So oh here we go we're back out. At moon gang with a special special edition of dumb money. A little flare. There.

Oh. That's called entertainment. Ah. We're getting going.

All hell's about to break loose in a couple minutes. No sense in me screwing around here. When you guys can hear it all for yourself let's watch it uh results last night getting uh right now here's the fed results. Here's what we're expecting we get the results in a little bit.

Where david kelly 79. Chance of 75 bips. Most likely what's going to happen i'll leave up the markets and we're going to listen to the results live stanley investment management. Okay folks uh we're going into this i think everybody is sort of low surprise factor.

Here. Everybody here. We go three quarters of a point. Um.

Let me turn first to david david. I remember you saying at the last one of these events that the risk of the fed is in these circumstances moving too late doing too much and doing it for too long is that still the prime. Risk the fed faces. Yes i mean the us.

Economy right now let's get going in a tight rope on the edge. I don't think gdp tomorrow will be negative uh. But i think over the course of this year. There'll be virtually no vote over all and rumble just tell me yeah big red big green coming in volatility bottom left.

Dollar bottom right tech sector top right. It's going through a spot. And then you can see some of the other ones over. Here bitcoin currently sitting at 2160.

75 basis points. Today. Because they just don't want to move until. They actually see signs of lower inflation.

Mona. Is the fed willing to take a recession mild something more than that in order to quash inflation yeah 90 seconds center for them right now inflation mandate um until we start to see that daily 10 just to get more people in here destroy that like button destroy the like button join with the moon game hit the subscribe button gdp report and even the earnings are backward. Looking the fed hadn't really tightened into restrictive or even neutral territory. We hadn't started quantitative tightening.

So if we're softening already 55 are saying big red when it does actually tighten we could see slightly bigger ahead in terms of economic softness and growth. Perhaps the silver lining is though markets have started to anticipate this ahead. Jim. We've got about less than one minute to go you're the only one in this trio.

Who sees even the remotest possibility of a full point hike from the fed what percentage do you put on that possibility well i say it's about 25. I mean our base cases that they go 75 basis points. I wouldn't rule anything out the fed 30 seconds have to be tough on inflation. So far sequentially.

They haven't seen core cpi or core inflation move down on a month over month basis. I think that they are trying to fight this inflation the problem is is that they're fighting a lagging indicator inflation with a policy tool raising interest rates that works with a lag. So it's very very difficult for them to actually time this and get this right. The risk is a recession.

The risk is a hard landing. They are willing to go into that territory in order to stop inflation. And i think that is where results will be coming out momentarily. Very seriously about fighting inflation.

They're not going to give up on this very easily at this point all right uh folks. We're gonna pause right there and go to steve eastman. This is just random positions steve. It's not like it's out yet reserve.

Hiking interest rates by three quarters of a percentage point fully expected. The funds right now to a range of two and a quarter to two and a half percent. The federal reserve making plain and saying that ongoing increases in the target range will be appropriate in the months. Ahead.

The committee is on track as well to be continually reducing its balance. Sheet it's at a reduced rate not. Right now 475. Billion and root to increasing that by 295 billion a month in the month of september.

The fed downgraded the assessment of the economy. Saying. It sees softening spending and uh production out there. It had been more upbeat in the prior report.

It still though sees robust job gains and a low unemployment rate. But it also sees elevated inflation notes a series of sources from that uh inflation supply demand imbalances higher food and energy prices and broader price pressures as well mentioning of course. The ukraine war is a source of inflation uh. But taking out the idea of the china.

Lockdowns continuing to increase uh inflation. So that's maybe a source of potential optimism. There uh and finally it was unanimous uh george. Who had dissented uh last time wanting 50 did not percent this time a unanimous decision by the federal reserve to hike interest rates by 75 basis points tyler all right steve thank you very much so that looks like pretty much kelly.

What we expected to see let's go around the panel and i'm going to go back to david kelly and ask you the simple question here's another three quarter point hike. We haven't had back to back hikes of that magnitude as long as i've been in the business of covering financial markets david as i recall i don't i can't remember numbers are so it must have been the early 80s. But is this the peak rate hike that we're like who's going to blink first the bulls are the bears cycle. Which is not to say we're not going to have more rate hikes.

But do you expect more 75 bases rate hikes as we move into september november december. No that's exactly the point tyler. I think we're seeing peak inflation and peak rate hikes. These two back to back 75 basis point rate hikes in june and in july.

I think will be the highest rate hikes we get in this cycle. I think in september they can back off to 25 to 50 basis points. And the reason for that is i believe both the july cpi number on the cpi number will be in the range of sort of zero to two tenths of a percent. Much milder inflation coming off the back of these lower gasoline prices in particular is this the first move.

