exacerbating supply chain issues because of lockdowns. the fed will continue to run off its balance sheet as planned that pace starting in september will be $60 billion in treasurys and $17.5 billion in mortgage-backed securities. that continues to the statement, goes on to say the fed will adjust monetary stance based on eve merging risks. this was a unanimous statement, includes votes 3:00 new members, full board, lisa cook, michael barr. the fed raising rates 75 basis points as expected but saying recent indicators show that spending and production have slowed, have softened is the word they used. charles, back to you. charles: a lot of interesting juicy stuff. edward, thank you very much my friend. the fed has made the hike expected. the street has to deal with the guessing game. you heard what edward said. new words, some taken out. maybe we'll learn some more in the question and answer period that is very important, more so today. this is a very serious dilemma, folks, twin evils of runaway inflation and recession are both lurking out there. i will borrow from john madden if you will to use a football analogy, this wide receiver right here that is inflation. it is already on the move we know that. if it gets in the end zone, that is runaway inflation, all bets are off. quarterback is jay powell, toss out fed policy which is the football, turning the receiver, bringing it back in. the wild card, your safety. what if he steps in gets an interception. the safety is recession. it starts to head to the other side. this is a deep recession. both of these are terrible consequences. neither one you want to happen, that's where we are! runaway inflation, deep recession, jay powell has the ball and we don't know what is going to happen. listen, here is the bottom line. it's a very confusing difficult time. that is why we're having this show right now. let's bring in guests right now because i have three of the best when it comes to the markets, how to handle all that, advisor group chief market strategist phil blancato, sarah kuntz, clear advisor senior managing director jim awad. let me start with you. i foe you're a football fan, i hope you got my analogy. can jay powell act like tom brady and win against all odds? >> he got what he wanted. raised rates, reducing consumption that is happening. m2 money supply going down. milton friedman, here is the key, pal, every time we saw the money supply shrink, inflation followed thereafter. core cpi will be down. much more the next month. fed getting what they want it. will take a little more than what they want but they will get there. charles: sarah, i'm not sure you're a football fan because i hope the analogy makes sense. this feels like a no-win situation for main street, even for the market. >> you know i'm not a tom brady fan. charles: [laughter] >> might be a little more of a hail mary, right? this is one of those things where i don't know if a two-point conversion will do it. i think you are going to have to go, this isn't a field goal, situation, this isn't two-point conversion. i think what we need here, we need the market needs some sense when will this be over. the fed has one strategy to make it be over, but that strategy is hurting consumers which means consumers aren't spending which means that it's not over. so it feels like we're a little bit stuck in this cycle. you know, powell will take the stand today and probably prolong the pain. charles: jim, i know you're not a big sports fan. i know you're down in hialeah betting on the ponies, stuff like that but work with me on this analogy if you can. what is going to happen here? >> well i think it is going to take some time but we'll know a lot nor more in september but i think the odds are the economy will continue to soften, inflation will peak, and at some point between now and the end of the year the fed will be done. the evidence we have now at least so far that corporations are weathering this fairly nicely. the earnings are not as bad as some feared. corporations are prepared for a recession. they're seeing some softening but nobody is ringing the alarm bells yet. so i stick with my long-time thesis it doesn't pay to bet against america. we'll navigate our way through this. but we'll be in a fog through september. charles: i agree with you long term but near term it has been tough, right? the market rallied the last three fed decision days. the next day it has been absolutely hammered. this has been a theme. phil, we'll see what happens today but always feels like we have to sleep on it. once the market has slept on it i guess there is indictment with powell because we've been down. do you think that can start to change? >> i do because i think the gdp print will surprise to the upside. i think we're seeing inflation come off. that is the market finding a bottom, to a point made, earnings season is not that bad. microsoft a real bounce, with modest number with expectations getting better. we're carving out a bottom here because of data improving modestly, inflation coming down a bit. the fed made their move. they may not have to make another one. with that football analogy, buddy, throwing short passes and keeping it real simple. it is working now. granted i know inflation is high but it is coming down. for this time i think the fed gets a pass. i think we trade sideways and grind higher into august and september. charles: i want to pick up on that, sarah, it is an interesting trend. we saw it last week, companies that missed last week up on average but a day after they reported. google, spotify, boeing, numbers were terrible and all the stocks opened higher. do you think it's a bottoming process? >> you know if reminds me of the phrase we've been down so long it looks up to me, right? people need to find something to trade. when you look at big companies like googles of the world that is one of my buys now. they have a lot of different business lies. their ceo is not a totally insane person. i think they will weather this storm. we're all in the storm, but the question is who do you think has the best boat? some of these megacap names are going to look better, like a safer bet than some of the riskier ones. charles: i'm not going to take the bait who is the insane ceo right now because that is a different show, but, jim, i will ask you, do you feel like maybe july, which has been a pretty good month, could we actually be turning the corner right now even though almost everyone that comes on the show says it is too early? >> well, it is too early but i do think that the bottom has been made. a lot has to go wrong for us to go back down where we were in june and i think the key issue