Decisions from the secretary of agriculture, secretary of labor, all these folks. You can understand how farmers feel like its a bureaucratic answer that we cant do anything. Are you sure theres not a special authority you have to do something more on this issue . Have you looked at every legal possibility . Unfortunately, some of the more difficult were not addressed in the senate. These mr. Miller for five minutes. Thank you, mr. Chairman. Ranking member, mr. Secretary, but did see you again. A very patient young man. I could tell you, mr. Secretary, you are very patient secretary. Thank you. I would stay ranked my nation. Livestock producers in my Congressional District at their local leaders that my Agricultural Advisory Council keep concerned impacting large regions. More troubling is the u. S. Most recent forecast released just last year indicating a 25. 5 decrease in the foreign income and 23. I know that that was touched on earlier. Farmers include strengthening pharmacy the net and Risk Management tools and the initiatives innovative technology, research, expanding biofuels, trademark, u. S. Dea for Technical Education including the underserved heat area of the economy. A trade deficit of 30 billion and trading up to the expanding markets through the fuels including bipartisan farm to fly at modeling update and i on thet of agriculture concerned partnerships and meat inspections if we are not able to cover all of my questions today which i know that we have not. I will submit that i would respectfully have the thanksgivings response in writing. International trade is critical to ohio in the United States agricultural producers, the most recent outlook for the trade deficit nearly doubled last year to 30 billion. Strengthening the ability to meet Global Demand detailing trade losses driven by the livestock treatment area export. For this reason i am working with several of my colleagues including forte, craig on a letter to you. Mr. Secretary, finally get to the question. I am out of breath. For roughly 60 years agriculture trade surplus, that is no longer the case. Resident expert counsel, to expand expert Market Opportunities can you please detail your plan for the global trade market. We recently announced our break room Agricultural Program design to expand and some of the lesserknown Market Opportunities that we know to diverse and five. No longer to live reliant on china. The chinese economy suffers, basically export software. When our economy is stronger than any other economy in the industrialized world, our consumers are able to purchase more. That impacts exports. The fact that for too many years we have ignored our infrastructure needs allowing our competitors to catch up with us. That is also part of it. We did put this program together in an effort to invest in our present, more trade missions, or promotions, or ability to get the word out about u. S. Products i think will be cost competitive we did have record years. I anticipate that we will get that surplus back. It will take a year or two. Thank you for the detailed answer. Calming National Security for foreign countries. All i asked that we question patient. Periodparagraph the problem still exists. I think that you recognize this. Not having the capacity to access these programs. If funding is being distributed unevenly and inefficiently. Can you discuss with us why would usda announced new initiatives, some authorized, some not without having the capacity to assist farmers and municipalities. With all due respect, i do not think that that is accurate. We have expanded to cooperative agreements and contracts with a number of organizations and entities helping farmers all across the country being able to Access Programs and assist them in applying for programs. I do not think that this is anecdotal. Farmers have consistently seen the inability to access that. We have literally over 100 organizations we will be contracting with. Thirty organizations contracting with fsa. The assistance is there and the help is there. As a number of the new initiatives as we set aside earlier is series of resources to provide for technical assistance. I was a mayor of a small town. I came from a local government background also. Councils of government. Basically providing that service im surprised that new york does not have those Regional Government to basically help with the grant writing. I dont know. New york does not have an institution when it comes to grant writing and i am heartened to hear that you do not believe that there is additional need for those initiatives. Farmers and communities have consistently said this to me now in this role. We are simplifying the process. We have cut the application process for loans and half. We have created a Loan Assistance Program to maybe make it a little bit easier. We have simplified the programs. I appreciate that. I would encourage them to take an earnest look. We will communicate where we think in the state, certainly new york there are some concerns i did want to ask at least one other question. Upstate new york to our dairy farms and fair milk pricing and farmers are anxiously waiting for determination from the usda. Hoping they will be restored to the higher of the Pricing System can you provide to us any incitement for the decision announcement. The announcement of 12,000 pages of transcript. They need to be analyzed and reviewed by their folks at usda and the economist and so forth. That will take some time. We will try to get this done. Sometimes within the next 10 11 months. Sooner than that, probably. It is of concern to many farmers across america. Mr. Secretary, we have an open invitation to visit the west end of upstate new york. The folks at cornell would love to see you. Congresswoman for five minutes of questioning. Thank you, mr. Chairman. Thank you, mr. Secretary, for coming before the committee. I will jump right to it. National security. It is important we do everything that we can to support and protect american grown products. As you know, unfair competition is a growing problem for our