three decades. it was necessary to address high inflation. chair powell: i will begin with one overarching message. we understand the hardship high inflation is causing. we are committed to bringing it down. we are moving expeditiously to do so. we have the tools and resolve to restore price stability. on c-span's new podcast. >> the next episode focuses on lyndon johnson. not everyone knew they were being recorded. >> johnson's secretaries new because they were tasked with transcribing conversations. they made sure the conversations were taped as johnson would signal to them. >> you will also hear some blunt talk. >> i want a report on the number of people assigned to kennedy on the day he died. i can't ever go to the the econe been through a lot over the past couple years. it is essential we bring inflation down to have a strong period of labor market conditions that benefit all. from the standpoint of our mandate to promote price stability, the current picture is plain to see. the labor market is tight and inflation is high. the federal open market committee raised its interest rate by point 75% and anticipates ongoing increases would be appropriate. we are continuing to significantly reduce the size of our balance sheet. i will have more to say after briefly reviewing economic developments. economic activity edged down in the first quarter. recent indicators suggests real gdp growth has picked up this quarter with consumption spending remaining strong. growth and business investment appears to be slowing and activity in the housing sector looks to be softening, in part reflecting higher mortgage rates. the tightening and conditions we have seen should temper growth and bring demand into better balance with supply. fomc participants have marked down their predictions for economic activity with the median prediction for gdp growth below 2% through 2004. the labor market has remained extremely tight with the unemployment rate near a 50 year low and wage growth elevated. over the past three months, employment rose by an average of 408,000 jobs per month, down from the average pace earlier in the year but still robust. improvements in labor market conditions have been widespread, including workers at the lower end as well as african-americans and hispanics. labor supply remains subdued with the labor force participation rate little changed since january. fomc participants expect supply and demand conditions to come into better balance, easing the upward pressures on wages and prices. the median projection for the unemployment rate rises somewhat, moving from 3.7% at the end of this year to 4.1% in 2024, levels above the march projections. inflation remains well above our goal of 2%. over the 12 months ending in april, total prices rose 6.3%, excluding food and energy. core prices rose to 4.9%. and made the 12 month change of the consumer price index came in above expectations at 8.6% and the change in the core cpi was 6%. supply constraints have been longer-lasting than anticipated and price pressures have spread through a broad range of goods and services. the surgeon the prices of crude oil and other commodities is boosting prices for gasoline and food and creating upward pressure on inflation. covid related lockdowns in china are likely to exacerbate supply chain disruptions. fomc participants have revised up predictions for inflation this year, particularly total pce inflation. the median projection is 5.2% this year and falls to 2.6% next year and 2.2 percent in 2024. participants continue to see risks in inflation as weighted to the upside. the fed's monetary policy actions are guided by promoting maximum employment and stable prices for the american people. my colleagues and i are aware high inflation imposes significant hardship on those less able to meet the higher cost of essentials, like food, housing, and transportation. we are attentive to the risks inflation poses on our mandate and are committed to returning inflation to our 2% objective. against the backdrop of the rapidly evolving economic environment, our policy has been adapting and will continue to do so. the committee raised the target rate for the federal funds rate by .75 point, resulting in a 1.5 increase in the target range so far this year. the committee reiterated it anticipates ongoing increases in the target rate will be appropriate and we are continuing to reduce the size of our balance sheet, which plays a role in firming monetary policy. out of our last meeting in may, there was a sense that a .5% increase in the target range should be considered in this meeting. we also stated we were highly attentive to inflation risks and would be nimble responding to incoming data and the outlook. since then inflation has again surprised to the upside. some indicators have arisen and projections for inflation this year have revised up notably. the committee decided a larger increase in the target range was warranted at today's meeting. this continues our approach of moving our policy rate up to more normal levels and will ensure that longer-term inflation expectations remain anchored at 2%. the median projection for the appropriate level of the federal funds rate is 3.4% at the end of this year, one point 5% higher than projected in march and .9% above the meeting estimate of its longer run value. the projection rises to 3.8% at the end of this year and declines to 3.4% in 2024. these projections do not represent the committee plan or decision and no one knows with any certainty where the