in the statement they mention the russian invasion in ukraine is creating tremendous hardship and continuing that upward pressure on inflation. the federal reserve also blames the china lockdowns for creating supply chain and continuing the supply chain issues. the fed balance sheet will continue as scheduled with the runoff of the balance sheet. the federal reserve revised inflation forecast for this year. went up to 5.2%, almost a full percentage point. they also revised the core inflation, that went up to 4.3%. for growth the fed sees economy growing at end of this year by just 1.7%, the same with next year, 2023 and 2024 they see finishing 1.9%. all of those projections were downgraded. on unemployment the fed sees near record low unemployment by ticking up to 3.7% by the end of the year and 3.9% next year. 2024, 4.1% where the unemployment rate will be. federal reserve sees the federal funds rate basically in line with st. louis federal reserve president bullard told me revising down, up to 3.4% ending this year. they're forecasting three 50 basis point hikes and one 25 basis-point hike with meetings that we have left here. next-year, the federal funds rate to 3.8%. that is one 50 basis-point hike next year and one more 50 basis point rate cut in 2024. so the headline here, 75 basis points like the market expected for the rate this time around during this meeting. ending projections, growth of this year has been downgraded. inflation has been upgraded. back to you guys. lauren: edward lawrence thank you very much. neil cavuto, host of "cavuto: coast to coast" joins us now. this is pretty telling. they took out household spending and fixed income spending remained strong. they took that out, come men terri that the economy is indeed slowing. neil your reaction? neil: i think they're seeing some of these, the numbers were even out in the last 24 to 48 hours. a slow down in retail sales. reversal of activity first time in five months. this consumer sentiment survey out of the university of michigan which has great currency we're told among federal open market committee members that the consumer is rethinking things. in the past to your point, lauren, the federal reserve is saying despite all these disruptions when it comes to taking vacations and packing flights, packing restaurants and broadway shows, people are still willing and able and eager to have a good time, pay often times through the nose for that but this is the first time to your point here that they seem to be signaling even that might have sort of a short-term duration to it. it is also interesting to point out now, if you buy the rough timeline that edward lawrence was putting out if we get to that schedule, it sticks to that schedule, 75 basis point hikes in the next one, maybe two meetings, slow that down in meetings in the fall, into december, you're still looking at a federal funds overnight bank lending rate at or north of 3 1/2%, possibly as high as 4%. the argument should be it should comb close to historical norms mirrors whatever inflation is doing. maybe their hope by that time inflation has been beaten down a little bit, or, they're going to have to do still more to aggressively get it up to the roughly 8 1/2% it is now? lauren: they're hiking into a slowing economy which is a concern for a lot of people. as you brought up, neil, friday, when we got the cpi read with the 40-year high inflation once again with consumer sentiment number, our projections where prices are going to be, how hot inflation is going to be in the future, those numbers were awful. that was the turning point. i want you to listen to what jay powell said after the last fed meeting, and that was just about a month ago. listen here. >> so 75 basis point increase is not something the committee is actively considering. what we are doing is, we raised 50 basis points today. >> so it is an about-face, yes. did things change that suddenly, you know -- it just seems like things moved and shifted really quickly? neil: you know, what is interesting, lauren, sometimes we're all told leaders don't necessarily obsess over the press they get. i never believe that, when it comes to presidents, for example, the chairman of the federal reserve. i think maybe jerome powell has read far too much of how cautious he is, how tentative he is, how reluctant he is to do anything big. maybe there is an inner paul volcker that wants to do something big, dramatic, make inflation his fight. if it means things slow down or god forbid we get ourselves driven into recession so be it. much like paul volcker it will be worth it in the end. that is my read into this, someone who follows him closely, wonders whether that tepid press attention to him that he missed the mark or as gerry baker written in "wall street journal" missed a lost things from the tentative nature of this inflation to the fact that that it isn't too big of a deal. that his overall vanilla approach to things. whether you find that justified or not just won't fly and now he is feeling his oats and sending a signal, this is just starting. now how the markets respond to that, so far favorably is anyone's guess. but again, not getting a sense what happens from mere is probably going to give markets and investors pause here because if this indeed a new jerome powell, a much more aggressive federal reserve, it could confuse folks and market abhor uncertainty. i know that is a tired old line but far from giving them a sense, now we know where this guy is going, this activity, because it is so much against the grain of his prior decisions and actions, now people are saying, which is real, the old jerome powell or this one? lauren: as you're speaking, neil, the dow turned south. it was up around 230 points right before the announcement. it stayed there. started coming down a little bit. now down for the dow 37 points while the other markets are positive. you've talking about a tougher jerome powell. it was a bank of america fund manager survey, a few days ago, they called this the summer of volcker as we deal with the risk of stagflation and slowing growth here in the u.s., but also globally. neil cavuto, thank you so much. good to see you. tune in to "cavuto: coast to coast" weekdays, noon here on fox business. let's turn to gary kaltbaum, phil blancato. thank you, gentlemen. we're watching the market reaction. it reversed course, if you're looking at the dow, we saw the s&p 500 