producers. In florida, this is a growing concern. We know that mexico has on their schemes. Everything from peaches and honey in apple juice from china. All of which is ending up in american schools. What is usda doing to making sure american grown products are being served in american schools and if there is a requirement to be used in schools. There is a requirement that proves we purchased and has to be produced and processed and every aspect of it being done in the u. S. What are we doing to ensure that that is in fact happening . We are finding products from all over the world and our school systems. If you want to give us information about the pacific specific circumstance, we have a process in which we can do the best we can to ensure that purchases are being made with the rules and let regulations. By the end of the corner, we can have a conversation and go through that. I would be interested in the School Districts that you alluded to so we could take a deeper dive into that particular area. Perfect. Moving on, as of february 9, there are currently 1550 applications for ecp applications with the usda that are either approved and not paid , not approved are still pending. In wake of Hurricane Ian. We have chatted about this offline. It has been a year and a half since Hurricane Ian in six months since hurricane a daily. The few that we have been very helpful. We know that that is also an issue. The ability to processes applications in the aftermath is simply put inadequate. Mr. Secretary, can you explain the delays and our producers getting the assistance when they needed the most . We are doing the very best we can to get the resources out. I know that you wanted to ensure that the state would be allowed to do this block grant process. If you authorize at the Congress Grant the opportunity and we would be more than happy to utilize that program. In the meantime, we are doing the best we can with the resources that we have. The resources your secretary can take to make programs a little bit more flexible and get the money out the door faster. I encourage you to utilize that authority. You mentioned the Biden Administration historic assessments to ensure small amid side producers get a bed shake. Other agencies are proposing that will regulate these very users that you are saying you want to protect their will regulate them out of business. They include waters of the u. S. The limitation guidelines and standards for meeting poultry products, reporting and the politicization of Crop Protection tools. The disclosure rule just a few. I had the administer of the epa tell me to my face that he had no idea what it was or vegetative straps were. Yet his agency is doing this for those we are trying to protect and support. Other agencies are playing in the sandbox. They want to dictate what producers grow and how they do it. Instead of advocating for farmers and ranchers that attended expanding and funding policies related to what they believed to be climate chart climate smart. You testified multiple times that you do not want other agencies to tell you how to do your job. Every other opportunity, other agencies are telling our farmers and ranchers how to do theirs. You and your written testimony asking if we are okay losing another 400,000 family farms in the next 40 years. Overregulation by the other agencies in this administration outside the usda are exactly, they are on the path to do exactly what your testimony is outlining. And set up idalis standing by i would encourage to take a very active role with this administration in which you serve to advocate not only in your department but across the other agencies that are pushing us out of business. I give back. The gentlemans time has expired. She no other questions to be asked by members, before we adjourn today, i want to offer my closing comments. Ranking member scott had an unavoidable conflict. Not able to be here for his closing comments. First, mr. Secretary, i want to thank you for joining us today. The agriculture which is the industry itself, it is so complex. Being commended and for the same goal that we want a highly effective farm bill. You have made the case for that. I think we have worked together to achieve from a policy perspective if that and all. Where we disagree, perhaps, quite frankly we have to find a way to pay for it. It is kind of a pipe dream. The good bipartisan work that we have done. I want to thank our members for participation. We have almost everyone. And thank our staffs for doing such a great job for putting this together. Im about frostbite here. [laughter] the as a few points i want to make. I heard about the inability to pass a farm bill. I just have to say Agriculture Policy takes teamwork. And we all need to be working as a team and, quite frankly a lot of reasons why we have not gotten a farm bill done it the fact that this farm bill, the senate has to take action and reconcile, i do not know how soon they will be ready. But, with that said, we are still waiting on technical assistance. We have at least a dozen that have been submitted three months ago. We have gotten great technical assistance. We are still bending from usda. We need that assistance to make sure that we are on track with great policy. Coming along. They cannot proceed without them we have a syndrome going on in this committee and i would say in the executive branch we have funding denial. I will come back to that. For the record, this committee has not been idle. Each member here has been invited to the countryside to hear from the very people that we are charged to represent. I have been very appreciative and thankful for the bipartisan participation that we have done over the last three years. Thousands of miles, meetings, roundtables, visit illustrated today. Seeing agriculture in action. That is how you build a great farm bill. Democrats, republicans and quite frankly the industry. Does our office that we have brought to the table. I have engaged in round tables and discussion. We have also heard today a lot of cherry picked data points. The farm