private sector economists, and members of the news media for this annual gathering. as you well know, it has been our custom for nearly four decades to welcome you to beautiful jackson hole, wyoming, part of the regions served by the kansas city fed. and i look forward to returning to that setting next year. with this year's online format, instead of expressing my gratitude to those who travel from around the globe to attend this symposium while managing jet lag, i will offer my appreciation to those attempting to manage local time zones with the current time no ranges from 6:00 a.m. thursday to 1:00 a.m. friday. this year has been an extraordinary one for monetary policy and central banking. many of the issues that we talked about for some time, including the low level of interest rates, slower case of growth, effects of heightened uncertainty, and how to effectively communicate monetary policy, have been amplified by the economic fallout of the pandemic. for more than a decade, it has seemed that central banking has lived in the shadow of the global financial crisis. it may be that the shadow of the pandemic extends even further, given the scale and the economic disruption and the truly extraordinary policy responses. castrogram is designed to light on these issues as we navigate the decade ahead. i look forward to the discussion and i think the authors and discussants who will provide insight on these topics. i also want to thank the staff who have worked tirelessly to anticipate and address the technological risk, uncertainty, and unpredictability of hosting a virtual symposium. we were -- will attempt to maintain live participation and debate in this format, understanding that technology, like monetary policy, may operate with long and variable legs. regardless, regardless -- recordings of this will be on our website. for copies of the papers and other materials also will be posted as they are presented. soundw, with the familiar that has for decades signal the start of each jackson hill -- jackson hole symposium. [bell ringing] let me turn to our program moderator, susan collins, to kick off the opening session. susan: thank you very much, president, and everyone who is watching us. it is truly a pleasure to be here for the 44th annual jackson hole symposium. and it is really also a pleasure that the first time is broadcast a public symposium, which is a tribute to making it more open and inclusive. this is focusing on the days ahead. from the pandemic, racial injustice, to the economic crisis, it's important to remember that each of these unfolds in a broader context. and understanding the longer-term trend, is also essential for today's policy. focused onposium is the decline of lower term growth, lower interest rates, and inflation are as valiant toward economic and a particular monetary policy as understanding the issues as we will discuss during the symposium today. and so to get us started, it is my honor to introduce the chair of the federal reserve, jerome powell. chair powell: thank you, esther, for hosting us today. thank you, susan, for that kind introduction. can we turn off the sound in here, please? thank you. the kansas city fed's economic policy symposiums have consistently served as a vital platform for discussing the most challenging economic issues of the day. judging by the agenda and the papers, this year will be no exception. for the past year and a half, my colleagues and i on the federal -- fomc have been conducting the first-ever public review of our monetary policy framework. earlier today, we released a revised statement on longer-run goals and monetary policy strategy, a document that lays out our goals, articulates our framework for monetary policy, and serves as the foundation for our policy actions. today, i will discuss our review, the changes in the economy that motivated us to undertake it, and our revised statement, which encapsulates the main conclusions of the review. we began this public review in early 2019 to assess the monetary policy strategy, tools, and communications that would best foster achievement of our congressionally assigned goals of maximum employment and price stability over the years ahead in service to the american people. because the economy is always evolving, the fomc's strategy for achieving its goals, our policy framework, must adapt to meet the new challenges that arise. 40 years ago, the biggest problem our economy faced was high and rising inflation. the great inflation demanded a clear focus on restoring the credibility of the fomc's commitment to price stability. chair paul volcker brought that focus to bear, and the "volcker disinflation," with the continuing stewardship of alan greenspan, led to the stabilization of inflation and inflation expectations in the 1990's at around 2%. the monetary policies of the volcker era laid the foundation for the long period of economic stability known as the great moderation. this new era brought new challenges to the conduct of monetary policy. before the great moderation, expansions typically ended in overheating and rising inflation. since then, prior to the current pandemic-induced downturn, a series of historically long expansions had been more likely to end with episodes of financial instability, prompting essential efforts to substantially increase the strength and resilience of the financial system. by the early 2000's, many central banks around the world had adopted a monetary policy framework known as inflation targeting. although the precise features of inflation targeting differed from country to country, the core framework always articulated an inflation goal as a primary objective of monetary policy. inflation targeting was also associated with increased communication and transparency designed to clarify the central bank's policy intentions. this emphasis on transparency reflected what was then a new appreciation that policy is most effective when it is clearly understood by the public. inflation-targeting central banks generally do not focus solely on inflation. those with "flexible" inflation targets take into account economic stabilization in addition