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00:00Two questions that everybody on Wall Street wants to know is how far how fast. And so let me start with that. Get the good stuff out of the way. Here is 75 basis points really off the table is 50 50. And maybe another 50 is going to be good enough. And then how high do you think you end up going. Well first of all good to see you Mike. It's good to have you here at our conferences. It's always a great time to be together. When I think about our policy. The first thing that is on my mind is that inflation is too high. And we need to act definitively and purposefully to to try to get that under control. I think if you look at what we what we've done so far in the last two meetings that have really started that process for me 50 for 50 basis points from now over the last 20 years you know is already a pretty aggressive move. I don't think we need to be moving even more aggressively. I think we could stay at this at this pace and this cadence and really see how the markets evolve. My expectation and hope really is that as we move closer to our neutral levels and far away from our accommodative stance that we're going to start to see a lot of the tightness and the tension the economy start to moderate which can then give us options and choices as to sort of what we do. After that point how far do you go. Where do you think you'll be by say the end of the year by the end of 2023. Well you know that's a very good question. I really think we need to be getting somewhere into the neutral range. And as you know different people have different ideas about what that looks like for me. I'm looking at somewhere between two and two and a half percent as our neutral range. And then let's just wait and see what's happening in the intro to the segment. A lot of discussions about uncertainty or as Seth Carpenter reference reference he's gonna be here. I'm really excited about that saying that there's a lot of volatility a lot of stuff that's going to play out. So once we get to that neutral level I think that'll be fine. We're going to in my view we're going to move a couple of times maybe two maybe three times see what happens. See how the economy responds to see if inflation continues to move closer to our 2 percent target. And then we can really take a pause I think and look at how things are going. Well take a pause. What does that mean. Not move at a meeting or would just be just a rolling decision as you go along. So for me I think all options are on the table at every meeting. So depending on how the economy is responding it could be that the economy is running strong. So we don't need to do anything. It could be that the economy is responding maybe a little less strong. So we might move to 25 basis points or we may stay at 50. So I'm really going to keep my my mind open. I'm going to observe what happens in the economy and then adapt my idea about what appropriate policy looks like based on a lot of economists and many of your colleagues have said you're going to have to go beyond neutral too restrictive. If you had a 4 percent inflation rate and a 3 percent Fed funds rate you've still got a negative real Fed funds rate. Why don't you think that you're gonna have to do that. Well my hope is that a lot of the things that are really out of our control things like supply chain disruptions and the like are going to start to get to a better place. We're gonna see how the labor market responds. There's there was a story just last week about retirees coming back into the workplace. Those are things that might relieve some of the tension that we're seeing in labor markets and allow producers to start to increase the supply of their supply of products. That then reduces the imbalance between demand and supply because all of this inflation is about an imbalance between the high demand and the low supply that's out there. So if we can start to see moving on the supply side that means we'll have to push less on demand. And so that inflation I'm hoping will come down. Now how fast we'll have to see. And that will really determine whether we have to get into restrictive territory. And if we do how far. But I'm totally open to that. But no I'll just say we've been doing surveys throughout the entire pandemic. Every one has come with predictions that turned out not to be the case. So I'm trying to be as humble as I can be. Really that's true to being in the moment and trying not to anticipate too many steps out in advance because there's just a lot of stuff that's gonna happen. You heard the markets at the top of the show. Does it worry you that we're seeing such a rapid sell off and that market rates are going up so quickly. So those are two different things. So one I think the move and market rates is actually quite interesting because we've not moved very far in terms of our policy rate but the markets have responded extremely fast. And that I think is is that's really positive for my view in the sense that they're taking on board the policies that we've. And now we've just got to deliver on that. And I think we're going to do that in terms of the volatility in equity markets. You know the one that one of the things that I found to be very interesting is as I talked to a number of people the range of forecasts about what's going to happen in the next six months the next 12 months has just really broadened considerably. And that will translate into I think higher volatility. And I think some of what we're seeing right now has to do with that. What would it take for you to have to rescue the markets. A lot of people say let's just say the economy not the markets that you get to 2023 you might start cutting rates again. Well look there's a lot of momentum in the economy right now. We just had a child support. Over 400000 jobs in the month. That kind of performance in the before times would have been a reason for for celebration. So I think we can ride out a lot of that momentum even as we are raising rates. And my hope is that we'll get to a place where we don't start to see breakdowns in labor markets or other parts of the economy so that we won't have to worry about that. But just to be clear we are we are being DAX and I am paying attention. And if necessary we'll do whatever it takes to make sure the economy stays on a solid path. But I know if I ask you about the recession probability your job is to say no I don't think that's going to happen because you're at the Federal Reserve. But a lot of your former colleagues including Bill Dudley and Don Cohen have said you cannot do this without inducing a recession. Well you know I was interviewing Roger Ferguson just last night and he said the same thing. So. So yes I am hearing all of that and I understand that. I actually think that the thing we have to just be mindful of is that this is in this context is nothing like we've ever seen in our in my lifetime and my my policy space the pandemic driven disruptions. We have a war in Ukraine. There are a lot of things that are intersecting in ways that I think make it really hard to know with any kind of certainty where the economy is likely to go. So I'm keeping my mind open. I'm I'm an optimist but a worried optimist. I worry all the time. And so I'm just gonna pay attention to see where things go. One last very quick question and that is it's an election year. There's a lot going on. Do you feel any political pressure. I'm not feeling any pressure. Look we have a clear job to do and that's that's meet our dual mandate today. And the labor markets are doing fine. Inflation is where we really have a challenge. And so we just need to do whatever it takes to get that inflation under control.

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