economy has positive it the departments own analysis tells a very different story. With many different farmers and ranchers it is a really different story today. Struggling. Also gathering this administration frankly of all sizes. Cases where they do not subscribe to a far left climate agenda. Hopefully everybody in this room and most people watching in no that i appreciate the fact that our farmers and ranchers are climate champions. We dont give them credit for what we do already. Knowing that american agriculture can be defined as Science Technology and innovation. It is not static. It is dynamic and we will move it forward with this farm bill. The fact is they are good ways to do that in their ways that really are not helping the american farmer. This administration embracing continued inflation, record cost of production, i appreciate some of the things we have talked about have come down a little bit. Not down to where they were to that in past years. Really, destruction, what leads to destruction of the agricultural landscape. I guess that that is a complex way of the loss of family farms we have heard and uneventful Market Basket update to solely allow them to increase the state. It is disingenuous. Using the data is at best. Not like he ample opportunity. It includes being prescriptive. Article one authority in terms of nonabusive way of how a future threat to food plan is evaluated. I have heard so many time the word cuts when it comes to that proposal for being prescriptive of the food plan. It is disingenuous. The leading factor in terms of hunger for many families that are struggling, really and poverty, is the cost of living. The impact of inflation adjust other factors. Supply chain disruptions. Think that would drive up the cost of living and the costofliving adjustments is not being taken away in this proposal. If that is the primary driver of increased costs and financial burden on these families, it is disingenuous and that is being nice. I could think of a few other words of saying our proposal makes cuts. A lot of talk about the climate pilot. Which, quite frankly, better done now by using ccc which should be there to directly help our farmers who are challenged financially. I would say that that is much better under what is been rolled out by usda under research. I am pretty confident there is a bipartisan consensus. We are still ahead of our competitors around the world. That is not where we want to be with agriculture. A unilateral insertion costing billions of success. Zero transparency and a self proposed clip. At includes the ira monies. Whatever is not spent, we hope it is all spent in an accountable way. It is an investment. The proposal that we put on the table being said by the farmville base. That money would be there for farm bills in 2015 at 2055. It will continue to grow an increase in investments. Also frustrated by the fact of the following up personally on this. You talked about the interests. We know that there is interest. That is how we built that piece of legislation that President Biden signed and now its 14 months ago. If we are really serious about getting investments in the conservation, we want to bring the private sector to the table and i think it will come in a big way. In 14 months at a time where we all know that conservation is so important, it is too long. To my friends on the other side of the aisle, the leadership has been hesitant to share how the proposed funding framework will help with priorities. Your number one priority is to reduce hunger. That is incredibly important. And the proposal which i freely admit is a budget gimmick. But it allows us to provide to snap to populations. They have had limited or no access to snap. They can increase access to people that have not been eligible for it. Quite frankly we maintained the costofliving adjustments which mean we are not cutting benefits i think that it is exactly why reducing means the expansion. Having that kind of pay for and also it seems to not be translating. If we put this in place the next administration, and it will be at some point a future administration, it may be more inclined, i hope not because i am a big supporter, may be inclined to decimate individual snap benefits. Our proposal for funding will present that from occurring because it will be prescriptive. We have almost unanimous support for this. Market access for our constituents. Directed by congress for any administration. All members appreciate the conservation programs. We will reinvest the ira to continue the great work of the great conservationist who would do that for more than a 10 year window. They will be made available to thrive. I would like to throw in the record a list of democratic priorities that i have here somewhere. Sent to me by the new dem coalition. Just an example of the request that we are trying to accommodate. 125 bills are priorities. It does carry a significant price tag. It will require the ability to move mandatory dollars into our current baseline. So, to which, you know, for all my colleagues, do you want your priorities funded, or not . Not just to build great policy, which i think weve done over the past number of years, we have to be at the table figuring out how we fund those. The funding that i propose is very thoughtful and balanced. I would argue in the long run beneficial for expanding the benefits that we see under these programs and the leadership of each and every person and your leadership says that these will not work, your leadership says that these will not work. So, quite frank the send me your realistic play paid for. With that, under the rules of the committee, the record of todays hearing will remain open for 10 calendar days to receive additional materials and supplemental responses from the witnesses to any question posed by a member. This hearing is adjourned. [inaudible conversations] cspan washington journal our live form involving you to discuss the latest issues in government, politics and Public Policy from washington and across the country. Coming up thursday morning, the