to their inflation objective. under ben bernanke's leadership, the federal reserve adopted many of the features associated with flexible inflation targeting. we made great advances in transparency and communications, with the initiation of quarterly press conferences and the summary of economic projections, which comprises the individual economic forecasts of fomc participants. during that time, thenboard vice chair janet yellen led an effort on behalf of the fomc to codify the committee's approach to monetary policy. in january 2012, the committee issued its first statement on longer-run goals and monetary policy strategy, which we often refer to as the consensus statement. a central part of this statement was the articulation of a longer-run inflation goal of 2%. because the structure of the labor market is strongly influenced by nonmonetary factors that can change over time, the committee did not set a numerical objective for maximum employment. however, the statement affirmed the committee's commitment to fulfilling both of its congressionally mandated goals. the 2012 statement was a significant milestone, reflecting lessons learned from fighting high inflation as well as from experience around the world with flexible inflation targeting. the statement largely articulated the policy framework the committee had been following for some time. the completion of the original consensus statement in january 2012 occurred early on in the recovery from the global financial crisis, when notions of what the new normal might bring were quite uncertain. since then, our understanding of the economy has evolved in ways that are central to monetary policy. of course, the conduct of monetary policy has also evolved. a key purpose of our review has been to take stock of the lessons learned over this period and identify any further changes in our monetary policy framework that could enhance our ability to achieve our maximum-employment and price stability objectives in the years ahead. our evolving understanding of four key economic developments motivated our review. first, assessments of the potential, or longer-run, growth rate of the economy have declined. for example, since january 2012, the median estimate of potential growth from fomc participants has fallen from 2.5% to 1.8%. some slowing in growth relative to earlier decades was to be expected, reflecting slowing population growth and the aging of the population. more troubling has been the decline in productivity growth, which is the primary driver of improving living standards over time. second, the general level of interest rates has fallen both here in the united states and around the world. estimates of the neutral federal funds rate, which is the rate consistent with the economy operating at full strength and with stable inflation, have fallen substantially, in large part reflecting a fall in the equilibrium real interest rate, or "r-star." this rate is not affected by monetary policy but instead is driven by fundamental factors in the economy, including demographics and productivity growth, the same factors that drive potential economic growth. the median estimate from fomc participants of the neutral federal funds rate has fallen by nearly half since early 2012, from 4.25% to 2.5%. this decline in assessments of the neutral federal funds rate has profound implications for monetary policy. with interest rates generally running closer to their effective lower bound, even in good times, the fed has less scope to support the economy during an economic downturn by simply cutting the federal funds rate. the result can be worse economic outcomes in terms of both employment and price stability, with the costs of such outcomes likely falling hardest on those least able to bear them. third, and on a happier note, the record-long expansion that ended earlier this year led to the best labor market we had seen in some time. the unemployment rate hovered near 50-year lows for roughly two years, well below most estimates of its sustainable level. and the unemployment rate captures only part of the story. having declined significantly in the five years following the crisis, the labor force participation rate flattened out and began rising even though the aging of the population suggested that it should keep falling. for individuals in their prime working years, the participation rate fully retraced its post-crisis decline, defying earlier assessments that the global financial crisis might cause permanent structural damage to the labor market. moreover, as the long expansion continued, the gains began to be shared more widely across society. the black and hispanic unemployment rates reached record lows, and the differentials between these rates and the white unemployment rate narrowed to their lowest levels on record. as we heard repeatedly in our fed listens events, the robust job market was delivering life-changing gains for many individuals, families, and communities, particularly at the lower end of the income spectrum. in addition, many who had been left behind for too long were finding jobs, benefiting their families and communities, and increasing the productive capacity of our economy. before the pandemic, there was every reason to expect that these gains would continue. it is hard to overstate the benefits of sustaining a strong labor market, a key national goal that will require a range of policies in addition to supportive monetary policy. fourth, the historically strong labor market did not trigger a significant rise in inflation. over the years, forecasts from fomc participants and private sector analysts routinely showed a return to 2% inflation, but these forecasts were never realized on a sustained basis. inflation forecasts are typically predicated on estimates of the natural rate of unemployment, or "u-star," and of how much upward pressure on inflation arises when the unemployment rate falls relative to u-star. as the unemployment rate moved lower and inflation remained muted, estimates of u-star were revised down. for example, the median estimate from fomc participants declined from 5.5% in 2012 to 4.1% at present. the