here, look, i'm looking forward to his press conference. i don't think he will give us that much because he doesn't know. the key issue as earnings roll out, watch out for tomorrow as corporations report. we'll get a better feel for how they're navigating this. but i would say, trade, we've made the low. trading range through september and i'm looking for a good, strong, fourth quarter, as we develop confidence that corporations have navigated through this and the economy is not a disaster. charles: i want to get focused on this earnings season. phil, i have to give you props. you say over and over again own hotels. talked a lot about travel. hilton up big today. visa say cross-border transactions up 40%. the question though, can it be sustained? >> i think it can because the fed will get to spike the football because they will take credit for beating down inflation. it is not the fed. on the back of the u.s. consumer which has been strong in spending that held us up, for that reason i still think the trade is still on. why? look what visa said, they're expecting revenues to increase 20%, including margins, hotel chains, airlines booking at high rates. added 600,000 jobs in the last quarter. this spending craze going into the best spending season of the year. halloween, thanksgiving, holiday season in general. when the consumer spends most robustly there is opportunity to win on the consumer discretionary and win on the travel stocks. they're not done yet. i think there is opportunity. they're still fairly priced. charles: sarah, let me go back. google is a name you like. we're seeing megacaps lead today. they have been beaten down. wall street written them off. meta reports after the bell. any other names look attractive to you? >> i'm not saying meta, right? you need a crystal ball to do that one. i think with meta we'll see this month in ad sales come out of snap and twitter have infected the entire industry but i think for these big megacap tech names like microsoft, like alphabet, like google that have a bunch of different business models they're worth a look. i keep telling you you know, still bullish on -- there are names looking at right now trading at decent p-e ratios. charles: jim last time you were on you were bullish on walmart. they issued a second warning. the stock got hammered pretty good. do you have faith in the management of company? it's a behemoth. they will be all right, no doubt about that but the management seems to be messing up pretty badly here? >> they will have a tough couple of quarters. they got hit with two things they didn't see. the first was how much inflation forced consumers to pull back on merchandise because they were paying so much for food and gas and then of course the switch from merchandise to services which left not only walmart but several retailers overstored. so they do go in the penalty box for that but their long-term record is excellent. i think you use this period of weakness to bet on a long-term record. charles: do you agree with jim, jim, do you agree rather with phil with respect to the consumer? is the consumer as strong as they say? i mean we keep getting evidence, yeah the consumer keeps stepping up to the plate, whether they have to alter what they're buying because of inflation but bottom line they haven't been deterred from spending? >> don't forget rate increases work with a lag and these rate increases will continue to affect the economy incrementally as will the balance sheet runoff. i expect the consumer to get weaker over coming months but again i don't think it will be a disaster. it will end up, nobody knows but if i had to make a bet right now, a shallow recession followed by a long gradual climb out, slow growth but growth. charles: sarah, we're about 140 s&p names into earnings season. anything report yet, so far that may have changed your mind, maybe piqued your interest, you didn't have, wasn't even looking at before? >> you know i am interested to see what happens you know, with some of the smaller car stocks. i think what we're seeing right now is that there is a lot of weakness in some of the big electric vehicle names and you're seeing a lot of really interesting things, you know, come out of the asian car companies. come out of gms, fords of the world. so i'm tarting to focus a lot more on that. i think that will be a big story, now that we're finally in place again two years into a pandemic, three years in, where these car companies have inventory to sell again. charles: 30 seconds left, phil, give you the last word here. you've been really optimistic, really bullish about everything. what are you concerned about, what could be wild card that trips us up. >> price of oil spikes into a situation out of control. charles: leave it there. sarah, jim, phil, absolutely fantastic stuff. i am glad you kind of got my football analogy, wasn't my best. i couldn't wait to do my john madden i will mytation. phil was fantastic in yesterday's big town hall, well-received, "inflation in america," the hangover edition. throughout the hour guests gave amazing answers, audience had amazing questions. it was really phenomenal. if you missed it, here is great news, it will air throughout the weekend friday night 8:00 p.m. on fox business. people with mon following money for 10 years but didn't have the could you arerage to ask. fed just hiked rate the 75 basis points as advertised. the street is all over the place what may happen next. my next guest has been in the recession camp. his position got a huge boost, oh, maybe the last two weeks from economic data but certainly this morning from the pending home sales report. down 20% from a year ago. the street thought it with be down 13% month-over-month. street was only looking for a 1% decline. national association of realtors say contracts won't pick up until early next year. fhn financial chief economist, chris lowe. chris, i have to tell you the economic data for the most part has been disasterous, for the most part. a couple things today had a beat. what does it feel like, that the recession argument is a moot point right now? >> i think it is. here's the thing you need to keep in mind, charles, as the fed comes in with its second 75 basis-point hike, after a 50 basis point increase back in may is that the april and may data, some of which is still rolling in was weak. the june data was weaker. the early july stuff that we have, the weakest still. so the momentum is downward. we saw it in the fed statement today. they're finally acknowledging growth is slowing down, right? charles: right. >> but they're still going with these megaincreases. you know, i don't have to say it, you just heard it, fed