congressman Glenn Thompson and oregon congresswoman. Cochairs of the career Technical Education caucus. Discuss the importance of Technical Skills programs for the u. S. Economy and workforce. We will look at it with Gerard Anderson and the washington journal joining the conversation live at 70 start thursday morning on cspan, cspan now or online at cspan. Org. Thursday on cspan the house back at 10 00 a. M. Eastern for general speecs by noonastern. Members are considering legislation to eliminate all cuent restrictions on the import and export on liquefied natural gas. At 10 00 a. M. On cspan2, irs commissioner testifying tha an oversit hring of the tax Filing Season and recent changes at the irs. On cpan three, cspanastern they testify on the effectiveness of vaccine safety reporting after the rollout of the covid19 vaccine. A live coverage on the app or online at cspan. Org. A healthy democracy does not just look at this, it looks like this. Where americans can see democracy at work. Citizens are fully informed. Republic thrives. Get informed straight from the source on cspan it unfiltered, unbiased, word for word. From the Nations Capital to wherever you are. Get the opinion that matters the most, your own. This is what democracy looks like. Cspan. Powered by cable. Now to a discussion on Monetary Policy and the economy with Federal Reserve might vice chair. Talking about bank failures, and the importance of being cautious when it comes to cutting Interest Rates. Hosted by the National Association of business economics in washington, d. C. It is just under one hour. Leaving the fed response for what arose a year ago in the wake of Silicon Valley thanks failure. Immediately prior to becoming vice chair he was dean of the school of thought public Foreign Policy at the university of michigan. From 20092010, he served as assistant secretary of treasury for Financial Institutions and in that role, he led the Obama Administration response to much of the financial crisis and also negotiated much of the dodd frank act. I am particularly pleased to introduce michael because we have known each other since we were teenagers growing up a few miles from here. In suburban maryland. I give you advice chair far. [applause] really great to see you. Monitoring this situation afterwards. Thank you for being here and for inviting me to be here. I greatly appreciate the opportunity to join you this year around. As you may expect, i was a little busy in march 2023 around this time. I will after bit share some thoughts on Lessons Learned from the stress in the Banking System at that time. In particular, what we have learned in terms of liquidity Risk Management. First i will start by discussing recent economic developments and Monetary Policy. I then will turn to the Banking Sector and focus on topics that lie at the intersection of the composition of the feds Balance Sheet, market functioning, Bank LiquidityRisk Management and the feds role in Liquidity Provision did starting with economic developments, surprised by developments in 2023. Myself included. Perhaps like many of you, i had projected it would cause a slow down and economic activity. Then with the march 2023 banking stress i was concerned that a contraction could further weaken the economy. At the same time, i also worry that inflation may remain elevated, even if we had a weaker economic activity. Supply chain problems in job matching problems continue to be elements of the pandemics disruption to the operation of our economy. I am glad to say that those worries did not come to pass. And part due to the official sector response to the banking sound Monetary Policy to the healing economy. And expanded at a solid pace. The labor market remains strong and inflation came down significantly. The current mix of outcomes we are experiencing we have received it improbable one year ago. How could we end up in an economy with risk growth gross. Bringing it to a screeching halt the Unemployment Rate jumped and Gross Domestic Product plunged at a annual pace. This had some of the most vulnerable populations of most. The strong government responses helped us both ease the effects and make it much more resilient. Once the economy restarted demand rebounded quickly while supply was hampered by supply chain difficulties. These supplies were compounded enormously. By shifting in a way to inperson services and towards goods. We are subsequently compounded by the war against ukraine which severely disrupted food and energy markets. Labor markets disrupted by the labor markets as well. They could not find enough workers in job matching was impaired. An important compare component has been the recovery of supply chains in good inflation, good production and good distribution. Showing supply chain conditions are still an issue but compared to pandemic arra constraints, we are in a much better position. For example, the price to ship a 40foot container from china to the west coast has recently risen to 4000. About twice the prepandemic level but it is far below the 20,000 rate in 2021 and another key component of the improvement in supply has been in the labor market. We have seen substantial improvements in the labor force to both stronger immigration and higher Labor Force Participation rates notably by women. As supply has improved labor demand has cooled. But this cooling has manifested largely in reduction to Job Vacancies rather than layoffs. At the same time we have seen the labor market working much more efficiently. With improved job matching up with a large disruptions during the pandemic. Labor market supply and functioning have allowed it to hold steady at a local level. They have brought the improved the lives of americans. Particularly so for groups that have suffered unemployment levels. And his jobless rates respond more to the business cycle. Another key part is the healing of our economy which has been the growth or production cavity. Measures of productivity tend to be volatile. It has picked up in the past year. It is in part likely coming from components that will yield improvements. Such as the integration of new technology, new ways of working and the large increases in new business formation and growth in new businesses has been found to lead to productivity gains. Likely through entrance we tend to innovate more. They must also innovate to compete with these new entrants. These increases in productivity are also consistent with real wage gains. Growth has been robust. Even as offered pressure of inflation has diminished. Both sides of our mandate over the past year. Monetary policy has been essential in this process. They have helped to supply the opportunity to catch up. Monetary policy for expectations longer term have stayed anchored in shorterterm have fallen. The fomc is preferred inflation gauge fallen from the peak of 7. 