muted responsiveness of inflation to labor market tightness, which we refer to as the flattening of the phillips curve, also contributed to low inflation outcomes. in addition, longer-term inflation expectations, which we have long seen as an important driver of actual inflation, and global disinflationary pressures may have been holding down inflation more than was generally anticipated. other advanced economies have also struggled to achieve their inflation goals in recent decades. the persistent undershoot of inflation from our 2% longer-run objective is a cause for concern. many find it counterintuitive that the fed would want to push inflation up. after all, low and stable inflation is essential for a well-functioning economy. and we are certainly mindful that higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes. however, inflation that is persistently too low can pose serious risks to the economy. inflation that runs below its desired level can lead to an unwelcome fall in longer-term inflation expectations, which, in turn, can pull actual inflation even lower, resulting in an adverse cycle of ever lower inflation and inflation expectations. this dynamic is a problem because expected inflation feeds directly into the general level of interest rates. well-anchored inflation expectations are critical for giving the fed the latitude to support employment when necessary without destabilizing inflation. but if inflation expectations fall below our 2% objective, interest rates would decline in tandem. in turn, we would have less scope to cut interest rates to boost employment during an economic downturn, further diminishing our capacity to stabilize the economy through cutting interest rates. we have seen this adverse dynamic play out in other major economies around the world and have learned that once it sets in, it can be very difficult to overcome. we want to do what we can to prevent such a dynamic from happening here. we began our review with these changes in the economy in mind. the review had three pillars, a series of fed listens events held around the country, a flagship research conference, and a series of committee discussions supported by rigorous staff analysis. as is appropriate in our democratic society, we have sought extensive engagement with the public throughout the review. the fed listens events built on a long-standing practice around the federal reserve system of engaging with community groups. the 15 events involved a wide range of participants, workforce development groups, union members, small business owners, residents of low and moderate income communities, retirees, and others to hear about how our policies affect peoples' daily lives and livelihoods. the stories we heard at fed listens events became a potent vehicle for us to connect with the people and communities that our policies are intended to benefit. one of the clear messages we heard was that the strong labor market that prevailed before the pandemic was generating employment opportunities for many americans who in the past had not found jobs readily available. a clear takeaway from these events was the importance of achieving and sustaining a strong job market, particularly for people from low and moderate income communities. the research conference brought together some of the world's leading academic experts to address topics central to our review, and the presentations and robust discussion we engaged in were an important input to our review process. finally, the committee explored the range of issues that were brought to light during the course of the review in five consecutive meetings beginning in july 2019. analytical staff work put together by teams across the federal reserve system provided essential background for each of the committee's discussions. our plans to conclude the review earlier this year were, like so many things, delayed by the arrival of the pandemic. when we resumed our discussions last month, we turned our attention to distilling the most important lessons of the review in a revised statement on longer-run goals and monetary policy strategy. the federated structure of the federal reserve, reflected in the fomc, ensures that we always have a diverse range of perspectives on monetary policy, and that is certainly the case today. nonetheless, i am pleased to say that the revised consensus statement was adopted today with the unanimous support of committee participants. our new consensus statement, like its predecessor, explains how we interpret the mandate congress has given us and describes the broad framework that we believe will best promote our maximum employment and price stability goals. before addressing the key changes in our statement, let me highlight some areas of continuity. we continue to believe that specifying a numerical goal for employment is unwise, because the maximum level of employment is not directly measurable and changes over time for reasons unrelated to monetary policy. the significant shifts in estimates of the natural rate of unemployment over the past decade reinforce this point. in addition, we have not changed our view that a longer run inflation rate of 2% is most consistent with our mandate to promote both maximum employment and price stability. finally, we continue to believe that monetary policy must be forward looking, taking into account the expectations of households and businesses and the lags in monetary policy's effect on the economy. thus, our policy actions continue to depend on the economic outlook as well as the risks to the outlook, including potential risks to the financial system that could impede the attainment of our goals. the key innovations in our new consensus statement reflect the changes in the economy i described. our new statement explicitly acknowledges the challenges posed by the proximity of interest rates to the effective lower bound. by reducing our scope to support the economy by cutting interest rates, the lower bound increases downward risks to employment and inflation. to counter these risks, we are prepared to use our full range of tools to support the economy. with regard to the employment side