earlier this week officially entering bear market territory on recession and rate hike fears. you know, gary, it is just a couple minutes now, did jay powell send the right message? is 75 now and then again, bringing rates to what, fed funds to 3 1/2% by end of the year enough to get the job done and bring down inflation? >> well the problem is is that he is playing catchup. he is at 1 1/2% right now with the one year-year-old over 3%. so the talk of him being inflation fighter, he is still an easy money central banker and therein lies the problem. that is why i continue to be worried going forward. i'll tell you who i am happiest for, that is the savers who have been screwed since christmas of 2018 with nothing off their money. finally that kicks into gear. the biggest problem is, he is tightening and forced tighten into a recession. we are in a recession now. all of the evidence is coming in. we heard delinquencies are starting to pick up. all little things we're hearing in advance are occurring. the worst possible time by the worst possible person to be doing what he is doing. we have no choice, because of all inflation created, because of all easy money and policies out of this white house. neil: to put it bluntly, gary. i want to look at the 10-year yield, it is rising a bit. it is above 3.4% now as i speak. 3.433%. we have a chart. it shows the two-year and 10-year yield and the two-year is the most sensitive to set policy. let's bring up this chart. i will point your attention to what we're seeing, you see the green line. if you look toward the end, the right side, you see this vertical spike upward of the two-year-year-old. 70 bps the past five days. how much does that concern you, phil? >> it does a bit. i'm not in the camp you go into recession. you go into recession consumer strong as it is. i don't disagree the retail sales are soft than we would like. whether it is the four number or issues around pricing. i don't think we fall into recession. i disagree with gary the fed is little bit later than we wanted. >> a bit? >> i'm not interrupting you, don't interrupt me, buddy. the consumer in excellent condition. lowest levels of debt on consumer balance sheet. lowest levels unemployment in history. highest rates. we can with stand bout with inflation. the issue can they tame oil? that is the reason they haven't been i believe. the fed is not taming oil. i agree with gary, policies of white house led us into this position and created a problem. to your point we're not inverted on two and 10. i don't think we get to the that scenario of strength of consumer. corporate profits are excellent. they're above the five-year average. up 12% over year-over-year. this is not about corporate debt. we're not seeing any deep debt. core of economy is strong, corporate balance sheet and consumer. yes we have inflation. yes the fed has to catch up. the biggest issue is oil and that is where the white house -- lauren: you've given me so much to respond to. gary you were trying to get. i let you say what they have to say. >> look, here is the problem, jay powell became the market. he became the end all be all. never in our lifetime have we ever heard of nine trillion dollars of printed money, and by the way they're worse over in europe. what you're seeing now is because of all of that that created a lot of the inflation he is now forced to roll it back, creating what you're seeing and we can talk about today and maybe the market rallies, maybe it doesn't but just in the last 11 days leading up to this the 10-year yield went too 2.7% to almost 3.5%, an unprecedented move taking mortgage rates above 6%. therein lies problem. main trend in yields is up. main trend in oil is up. until that dynamic changes it doesn't matter what jay powell does, doesn't matter what he says. why? because he is way behind the curve. i know it is an off the-used verbiage but it is the fact. he has got to get himself into gear. if i was him in the presser i would have jumped a point 1/2 to two points today and explain why. that we have to play catchup. we are determined to fight this inflation. just remember, we're in the eights in inflation and still 1 1/2%. ridiculously low. again, thus my worries. now we're seeing a lot of evidence on the economy. i keep fingers crossed things will be better but i'm not so sure. lauren: seems like, phil, the downshift it has been fast, it has been jolting. i agree with you you look at the broader economy there are still signs things are good, unemployment rate 3.6%. we're hearing from companies in all sectors they're cutting jobs. even the strong housing sector, compass, for instance laying off some workers. phil? >> i agree with you but you have 11 1/2 million jobs open and only 3 people looking. that see the labor market soften a little bit, to stop wage inflation. having one year fantastic boost for consumer is great. we want to keep doing that. labor market get equalibrium again is good not bad thing. the problem with the stock market it's a bit about inflation. not totally. about going back to valuations that make sense. we had 45% earnings growth last year. we'll have five this year. that takes a market to settle down. by the way, everybody, gives up student to buy good stocks, really inexpensively. i'm a buyer here, not a seller. i'm not buying into the recession rhetoric or inflation rhetoric. lauren: final words to you, gary? >> can i make one important statement to the viewers? make less attention to powell what he does and what he says and watch the yield. if yields start to come down i will buy the living heck out of the market. i've been out of the market. that is the end all, be all now. it used to be powell ran the markets. the markets are now running him. if the 10-year can start falling back below three and even lower i'm all in but so far the trend is way up and i think what you say recently, just not very good vertical move in yields. >> you just call the fed irrelevant, gary? >> i did, yes. i think the interest rate by the real market, real world, matters 99%. i say the fed is 1% at this juncture. just playing catchup. lauren: phil? >> one piece of advice, on that real fast. agree with gary there. >> yay. >> any modest correction? the price of oil, either saudis or we turn it on, any modest on oil impacted inflation, 10-year goes down. that is what you focus on anybody. any correction there and -- lauren: i hear that. i hear that. retail