1 in june 2022 to 2. 2 in december 2023. Unemployment has remained a 50 year low. As central bankers we always need to consider to achieve both of our goals. Risks on the horizon including an economic slowdown that could reduce. Or the risk of inflation not staying on its path to 2 . As indicated in the most recent news conference, we are confident that we are on a path of 2 inflation. We need to see continued good data before we can begin the process of reducing the federal funds rate. I fully support what he called a careful approach to considering policy given current conditions. Report for e reminder of the past back to 2 may be a bumpy one. No modern experience for what we have been doing. I want to turn to current banking conditions. The Banking System remains sound and resilient. Much better shape than it was last spring. There are a few patches and pockets of risk that we continue to watch including the impact on Office Commercial real estate in certain Central Business districts. Just a couple of weeks ago, disappointing earnings and higher loss provisions that one thing, precipitated declines in stock prices. A single bank missing its revenue expectations and increasing the provisioning does not change the fact that the overall Banking System is strong we see no signs of liquidity problems across the system. Nevertheless, we continue to monitor conditions carefully across the sector just as we always do. Crucial to banks being resilient is liquidity management. That was clear in march of 2023 and remain so now. We have learned that runs can materialize with unprecedented speed and severity spreading contagion. Silicon valley bank lost in a single day. Expecting to lose 100 million more the following day. 85 of the firms deposit. Shortly thereafter on Signature Bank and first republic, each of which lost 20 of deposits within hours were much faster than we have seen in previous episodes. The runs on all three were especially severe. Imprudent funding reliance on uninsured deposits placed by concentrated and often highly networked customer base. These deposits were previously assumed to be at the depositors were heavily concentrated in Venture Capital in the Technology Sector firms. Signature bank set uninsured depositors from crypto related firms. High concentrations of High Net Worth and ensure depositors. Many of these depositors rapidly withdrew their balances. Deposit flows much higher than assumed under the liquidity requirements such as the liquidity coverage ratio. At the same time these institutions face these outflows they also face challenges meeting them with the asset. The high quality liquid asset, not monitor for these assets to turn them into cash. Especially acute as they have these go down, they do not have to reflect the decline of market value. Selling the hdm portfolio. Results to recognize the entire portfolio. Turning it into cash particularly when sales are not feasible and is eliminated to ramp up access to secured funding sources. Proving problematic in large ties last march. Many have been analyzing these dynamics and ive taken steps to address these risks. Over the past year for example we have seen banks reducing their reliance on hdm for liquidity purposes. Adjusting the competition of the portfolios. Enhancing their ability to tap different sources of liquidity. They have also been updating their contingency funding plans. The practices are important for individual Firm Resilience and aggregate financial stability. I remain focused on how we can improve thank readiness for the discount window. The discount window provides ready access to liquidity including forms coming under strength. But bank should do some preparation to be fully ready to tap the window. That includes repositioning collateral and testing discount window usage. We also need to continue to improve discount window operations. Bankbook entity needs contributing directly to the Balance Sheet. The fed senior Financial Officer survey shows that banks now prefer to manage to hire reserve level than it did precovid. Several side in the march liquidity as a significant driver. They are implementing with plentiful reserves. Sizable redemptions every month. This process have been operating smoothly. So far, it has largely been accompanied on the large side of our Balance Sheet. Rather than reductions in reserves. Since eo rn he remains tie the boat we several buffer before reserves can start to decline in a meaningful way. The fomc reiterated in may of 2022 that if plants operate Monetary Policy with an ample reserves regime over time. As many market commentators have pointed out that may be difficult to determine what level of reserves is consistent with ample. Market dynamics from september 2019 illustrate this. When rates spiked in the pressure felt over to the federal funds market. They had to rapidly ramp up operations to reserves. A factor leaving to the establishment of the repo facility. It will help dampen pressures in shortterm money markets. I am pleased to see that there has been a steady growth in the number of firms signed up for the facility and that current counterparties for the facility engage in regular testing as a part of maintaining access. Despite the improvements in our tools, also important to closely monitor Market Conditions well