of our mandate, our revised statement emphasizes that maximum employment is a broad based and inclusive goal. this change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities. in addition, our revised statement says that our policy decision will be informed by our "assessments of the shortfalls of employment from its maximum level" rather than by "deviations from its maximum level" as in our previous statement. this change may appear subtle, but it reflects our view that a robust job market can be sustained without causing an outbreak of inflation. in earlier decades, when the phillips curve was steeper, inflation tended to rise noticeably in response to a strengthening labor market. it was sometimes appropriate for the fed to tighten monetary policy as employment rose toward its estimated maximum level in order to stave off an unwelcome rise in inflation. the change to "shortfalls" clarifies that, going forward, employment can run at or above real-time estimates of its maximum level without causing concern, unless accompanied by signs of unwanted increases in inflation or the emergence of other risks that could impede the attainment of our goals. of course, when employment is below its maximum level, as is so clearly the case now, we will actively seek to minimize that shortfall by using our tools to support economic growth and job creation. we have also made important changes with regard to the price stability side of our mandate. our longer-run goal continues to be an inflation rate of 2%. our statement emphasizes that our actions to achieve both sides of our dual mandate will be most effective if longer-term inflation expectations remain well anchored at 2%. however, if inflation runs below 2% following economic downturns but never moves above 2% even when the economy is strong, then, over time, inflation will average less than 2%. households and businesses will come to expect this result, meaning that inflation expectations would tend to move below our inflation goal and pull realized inflation down. to prevent this outcome and the adverse dynamics that could ensue, our new statement indicates that we will seek to achieve inflation that averages 2% over time. therefore, following periods when inflation has been running below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time. in seeking to achieve inflation that averages 2% over time, we are not tying ourselves to a particular mathematical formula that defines the average. thus, our approach could be viewed as a flexible form of average inflation targeting. our decisions about appropriate monetary policy will continue to reflect a broad array of considerations and will not be dictated by any formula. of course, if excessive inflationary pressures were to build or inflation expectations were to ratchet above levels consistent with our goal, we would not hesitate to act. the revisions to our statement add up to a robust updating of our monetary policy framework. to an extent, these revisions reflect the way we have been conducting policy in recent years. at the same time, however, there are some important new features. overall, our new statement on longer run goals and monetary policy strategy conveys our continued strong commitment to achieving our goals, given the difficult challenges presented by the proximity of interest rates to the effective lower bound. in conducting monetary policy, we will remain highly focused on fostering as strong a labor market as possible for the benefit of all americans. and we will steadfastly seek to achieve a 2% inflation rate over time. our review has provided a platform for productive discussion and engagement with the public we serve. the fed listens events helped us connect with our core constituency, the american people, and hear directly how their everyday lives are affected by our policies. we believe that conducting a review at regular intervals is a good institutional practice, providing valuable feedback and enhancing transparency and accountability. and with the ever changing economy, future reviews will allow us to take a step back, reflect on what we have learned, and adapt our practices as we strive to achieve our dual mandate goals. as our statement indicates, we plan to undertake a thorough public review of our monetary policy strategy, tools, and communication practices roughly every five years. thank you very much. thank you, chair powell, for your remarks and also for engaging the conversations. -- [nolly believe that audio] sorry, i think i can hear you now, susan. you, chair powell, both for your remarks and your consensus statements, and also for the conversations. i believe this is actually the first time that after the remarks [indiscernible] and so [indiscernible] and so i wanted to commend you for that, as well. why don't we just dig right in? [indiscernible] with think let me start [indiscernible] focused on the changes in the inflation strategy that you'll be following. so, as you [indiscernible] however, going forward, [indiscernible] while there's a lot of discussion in [indiscernible] wondered if you'd say more about how to communicate that to the public. to what extent is it going to seem like real change? so theowell: well, public communication of it is very important, as you point out. as i mentioned in my remarks, we're well at the fed listened events and people don't generally think about inflation moving up. we're talking about inflation moving moderately, the overshoot will be moderate and for some time, which is to say not permanent or long periods of time. so, i think it's very important that we get that message out. it's also important people understand this is not a formulaic approach. the committee will continue to consider all the things it particular the considers in making monetary policy, but will aspire to having inflation run above 2% after periods in which it runs for an extended period below 2% so that we can average 2%. so i think that concept should be well understood and i think it's the appropriate one. thatan the review understood the situation we are in calls for makeup strategies and this seems to us to be the right makeup