flipside of that they see less inflation. Core pce was 2 . Now it is 1. 9 that seems like a goldilocks scenario if there everyone. Why are you keeping if you had fends at 2. 3 . Slowdown in business sales. Profits recession, 2015, 2016. The federal fun rate during that period averages less than onehalf of 1 . We may be headed into that situation fairly soon. Energy Product Sales fon from growing faster 5 a year ago, now headed down to 2 . That is not good. It is high time for the fed to take a preventative measure, bring the slowdown to an end, not be shy about cutting fed fund. Charles give it a booster shot . Inflation is wellcontained. My goodness, core pce priced inflation, 1. 6 . If anybody on the fed is worried about inflation taking off i think they have the wrong job. Charles seems like theyre worried about the exact opposite. They cant get inflation to move. Cut rates. How far do you take that . This is supposed to be a tool when we get in real trouble that something we can use. Were not in real trouble. If they keep taking it down, not having major effect, what happens when the Business Cycle actually ends . 1998 was only time i can remember in recent history where the fed took its cue from inverted yield curve as quickly as possible. Yield curve inverted the summer of 1998. Problems in russia. Problems in korea. They cut rates by 3 4 of a percentage point. Despite the fact the economy was growing by 4 . Real Consumer Spending was growing by 5 . Charles go back to jennifer for a moment. Jennifer, you have an update. Reporter i wanted to add, charles, listening to your conversation the fed is close to what we call the zero lower bound. Typically, historically, when the fed cuts rates the economy is deteriorating yes, were not quite there. Theyre at four or 5 on fed funds rate. Were sitting at 2. 25 to 2. 50. So they dont have a lot of room to manuever with on the downside. They want to err on the side doing more now to prevent a downturn, as opposed get into a bad situation as opposed theyre not doing enough. Charles put a tourniquet on now even though you dont need it . Sorry, say that again . Charles apply the tourniquet now even though you dont need it today . That is the thinking. Insurance. Charles insurance is a good word. Some people are worried about the opposite. Carol brought it up earlier, there wont be any arrows in the quiver you know when they talk about unconventional tools being conventional, to me it is like theyre saying forget about rate cuts. We have qe, one, two, three, four, five. That worked so well across the popped. Charles they may look at place like australia, they havent had recession in 28 years. Nor did they ever go to the zero bound. There was discipline at reserve bank of australia. Charles what do you make of it then . Listen, carol is saying that the economy is too strong for them to be taking this sort of drastic action. I read your work. Almost every day you see something in this economy that is flashing red flags for you. Was talking to john in the green room before we came on the air. 11 consecutive months yearoveryear increases layoffs. Last year something you could ignore, retail jobs being lost. This year weve gone up in terms of salary. Moved to industrials, moved to autos. In may it was tech. Tech was leading area of layoffs. In addition to that, we are a country that consumes, yesterday cash freight index came out, for the sixth consecutive month what we move around the country has been in decline. They introduced for the very first time in their statement the word, contraction. Theyre now anticipating a contraction. Were amazon nation. We better be consuming. Youre saying economy is not strong . I think economy is on very weakening path, if you look at sources of support gone into the last gdp reports, look at consumption in this country it has been taking down along with Business Investment. How much can you rely on state and local spending inventory investment. Do you think that fiscal policy, one rate cut is going to change that . No, of course not. Focusing more on fiscal policy . I think well go down a slippery slope. They got rid of zero lower bound, replaced with effect of it rate. God forbid we go into negative Interest Rate territory but market is anticipating qe. Charles the market should, john, the fed is telling us to. We will get the thinks we call unconventional wont be you conventional. They bring up the zero bound. We know this is different this time. Whatever is driving them, you know, again my theory they dont want us to ever dip into recession. For most part people thought that was natural cycle, unavoidable but maybe powell thinks he can sidestep it . At some point they will have to provide some sort of monetary stimulus in order to offset fiscal tightening taking place because of tariffs. Tariffs are equivalent to tax hikes. Charles awe approve fed cutting rates next month . It will be equivalent to another autopilot statement. Charles carol you think this is moment they show independence . Im saying you hold tight. Not that you need to raise rates. Show some discipline here, not let markets dictate what goes on with the economy. Charles jennifer. I was going to say, markets forcing the fed into a rate cut here. You know, the fed has been forced to take action. They will have to walk this