economy will be a year or more from now. we will be looking for compelling evidence that inflation is moving down consistent with returning to 2%. we anticipate ongoing rate increases will be appropriate. today's 75 basis point increase is unusually large and i do not expect moves of this size to be common. either a 50 basis point or 75 basis point increase seems most likely at our next meeting. we will make decisions meeting by meeting and will communicate as clearly as we can. our focus is bringing inflation back down to our 2% goal and keep long-term inflation expectations well anchored. making appropriate monetary policy in this environment requires recognition that the economy obviously evolves in unexpected ways. inflation has surprised to the upside over the past year and further prices could be in-store. we need to be nimble responding to data and the outlook and will strive to avoid adding uncertainty to what is already a challenging at uncertain time. we are attentive to inflation risks and determined to take measures necessary to restore price stability. the american economy is strong and well positioned to handle tighter monetary policy. we understand our actions affect communities, families, and businesses across the country. we will do everything we can to achieve our maximum employment and price stability goals. thank you and i look forward to your questions. >> howard schneider with writers. did you feel you boxed yourself in with the language you used at the last press conference about 50 basis point hikes in june and july? would you give us as detailed a sense as you can in what role you played chair powell: chair -- what role you played in reshaping market expectations so quickly on monday? chair powell: as you know, we always aim to provide as much clarity as we can on our intentions, subject to the inherent uncertainty. we think it is more effective when market participants understand how policy will evolve. in the current unusual circumstances with inflation well above our goal, we think it is helpful to provide even more clarity than usual, subject to uncertainty in the outlook. over the course of this year, financial markets have responded and have generally shown they understand the path we are laying out. it remains data dependent. that's what we generally think about guidance and that's why we offer it. when i offered that guidance, i said it was subject to the economy performing in line with expectations. i also said if data came in worse than expected, we would consider moving even more aggressively. we got the cpi data and also some data on inflation expectations late last week, and we thought for a while and thought this was the appropriate thing to do. do you wait six weeks to do it at the next meeting? i think the answer is that is not where we are with this. we decided we needed to go ahead, so we did, and that's how we made the decision. >> thanks for taking my question. gina with the new york times. could you describe how you are deciding how aggressive you need to be? what does 75 achieve that 50 wouldn't have and why not go for a full percent at some point? chair powell: we are looking for compelling evidence that inflationary pressures are abating and inflation is moving back down and we would like to see that in a series of declining monthly ratings. we had been expecting to see a sign of inflation flattening and ideally beginning to decline. we said we would be focused on data, attentive to inflation risks, the things i mentioned to howard moments ago. contrary to expectations, inflation surprised to the upside. some indicators inflation has risen and projectors this year have moved up notably. we thought strong action was warranted and we delivered that in the form of a 75 point rate hike. we have been moving rates up expeditiously. over the seven months since we pivoted and began moving this direction, we have seen financial conditions tightening, appropriately so. the federal funds rate even after this move is 1.6%, so the committee is moving rates up expeditiously to more normal levels. we came to the view we would like to do more front end loading on that. the sep gives you the levels people think are appropriate at given points in time. this is about the speed with which you would get there. 75 basis points today. i said the next meeting could be about a decision between 50 and 75. that would put us in the july meeting and that more normal range and that's a good place to be because you have more optionality about the speed you would proceed going forward. talking about the sep, what it says is committee participants would like to see policy at a modestly restricted level at the end of this year, six months from now. so much data and so much can happen so remember how uncertain this is. that is a range of 3.5%. that's what they want to see, knowing what they know now, understanding we need to show resolve but also be flexible to incoming data as we see it. if things are better, we don't need to do much, and if they are not, we do that much or more. next year, people see a bit more tightening in a range of 3.5% to 4%, and that's generally what people see as the appropriate path for getting inflation under control and getting back down to 2%. 