strategy, were under shoot of inflation are not forgotten that are made out and meet up in a way that allows us to continue to consider all the monetaryat come into policy rather than try to follow a reticular formula. susan: thank you. [indiscernible] so, if i could just -- [cross talk] chair powell: go ahead. susan: if i could just push back a little further into the comments you made about the framework that was so much focused on the crisis we're in at the moment. are there changes in policy people should expect to see as a result of the strategy you have walked us through? chair powell: so i guess i would just set the stage a little bit. we began the review or announced it publicly we were beginning a review in early 2019. and we had planned to announce our conclusions and we are indeed ready to announce our conclusion in the april or june meeting this year. so, most of the work that was done took place during 2019. so, the review is meant to establish a framework of monetary policy that will guide our decisions for the foreseeable future. it was meant to take into account the learning that we did while watching the full business cycle take place after the global financial crisis and that we have indeed seen a cycle so we thought it was time to up date. so, it wasn't designed to dictate any future about interest rates or other monetary policies. however, all of the things we do going forward will reflect the changes that we've made to the framework. i would think of it that way. it doesn't dictate particular outcomes, though, at particular meetings or the timings of those particular outcomes. susan: so, you mentioned [indiscernible] i would like to hear more about this. so, the rationale and you thinking for launching -- [indiscernible] you mentioned that it was 18 months ago. [indiscernible] i wondered if you'd say more about what your motivation was when launching this, but also whether [indiscernible] chair powell: sure, so the review is really part of a broader program of enhanced transparency and accountability, really something the fed's been working on for 30 plus years now. today, surveys showed that public faith in large institutions around the world is under pressure and so i think institutions like the fed have to aggressively seek transparency and accountability to preserve our democratic legitimacy and there are a bunch were doing. -- a bunch of things we're doing. the review was the center of that. i thought other federal banks have done other forms of reviews. not all of them around monetary policy and i thought this was something we could do to get great benefits and be able to up -- update our framework. and the economic question we had to adapt to is what we had to learn since the global financial crisis since that long expansion. we knew we were going to be closer to the effective lower bound in all likelihood and had to address that as i described in my remarks. didnt know how it would come -- we didn't know how it would come out. we are happy with where it came out. if you'll allow me to just say for a second that we were in the design process when the vice chair arrived in the fall of 2018 and there were only three governors, i think, at the time and he had the time and really took this on and we would not be sitting here talking about this without his great leadership efforts in bringing this forward. i'd also mention the other members and the subcommittee and pretty much every member of the fmo see, every part -- fomc, every participant can look at the document and see their own use and reflect it. i mentioned some of the things. i think there were great gains just in the process of engaging with lawmakers and engaging with the general public on these issues and seeking input and accountability. i think that is the most welcome thing when you do that. so i think even apart from the gains in the framework, that was something i was quite struck by. the fed listens events were just really striking. you were in chicago, i think . that conference, there were two panels of people from low to moderate income communities that spoke about the economy in their lives and it was just riveting. it was the highlight of that conference, which was chocked with global monetary policy experts. but to hear them talk about what a tight labor market means in their communities was something none of us will forget. and i think we knew that, intellectually, but hearing it and hearing it a lot over the course of fed listens and seeing the sharing of the benefits from a labor market that's tight in the eighth and ninth years of the expansion, waiters moved up on the lower end. we saw labor force participation, employers doing lots and lots of things to recruit people who might not have been recruited earlier. so, it's a very virtuous thing and one that i mentioned in my remarks will take support from congress over time. it's not just about monetary policy. , healthut transparency care, all the things that in able people to get into the labor force and stay there and progress in their careers through the labor force, so those are some of the things i take away from the process. susan: so, as someone [indiscernible] really does reach out to the public and engage in different ways. i wonder if you'll say a bit more about how, as a regular process, the influence of voices from the public does actually play a role in terms of monetary policy decisions and thinking because that's a topic that i think is not at all understood by the public. chair powell: so, through the reserve bank system, we have a unique, really, presence in communities around the united states. and we're present not just in the business community, but educational, medical, we are present in neighborhoods and we harvest that information and it goes into a lot of what fomc participants say, goes into the research we do, that data we collect. we collect a lot of unique data on first outcomes among the different groups and that kind of thing. and all of that goes into our fomc deliberations. in particular, it informs our understanding of what maximum employment really means. so we focus on, at every fomc meeting, in