policy works with a lag. by the time they realize what they have done they will have done it. charles: but isn't that the dilemma? because many say this is such a unique period when they have been aggressive in the past but never aggressive in an economy that was already slowing down. i used the football analogy, football you throw to where the receiver is going to be. who knows. they're exacerbating a situation that get like it was organically happening anyway? >> i think team recession has two-man coverage on your receiver and in fact what i would say is you're right, the fed doesn't do this when data looks as weak as this except they have. they did it last in 1981 and the reason they did it because they tightened aggressively in '79 and 80. they brought inflation down from double digits to 7 1/2. then it started going up again. and they had to induce another recession less than a year later. jay powell told "the wall street journal" just a month ago his biggest fear is repeating that mistake. charles: he is also invoked the name volcker several times. there was that now, i would say infamous showdown in the senate with senator from alabama brought up paul volcker, more or less, paraphrasing you're no paul volcker. it felt like it stung a lot. he mentioned volcker's name a lot since then and committed to be volckeresque, if you will. >> the patron saint of aggressive fed policy. you have to remember, a lot of us weren't alive back then, i was, but i was a kid, but i do remember the gas lines. i do remember the depth of the recession. that's where the rust belt came from. the giant manufacturing heart of america went from that to people sleeping in their cars because the fed had to tighten so aggressively. this fed doesn't want to do that. charles: right. >> and the way you avoid that pain is by killing inflation early. the longer you wait the worst the cure. charles: but did they wait too long anyway? in other words, sticking with the transitory narrative, did they miss their opportunity not to make a mistake or as harsh as they want to? >> yeah, look, normally, when i say normally, anytime in the last 35 years you start to see signs of a recession and the fed's manuel says at that point you go to wait and see. you stop with the rate hikes, wait and see a few months of data, you decide if you should next ease or tighten. they can't do that anymore. they have to wait for the inflation numbers come down. they have to aggressively tighten until then. when we have inflation 4%, between three and four, they can wait and see. that is months away. charles: the last week or so, a lot of folks have said that. i don't know if there is some sort of hint, some fed official, maybe bostick when he said they would hike a couple times then kind of take a look around but all of sudden everyone is afraid this fed may adapt that hike couple times, hike pause, that could be a classic mistake, do you agree with that? >> well, yeah, the last person to weigh in on that was jim bullard, right, from st. louis, said let's get it to 4% by end of this year to see if we have to tighten more. >> street is modeling 3 1/2 right now. >> that is exactly right. the street never got much past 3 1/2. they're backing off since then. they're looking 3.25, 3 1/2 at the end of the year. what we're hearing from those inside of the fed they think that won't be enough. charles: i have anecdotal stuff to ask you. waste management posted great numbers this morning. ceo said how can there be a recession with this much trash? does he have a point? >> it is absolutely he has a point. people are spending a tremendous amount of money. i would say, to me, anyway, reminiscent of december 07, first quarter of '08. later on we find out we were already in recession but at that time nobody thought we were in recession and very few people thought there was risk of a recession. by the end of' 08 we were in real pain. it wasn't just recession but a deep one. that is where i think we are right now. are weigh in a recession? probably not. are we on the discussionp of one? i think so. is it going to be severe? it will if the fed keeps tightening it will be. charles: sounds like benign for lack of a better word cpi report that ultimately will have to come through to put the brakes on what the fed is doing or what the fed needs to achieve? >> yes. the next one will probably be benign. gasoline prices are down 10% from where they were at their peaked. they peaked during the survey for the last cpi. so they will be down in this cpi but i think it is going to make more than one good cpi report to quiet the fed. we had three waves of inflation since the end of last year. each one has been higher. so we need to see lower highs, lower lows on those inflation waves. charles: chris, great stuff. appreciate it. thank you so much, my man. all right, folks you can hear the drum roll, if you pay attention it is right in the background. by the way it will get louder and louder as jay powell gets ready to step up to the podium. joining me now to discuss, nomi prins, and first and foremost, congratulations on your fifth book, permanent distortion. i think it is out in october. so how does this actually, that title, how does it fit into what is going on right now with the federal reserve? i think what chris said at the end is important also. three waves of inflation that also felt like some sort of man-made mistake or government-made mistake? >> yeah. so, thanks, it is actually lucky number seven. charles: wow. >> october 11th. which must mean something, 7-11. can't wait to talk more about. the concept of permanent distortion is this idea of what will happen the fed pumps so much money into the markets, it is still sitting in a $8.9 trillion balance sheet. as much as it talks about letting stuff roll off it hasn't, not june, not july, hasn't rolled off yet. that is part of why the asset prices went up relative to the real economy. the real economy lost out on the pumping and it is also losing out right now on the aggressive pace of rate hikes. permanent distortion disconnects what the market hears and how it react what is the real economy feels and what it goes through and that concept started in 2008, magnified in 2020. we're still in it. we're at a negative point of it because we're at a point where recessions from a technical perspective is happening. we've had a lower gdp last quarter of the we will again this quarter and there is other signs of that slowdown and the fed is continuing to sort of get what they will think is a touchdown to use your prior football analogy when inflation dials down but it is going not be because of what the fed did. it will be because at some