sales report, yeah it fell, sales fell for the month of may but we were still spending on the essentials, right? which is gas and food because it is dire types right now. we got to go. gary, phil, thank you so much. right now i want to bring in crossmark chief investment cio, bob doll. we started are we in a recession, how much is the economy slowing discussion. you say we're not in a recession. we might not have to get into recession. do you still hold that point of view after what we just heard from the fed. >> we're still there. i'm 40% chance of recession. every time inflation gives us a worse than expected number last friday the probability of recession goes up because the fed has more work to do. i'm going to agree we need to see yields peaking. we need to see oil prices peaking. eventually, need to see the end of the fed raising rates for the stock market to have a noticeable up tick and that's far away. lauren: yeah. you were going through that list, i'm thinking to myself that is not going to happen, that is not going to happen, we have no idea on that but this is like the biggest period of uncertainty we've ever seen because this is the most unpredictable fed i've ever seen. >> not only do we have monetary policy uncertainty, fiscal policy uncertainty, foreign policy uncertainty. it is a at a tumultuous world. lauren: what do indresstores do? >> if we don't have recession, risk is time and price f we have recession we're going lower. earnings estimates have toby cut no matter what. investors say why am i invested? what is my horizon. if i can find good companies cheap i will add to them. if i'm over invested unleveraged not too late to take money off the table. on big up days when my screen is green. i'm trying to sell things. when i get a lot of red on the screen, my stomach doesn't feel so good, that is when i'm doing some buying. >> first quarter, gross domestic product contracted, right? the atlanta fed now gdp number is at 0%. so, speaking of uncertainty, they could revise that. then what if we get a second quarter of negative gdp growth which is by definition recession? >> i think a lot of it's, getting technical is the components. when it's trade and inventories which is what killed us in the first quarter, that's less onerous than if it's final demand. in other words, the consumer was fine in the first quarter gdp numbers. we're weakening here in the second. retail sales number as you pointed out was not so good. i think we have a chance with skating through low growth, strong consumer, strong corporate sector albeit both weakening, i won't deny that and very robust labor market. we never had a recession with the robust labor market. lauren: a lot of strength in the labor market people going back to work. jobs restored rather than jobs created, right? >> true enough. lauren: we're starting to hear about layoffs in the crypto sector, in the housing sector, in the tech sector, if it is not a layoff that we're getting pause on hiring. that can change pretty quickly. >> three things i said, consumer, corporate, jobs market they're at the margin getting worse. lauren: what are the chances looking retail sales, surprise fall, minus .3%, first drop all year, what are the chances that solves the fed's problem in that it's demand destruction, slowing consumer, that brings down inflation in of itself? >> you're right. bad news is good news. we're in that bad news for economy, means less pressure on inflation, less pressure how far the fed has to raise rates. the stock market says, i can deal with that. it is last friday we get worse than expected inflation, the fed has more to go, guess what, i got to sell because valuations are coming in. oh, my goodness, earnings could be at risk too. lauren: retailers are slowing some strength as we we look at a nice chart of gains across the board. we were talking at the top of the show being this perhaps the volcker moment for jay powell. he has to toughen up. at his last press conference when he first came to the podium he addressed the american people. he said, look i have to say i wrote down the exact thing he side i would like to take this opportunity to the speak directly to the american people. i know you're hurting. well, we're hurting more now. do you expect him to have that same tone when he takes the podium ten minutes from now? >> whether it he says it deliberately or not he has no choice. americans are hurting. inflakess running 8%. i'm guessing earlier i said no recession, i think 60-40, anomalies in the economy. whether we have recession or not we'll not have a great growth period. lauren: bob doll, thank you, appreciate it. bring in here danielle dimartino booth quill intelligence ceo you think we're in recession now, correct? >> i actually do. revisions in april that was cut in half. so the trajectory going into june with the starting point of zero percent or s&p global, took their q 2. gdp forecast down to 0.9%. even the street is starting to foresee a recession. if you incorporate slowing we're seen, layoffs you were speaking to, warner laid off 1000 in the ad business for example, you mentioned redfin, you mentioned compass, 62% of mortgage lenders are laying off right now, feasible we see a negative june retail sales report as well. meaning consumer will lead us into a second consecutive quarter after negative gdp growth. excuse me, negative gdp. no growth. lauren: then essentially,5 basis points now, the fed is hiking into a recession that you think we're in? >> i think that is the case. i think it is very telling the day jerome powell was confirmed by the senate after they had kind of held him hostage more than three months, that he came out and made, he did an interview said recession was going to be in the cards. of course he can't use the "r" word. that is against the fed's rules. i was inside of the fed for nine years. they can't say recession. they can't scream fire in a crowded theater but they have alluded to this. lauren: is this operation fed gain credibility with this bold move today? >> i think it is. people forget when jay powell first took office, he was different, more resolute, more hawkish type of fed leader. volcker was one of his mentors. if he is coming in late, finding his inner volcker he will have to put u.s. economy into recession. that will be the tough medicine that has to be taken. lauren: the consume certainly slowing. homebuilder sentiment read it is down