before pressures emerge. They can and do traffic closely. Having difficulty accessing reserves in a way that could or the redistribution of reserves that may not be immediately evident. They could result from a variety of factors in eluding the fact that Smaller Banks have a less diverse array of hotel market Funding Options to tap. So we will be approaching these questions carefully. Indepth discussions of our Balance Sheet soon. In conclusion, i hope my remarks have given you a sense of how i view the current state of the economy as well as the path that has gotten us here. Economic healing has gotten us to lower inflation while growth remained solid. That is to the great benefit of the american people. The Banking Sector is sound. I am focused on ensuring its continued resiliency. One aspect of this work is carefully examining the banks between liquidity, the Federal Reserve liquidity and the evolution of our Balance Sheet. Thank you very much. [applause] im told that im sitting on this side. Hello. Hello. Thank you for being here again. I thought that we should started on the interaction between recent Economic Data and Monetary Policy. You did a good job. But paths are not always smooth. Hot or both of the jobs in the cpi report. Both up 350,000. Broadbased gains, wage growth in the 5 gain of three months. On a threemonth basis. How does this affect your thinking when you think about cutting. As i said the road down to 2 is likely to be bumpy. That is something that i expected before. Something i still expect. Something that i think helps confirm. One of the reasons why think its important to be careful and cautious as we begin to think about what the right appropriate time is to reduce the federal funds rate. I think that it is also important to have a long historical look. Its hard to find an example that is exactly like the one we are in where things turned out well. So, you know, we have to be careful for that reason. On both sides. We want to make sure that we do not cut prematurely and you know , lt a confident glide, even if it is a bumpy glide down to 2 geared we dont want to wait too long and end up causing cracks in the labor market that none of us want to see geared the healing of the economy mean that we have been able to really bring it down while still having a strong labor market which is reflected in the january report to help the economy. Our risk is there and we are really very conscious of that. Each of us get to ask a question of law. You know, the answer is, we are really looking at the totality of the data. Not a single point, month. The data stronger than expected both from the job site and on the inflation side yard we want to continue to see good data over time. We want to look at the totality of the data coming in. Both on the labor market and picture. Not something that we only up date and are thinking about every fomc meeting. Not only the data but what they suggest about our forecast for the future. And the balance of risks that we are looking at the that is a constant judging process. I would say that it is a difficult set of judgment to make in the Current Situation because they are not really good clear historical parallels where you can say, well, the last time we emerge from a Global Pandemic was a very long time ago. Trying to figure out what it has meant and how much healing has happened and how much is left to be done we are looking at. We want to see inflation continue on a sustainable path down to 2 . I am also a soft landing optimist. One of them is when i look at decomposing the composition of inflation. Especially if we talk about cpi. Falling goods prices that have served as persistent housing inflation and persistent inflation in your other services your super core services. How does that inflict your outlook . I think that that is right. I would not describe myself as a soft landing optimist. I would say that data suggests we are in a good path right now. But it is very early to say whether we would end up with a soft landing are not end up with a soft landing. We have been able so far to see significant disinflation with the strong labor market and that is to the benefit of all of us. I would be very careful about where we are in that process and how much work is still to go. I think you are right to call out the three major categories that we are looking at. We have seen it come down very sharply and result in good deflation broadly speaking. It is deflation that is at a lower level than historically present. And, so, when you are thinking about what may happen, both because of historical trends which suggest it would be lower than it is now and because a lot of the improvement and supply has happened already. There is still more to deal. A lot of it has happened already you expected to continue, but to continue closer to zero than it is now. When you look at housing, you know, most of you look at real time measures of market rents. Then you need to see a pretty long lag before they translate measures average Housing Services inflation in the economy hopefully average rent instead of marginal rent and in the owners equivalent of that and that just takes time. Everything about the Realtime Data suggest that we stop plenty of glide paths Going Forward on the east to see disinflation. That brings you to the third major component until recently it has been kind of bumping along at a high level and we see progress in that in recent periods. I think we have also seen the january report in terms of wage pressures that are moving down to levels that are more consistent with sustainable inflation. You have a story that is about the gradual disinflation process that we have seen. We need that to come down to the target and that is how i think about it. Lets dig in a little bit more on housing. Three quarters to express concern that the rebounded housing prices can preempt. The top question from the audience is about the relationship between tight Monetary Policy and its impact on enter sensitive sectors. Lets put it this way. Housing supply in Interest Rates and then