point energy prices will tame, food and prices will tame, supply disruptions will tame. that has a lot of volatility attached to it which also has nothing to do with the fed and at some point they will declare victory, touchdown, yeah, that was us. charles: all right. joining us now we have quill intelligence ceo danielle dimartino booth. your initial thoughts on the fomc, not the decision, but changes in language. a lot of changes. >> well i think the critical change was the very first sentence and that was a recognition that the tightening that they have done has indeed had an impact, a negative impact on consumption and that is exactly what they want to see by the way so this is something i think the market is celebrating because it's the first hint, we might be stopping, we might be pausing going forward. charles: so to that point, it's a big question mark today, where to from here, right? and you know nomi talking about taking a victory lap. we know jay powell can't wait. this one he can taste. because of the transition mess-up everything else. he wants this desperately. at same token he knows he can't be premature with it. >> look, we've got two press conferences two days in a row with janet yellen tomorrow afternoon. we don't know why yet. when it comes to victory lap though, charles, we'll have to see. pending home sales which you flashed up earlier, down 20%. that is his goal. in the sense he wants to slow the economy, he wants to flirt with recession and possibly engineer a soft landing but maybe not. that is his victory. we, i'm telling i think his tone today will be tougher than what people anticipating. charles: really? >> i really believe that. charles: so, nomi, there is a lot of pressure on the fed to keep feeding the street information, these targets. even though some people are concerned there are drawbacks to all of this, particularly when you say you're data dependent. coming today at least five or six fed officials said 75 basis points. what should they be focused on, you know, kind of foretelling what they're going going to do t the street is not surprised or really, truly looking at data and being data independent? >> i think transparent is a good thing if they're also looking at data. what tends to happen, the beginning of the language just released, this idea spending has softened. throwing in words like that i think opening towards the end or pivot to neutrality. i don't think we get another 75 basis point hike. i think we soften into a 50 basis-point hike next time, go down from there i don't think we get the hike, inflation when you exclude food and energy that is significant component of the general cpi numbers, even if you take it out look at 5.9% inflation without food and energy, rest of factors in that inflation figure many of them are still dependent on energy and on fuel costs, your hospital, ambulance going to take someone to a hospital, there is a lot of components are also tied up in that. if that comes down overall inflation will come down but i think he is trying, you said taste it, trying to use some words out there that will enable that to happen so he doesn't get pinned with i caused a big recession of the united states and the global economy and also got jackson holcombing up. there will be a lot of leaders concerned about higher dollar with that does to their economies that will come into play with the verbiage we hear going into that and next fomc meeting. >> let's talk about some of the stuff, danielle. chattiness, commentary i don't think you're a fan of that, are you? i feel they swayed markets unnecessarily. they added more question markets that needed there? >> definitely introduce as element of volatility, disruption, uncertainty already what is uncertain backdrop. i've been a fan having fed spokesperson, jay powell, one, if somebody they hire as well, having that many speakers is disruptive and confusing for investors. charles: yield curve, two and 10 this is the most inverted since 2000. three-month 10-year is really close. they say that is the one powell's looking at. what does it mean? if all of these are inverted does it mean that recession, no matter what is in the cards near term? >> that typically has been the case. his favorite yield curve typically does not invert unless we're actually in recession. that is why it is something after lagging indicator as opposed two year, 10-year which is more predictive leading in nature. charles: what do you think the way, the market is obviously on a holding pattern and the big debate of course is will the fed go too far? i think your point about the very first sentence, keeping us in this holding pattern is important but also alluded to tougher language. what ask going to be the question that really gives powell the toughest time in the next three minutes when he starts to speak? >> i think if any reporter has the gumption they will ask him about the atlanta fed gdp came out as negative 1.2%, revised this morning. i think that is the question, if we're in recession what does that imply for the going forward with monetary -- are you going to be as hawkish if we're actually in recession according to the fed's data? charles: nomi, the fed, they have got a choice to make. a lot of folks would like to see him err on the side of recession, inflation touches everyone. in recession only some people lose their jobs, welfare, unemployment benefits to help them. that sounds elitist to me. is there a side they should err on? >> they should err on the side of the american worker definitely. what is happening right now, we're at a point with our unemployment rate, real unemployment rate, people unattached from the employment workforce, we're at 3.6 and at 7. those are exactly the numbers we were at in beginning of 2019 when the fed piv pivoted back from raising rates 2.25, then through the summer, cutting 25 basis points through the following periods and the pandemic. the numbers we're seeing actually what we've seen before when the fed chose to reduce rates in order to help the economy. we have that inflation component we have this time we didn't have that time. charles: right. >> at end of the day a lot of people are unattached to the workforce and that number does not seem to be promoted in the ranks of the fed yet and i think it can be looked at as backdoor to declaring that victory lap, look we've done enough. we'll pivot at least to neutral and wait and see on some more data. charles: less than a minute, shaking your head, reply to that fine. she also brought up made me think this quantitative tightening, are they really serious? i don't think they are really going to do it. >> they are really serious. charles: are they doing anything? has the balance sheet come down? >> no. >> it has reduced, people understand treasurys mature on 15th, last day of every month. charles: are they buying anything in the meantime? >> not increasing size of balance sheet. lag maturity settlement time for mortgage-backed securities. that creates some confusion but they're dead set on having this quantitative tightening increase -- charles: won't be 2, 3, trillion dollars? >> i don't think they get that far but they are pushing forward with quantitative tightening. i would like somebody to ask him about that at the press conference as well. charles: they have to pick a sidemake a mistake or error inflation or recession? obviously recession. they don't mind pushing us into recession. >> seems like they don't seems like exactly where they want to go. charles: that will hurt a lot of people, social justice warrior, help the average person out there, unemployment low for everyone. >> charles, we see increase in multiple job holders that tells me they're not making it. charles: there he is, jay powell. >> good afternoon. my colleagues and i are strongly committed to bringing inflation back down and we're moving expeditiously to do so. we have both the tools we need and the resolve 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 two-and-a-half nears and have proved resilient. it is essential that we bring inflation down to our 2% goal 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 fomc raised its policy interest rate by 3/4 of a percentage point and anticipates that ongoing increases in the target range for the federal funds rate will be appropriate. in addition we are continuing the process of significantly reducing the size of our balance sheet and i will have more to say about's monetary policy actions after reviewing briefly economic developments. recent indicators of spending and production have softened. growth in consumer spending has slowed significantly in part reflecting lower real disposable income and tighter financial conditions. activity in the housing sector has weakened in part reflecting higher mortgage rates. and after a strong increase in the first quarter business fixed investment also looks to have declined in the second quarter. despite these developments the labor market has remained extremely tight with unemployment rate near 50-year low, job vacancies near historical highs, wage growth elevated. over the past three months employment rose by an average of 375,000 jobs per month, down from the average pace seen earlier in the year but still robust. improvements in labor market conditions have been widespread including for workers at the lower end of the wage distribution as well as for african-americans and hispanics. labor demand is very strong while labor supply remains subdued with the lable for force participation rate little changed since january. overall the continued strength of the labor market suggests underlying aggregate demand remains solid. inflation remains well above our longer run goal of 2%. over the 12 month ending in may total pce prices rose 6.3% excluding the volatile food and energy categories. core pce prices rose 4.7%. in june the 12 month change in the consumer price index came in above expectations at 9.1% and the change in the core cpi was 5.9%. notwithstanding the recent slowdown in over all economic activity aggregate demand appears to remain strong, supply constraints are larger and longer lasting than anticipated and price pressures are evident across a broad range of goods and services. although prices for some commodities have turned down recently the earlier surge in prices of crude oil and other commodities that resulted from russia's war on ukraine has boosted prices for gasoline and food, creating additional upward pressure on inflation. the fed's monetary policy actions are guided by our mandate to promote maximum employment an stable prices for the american people. my colleagues and i are acutely aware high inflation imposes significant hardship especially on those least able to meet the higher costs of essentials like food, housing and transportation. we are 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. at today's meeting the committee raised the target range for the federal funds rate by 3/4 of percentage point bringing target range two .25 to 2 1/2%. we're continuing the process of significantly reducing the size of our balance sheet which plays an important role in affirming the stance of monetary policy. over coming months we will be looking for compelling evidence that inflation is moving down consistent with an nation returning to 2%. we anticipate on going raises in federal funds rate will be appropriate. the pace of those increases will continue to depend on the incoming data and the evolving outlooks for the economy. today's increase in the target range is the second 75 basis point increase in as many meetings. while another unusually large increase could be appropriate at our next meeting that is a decision that will depend on the data we get between now and then. we will continue to make our decisions meeting by meeting and communicating, communicate our thinking as clearly as possible. as the stance of monetary policy tightens further it likely will become appropriate to slow the pace of increases while we assess our how cumulative policy adjustments are affecting the economy and inflation. our overarching focus is using our tools to bring demand into better balance with supply in order 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 often involves, evolves in unexpected ways. inflation has obviously surprised to the upside over the past year and further surprises could be in store. we therefore will need to be nimble in responding to incoming data and the evolving outlook and we will strive to avoid adding uncertainty which is already an extraordinarily and challenging uncertain time. we are highly attentive to inflation risks and determined to take the measures necessary to return inflation to our 2% longer-run goal. this process is likely to involve a period of below-trend economic growth and some softening in labor market conditions but such outcomes are likely necessary to restore price stability and to set the stage for achieving maximum employment and stable prices over the longer run. 