six months in a row. hit a two-year low, danielle. at the same time 30-year fixed rate mortgage, 6.28%. last week it was 5.5%. that is an incredible move to the upside. put that in dollar terms for the average american with a 400,000-dollar home, 20% down at the beginning of the year you paid $1400 a month for your mortgage. now you're paying $1950 a month. that is a big deal. can the consumer handle higher interest rates? >> i don't think that the consumer can handle higher interest rates. cfo of ford corporation today, in his speech said ford is seeing automobile delinquencies begin to tick up. that is another interest rate sensitive sector. to your point, with the national association of homebuilders this morning, read into the read, traffic, traffic of perspective homebuyers coming through homes actually contracted last month for the very first time. we're seeing a year-over-year decline in people being able to look at homes because to your point, those mortgage paints are simply not tenable in that they have increased so much. just since the start of the year. lauren: home prices are not come down enough to juice that potential sale for anybody either. what dowhat do you think jay pol should say when he speaks in what, six minutes from now? >> i think that jay powell should reiterate what he focused on last month. that's they're going to have to effectively set aside their labor mandate right now and nod to the fact that inflation is the much bigger depressant on u.s. households and it is the fed's sworn duty to make monetary policy in the public interest. he will continue to forge down this path, knowing it will not going to be easy going forward. knowing people like esther george, who is a known hawk, dissented, she is in the midwest. she has seen recession set in, in secular portion of the economy. that is likely why she dissented. he is going to have to deal with potentially much more of that going forward. i think he needs to be his strongest jay powell ever today. lauren: wow, danielle, good point about esther george. i didn't think of it that way. thanks very much for inside information. we appreciate it. as i've been saying jay powell is expected to speak any moment on the fed's decision. you're looking at podium. he is going to address reporters in that room. the american people moments from now as we wait for that, let's bring in economist nomi prins and bank of mellon wealth management a leash is -- alicia levine. thanks for joining us. what is your initial reaction to the fed's decision today to go to 75? >> it is a part of powell push to get it out sooner, do the 75 before we see more recessive growth come out. they have also reduced their gdp forecast as part of the 75 basis-point hike. so it is almost like a race against time for powell to do the sort of politically and inflationary expedient thing but also to recognize as the fed also reported today, that growth is actually slowing down as we speak. lauren: alicia, let me bring you in here, i'm looking at with the market, u.s. rate futures how they're pricing in future hikes. there is 93% chance of another 75 bps in july. 55% of 50 in september. does that seem about right to you? >> that feels about right but i think what will be really important at the presser is if jay powell doesn't close off any avenues for what might happen because what happened six weeks ago he was asked the question about 75 and he shut it down. lauren: immediately. >> yeah, immediately. the issue is the data is very noisy and hard to predict. it is a situation where you see some prices coming down, on the other side inflation is up, prices are up. he would be say serious about 2% as the target. we'll not preclude any move in the next few meetings. >> is 2% even realistic, nomi? >> that is a really good question. right now the other thing powell should indicate, there is two types of inflation. monetary inflation pushes upasset and home prices. that is taken on by the fed. there is real inflation, food and fuel fed can't do anything about. it doesn't have the ability to create wheatfields. it doesn't have the ability to produce oil lines. there is tenuous state what constitutes inflation they say they're fighting and what is actually inflation that consumers are feeling. they can't control them. lauren: that is a really good point. alicia, can you respond to that? in a sense there is not much the fed can even do here. it is all policy from the administration, president biden and the white house? >> look, the fed can't do anything about supply shortages and can't do anything about the supply chain, can't do anything about energy and food prices. the issue is inflation seeped into areas the fed can control which is the labor market and housing. 's we were speaking about earlier, housing is the most cyclically sensitive to rate but they can't do anything about supply shock coming from energy and food. they're in a sticksky situation. you attack inflation by raising rates but you wind up really putting kibosh on the real economy in a situation where the economy is already slowing. there aren't really many easy answers here. i would say this their prime objective now is getting inflation down, and making sure the american people know they're serious about it. lauren: but nomi, feels like they lost credibility in the sense they were so late to acknowledge inflation was here to stay at least for the time-being. that it wasn't transient. that it is pervasive for a the loaf people. i can't tell you how many times i fill up the gas tank, i am my windows are open, i am talking to person across. wow, 5.60 down the street. 