every briefing, in pretty much all my public remarks in my colleagues public remarks, we will call out for example, unemployment rates and labor force results not just because it's the right thing to do, but it's something we are very focused on. these disparities are a long-standing feature of the american economy and they really do hold us back. as rafael bostic pointed out so weigh on the whole economy. so all of that goes into our thinking. not in a mechanical way, but in our understanding of what maximum employment is and you saw during 2019, when the unemployment rate fell to 3.5%, well below most estimates of a sustainable rate of unemployment, you didn't see us raising rates or expressing concerns. you actually saw us cutting rates during 2019, not because of that but we were hesitant to cut rates because of the low level of unemployment. susan: so, just to follow up on that a bit, you have made some very strong and very clear statements about racial justice and the challenges of economic disparities particularly related to racial inequalities. and, of course, we know that many of those disparities are in such clear relief in the current context. so, i would like to ask you to say a bit more about how the mandate would be interpreted in a more broader and inclusive way. what else can the fed do to address some of those important disparities? chair powell: so, as i mentioned, these are long-running features of our economy, which figure into our understanding of the economy and into our decisions. and i would say also, while they are long-standing, the pandemic has really shown, the effects of the pandemic have fallen to a large extent, not exclusively, but to a large extent on people working in the service economy and public-facing jobs and these relatively low wage workers, and that's been heavily skewed so what, minorities, can the fed do? if you look at the record, we are doing lots of research around these we're talking about issues. we're talking about it publicly, talking about these issues publicly, and incorporating into our thinking. i think the key thing is, though, the single most important thing we can do here is to support a strong labor market. as i mentioned earlier, that is something we can do but that is more of an all government, all society project we need to take on forcefully. it can't just be the way the fed manages interest rates through the business cycle. although -- in other words, it's not wait until the eighth or ninth year of the cycle to get the kinds of results. we can do better than that but through other policies. those things we can do, i think a lot of them we're doing. it is important to point out, though, our interest rate policies and other policies affect all americans and are for the benefit of all americans. they're just in that sense, want tools and there are better tools for dealing directly with distributional issues. those are the tools held in our system of government by elected officials and the people who were appointed in the executive ranch who work for an -- branch, who work for an elected official. it needs to be in all of government, all of society kind of thing. we really need it to be broader than just the fed and i think we're doing the sort of things we think we can do now and will keep doing them. susan: so, certainly does have to be a broader effort. in that context, i wanted to ask you a bit about some of the special programs, the facilities to try to get funds into the community, in particular in places and for groups that are really struggling. as you know, the fed has come under criticism that some of the facilities are not reaching some of the groups that are the hardest hit, for example minority businesses are often described. and i wonder if you'd say a bit more about whether there are additional things the fed could be doing, perhaps in partnership with others in that context? chair powell: so on the main streets of the facility, we did a great deal of outreach to community development, financial institutions and minority institutions and other organizations that represent those constituencies. and so we're doing everything we can to reach those constituencies. remember, this is a very broad program designed to make loans. these are loans we can make. we can't make grants the way the ppp program does. that's really fiscal policy. what we are doing is making loans and the law requires us to have a reasonable expectation. that the loans will be paid. the bank has to keep a piece of that loan, so we are looking to reach small or medium-sized businesses through that. but i do think this is a unique exercise for us. we've never done anything like that, lending to businesses -- i wouldn't say we've never done it , but we've never tried to reach out broadly like this, particularly to smaller institutions. we've put more effort and work into the main street facility than anything else we've done. it's a very challenging exercise. we're making progress there. we're getting more and more loans made. small committee banks are act -- are backed up, but it's going to take more than that. it's going to take more erect -- to smaller businesses and i think that's an area where fiscal policy can really do things that's very hard for us to do. so, i would look to the policy for help there. susan: yeah, and so clearly, it has to be a partnership that has the kind of broad impact we would hope to see. i do want to talk a bit about the current crisis compared to other crises that the fed has grappled with. and in particular, one of the questions i get asked is to what extent, from the perspective of monetary policy, is grappling with a major recession caused by a pandemic any different from grappling with one that is caused by a financial crisis as we saw back in 2008, 2009? i'd be very interested in your thoughts about that difference. chair powell: it's a very, very different situation. i think so far, the beginnings of the recovery and that recovery are quite different. this crisis did not originate in the financial system or from an asset bubble or from an imbalance or anything like that. and all of those were features