back. It will be up to powell in this press conference to walk this tightrope, look were willing to take action but at the same time from our Vantage Point yes, some of these forward looking indicators like freight weight index you alluded to, manufacturing are showing some cracks. But consumer is holding up. Retail sales were great in may. Revised up in april. Jobless claims are stable for six months. So were watching this, not quite ready to act. Charles jennifer, you remember may 1st when powell disappointed wall street with the transer to comments . You think they can walk this tightrope now . I think theyre over their skis. If they walk it back, fine, lets admit this market will take a pretty good hit if they say there wont be any rate cuts or rate cuts will be minimized to one for the rest of the year. Absolutely, charles, i agree with you 100 . Powell is to say were willing to take action when and if things deteriorate. But he also has to say from where we look now things are okay. Charles jay powell coming out now. Thank you all very, very much. Good afternoon and welcome. My colleagues and i have one overarching goal, to sustain the economic expansion with a strong job market and stable prices for the benefit of the american people. At the fomc meeting that concluded today we maintained our policy Interest Rate but made some significant changes to our statement. Since the beginning of the year weve judged that our current policy stance was broadly appropriate and that we should be patient in assessing the need for any changes. In light of increased uncertainties and muted inflation pressures we now emphasize that the committee will closely monitor the implications of incoming information for the Economic Outlook and will act as appropriate to sustain the expansion with a strong labor market and inflation near its 2 objective. Id like to take a step back and review how the changing economic and financial picture brings us to todays decision. So far this year the economy has performed reasonably well with solid fundamentals supporting continued growth and strong employment. Inflation has been running somewhat below our objective but weve expect i had it to pick up supported by solid growth and a strong job market. Along with favorable picture we are reminded of strong crosscurrents with trade developments and concerns about Global Growth. At time of our last fomc meeting which ended on may one, there was tentative evidence that these crosscurrent were moderating. Latest data from china and europe were encouraging and there were reports of progress of trade negotiations with china. Our continued patient stance seemed appropriate and the committee saw no strong case for adjusting our policy rate. In the weeks since our last meeting the crosscurrents have reemerged. Growth indicators from around the world have disappointed on net, raising concerns about the strength of the global economy. Apparent progress on trade turned to greater uncertainty and our contacts in business an agriculture report heightened concerns over trade development. These concerns may have contributed to the drop in Business Confidence in some recent surveys and may be showing through incoming data. Risks in the Financial Markets have deteriorated as well against this backdrop inflation remains muted. While the baseline outlook remains favorable the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional Monetary Policy accommodation. Many fomc participants now see that the case for somewhat more accommodative policy has strengthened. Let me explain the basis for this judgment starting with the outlook for jobs and growth. Participant see unemployment remaining low this year and next. Monthly job gains in may were lower than expected, however, and in light of recent development this bears watching. Still many labor market indicators remain strong. Community business and labor leaders all tell us that the prospects for jobseekers have seldom been better. This is true for those who traditionally struggled to find work. Wages are rising. This is particularly so for lower paying jobs. Committee participants growth projections from 2019 are little revised from march with a central tendency of 2 to 2. 2 , just above the estimates of longer run normal growth. The growth projections for the year as a whole mask some important details about the composition of growth. Annual growth will be boosted by the surprisingly strong First Quarter which had just been reported at the time of the may fomc meeting. As i noted then, the unexpected strength was largely in net exports and inventories, components not generally reliable indicators of ongoing momentum. The more reliable drivers of growth on economy are spending on consumption and Business Investment. While consumption was weak in the First Quarter, incoming data show it has bounced back and is now running at a solid pace. In contrast the limited evidence available at this time suggests that growth in business fixed income has slowed in the second quarter. Moreover manufacturing production posted declines so far this year. Thus while the baseline outlook remains favorable, many fomc participants cited investment picture and weaker Business Sentiment and crosscurrents i mentioned earlier as supporting their judgment the risk of less favorable outcomes has risen. After running close to our symmetric 2 objective for most of last year, inflation declined in the First Quarter. Data since then show some pickup. Participant broadly see inflation moving back up toward our 2 objective but at a slower pace than had been expected. The central tendency for 2019 core inflation which omit volatile food and energy component, it between 1. 