5.40. that is nuts. remember when it was three? that is what people are talking about. >> that is absolutely right. you can't stop talking about. you don't get over it every time you fill up the car. it is high and painful. those are real dents, talk about 4 to 500 extra on household budget stretched. even with wages even with the fed doing what it is doing have not kept up with inflation, these real household items like food and fuel. that is the problem. the fed was so late recognizing inflation that it could control to alicia's point. as a result it is trying to overcontrol it right now but at risk distorting relationship between market, financial asset prices, the experience of the real economy. lauren: as we wait on jay powell to come to the podium any second now, alicia i will give you the final words here. >> so i think the really interesting thing here if you look at the summary of economic projections the fed is projecting the unemployment rate to move up higher than they did six weeks ago, back in march. so what that means is that soft landing which they're project something bumpier and that's essentially the message here, that unemployment will have to go up to get inflation down. no fed wants to say that but they have said it. lauren: you hit the nail on the head. here is jay powell. >> we're strongly committed to bringing inflation back down. we're moving expeditiously to do so. we have both the tools we need and the resolve that it will take to restore price stability on behalf of american families and businesses. the economy and the country have been through a lot over the past 2 1/2 years and have proved resilient. it is earnings we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all. from the standpoint of our congressional mandate to promote maximum employment and price stability the current picture is plain to see. the labor market is extremely tight and inflation is much too high. against this backdrop today the federal open market committee raised its policy interest rate by 3/4 of a percentage point and anticipates on going increases in that rate will be appropriate. in addition we're continuing the process of significantly reducing the size of our balance sheet. i will have more to say about today's monetary policy actions after briefly reviewing economic developments. overall economic activity edged down in the first quarter as unusually sharp swings in inventories and net exports more than offset continued strong underlying demand. recent indicators suggest that real gdp growth has picked up this quarter with consumption spending remaining strong. in contrast growth in business fixed investment appears to be slowing and activity in the housing sector looks to be softening, in part reflecting higher mortgage rates. the tightening and financial conditions we've seen in recent months should continue to tamper growth an help bring demand into better balance with supply. as shown in our summary of economic projections fomc participants have marked down their projections for economic activity with the mead yang proprojects for real gdp growth running below 2% through 20 204. the labor market has remained extremely tight with the unemployment rate near a 50 year low, job say vacancies at historical highs and wage greg elevated. employment rose average of 308,000 jobs per month down from the average pace earlier in the year but still robust. improvement in labor market conditions have been widespread including workers at the lower wage distribution as well as african-americans and hispanics. labor demand is very strong while labor supply remains subdued with the labor force participation rate little changed since january. fomc participants expect supply and demand conditions in the labor market to come into better balance easing the upward pressures on wages and prices. the median projection in the sep for the unemployment rate rises somewhat over the next few years moving from 3.7% to the end of this year to 4.1% in 2024, levels noticeably above the march projections. inflation remains well-above our longer run goal of 2%. over the 12 months ending in april, total pce prices rose 6.3% excluding the volatile food and energy categories. core prices rose 4.9%. in may the 12 month change in the consumer price index came in above expectations at 8.6% and change in the core cpi was 6%. aggregate demand is strong. supply constraints have been larger, longer lasting than anticipated and price pressures spread to a broad range of goods and services. the surge in prices of crude oil and other commodities that resulted from russia's invasion of ukraine is boosting prices for gasoline and food and it's creating additional upward pressure on inflation. covid related lockdowns in china are likely to exacerbate the supply chain disruptions. fomc participants have revised up their projections for inflation this year, particularly for total pce inflation given development in food and energy prices. the median projection is 5.2% this year and falls to 2.6% next year and 2.2% in 2024. participants continue to see risks to inflation as weighted to the upside. the fed's monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the american people. my colleagues and i are acutely aware high inflation poses significant hardship especially on those least able to meet cost of essentials like food, housing transportation. we're highly attentive to the risks high inflation poses to both sides of our mandate and we're strongly committed to returning inflation to our 2% objective. against the backdrop of the rapidly evolving economic environment our policy has been adapting, it will continue to do so. at today's meeting the committee raised the target range for the federal funds rate by 3/4 of a percentage point, resulting in a 1 1/2 percentage point increase in the target range so far this year. the committee reiterated that it anticipates that on going increases in the target range will be appropriate. we're continuing the process of significantly reducing the size of our balance sheet which plays an important role in firming the stance of monetary policy. coming out of our last meeting in may there was a broad sense on the committee that a half percentage point increase in the target range should be considered at this meeting if economic and financial conditions evolved in line with expectations. we also stated that we were highly attentive to inflation risks. that we would be nimble responding to incoming data and the revolving outlook. since then inflation has again surprised to the upside. some indicators ever inflation expectations have risen and projections for inflation this year have been revised up notably. in response to these developments the committee decided that a larger increase in the target range was warranted at today's meeting. this continues our approach of expeditiously moving our policy rate up to more normal levels t will help insure longer-term inflation expectations remain well-anchored at 2%. as shown in the sep the median projection for the appropriate level of the federal funds rate is 3.4% at the end of this year. a percentage point 1/2 higher than projected in march and .9 above meeting estimate of its longer run value. the median