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. i look forward to your questions. >> rachel. reporter: hi, chair powell, thanks for taking our questions. rachel siegel from "the washington post. wonder if you can walk us through your thinking on the decision not to go for a full percentage point increase? we saw a ramp up after the may cpi report came in hotter than usual and the obviously the june figure did too. was there talk of stronger hike at this meeting? thank you. >> sure. we judged a 75 basis point increase was right magnitude in light of the data in light of on going increases in the policy we have been make. i wipe say we wouldn't hesitate we would make a larger move if the committee would conclude that would be appropriate. that was not the case at this meeting. there was very broad support for the move we made. you mentioned the june meeting, we had said many times we were prepared to move more aggressively if inflation were to disappoint. we moved more aggressively in the june meeting as we said we would do. we continued in a more aggressive rate as the june continues to disappoint in the cpi reading. reporter: thank you so much for taking our questions. colby smith with "the financial times." as the committee considers the policy path forward how will it weigh the expected decline in headline inflation which might come as a result of the drop in commodity prices against the fact that we are likely to see some persistence in core readings in particular? and given that potential tension and signs of any kind of activity weakening here how is the committee's thinking changed on how far into restrictive territory rates might need to go? >> so, i guess i would start by saying we have been saying expeditiously move to the range of neutral. 2.25 is the right in the range we think neutral. the question is how we think about the path forward. one thing that hasn't changed, won't change our focus is going to continue to be using our tools to bring demand back into better balance with supply to bring inflation down. that will be our overarching focus. we expect ongoing rate hikes will be appropriate. we'll make decisions meeting by meeting. what are we going to be looking at? we'll be looking at incoming data as i mentioned. that will start with economic activity. are we seeing a slowdown, slowdown in economic activity we think we need? there is some evidence that we are at this time. of course we'll be looking at labor market conditions and we'll be asking whether we see of the alignment between supply and demand getting better, getting closer. of course we'll look closely at inflation. you mentioned headline and core. our demand for headline but not for core but we look at core is actually a better indicator of headline and of all inflation going forward. so we'll be looking at both. we'll be looking at them for, at both really for what they're saying about the outlook rather than just simply for they say. but we'll be asking, do we see inflationary pressures declining? do we see actual reads of inflation coming down? in light of all that data the question we'll be asking whether the stance of policy we have is sufficiently restrictive to bring inflation back down to our 2% target. it is also worth noting rate hikes have been large, they have come quickly and, it is likely that their full effect has not been felt by the economy. there is probably some additional tightening, significant additional tightening in the pipeline. so where are we going with this? i think the best, i think the committee broadly feels we need to get policy to at least to a moderately restrictive level. maybe the best data point for that would be what we wrote down in our sep at the june meeting. i think median for end of this year, the median would have been thrown 3.25 and 3.50. people wrote down 50 basis points higher than that for 2023 even though that is now six weeks old i guess that's the most recent reading. of course we'll update that reading at the september meeting in eight weeks. that is how we're thinking about it, as i mentioned as it relates to september another unusually large increase could be appropriate. but that is not a decision we're making now. one we'll make based on data we see. we'll be making decisions meeting by meeting. we think it is time to just go to meeting by meeting basis, not provide the kind of clear guidance we had provided on the way to neutral. >> nick. reporter: nick timeros of "the wall street journal." chair powell, you said that your policy works through influencing expectations and policy needs to be at least moderately restrictive which means you need financial conditions to stay tight. futures market pricing currently implies you will raise rates this year along the lines of your june sep and lower them a few months later next year. are these expectations consistent with the need to keep financial conditions tight in order to moderate purchasing power and bring inflation back to 2%? >> so i'm going to start by pointing out that it's very hard to say with any confidence in normal times, in normal times what the economy is going to be doing in six or 12 months and so to try to predict what the appropriate monetary policy response, we do that in the sep but nonetheless you have to take any estimates of what rates will be next year with a grain of salt because there is so much uncertainty. these are not normal times. there is more uncertainty about the path ahead than ordinarily and ordinarily it is quite high. the best data, the only data point i have for you really is the june sep which i think is, just most recent thing that the committee's done. since then inflation has come in higher, economic activity has come in weaker-than-expected but at the same time i would say that's probably the best estimate where the committee's thinking is still which is we would get to a moderately restrictive level by the end of this year by which i mean somewhere between three, 3 1/2% and we the committee sees further rate increases in 2023 as i mentioned, we'll update that of course at the september meeting but, that is really the best i can do on that. reporter: you said inflation had been a little hotter than anticipated. has your view of the terminal rate changed since june? >> so i wouldn't say it was -- i think we didn't expect a good reading but this one was even worse than expected i would say. i don't talk about my own personal estimate of what the terminal rate would be. i do, i will write down that in -- it is going to evolve. obviously it has evolved over the course for all participateness, for all participants it evolved over the course of the year as we learned how persistent inflation is going to be. by the time of september meeting we'll see two more cpi reads, two more labor market reads and significant reads about amount of economic activity and geopolitical developments, who knows. it's a lot, eight-week intermeeting period. we'll see quite a lot of data and we'll make our decision at that meeting based