7 and 1. 8 . Setting aside shortterm fluctuations committee participant expressed concerns about the pace of inflations return to 2 . Wages are rising as noted above but not at a pace that would provide much upward impetus to inflation. Moreover weaker Global Growth may continue to hold inflation down around the world. We are firmly committed to our symmetric 2 inflation objective. Were well aware inflation weakness persists in healthy economy could precipitate to arrest downward drift in long ward running Inflation Expectations. Because there are no definitive Inflation Expectations we must rely on imperfect proxies. Some survey based expectations measures are near the bottom of the historic ranges. Combining these factors with risk to growth already noted participant expressed concerns about a more sustained short fall of inflation. Overall our policy discussions focused on the appropriate response to the uncertain environment. The projections of appropriate policy show that many participant believe that some cut in the federal funds rate will be appropriate in the scenario they see as most likely. Though some participant wrote down policy cuts and others did not, our deliberations made clear a number of those who wrote down a flat rate path agree that the case for additional accommodation has strengthened since our may meeting. This added accommodation would support Economic Activity and inflations return to our objective. Uncertainties surrounding the baseline out look have clearly risen since our last meeting. It is important however, that Monetary Policy not overreact to any individual data point or shortterm swing in sentiment. Doing so would risk adding even more uncertainty to the outlook. Thus my colleagues and i will be looking to see whether these uncertainties will continue to weigh on the outlook and we will use our tools as appropriate to sustain the expansion. Thank you. I will be pleased to take your questions. Nick timber of the wall street journal. Did you consider a rate cut specifically today . Was this one of the policy options in the teal book . Is the committee moving given uncertainty you addressed moving change its policy before the next meeting . So the committee had, our usual long discussion of global and domestic economic and financial conditions and then spent this morning talking about Monetary Policy. And came to the view that i expressed to you, which is that were going to be monitoring, monitoring the crosscurrents and the other items that we mentioned but that wed like to see more Going Forward, particularly wed like to see whether these risks continue to weigh on the outlook. So generally, as i mentioned, many on the committee do see a strengthened case. Eight of those strengthened case for cutting rates, eight wrote down rate cuts. A number of others see that the case has strengthened but the committee wanted to, wanted to see more as i mentioned and i also mentioned that some of these, some of these developments have been of quite recent vintage. And so we do expect that well be learning a lot more on all of these issues in the near term. And, that is our focus. Do you think something could change before the next meeting . Im sure things will change before the next meeting. I expect a full range of data and information on all of these issues that we are looking at. I think well learn a great deal more about them and i think thats, we think thats the right way to move here. Again many of these development happened part of the way through the last inner meeting period. Only seven weeks ago we had a great jobs report. Came out of the last fomc meeting feeling our economy and policy was in a good place. We want to see, we want to see and react to developments and trend that are sustained, that are genuine and not react just to data points or just to changes in sentiment which can, which can be volatile. At the same time, we are, were quite mindful of the risks to the outlook and are prepared to move and use our tools as needed to sustain the expansion. Mr. Chairman. Steve liesman, cnbc. Could you walk us through your thinking about trade . It was really the threat of tariffs against mexico that caused at least the market to become definitely pricing in rate cuts. If, for example there is a deal with china, does that take the possibility of rate cuts off the table . Yeah, so i would say that were not looking at any, any one thing. I would start by agreeing with your premise that news about trade has been an important driver of sentiment in the intervening period but were also looking at Global Growth. It is really trade developments and concerns about Global Growth that are on our minds. So were not exclusively focused on one event or one piece of data. Risks seemed to have grown. In the meantime we have incoming data in the United States thats been pretty good, particularly for the consumer. Consumer spending is solid supported by, you know, a healthy