projection rises further to 8.3% at end of next year and declines to 3.4% in 2024 still above median longer run value. these projections do not represent a committee plan and decision and no one knows with any certainty where the economy will be a year or more from now. over coming months we'll be looking for compelling evidence that inflation is moving down consistent with inflation returning to 2%. we anticipate that ongoing rate increases will be appropriate. the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy. clearly today's 75 basis.increase is an unusually large one. i do not expect moves of this size to be common. from the perspective today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting. we have will however, make our decisions meeting by meeting and we'll continue to communicate our thinking as clearly as we can. our overarching focus is using our tools to bring inflation back down to our 2% goal and keep longer-term inflation expectations well-anchored. making appropriate monetary policy in this uncertain environment requires a recognition that the economy evolves in unexpected ways. inflation has obviously surprised to the upside over the past year and further surprises could be in store. which there for will need to be nimble responding to incoming data and evolving outlook. we will strive to avoid adding uncertainty to what is extraordinarily challenging and uncertain time. we are highly attentive to inflation risks and determined to make measures necessary to restore price stability. the american economy is very strong and well-positioned to handle tighter monetary policy. to conclude, we understand that our actions affect communities, families and businesses across the country. everything we do is in service to our public mission. we at the fed will do everything we can to achieve our maximum employment and price stability goals. thank you. and i look forward to your questions. reporter: thank you, howard snyder with reuters. two related questions, chair powell. do you feel you boxed yourself in with the language you used at the last press conference on 50 basis point hikes in june and july and would you please give us as detailed a sense you can what role you played in reshaping market expectations so quickly on monday? >> so as you know we, we always aim to provide as much clarity as we can about our policy intentions, subject to the inherent uncertainty in the economic outlook because we think monetary policy is more effective when market participants understand when they understand our objective function, our reaction function and in the current highly unusual circumstances with inflation well above our goal we think it is helpful to provide even more clarity than usual again uncertainty to the outlook. i think over the course, over the course of this year financial markets have responded and have generally shown that they understand the path we're laying out. of course it remains data dependent. and so that is what we generally think about guidance. that's why we offer it. of course when i offered that guidance at the last meeting i did say it was subject to the economy performing about in line with expectations. i also said that if the economy performed, if data came in worse than expected then we would consider moving even more aggressively. so we got, we got the cpi data and also some data on inflation expectations late last week. and we thought for a while, we thought this is the appropriate thing to do. the question is, what do you 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. so we decided we needed to go ahead and so we did. and, that is really how we made the decision. reporter: thanks for taking our questions, gina with "the new york times." you, i just wonder if you could describe for as you little bit how you're deciding how aggressive you need to be? obviously 75 today. what did 75 achieve that 50 wouldn't have? why not just go for full percentage point at some point? >> sure. if you take a step back, what we're looking for is compelling evidence that inflationary pressures are abadeing, that inflation is moving back down. we would like to see that in the form of a series of declining monthly inflation reads reads. by this point we expected clear signs ever inflation flattening out and ideally beginning to decline. we said we would be data dependent, focused on incoming data, inflation risks things i mentioned to howard moments ago. contrary to expectations inflation again surprised to the upside, some indicators of inflation expectations have risen and projection this is year have moved up notably so we thought strong action was warranted at this meeting and today we delivered that in the form of a 75 basis point rate hike as i mentioned. the point of it is really this, we've been moving rates up expeditious to more normal levels. over the course of the seven months since we pivoted we began moving in this direction we've seen financial conditions tighten, appropriately so. the federal funds rate even after this move is at 1.6%. so again the committee is moving rates up expeditious to more normal levels and we came to the view that we would like to do a little more front enloading on that. the sep gives you levels more prepare at at given point in time. this is really about the speed which you would get there. as i mentioned, 75 basis points today. i said the next meeting could well be about a decision between 50 and 75. that would put us at the end of the july meeting you know in that range of, in that more normal range and that's a desirable place to be. you begin to have more optionality about the speed you proceed going forward. just talking about the sep for a second, what it really says is that committee participants widely would like to see policy at a modestly restrictive level at the end of this year. that is exmonths from now. so much data and so much can happen. remember how highly uncertain this is. but that is generally a range of three to 3 1/2%. that is where people are. that is what they want to see, knowing what they know now, understanding that we need to be, feel resolved but also flexible to incoming data as we see it. if things are better we don't need to do that much. if they're not, we either do that much or possibly even more but in any case it will be very data dependent. then you're looking next year, what you see, people see a bit more tightening in the change of maybe 3 