75 basis points seemed like the right thing to do at this meeting and that's what we did. >> steve, cnbc. thank you for taking my question. you have not used the phrase in a long time monetary policy is in a good place, a phrase you use often. now that the committee is projecting 3.8% next year in terms of the funds rate, similar to where the market is now, do you think that's a level that is going to be sufficiently high enough to bring down the inflation problem? as a follow-up, could you break that apart for me how much is restricted and how much is a normal positive rate that ought to be embedded or not in the funds rate? chair powell: the question really is, how high does the rate need to go? estimates on the committee are in the range of 3.5% to 4%. you could think about the longer run neutral rate. we think that is in the mid-twos. you could look at broader financial conditions, asset prices, the effect you are having on the economy, rates, asset prices, credit spreads. you can also look along the yield curve. for much of the yield curve now, real rates are positive. that's not true at the short end of the yield curve in the early years. you have negative rates still. that is one data point, one part of financial conditions. i look at it this way. we move the policy rate. that affects financial conditions and affects the economy. we have rigorous ways to think about it but it comes down to, do we think financial conditions are having the desired effect on the economy? that desired effect is we would like to see demand moderating. demand is very hot still in the economy. we would like to see the labor market getting better balanced between supply and demand and that can happen between both supply and demand. right now demand is significantly higher than demand and supply. these are things we can affect with our policy tools. there are many things we can't effect. the commodity price issues we are having around the world due to the war in ukraine and the fallout from that, and the supply-side things pushing on inflation. that's how i would think about it. >> does 3.8% get the job done? chair powell: it is certainly in the range of plausible numbers. i think we will know when we get there. you would have positive rates and inflation coming down by then, i think you would have positive rates across the curve. the neutral rate is pretty low these days. i would think it would, but we are going to find that out empirically. we are not going to be completely model driven. we are going to be reacting to incoming data on financial conditions and what's happening in the economy. >> chair powell, you have said you like your policies to work through expectations. this decision was different from how you and your colleagues had set the expectations during the inter meeting period. you said what changed was the inflation expectations data. was there something you saw that was unsettling enough to risk eroding credibility of your verbal guidance by doing something so different from what you had socialized before? chair powell: we look at a broad range of inflation expectations. you have the public, surveys of the public and experts, and we have market-based. if you look at the broad range of market data, you see expectations are still very much in the place where short-term inflation is going to be high but comes down sharply over the next couple of years. that is where inflation expectations are, and as you get away from this episode they get back down close to 2%. it is important to us that that remain the case. if you look at most measures most of the time, that's what you see. if we even see a couple indicators that bring that into question, we take that very seriously. the preliminary michigan reading might be revised. it was quite eye-catching. we also noticed the index of common inflation expectations at the board has moved up after being flat for a long time. this is something we need to take seriously. that is one of the factors in deciding to move ahead with 75 basis points today. we are determined to keep them anchored at 2%. that was one of the reasons. the other was the cpi rating. >> if you saw movement like that again, would that put a 75 or even 100 basis point increase in play at your next meeting? chair powell: we are going to react to the incoming data appropriately. i wouldn't want to put a number on what that might be. the main thing is to get rates up and pretty soon we will be in an area where as you get closer to the end of the year you are in a range where you have restricted policy, which is appropriate, forty-year highs in inflation. we think the policy needs to be restrictive and we don't know how restrictive so i think that's how we will take it. >> neil erwin from axios. the decision to go to 75 basis points, do you worry that will make policy guidance a less effective tool in the future? should we think about the symmetrical reaction function if the labor market starts to roll over? chair powell: to take your second question first, yes. we are resolved to take this on but are going to be flexible in the implementation. and your question was guidance. the overall exercise, we will try to provide as much clarity about our policy intentions as we can because we think that makes monetary policy work better. there is always a trade-off because you have to live with that guidance. i think this year has been a demonstration of how well it can work. with us having done very little in the way of raising interest rates, financial conditions have tightened significantly through the expectations channel as we have made it clear what our plans are. that has been a healthy thing to be happening. and that is progress on inflation. inflation can't go down until it flattens out and that is what we are looking to see. even if you