Interest Rates and housing prices. Let me start with the basics. We are not targeting house price levels in our work. We are trying to bring it broadly in the economy down to 2 . Four many many years. I know that it is been far short of housing demand. You have on top of that in the current moment higher Interest Rates have resulted in cellblock in particularly for the home market which means that we are seeing very few sales in the sales that we are seeing are still at elevated prices. A lot less a cavity because they dont want to move because they cannot afford a new mortgage at a higher rate. They cannot move into a new house that they like to because of the higher interest rate. It is dampening activity in that sector. More activity in the new home sector continuing to provide the market. The inflation dynamic, we are still seeing the basic story hold. The realtime market rent data that we saw one year ago in 18 months ago is still feeding into our measures of inflation. I expect that to continue. Small banks hold about 50 of all commercial real estate. Loans are otherwise on the Balance Sheet. Can you talk about how confident you are to handle serious pressure given that the fed will terminate the facility in march. Let me talk about the back part of that and then the front of it. Talking about in under the emergency conditions that were in place in march of 2023. I think that program was really quite successful in stopping, along with other actions that we took, stopping the bank runs in the system and ensuring that banks could have the liquidity that they needed at a longerterm rate at that time to stabilize the system. We saw borrowing under that that we saw was quite productive. We are not seeing it in the system. The kind of risk in the bank system right now with respect to commercial real estate likely kind of oldfashioned types of risks that banks face and any credit circumstance. What we are seeing in the Banking System, we look at this as many analysts do, you look at the very largest banks with very low concentration to commercial real estate. We do see some banks and smaller space in the regional space with heavier concentration to commercial real estate. Then you need to look under the hood and say what types do you have and where have we seen pressures and that. The pressures are more acute and certain Central Business districts. They are better than they were last time we had a downturn. That is a positive thing. On the negative side vacancy rate are higher than they otherwise would be because of the changing work. Lower vacancy rates translating to these loans. There will be losses in the sector. Banks are provisioning for that to happen. I think we will see a play out over a longer period of time. I do not expect the kind of acute pressure that we saw that was related to the unique circumstances of last march. You talk to them about health and maturity assets and you highlighted that if a big sales any of the asset they have to market for whatever loss they experience on that scale. Enabling them and if so what if we had basic accounting rules if they had the wherewithal then they could classified as h dm. Consistent with the idea of what a bank is. They hold them to maturity. Thanks having the right liquidity and also that to the extent that banks are relying on this to monitor liquidity purposes that the assumptions are realistic. You cannot sell, as you pointed out, you need to essentially be able to rebuild those maturity securities and under stress there are limitations on how much repo can fit through the system and whether bilateral basis counterparties will continue to permit the recalling of the securities that we saw indication that there were limits on that. We want to make sure that they are being realistic about how they are looking at it with respect to liquidity. Assuming that sufficient liquidity, it makes sense to hold the maturity. I guess at some are asking about nonBank Mortgage lenders. We are always looking throughout the system. It is part of what we are doing when we are thinking about the safety of the Banking System because they are nonconnected to the Banking Sector. So, we do look at Bank Mortgage servicers. We want to make sure that there operating in a safe way. We look at how they are operating the system. We look at risk at how they come from the hedge fund sector. The rise of the basis trade which is highly leveraged activity by hedge funds in the treasury markets. Wanting to make sure that there are not, you know, liquidity trap set they are building in that sector. We looked at the insurance sector with respect to nonliability assets. We are looking very broadly saying that only within the thinking system but where are the risks and how could they manifest. This and set to what we are always looking at. Thank you. It is critical infrastructure. What is the fed doing under the supervision mandates which are the largest banks that are most stable to invest as difficult as it is protected from thirdparty vendors and by the Payment System who may have lower defenses. You are right to point out. Cyber risk is prevalent all around it. My guesses all of you and your companies and organizations worry about this all the time where you have people in your companies and organizations that worry about this all the time. Our role in this is to supervise banks to ensure that they have adequate processes to identify their vulnerabilities to measure and monitor those vulnerabilities. Protecting against Cyber Attacks to test their own protections. That they are robust. Enter prepare when that happened that things happen all the time in the cyber world spirit it is not enough to invest upfront, important, not enough to invest upfront and identification and protection of risks. It is resiliency when things go bad. Resiliency planning and testing, we are examining in supervising banks all the time for that. Work with them to ensure they have the systems in place so that, first of all they are investigated and if something goes wrong they can take action to address other things. Lets