1/2 to 4%. that is generally what people see as the appropriate path for getting inflation under control and starting back down, then getting back down to 2%. so 75 basis points seem like the right thing to do at this meeting. and, that is what we did. reporter: steve liesman, cnbc, thank you for taking my question, mr. chairman. you have not used phrase in a long time, monetary policy is in a good place which is a phrase you used to use often. now that the committee is projecting 4% on, or 3.8% next year in terms of the funds rate which is similar where the market is now, futures market, 4% funds rate next year, do you think that's a level that is going to be sufficiently high enough to deal with and bring down the inflation problem? just as a follow-up, could you break apart for me how much of that is restrictive, how much is a normal, positive rate that ought to be embedded or not in your opinion in the funds rate? thank you. >> sure. so the question really is, how high does the rate really need to go. this, the estimates on the committee are in that range of 3 1/2 to 4% and how do you think about that? you can think about the longer run neutral rate. you can compare it to that. we think that is in the mid 2s. you can look frankly broader financial conditions, look at asset prices, look at effect you're having on the economy, rates, asset prices, credit spreads, all of those things go into that. you can also look at the yield curve and ask all along the yield curve where is the policy rate? so for much of the yield curve now real rates are positive. that's not true at the short end. the short end of the yield curve in the early years you don't have real, you have negative rates still. but that really is one data point, it is one part of financial conditions. so i think, i have to look at it this way, we move policy rate that affects financial conditions. that affects the economy. we have of course race, rigorous ways to think about it but ultimately comes down do we think financial conditions are in a place where they're having desired effect on the economy and 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 in balance between supply and demand. that can happen both from supply and demand. right now demand is substantially i here than available supply though. we feel there is a role for us moderating demand. those things we affect with our policy tools. many things we can't affect, those would be commodity price issues around the world due to the war in ukraine and, and fallout from that and also just all of the supply side things that are still you know, pushing upward on inflation. so that is really how i think i would think about it. reporter: 3.8%, get it done, get the job done in relation to inflation? >> it certainly in the range of plausible numbers. i think we'll know when we get there, really. honestly that would be, you would have positive real rates, i think inflation coming down by then. i think you would have positive real rates across the curve. i think neutral rate is pretty low these days. i would think it would. you know what? we're going to find that out empirically. we'll not be completely model-driven about this we'll look at this keeping our eyes open, reacting to incoming data and both on financial conditions and on what's happening in the economy. reporter: thanks. nick timeros of "the wall street journal." chair powell you've said you liked your policies to work through expectations and now obviously this decision was quite something different how you and almost all of your colleagues set those expectations during the inner meeting period. i know you just said what changed really inflation data, inflation expectations data but i'm wondering on the inflation expectations data was there something you saw that was unsettling enough to risk eroding the credibility of your verbal guidance by doing something so different what you had socialized before? >> so if you look at, look at broad range ever inflation expectations. so you got the public, you've got surveys of the public and of experts and got market-based. if you look across that broad range of data, what you see is that expectations are still in the place 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 really where inflation expectations are. and also as you get away from this episode, get back down close to 2%. so this is really very important to us, that that remain the case and i think if you look for 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. we do not take this for granted. we take this seriously. preliminary michigan reading, might be revised, it was quite eye catching. we noticed that. index of common inflation expectations at the board has moved up after being pretty flat for a long time. we're watching that, and we're thinking, this is something we need to take seriously. that is one ever the factors as i mentioned. one of the factors in our deciding to move 75 basis points. this is what we saw in inflation expectations. we're absolutely determined to keep them anchored at 2%. that is one of the reasons. the other was the cpi rating. reporter: if you saw movement like that again, another tick up in inflation expectations would that put a 75 or even 100 basis point increase in play at your next meeting? >> you know, i will just say we'll react to the incoming data and appropriately i think. so i wouldn't want to put a number on what that might be. the main thing is to get rates up and then pretty soonwell be in an area where we're, i think, as you get closer to the end of the year you're in a range where you've got restrictive policy which is appropriate, 40 year highs in inflation. we think policy will need to be restrictive. we don't know how restrictive. so, i think that is how we'll take it. reporter: hi, chair powell. neil irwin from "axios." thanks for taking our questions. the late-breaking kind of decision to go 75 basis points, do you worry that will make policy guidance a less effective tool in the future? should we think of that symmetrical reaction function if we get soft reads on inflation and labor market starts to roll over? >> to take your second question first i think yes. we're resolved to take this on but we'll be flexible in implementation of it. sorry, your question was guidance. so, again the overall exercises that we try to be, provide as much clarity about our policy intentions as we can. we think that makes monetary policy