don't see progress for a longer period. soon enough we will be seeing progress at some point and will react appropriately. i would like to thank our guidance is credible but it is always conditional on what happens. this is an unusual situation to get some data late during blackout, very close to our meeting. very unusual to one that would actually change the outcome. i have only seen in my 10 years plus seen something like that one or two times. i don't think it is something that will come up a great deal. >> colby smith with the financial times. on the convincing threshold for the inflation trajectory, what is the level of realized inflation that meets that criteria and how is the committee thinking of trade-offs with much higher unemployment than even what is forecasted? chair powell: the second part i didn't get. >> if the trade-off is higher unemployment than even what is forecasted, if inflation is moderating at an acceptable pace. chair powell: what we want to see is a series of declining monthly ratings for inflation, and we would like to see inflation headed down. right now our policy rate is well below neutral. soon enough we will have our policy rate. let's -- then the question would be do you slow down? making these judgments of is it appropriate now, can we slow down from 50 to 25, or speed up? that is the kind of thinking we will be doing. ultimately, we are not going to declare victory until we see a series of these, really see convincing evidence that inflation is coming down. that is what it would take for us to say we think this job is done. and we saw last year inflation came down over the course of the summer and went back up. i think we will be careful about declaring victory. but it will be flexible and sensitive to incoming data. >> are you more concerned that to bring down inflation it will require more than just some pain at this point? >> i do think the objective, and this is reflected, our objective is to bring inflation down to 2% while the market remain strong. what is becoming more clear is many factors we don't control are going to play a very significant role in deciding whether that is possible or not. and i'm thinking about commodity prices, the war in ukraine, supply chain, the monetary policy stance doesn't affect those things. having said that, there is a path for us to get there. it is not getting easier, it is more challenging because of the external forces, the path is to move down. take for example the labor market. you have two job vacancies for every person actively seeking a job. that has led to a real imbalance in wage negotiation. you can get to a point where the ratio was at a more normal level. you would expect to see those wage pressures -- people are still getting healthy wage increases, real wage increases, but at a level consistent with 2% inflation. that is a possibility. you can say the same about some product markets. there is excess capacity really where the strong demand has gone in. where the capacity is constrained. effectively what we think of is a vertical supply curve. demand comes in and is very strong. shows up in prices, not more cars. because you don't have the semiconductors. in principle, it can work in reverse where demand comes down. you could see prices coming down more than the typical economic relationships you see in the textbooks because of the unusual situation we are in on the supply side. so there is a pathway. it will not be easy. it is our objective, but it will depend on factors we don't control. >> thank you for taking our questions. the new projections show the unemployment rate ticking up through 2024. is higher unemployment rate necessary to combat inflation, and what is lost at the end and people lose their jobs? chair powell: you are right. we have unemployment going up -- the median is 4.1%, a range of actual forecasts. i would characterize it if you got inflation down to 2% and unemployment rate went up to 4.1%. that is still a historically low level. we had not seen unemployment rates below 4% until a couple of years ago. we had seen it for one year in the last 50. so the idea three point 6% is low -- 3.6% is low, 4.1 with inflation on the way to 2% would be a successful outcome. we are not looking to have a higher unemployment rate, but i would look at it as a successful outcome. -- chair powell: we are not -- we don't seek to put people out of work, of course. we never think too many people are working and fewer people need jobs. but we also think you cannot have the kind of labor market we want without price stability. we have to establish price stability to have that kind of labor market. that is a labor market where workers are getting wage increases. maybe the workers at the lower end of the spectrum are getting bigger wage increases before the pandemic, where participation is high, a lot of job opportunities. the labor market we had before the pandemic, that is what we want to get back to. and you see disparities between various groups and historic lows. we want to get back to that place. but it is not going to happen with the levels of inflation we have. so we have to restore it. it really is in-service in the medium and longer-term of the kind of labor market we hope to achieve. >> as you just mentioned, the community projects .5 percentage rise over the next couple of years. it removed a line from the policy statement that the labor market can remain strong while it tightens policy. you mentioned it is your objective. i'm wondering if you could explain why that