job market, high levels of employment, wages going up. We do see some areas that were looking at, such as i mentioned business fixed income. So, also prolonged short fall in inflation and perhaps job growth. We dont like to look at one job report. We like to average over three or six months but still that bears watching. So well be monitoring the implications of all those developments for the u. S. Economic outlook. We expect to learn a good deal more as i mentioned and well be asking the question whether those risks will con to weigh on the outlook and in the end well use our tools as appropriate to sustain this long expansion. Heather long from the washington post. Could you clarify what you would do if the president tweets or calls you to say he would like to demote you as fed chair . I am, i think the law is clear that i have a fouryear term. I fully intend to serve it. Hi, chair powell. Gina smilek from the new york times. I was hoping you could clarify us a little bit how youre thinking about the risks of waiting too long to cut rates versus the risks of cutting rates prematurely, sort of what the balance of risks are, how you talk about that . Right. So were always trying to balance that risk. But i would say, given the quite recent nature of some of the events, i think the committee felt though that the right thing to do was to wait and see more. We will see a lot more on all these issues in the very near term. I dont think the risk of waiting too long is prominent right now. I would say as a general matter it is always something we have to weigh. But i think we believe that, that the right thing here is to watch carefully in the near term and see how these risks unfold, see whether they continue to weigh on the outlook. [inaudible] obviously we try to avoid going from maturely as well. In this case, you know, there is always some judgment in these things but, i would just say that, that the risks that we see having emerged are, are risks that have gotten our attention and that have called a number of us to write down rate cuts and a number of those who havent, to see that the case is strengthened. Marti. Marty with the ap. You had your first dissent in your time as chairman. Does that give us a sense there was debate among a group that was pushing for a rate cut this time . And how do you, do you expect further dissents Going Forward . Let me say the same thing as i said the last time before there were any dissent that i think the process of careful, thoughtful dissent is very healthy one. And ive always believed that. I feel like you make better decisions when you hear disparity of views. I really do look at it that way. I would add though, that the support for the path we took for the policy statement that we adopted was quite broad. James. Then howard. James with the financial times. Mario draghi at the ecb yesterday sent a strong signal of new stimulus for the eurozone. Do you think that such actions to ease policy at other Central Banks around the world will put more pressure on the fed to do the same . Well, first i think all Central Banks are focused on their domestic, their mandates are domestic, theyre focused on Economic Conditions from a domestic standpoint. Goes for the European Central bank, the fed, all Central Banks. So that is our principle focus. So it could cut either way. You know, i would think that to the extent you see stronger financial conditions, stronger activity in the ecb after a rate cut that would tend to support activity. So were really focused on you know, the risks to our, on baseline out look and risks to those outlooks. That is our principle focus. Howard, then chris. This is the first time that youve been really issuing steps in era when rates are going to be going down. Two related questions. Is there concern that you will be causing a sort of dot deflation, dont buy your car now because it will get cheaper in six months because were cutting rates and that will fulfill itself . On inflation that was pretty big drop in expected pce. Yet without reacting to it are you not sort of undermining your own credibility in terms of commitment to the 2 target . I will take the inflation one first. I didnt quite follow the dot question . Well the fact that expected inflation went from 1. 8 to, 1. 8 to 1. 5. The fact youre not responding. That is inflation question. The fact you signaled rate cuts are coming, was there any concern on the committee this would tell consumers, tell people, dont borrow know, dont spend now, because it would be cheaper later . I see. Let me answer the inflation question first. Were saying that, i noted in the statement and also in my what i said here, we saw marketbased measures of Inflation Expectations break evens dropped. We noted that also in the statement. I noted it as a reason for us to, one of several reasons why it feels to us that the case for more accommodation has strengthened. So we find that notable, not only that. The, the actual forecast for inflation this year among fomc participant dropped a couple of tenths. That means a more prolonged short fall of inflation. Let me say on inflation it is something ive been concerned about for quite a long time. It is one of the principle reasons i called for the review in a world where were, policy rates will be closer to the effective lower