on the data. >> gene -- gina. reporter: hi, jerome, thanks for taking our questions, "new york times." you alluded to this earlier, in event you see inflation headline numbers, oil prices coming down so much, core inflation continues to be stronger and picks up, i wonder how you would think about that? >> it is hard to deal with hypotheticals but i just would say this, we would look at both and we would be asking ourselves, are we confident that inflation is on a path down to 2%? that's really the question. we'll be making you know, our policy stance will be set at a level ultimately at which we are confident, that inflation is going to be moving down to 2%. so, you know, it would depend on a lot of things. of course, as i mentioned core inflation is a better predictor of inflation going forward. headline inflation tends to be volatile. so in ordinary times you look through volatile moves in commodities. the problem with the current situation is that if you have a current sustained period of supply shocks those can actually start to undermine, or to work on deanchorring inflation expectations. the public doesn't distinguish between core and headline inflation in their thinking. so it is something we have to take into consideration in our policy making even though our tools don't really work on some aspects of this, which are the supply side issues. reporter: steve liesman, cnbc, thanks for taking my question, mr. chairman. earlier this week the president said we're not going to be in a recession. so i have two questions off of that, do you share the president's confidence not being in a recession, and second, how would or would not a recession change policy? is it a bright line, sir, where contraction of the economy would be a turning point in policy? is there some amount of contraction of the economy the committee would be willing to abide in its effort to reduce inflation? >> so as i mentioned we think it's necessary to have growth slow down. growth is going to be slowing down this year for a couple of reasons, one of which is that you're coming off of the very high growth of the reopening of year of 2021. you're also seeing tighter monetary policy and you should see some slowing. we actually think we need a period of growth below potential in order to create some slack so that the supply side can catch up. we also think that there that will be all likelihood some softening in labor market conditions. those are things that we expect that, we think that they are probably necessary if we're to have get inflation, be able to get inflation down on a back to 2%, ultimately get there. reporter: the question was whether you see recession, how that might or might not change policy? >> so we're going to be, again we'll be focused getting inflation back down. we, as i said on other occasions price stability is really the bedrock of the economy and nothing works in the economy without price stability. we can't have a strong labor market without price stability for an extended period of time. we want to get back to the kind of labor market we had before the pandemic where differences between racial and gender differences and that kind of thing were at historic minimums. where participation was high. where inflation was low. we want to get back to that. but that is not happening, that is not going to happen without restoring price stability so that is something we see as something that we simply must do and we think that in the, we don't see it as a trade-off with the employment mandate. we see it as a way to facilitate the sustained achievement of the employment mandate in the long term. reporter: howard schneider with reuters. particularly with regard to expectations it has been said the last few months the risks of doing too little outweigh the risks of doing too much. bus that remain the bias? >> we're trying to do just the right amount, right? we're trying not to have a recession. we don't think we have to. we think there is a path for to us bring inflation down while sustaining a strong labor market. as i mentioned along with, in all likelihood some softening in labor market conditions. so that is what we're trying to achieve. we continue to think there is path to that. we know the path has clearly narrowed, really based on event outside of our control. it may narrow further. so, you know, i do think, as i said, just now that restoring price stability is just something that we have to do. there isn't an option to fail to do that because that is the thing that enables you to have a strong labor market over time, without restoring price stability you won't be able to over the medium and longer term to actually have a strong, sustained period of very strong labor market conditions. of course we serve both sides of the dual mandate. we see them well-aligned on this. reporter: as follow-on to that -- charles: want to jump in here for a second, chairman powell just used the word recession himself. he has been trying hard not to mention it. i've got danielle dimartino booth still with me. feels like he is saying okay everything is important and that jay powell that came out with that august 27th, i think 2020, sort of whatever he changed, became social justice jay powell, still in his heart. he is saying i want to get back to where the racial and gender participation, everything was amazing february 2020 but first i got to beat upphis t ecomymy mo . snds l likee ae lf o f a lpl ificeclyecn tve peoveeple ee toantantantot mo. ..e he he i iin iinm tooo m, tiu to lo tnger avakehe pain in order to get back to a stronger footing for the labor market going forward. he is using a ton, also putting a disclaimer out there he is equating recession with strong labor market. meaning if we get a technical recession for two quarters he is already kind of pushed that aside. it is only about the labor market. charles: to that point he did talk about, you know, how restrictive they have to be. where they might be at the end of the year. >> yep. charles: he was asked, he talks about the idea that the fed wants to influence behavior. the question was asked if that is the case, is everyone being premature seeing rate cuts next year? he kind of dodged that a little bit. >> he did. he said look back what we said in june. i know it was six weeks ago, look back what we said in june. in in 2023 we'll still be tightening. he alluded in my view he will continue tightening through the end of the year and midterms and keep going. charles: what is the thing that struck you most? questions are getting repetitive but there is some bombshells here. what do you think we go home tonight and sleep on this, market will be the driver? >> to me the old