bork better. it is always a tradeoff because you have to live with that guidance and so you do it, it helps a lot of the time. i frankly think this year has been a demonstration of how well it can work with us having done very little in way of raising interest rates financial conditions have tightened quite significantly through the expectations channel as we made it clear what our plans are. so i think that has been a very healthy thing to be happening. so, and i would hope that our, it is always going to be, any guidance that we giver is always going to be subject to things working out about as we expect. in this particular situation you know, we're looking for something specific and that is progress on inflation. we want to see progress. we want to see, inflation can't go down until it plat ins out. that is what we're looking to see and if we don't see that, that is the kind of thing, if we don't see progress for a longer period that could cause us to react. soon enough we'll be seeing some progress at some point and we'll react appropriately to that too. i would like to think though that our guidance is still credible but always going to going to be conditional what happens. this is an unusual situation to get some data late in, during blackout, pretty close, very close to our meeting, very initial one that would actually change the outcome. so, i only seen in my 10 years plus here at the fed i have only seen something like that even close to that one or two times. so i don't think it is something that will come up a great deal. reporter: thank you so much for taking our questions. colby smith of "the financial times." on the clear and convincing threshold for the inflation trajectory what is level of realizing inflation that meets that criteria and how is the committee thinking about potential tradeoff of much higher unemployment even forecasted in the sep if inflation is not moderating at this acceptable pace? >> the second part i did not get? >> what is the potential tradeoff of higher unemployment even than what is forecasted in the sep if inflation is not moderating at an acceptable pace. >> right. so what we want to see is you know a series of declining monthly reads for inflation. we would like to see inflation headed down. so, but right now, our policy rate is well below neutral, right? so, soon enough we'll have our policy rate, let's assume the world works out the sep rate is up where we think policy should be then the question is should you slow down? you will be making judgments about is it appropriate to slow down from 50 to 25, let's say or speed up? that is the kind of thinking we'll be doing. again we're looking ultimately, we're not going to declare victory until we see a series ever these, really see convincing evidence, compelling evidence that inflation is coming down and that's what i mean by, that is what it would take for us to say, okay, we think this is, this job is done because we saw, frankly we saw last year inflation came down over the course of the summer and turned right around and went back up. so i think we'll be careful about declaring victory but implementation of our policy is going to be flexible and sensitive to incoming data. reporter: are you more concerned now to bring down inflation it will require more than just some pain at this point? >> again i think that, i do think that our act jeb tiff, this is what is reflected in the sep, but our objective really is to bring inflation down to 2% while the labor market remains strong. i think that what is becoming more clear, many factors we don't control are going to play a very significant role in deciding whether that's possible for not. there i'm thinking of course of commodity prices, war in ukraine, supply chain things like that, where we really can't, monetary policy stance doesn't affect those things. so but having said that, there is a you know, there is a path -- there's a path for to us get there. it's a not getting easier. it is getting more challenging because ever these external forces and that path is to move demand down. you have a lot of surplus demand, take for example, in the labor market. you have two job vacancies for essentially every person actively seeking a job. that has led to a real imbalance in wage negotiating. you could get to a place where that ratio was at a more normal level, you would expect to see those wage pressures move back down to levels where people are still getting healthy wage increases, real wage and, you know, where really where the strong demand has gone into -- sorry, where there's capacity constrained, right? a vertical supply curve or close to it. so demand comes in and is very strong and shows up in higher prices, not higher quantities, not more cars because they can't make the cars because they don't have the semiconductors. in principle, that could work in reverse, when demand comes down, you could see -- and it is not guaranteed, but you could see prices coming down more than the typical economic relationships that you see in the textbooks would suggest because of the unusual situation we're in on the supply side. so there's a pathway there. it's not going to be easy, and, you know, there -- again, it is our objective, but as i mentioned, it's going to depend to some extent on factors we don't control. >> hi, chair powell, thank you for taking our questions. rachel from the washington post. the new projections show the unemployment rate ticking up through 2024. is the higher unemployment rate necessary in order to combat inflation? and what is lost if the unemployment rate has to go up and people lose their jobs in order to control inflation? thank you. >> so you're right, we have unemployment going up -- the median is 4.1%. there's a range of actual forecasts, and i would characterize that, if you were to get inflation down to, you know, on its way down to 2% and the unemployment went up to 4.1%, that's still, you know, historically low level. you know, we hadn't seen rates -- unemployment rates below 4% until a couple years ago for -- we'd seen it for like one year in the last 50, so the idea that, you know, 3.6% is historically low, in the last century, so a 4.1% unemployment rate with inflation well on its way to 2%, i think that would be -- i think that would be a successful outcome. so we're not looking to have a higher unemployment rate, but i would say that -- i would certainly look at that as a successful