line was removed, and whether it means the fomc is trying to reduce a recession to bring inflation down? >> not trying to induce a recession. we are trying to achieve 2% inflation considered with a strong labor market. clearly, it is our goal to bring about 2% inflation while keeping the labor market strong. the sep has inflation getting down to a little above 2% in 2024, with unemployment at 4.1%. this is a good labor market. there are pathways to do it. but those pathways have become more challenging due to factors not under our control. thinking of the fallout from the war in ukraine, a spike in prices of energy, food, fertilizer, industrial chemicals, and the supply chains more broadly, less than anticipated. the sentence we deleted said we believe appropriate monetary policy effectively alone can bring about the results of 2% inflation with a strong labor market. so much of it is not down to monetary policy. it kind of says monetary policy alone can do this, and that didn't seem appropriate so we took it out. >> given the new projections, talk about what accounts for such reduced confidence against a month ago or three months ago that inflation will normalize on its own of the supply-side issues that worked out. >> we have been expecting progress. we did not get that. we got the opposite. i think the situation, the consequences of ukraine becoming more clear, you see the situation getting more difficult. a lot of countries around the world are looking at inflation of 10%. largely due to commodities prices. all over the world, you see these effects. and we see them here. gas prices at all-time highs. that is not something we can do something about. and by the way. headline inflation is important for expectations. the public's expectations, why would they be distinguishing between core inflation and headline inflation. core inflation is what we think about. it is a better predictor of future inflation. but headline inflation is what people experience. expectations are very much at risk due to high headlines. the environment has become more difficult in the last four or five months. hence the need for the policy actions we took and resolutions to get rates up to where we think they need to be in coming months. >> i want to ask -- you talk about cpi going to 8.6%. the market falling, then revisions to the previous months were down. are you hearing about consumers slowing spending or changing habits? >> we are watching very carefully for that. looking at the big store numbers and all of that i think the fair summary of what we see is you see continuing shifts in consumption, sales going down. but overall, spending is very strong. the consumer is in good shape financially. they are spending. no sign of a broader slow down in the economy. people talk about it a lot, consumer confidence is low. and also stock prices. but that is what we see. we do not see her broad slowdown. we see job growth slowing, but it is at robust levels. the economy slowing a bit. but still healthy growth levels. >> as you are raising rates, how closely are you watching consumer spending, or is there something you are watching more closely? >> it would be hard to watch anything closer than consumer spending. but we watch everything. business investment, which has softened a bit. we are responsible for everything. but consumption is 60% of the economy, two thirds of the economy. and there's a lot going on. flows back and forth. but ultimately it appears the u.s. economy is in a strong position and well-positioned to deal with higher interest rates. >> thank you. are you targeting headline inflation or core inflation? how far would you chase oil prices if they keep going up, if that will be the component driving expectations? would you risk recession for a headline rate if the core rate holds steady or goes down? >> we are responsible for inflation in the law. inflation means headline inflation. that is our ultimate goal. we look very carefully at core inflation, because it. better than where inflation is going. more relevant to our tools. the parts that don't go into core are mostly outside of our scope of tools. the current situation is difficult because of what i mentioned about expectations. the energy prices are set by global commodity prices. most of the food prices are heavily influenced by global commodity prices. so we can't have much of an effect. so we have to be mindful of the potential effect on inflation expectations from headlines. it is a very difficult situation to be in. and we cannot do much about the difference between the elements that make up headlines that are not in court. >> -- as a clarification, when the members gave their forecast, when where they inserted into the record? where they revised after the cpi or michigan numbers came out, or does the sep reflect the same factors that lead you to go to a 75 basis point move? chair powell: the sep is one piece. it reflects all of the economic readings and 75 basis point increase. people had that in hand when the seps were submitted. it is not in addition to the sep, they all reflect their thinking about the rate increase and what is going forward. >> i wanted to ask about how you are measuring progress, especially since you have started frontloading rate hikes more. you talked about how you want to see inflation coming down over a series of reports. i'm curious whether you think inflation data itself is a really good indicator, or whether you might be concerned it is a lagging indicator, or it might send confusing