turn to the transition of Monetary Policy. Having a dominant view on the respondent was that it has not really changed from the 1218 months. The second most common view would be speeded up somewhat. A question from the audience of what are your reflections on the transmit, how the speed of transmission of Monetary Policy is through the cycle. Not just speed, but speed or nature. I do not think that there is a definitive answer to that. The same formulation that Monetary Policy is i think the research can agree on. I can make a case for some aspects of transmission being faster. Communication i think is more rapid. About to say responding more quickly to Monetary Policy. In the financial conditions more rapidly. But then there is a second and third legs. The Financial Economic conditions. I think that it is harder to tell the story about why that would be faster than it was before. You can argue why they had slower legs because of the fact that many people for example into a longer term fixed rate Business Loan and mortgage is. And that because of the policies that were done in the wake of covid has sold Balance Sheets and business Balance Sheets were much more robust and so there was more time for households and businesses to wait before needing to refinance their loans and that would lead to slower transmission. I think its very hard to come up with the firm answer on that similar to what though range of legs. A popular audience question. Given the elevated Economic Uncertainty and volunteer eddie, are you surprised by its relatively low level . They rose rapidly and then fell a little bit. I think its getting used to what it will be. I think the fiscal entities will be issuing in large volumes for quite some time. Obviously playing into that. The uncertainty about underlying variables that affect how we think about what the neutral laid long term is difficulty understanding fully what Monetary Policy is for greater uncertainty about that path. I think all of these things play in. Too early to know what the right level is. And, so, someone in the audience is asking, is it time to move away from extreme data independent and adopt a perspective as you did in your report remark. I dont know what it means to be extremely data dependent. [laughter] it is just absolutely crucial. Of course data report with a lack what happened in the past. If we are really good we get a good understanding what happened a few months ago. In the balance of risk as ive said. What we think the shape of the future may be. We cannot see into the future, any of us. We dont have a crystal ball. We as data and we use models and we use dutchmen and they come together to make an assessment about the probabilities of different paths in the future. It is important to use data. We cannot only look backward with the data. You have to use it to understand the different ways the economy may involve in the different ways inflation may evolve. You have to use judgment because we are in between the two. We have yet to use models because it structures thinking. We are in a historical. That is very unlike any other historical periods in terms of the nature of the shocks of our economy that we went through. Some of your colleagues have said we can talk about the digital currency. It is instant and up and running how is it going. When will it enable that household that is living paycheck to paycheck to receive their paycheck and deliver rent to their land lord on the same day. It is an excellent topic area one that i care a lot about. The opportunity once fully up and running to contribute to Financial Inclusion to contribute to helping low and moderate income to move paycheck to paycheck. Do exactly what you just said. Receive their income into timely way. It is there when it is there. Most of us in this room do not have to worry about making our bills on time because we have liquid buffers. We have shock absorbers in the system. They dont have any slack. Even a small problem like getting their payment made good late can be a spiral downward in their position. It is working really well so far it will take time. It is a Payment System anytime you develop a Payment System, it is about building a network. Payment systems have Enormous Network externalities so the more you grow the system the more value it is to the participants in the system. If you think about the development it ach it took me decades to be the cutest. Or the development of paper checks back in the day. Or before that, bank notes. These things take time to develop and achieve. And what they do, we just take them for granted. We just assume they have been there all along. We are adding to the system. I made bright thanks and credit unions. We are providing the rails. The institutions providing services to consumers and businesses to households are banks and credit unions. We need to sign up lots of banks and credit unions. It is going faster than we anticipated but its at lower levels. It will take time. They start sending money to each other at higher volumes. Once people start spending money at higher volumes that can be used for more use cases. It has to build but it will take some time. Grade. I am very optimistic and excited about that now. You are a lawyer spending a lot of year career with the economist. At the fed, you did so at treasury and they have gotten some since the last decade or so similarly consents up about inflation transitory in 2021. What is your advice . That is a dangerous thing to ask a lawyer. Spending a lot of my personal career around economist and other disciplines besides law. I have had coauthors that were economists and economists that were career staff psychologists and at the school lots of different kinds of fields. I was found that incredibly valuable. I will just tell a little story and then i promise to come back and answer your question. One of the reasons i am sitting in the seat now is because of an economists named ned. He was on the Federal Reserve board when i was at the u. S. Treasury department in the 1990 s. He was obviously much more prominennd