of the housing bubble, the housing crisis, and the financial crisis. that was the heart of the global financial crisis and it was global in that sense. this really was a natural disaster that hit an economy that was doing well with a banking system that was well capitalized and highly liquid and understood its risks pretty well. and it's actually been a source of strength. so that's very different, although we have seen lines emerge under great stress. no doubt we will come back and look at those when it's time to do that. sometimes required by their government, sometimes on their own, withdrew from certain economic activity to protect pandemic allom the around the world. there's no playbook for that. our response was quite different from the financial crisis. we immediately cut rates to zero. we raised our asset purchases, to support market function. we weren't trying to stimulate the economy, but the idea was not for people to go out and spend. it was to provide a little bit of comfort to assure credit was flowing to households and businesses. and then when the expansion came, to support that recovery and expansion with monetary policy. so it's very, very different. also, this business of lending nonfinancial corporates and also -- lending to nonfinancial corporates and also to state and local government was unique because the intermediation process simply stopped. the financial system, it was such a flight to safety when the pandemic hit that credit intermediation between savers and borrowers just essentially stopped and we had to step in as municipal for the markets and the corporate markets and have been doing so for smaller businesses and we did so around the world for dollar funding markets. so it's very different, but i would say this, though. we had the deepest quarter loss in gdp we've ever had but the economy was strong back in february. there's a lot of strength in the economy. , remember, the economy was strong back in february. there's a lot of strength in the economy. the economy in may and june came stronger than expected. there still a healthy economy here, except for this area that has been directly affected by covid. so if we can keep the disease under control, the rest of the economy can recover fairly quickly. the problem this time is that there's a particular part of the economy which involves getting people together and feeding them, flying them around the economy, having them sleep in hotels, entertaining them -- that part of the economy will find it difficult to recover. that is millions of people who are really going to struggle to find work. we need to stay with those people, we need to support them, and help them get back into their working lives and homes. congress has done a lot on that and we will keep doing what we can, but that is going to be the issue. i think we will get to this maybe with some starts and stops with reasonable growth, but ultimately, we are looking at a long tail of a couple of years at least of people who worked in those industries will struggle to find work, and, again, we need to support them. susan: a very different trajectory, as you described. chair powell: very. susan: in that context, do you see any role for the fed in terms of those financial institutions that do community development? chair powell: you know, we are very highly engaged with the cdfi, the community develop an ment financial institutions. and those of them who are banks are taking part in the programs, now took part in the ppp , they took part in the liquidity facility, so we strongly support them engaged with them, and the same is true of ndi's. that is not where liquidity shortage is. that is not where the big problems in the economy -- they are really in the service and manufacturing sector. it is in the real economy this time. big credit losses. here we have highly capitalized institutions, and we have credit problems in the real economy, and, you know, we a different situation this time. susan: thank you. we are almost out of time, unfortunately. i thought what i would do for our last minute or two was to cycle back to the very public review of the monetary policy framework and ask if you have any additional thoughts or next next steps that you expect the fed to take in terms of moving forward with changes that you have described for us? chair powell: well, first of all, i am very pleased with how it worked out. again, from the standpoint of just public engagement. that is always a good thing for like the fed, particularly the fed. to seek accountability, not just going through the motions but really actively explain ourselves as clearly as possible to the public and the public representatives. in that sense, i think it has been a success. i think, really, the changes to our framework, time is really going to tell, and it will decide the effectiveness of the changes we have made. i think it is a promising set to deal with what is a reality of a quite difficult macroeconomic context of low inflation, low relatively low productivity, slow growth. it is not a phillips curve. you have to put that together and you really got to work to find every scrap of leverage in helping stabilize the economy. our actionsll, and will ultimately tell. i am grateful to you and to be a part of a great organization where they used every part of the organization to advance the project. i'm very grateful to be part of this. susan: thank you, chair powell. it is really a pleasure to speak with you this morning here. i would like to congratulate you and the federal reserve team, a thoughtful and publicly-engaged review of the monetary strategy. so thank you very much. chair powell: thank you very much, susan. good to see you. [captions copyright national cable satellite corp. 2020] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] on tuesday, secretary steven mnuchin testifies in for of the house on children, workers, and families and the implementation of key stimulus programs approved earlier this year. watch live coverage beginning at 1:00 p.m. eastern on c-span, on-demand on c-span.org, or listen live on dd

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