bound than just as a general matter we need to be really strong on 2 inflation. So i think, you know, we certainly dont want to be seen as weak on inflation. I dont believe we are. In terms of the dots, youre right, this is the first time i believe weve had, talked about cutting in the dot era. I fest the dot era, began in january 2012. Were working our way through it. I think it is just something we do. You know my view on the dots they overall provide useful information for people but we need to do our absolute best to explain what they are and what they are not. Speaking of which they are not a forecast of the group. Theyre not discussed or debated at the meeting. Theyre an input to policy more than an output of policy. Theyre also only the most likely case. So in a situation where there is relatively high uncertainty there is the most likely case but the second most likely case might only be a little less likely. That doesnt show up in the dot. The dot is either one thing or its another. So i would say if you pay too close attention to the dots you may lose sight of the larger picture. Chris. Thank you, chris con done, bloomberg news. Mr. Chairman, if and when the committee decides to cut rates i suspect there will be debate whether you should move by 25 or 50 basis points. Indeed there is pretty substantial body of academic literature arguing that a central bank close to the zero lower bound ought to act sooner and moring a agressively than it other would. What would you think of that proscription. If you could discuss a couple minutes the pros and cons of a 50 basis point cut, how you propose that question. On the specific question of that, that is something we havent engaged with yet, it will depend very heavily on incoming data and evolving risk picture as we move forward. So it would be, nothing i can say about that is specific to the near term question that we face. More generally though, the research you refer to, essentially notes that in a world where you are closer to the effective lower bound it is, why research kind of shows this, it is wise to react, for example, to prevent a weakening from turning into a prolonged weakening. In other words, sort of an ounce of prevention is worth a pound of cure. That is a valid way to think about policy in this era. I dont know, it is always in, i think it is in the minds of policymakers, you know, during this era, because it is, it is well understood to be correct. I dont know what that means in terms of the size of a particular rate cut Going Forward. That will depend heavily upon, you know the actual data and evolving risk picture. Donna borac with cnn thanks, chairman powell. Democratic president ial candidate Elizabeth Warren has provided a proposal to revalue the u. S. Dollar in order to address concerns rising trade deficits. The president himself routinely complained about the u. S. Dollar that it resulted in quote, tremendous, close quote with competitive advantage with countries like china and others. Do you think an overvalued dollar is a drag on americas global competitiveness, and would you support a intervention of some kind on this issue . The u. S. Treasury has responsibility for Exchange Rate policy, not the fed. We dont comment in that sense on the level of the dollar. We have a responsibility for maximum employment and stable prices. We use our tools to achieve that. Of course we do that through changing financial conditions. One of those is the dollar but we dont target the dollar. That is something we dont do. In fact Central Banks, rather, nations when they get together routinely adopt a communique we will target our economic and financial conditions and not our Exchange Rate using Monetary Policy. That includes the United States and the g20 communique we adopted 10 days ago. So im not the right person to ask about that sort of dollar policy innovation. Paul, then edward. Thank you, chairman powell. Paul keirnen from dow jones. If the most, according to the dot plot, if the most likely case is that you will have to cut rates in the next 18 month, and given some of the concerns about you know, policy needing to react sooner and more aggressively what is the downside to cutting rates now . Why not just cut them now . Thank you. So why not now . And i would say there was not much support for cutting rates now at this meeting. There was, as you can see, a number of people wrote down rate cuts but all of those but apparently one felt that it would be better to see more to, before moving. And i gave a couple reasons why that is the case. First it is just, the fact that some of these developments are so recent that we want to see whether, whether they will sustain. So we felt that it would be better to get a clearer picture of things, that we would in fact learn a lot about these developments in the near term. Ultimately the question were going to be asking ourselves is, are these risks going to be continuing to weigh on the outlook . And we will act as needed including promptly if that is appropriate and use our tools to sustain the expansion. Edward. Thank you for doing this, chairman. Edward lawrence from fox business network. How do you reconcile the conflicting Economic Data coming in . On one hand you have strong overall growth, Consumer Spending is strong, on the other hand manufacturing