powell is back. can't tell what the economy will do six to nine months. that is how he characterized the first press conference before the powell pivot. charles: when the market fell apart. he. >> he is talking tough, charles. charles: we'll leave it there. go back to jay powell. >> doesn't make sense the economy would be in recession with this kind of thing happening so i don't think the u.s. economy is in recession right now. haven't seen it, have to see what it says. i would say generally the gdp numbers do have a tendency to be revised pretty significantly. it is just it is very hard, very hard to accumulate u.s. gdp. it's a large economy and a lot of work and judgment goes into that. you tend to take first gdp reports with a grain of salt. of course it is something we'll be looking at. >> victoria. reporter: hi, chair powell, victoria with "politico." i want to ask about the new conflict of interest rules you al rolled out. some senators are asking for those rules to have more teeth and more transparency about fed officials financial activity. i wonder if you can speak to that, whether you intend toughening those rules anyway? >> so those are the toughest rules in place, you know at any comparable institution that i'm away of we thought about this carefully. we put them in place and we're building the infrastructure so that, so that enforcement will be tight. that actually you wouldn't be able to make trades unless they're precleared. the amount of trades you make, they will have to be 45 days or more before any fomc meeting. i think we've really, you know, created a very strong and robust set of rules that will, you know, support public trust in the institution. and, again we're just now, system is just now up and running. i'm proud of what we did. reporter: chair powell, hi, katerina, "bloomberg news." i wanted to ask a little bit more about the 75 basis points, versus 50, versus 25. can you talk a little bit about what, what kind of goes into your thinking for, you know, making the decision on how much to raise rates, and you know, just talking about a very large amount that you alluded to, could that possibly be 100 basis points and then -- charles: we got to jump in again, folks. jay powell made amazing comments on gdp. he does not think it will be negative tomorrow. he also said they tend to be revised significantly. i think he threw wall street a bone right there. >> yep. anything can change in a year. revisions, take a long time to play out. if negative he dismissed it. we'll revise negative gdp away. wait for data to settle after revisions. >> what do you make of his comment, no recession right now? >> he is defining recession as low unemployment. they're moving the goalpost. he is redefining technical recession two prints in a row. he is saying doesn't matter. charles: monster rally in the nasdaq. if the gdp number tomorrow, isn't negative around so far today we had two firms upgrade their gdp number, goldman sachs, jpmorgan. it is not negative, is wall street, maybe wall street is setting itself up right now? >> could be. jay powell will have to come through with a large rate hike again of the he used unusually large. like the princess bride, unusually large road dented. meaning 75 is still alive for the september meeting. >> thanks at lot. let's hear more from the fed chair. >> i still think you can think of the destination as broadly in line with september, i'm sorry, the june sep. it is only six weeks old, and sometimes seps can get old really quick. this one i would say is probably, probably the best guide we have where committee needs to get end of year. we'll appointment to that. >> chris. reporter: hi, thank you. chris, associated press. i wanted to ask about right now they're is a sort of growing gap between fed's preferred measure of inflation, pce index, and the one followed by the public, the cpi of course. how do you expect to handle this divergence the pce comes down to consider slowing rate hikes even if the public is seeing much higher cpi ratings thank you. >> interesting situation. we long used pce, we think it es better capturing the inflation that people actually face in their lives. i think that view is pretty widely understood. that said the public really reads about cpi. the difference really is because the cpi has higher weights on things like food, gasoline, motor vehicles and housing than the pce index does and so that accounts for a lot of the difference. however, over time they tend to come together. we're given the importance in the puck lick eye of cpi and calling it outing and notice it and we target pci because we think it's a better measure. it will come together eventually and the typical gap was really about 25 basis points for a very long time. if it got to, you know, 40 basis points, that would be very noticeable and now it's larger than that because of the things i mentioned so we'll be watching both but again, the one that we think is the best measure always has been pce, at least since i think we -- some 20 plus years ago moved to pce. >> like to give a couple things together. michael bloomburg. the destination pretty much remains the same in terms of your end of the year target, but where are you in the journey? we now see the federal stimulus programs end, you mentioned consumer spending, business investment has slowed. are they moving at a pace you would expect or is demand still greater than supply -- too much greater than supply that you need to do significantly more. i ask because there are lags in the impact of monetary policy as you mentioned and a lot of this might hit in 2023, the strong dollar effect may hit in 2023. when the economy might be weak, how do you know where you are and where you think you need to get to? >> well, just talking about demand for a second. as i mentioned in my remarks, i think you pretty clearly do see a slowing now in demand in the second quarter. consumer spending, business fixed investigationment, housing -- investment, housing and places like that. people widely look at first quarter numbers and thought they didn't make sense and night have been misleading in terms of the overall direction of the economy, not true of the second quarter. but at the same time you have this labor market and there's plenty of experiences where gdp has been reported as weak and the labor market as strong and the economy has gone right through that and been fine. that's happened many times and it used to happen, if you remember, in the first quarter of every year for several years in a row, gdp was negative and the labor market was moving on just fine and turned out to be just measurement error. we don't know the situation, the