signals, given there is supply demand aspects? i guess my question is do you think inflation will tell you when you have gone to where you need to go, or do you feel like it is better to overshoot than to under shoot? chair powell: i think the role we can play, it is around demand. we will be able to see the areas we can effect, those associated with excess demand. we will able to see our effect on job openings in real time. that would tell us about wages. wages are not responsible for the inflation we see, but going forward they would be very great. i'm not sure i'm getting to your question. >> is inflation data itself the best indicator for when you get to where you need to go, or might it lead you to go too far? >> there is always a risk of going too far or not far enough. it will be a difficult judgment to make. we are mindful of the dangers. i will say the worst mistake you can make will be to fail, which is not an option. we have to restore price stability. it is the bedrock of the economy. the economy will not work the way it is supposed to. so we want to get the job done. the inflation happened relatively recently. we don't think it is affecting expectations in any fundamental way. we think the public generally sees us is very likely to be successful in getting inflation down to 2%. it has been key to the whole thing that we sustain that confidence. that is how we are thinking about it. >> brian chung with yahoo! finance. i want to expand on what you said about the general public feeling you can get this done. you talked about being down, household inflation expectations up, -- a tabletop. the general feel among american households and businesses square with your expectations of the economy, given the description of inflation changed between may and june? >> clearly, people don't like inflation a lot. many people experience it for the first time. because we haven't had anything like this kind of inflation in 40 years. it is really something people don't like and they are experiencing that. it is showing up in surveys and all kinds of ways. and we understand that and we understand the hardship people are experiencing from high inflation and we are determined to do what we can to get inflation back down. that is really what we are saying. clearly it is an incredibly unpopular thing. it is painful for people. i guess what i'm saying is the critical question, the perspective of doing our job, is making sure the public does have confidence that we have the tools and we will use them and they work to bring inflation back down over time. it will take time to get inflation down. but we will do that. >> you have talked about inflation a few times, you mentioned oil prices, china lockdowns. but aside from rises in commodity prices, we also see stickier measures of inflation, including the cleveland fed and cpi's. how persistent do you see the underlying measures of inflation, and how do you expect -- where do you see those going? >> as i mentioned in my opening statement, inflation started off quite narrow, very directly pandemic related areas. and it spread broadly across the economy and into the services sector. particularly, you see it in travel if you have flown on a plane. they are very full and tickets are expensive. so you are experiencing services inflation, shelter inflation is high. and you see the cleveland measure going up, many other measures going up. it is a time we are not seeing progress and we want to see progress. that is another part of why we did what we did, and why the s&p 500 looks like it does. we see it as appropriate to get the policy right up to restrictive levels, which would be the thinking of the committee in the range of 3.5%. and after that, you see with -- what the rest of the sep says. >> marketplace. do you still think a soft landing is possible? how would you define that, given the revised projections for unemployment, gdp, inflation? >> i think what is in the sep would meet that test. you are at getting back down to almost 2% inflation by 2024. the unemployment rate as low as 4.1%. i would call it as well as meeting that test. do i still think we can do that? i do. i don't want to be the handicapper, that is just our objective. i do think it is possible. i think events over the last few months have raised the degree of difficulty, created challenges. the answer to the question can we still do it, there is a much bigger chance that it will depend on factors we don't control. fluctuations, spikes, commodity prices. they could wind up taking the option out of our hands. we just don't know. we are very focused on getting inflation back down to 2%, which is essential for the benefit of the public and to put us on a path back to the sustainably strong labor market like before the pandemic. >> thank you. i was wondering if you could talk a little bit more, economists are worried you are hitting the economy with a sledgehammer. now there is more risk of a recession than the 50-50 path of rates. can we talk more about that and what evidence would get you to stop rate hikes and rivers? -- reverse? >> financial conditions have tightened over the last seven months. that is a good thing, we think. but the federal funds rate, even after this increase, is 1.6%. it is hard to see that rate. even if we saw another one, would get there. still, it is a low rate. it is not calculated to bring a recession on. by then, we will have seen a lot more data. as i mentioned a couple times, the views are around a modestly restricted stance in the 3, 3 .5% range. also conditioned on that being the appropriate thing to do. if we see data going in that direction, it will be reflected in the policy. we will be watching if things go in the direction we expect, they will adapt. it is a highly uncertain environment, extraordinarily uncertain environment. we will be determined and resolved, but flexible. >> market news international. thank you. i was wondering if the fed initiated a review of policy over the last two years or so, given the inflation. will it be shared with the public? secondly, given the extraordinary volatility in financial markets, are you concerned qt will make it worse? chair powell: what was your question on qt? >> given the illiquidity and extraordinary volatility in financial markets, will cutie make it worse -- qt make it worse? chair powell: of course we have been looking very carefully and hard at why inflation picked up so much more than expected last year and why it proves so persistent. it is hard to overstate the extent of interest we have in that question more in, noon, and night -- morning, noon, and night. you have to understand the context. the context is this. for decades before the pandemic and the reopening, you had a world where inflation was dominated by dis-inflationary forces, such as declining population or aging demographics. globalization enabled by technology, other factors, low productivity. that is how all of the models work. decades and decades of data, they look at that. a very flat phillips curve. so we have experienced an extraordinary series of shocks. think about the pandemic, the response, the reopening followed by the war in ukraine. followed by shutdowns in china. ukraine having effects for years. so we are aware of a different set of forces driving the economy. we have been for quite a while. these forces are different. inflation is behaving differently. in our thinking, it is a question of very strong demand. but you could not get this kind of inflation without a change on the supply side, which is there for anyone to see, these blockages and shortages, people dropping out of the labor force and things like that. that is how we are looking at it. we have done a lot of work internally on -- and thinking about what all of that means. you don't know whether those forces -- to what extent they will be sustained. in other words, will we go back to a world where it looks a little more like the old world? where are we going to be in a world where major supply shocks go on? you see these ways of supply shocks as you did in the 70's, and they go away. there is a new normal and things settle down. but we don't know what it is going to be. in the meantime, we have to find price stability and maximum employment in this new world where inflationary forces -- you see them everywhere. look around the world at inflation levels. it is absolutely extraordinary. not just here. we are in the middle of the pack. but we have a different inflation than others have. partly because our economy is stronger and more highly recovered. we have done a lot of introspection and work on that. on qt, we've communicated clearly to the markets about what we are going to do. markets seem to be ok with it. we are phasing in treasury issuances down quite a lot from where it has been. i have no reason to think markets are forward-looking and they see this coming, i have no reason to think it will lead to illiquidity and problems. it seems to be understood and accepted at this point. >> the last question will go to mark. >> mark hammer right with bank rate. i wonder what your assessment is about the outlook for the housing market, given the years long increase in home prices and the sharp rise in mortgage rates? all of that of course given a heightened sensitivity around the housing market, given the fact that was a trigger for the great financial crisis over a decade ago. chair powell: rates were very low. a good place to start is rates were very low for quite a while because of the pandemic and the need to do everything we could to support the economy when unemployment was 14% and well higher than that. rates are low, now they are coming back to more normal or above levels. in the meantime, while rates were low and demand was high, demand for housing changed from wanting to live in urban areas, to living in single-family homes in the suburbs famously. so the demand was much higher. we saw prices moving up very strongly for the last couple of years. that changes and rates have been moved up. mortgage rates have moved up a lot. and you see a changing housing market. we are watching it to see what will happen. how much it will really affect residential investment? not really sure. how much will it affect housing prices? not really sure. obviously we are watching that carefully. you would think over time -- there is a tremendous amount of supply in the housing market of unfinished homes. as those come online, the supply of finished homes for sale is incredibly so it is still a tight market, so prices might keep going up in a world where rates are up. it is a complicated situation that we watch carefully. if you are a homebuyer, a young person looking to buy a home, you need a reset and we need to get to a place where supply and demand are together and inflation is low again and mortgage rates are low again, so this will be a process where we do our work in a way where the housing market settles in a new place in housing availability and credit availability are at appropriate levels. so, thank you very much.