numbers were a little bit weaker, growth in jobs but coming in weaker and you have low inflation . Specifically what data are you looking at that you decided not to have a rate cut . Well, you gave a pretty good picture. Its a complicated picture and the answer is that we look at all of it, but i would say the big pieces of it are this. The baseline outlook has been a good one, that has basically been Consumer Spending coming back up in the second quarter. That is coming true. And Consumer Spending is at healthy level. That makes sense. You have a tight labor market. Companies in surveys say labor is scarce. Surveys saying jobs are plentiful. Wages are going up. High levels of household confidence. Outlying fundamentals for consumer, spending part of the economy, 70 of the economy is quite solid. Job creation, if you take a threemonth average is still well above, you know, the level of entry into the workforce. So that part of the economy is solid. You mentioned manufacturing. Were seeing this all around the world. Manufacturing investment and trade have been weaker. It is not solely a domestic issue. It mate be there are a range of factors that are contributing to that including, for example, what china has done over the last couple years in working to bring down its leverage. Some of it may be uncertainty over your supply chains trade developments. Boeing 737 issues may be contributing. Low every oil prices are contributing to lower investment although theyre also leading to lower gas prices which supports spending. There are many, many things. One thing that doesnt explain it all. Something that were watching. But you do see growth in services. This pattern around the world of weak manufacturing but growth in the far larger part of the Services Economy which has led to low unemployment, good job creation, rising wages that is kind of the two big pieces of it that you see. Then you see the crosscurrents, if you lay crosscurrents on top of that concerns about Global Growth and trade developments, you have the full picture. I think what that picture, what we took away from that picture is we would like to see more. That we do see these risks and what we want to do we want to watch and see whether they continue to weigh upon the outlook. Mike, reporter if Consumer Spending is solid and Business Investment has been slowed by uncertainty, id like to get your thinking on what a fed rate cut would do. Have you modeled the additional growth and inflation you might get from a rate cut . Can you identify any sectors that would benefit from a lower cost of capital or is this really about the fed being the only game in town . Well, we have the tools we have and were committed and sworn to using them to support Economic Activity, and they do support Economic Activity through a number of channels that are reasonably well understood. Some more directly tied to Interest Rates than others, but we do generally believe that our Interest Rate policy can support demand and support Business Investment as well, and so we will use those tools and use them as we see as appropriate to achieve or objectives which really are to sustain this expansion and i would just make a note of that, the reason why we say sustain the expansion is youre seeing now for the first ti time, you know, communities that are being brought into the benefits of this expansion that hadnt been earlier. Youre ten years deep into this and thats something we heard quite a lot at the conference in chicago on the review and i would say its one of the reasons why we think its so important to sustain the expansion, keep it going, because we really are benefiting groups that havent seen you know, this kind of prosperity in a long time. Reporter given your description of the crosscurrents, do you think fed policy can solve those problems . So we take, you know, we take the crosscurrents as a given and we have our tools, you know, we dont we react to anything in principle that could undermine our achievement of our mandate goals, maximum employment, stable prices, is worth of our attention and can call forth a policy response. And thats just how we look at it. Reporter victoria guido with politico. You said the fed doesnt take shortterm Political Considerations into account and you have defended the feds independence. I was wondering, is there a point at which you think that publicly or privately, you should push back on the president s criticisms rather than ignoring him, and also, do you think that you and the president have the same goals when it comes to Monetary Policy . You know, i dont discuss elected officials publicly or privately, really, so i would just say that we are, at the fed, we are deeply committed to carrying out our mission and also that our independence from direct political control, we see as an important institutional feature that has served both the economy and the country well. Reporter Nancy Marshall with marketplace. Chair powell, are you concerned that new Digital Currencies like libra which facebook unveiled this week could undermine the fed and erode your power to influence the economy, and did anyone from facebook talk with anyone at the fed before libra was unveiled this week . So on your specific question of Digital Currencies replacing central bank currencies, i think were a long way from tha