I think common saying first move is the wrong move. The question is you you you reach mid. So i think next time. The veteran's rates only 50 bases is this the move that's going to be the wrong.

They're still being aggressive right now. Well pretty muted reaction. So far bob assani and rick santelli. Join us to look at the markets guys in this early few moments as we digest.

It rick let's start with you and remind everybody that the 10 year prior to the fed's last move six weeks ago. Was at three and a half percent and here. We are still sitting around 275 or so you know. And that is the key.

If you look at where two year note. Rates and ten year notes were on the fifteenth. Which is when this maintenance move. Okay of 75 base points the last time everything peaked on the 14th as a matter of fact.

If you look two year note. Yields right now are down nearly 40 basis points from their 347 high close and the tens are down over 72. I thought it'd be a lot more volatility high close both their high closes were the day before the tightening. So the fed's big 614 was to send a message to the market the markets have been tightening financial conditions doing the heavy lifting.

But something's changed since then the market has eased is losing credit conditions pretty much on every level. You look at and that is the quandary right now many believe large institutional traders that many big hedge funds are going the other way they're going along with the fed who's supposed to be the big inflation fighter and they're saying the market moves of late are wrong they're saying they're wrong. If you look at the dow. The dow's up what over five and a half percent.

The nasdaq close to 10 percent since the 6 15 meetings. So the real issues all right are they going to rug. It if the markets are wrong. Then today are they going to russia sell them watch everything go down in stocks.

And a great day to sell to watch all rates go up. But that doesn't seem to be happening. And the big question is why is this the rug. I think the markets are wrong what i think is is that everybody's underestimating the recession issues in europe and the manufacturing deterioration that most likely will happen in europe.

I really do think that the reason our markets are counter. Intuitively trading has much more to do with the issues outside the us and energy does anybody out there really think that putin is going to let germany and europe stockpile enough to get through the winter isn't that the whole point of what he's doing is to make sure that doesn't happen. I think there's going to be a bumpy ride ahead especially for europe and i think that's why our markets are moving in the wrong direction. So say the big shorts.

Who think. The fed has to be tougher and that this press conference is going to be coming back down. Because the markets are doing a no no 53 96. 30.

What the fed is trying to do all right that said we see stocks rallying somewhat uh from where we were going into the decision. Uh bob assani. Let's turn to you build on that point rick was making and uh. What else you think traders are talking about there were no dissents in this decision by the way so a very muted reaction and i'm looking at technology stocks virtually unchanged since the announcement.

The s p is up six or seven points. But really very excuse that 302. The question is what would the stock market really work right now is they want. The stock market wants to validate the current belief that any recession might be mild.

Well. He's got to convince everyone that the fed rate. Hikes are pretty much front and loaded going to happen in the next. Several months they'll be done by the end of the year.

They have to come to believe that powell believes that there are some signs the economy is slowing and there may be some kind science information is cracking to the downside. He's going to provide that kind of direct validation. So the bulls already are saying well that's august 25th. Maybe that will be the point at which we have clearer signs and he can make a signal at that point.

But right now you got a little bit of everything in this job. Gains have been robust unemployment rate remain low. But inflation remains elevated and ongoing rate hikes are appropriate. There's a little bit for everyone right now.

And i suspect. That's why we're getting such a muted reaction. Let me go back. Thank you bob let me let me go back to jim karen.

I saw you not alternately nodding your head and shaking your head while rick was talking i'm not sure which you were doing to what things he was saying. But why don't you untangle your your your facial expressions. For me. Yeah.

I i think i largely agree. With what. Rick is is saying. I mean.

I think the markets are probably a little bit misguided in the sense. That yes. There is a healthy reprieve. That interest rates maybe have stopped going up as people like to say.

It's the change that matters. It's the delta that matters. You know so maybe the the fastest pace of rate. Hikes is now behind us.

The fed goes 50. And then 25s after that and maybe bond yields aren't going up so much. But what the market's forgetting to ask is why are yields so low at this point. Why is this actually happening and i think why it is happening is because the market is sniffing out a harder landing and potentially even a recession and also a slow recovery going down the recession.

As well. So i don't believe that that that the markets will or that the fed will quickly try at 395 degrees. I think that we can be in a very very very low uh growth scenario for an extended period of time. And i think.

That's what bond yields are essentially telling. Us. Credit spreads are are staying relatively tight. Because if there is a recession.

It's probably mild so you don't get a big default cycle. So i think there's a lot in here for almost everybody what's ahead of us isn't good it's not terrible. But it's not great growth or it's not uh an appropriate response to what's actually taking place uh. You know right now with fed policy.

I think that we're going to have turbulent times ahead. And i i think we need a brace for that and see this as a little bit of a better all right interesting interesting point there mono let me get you to to react to what jim. Just said and and and what rick just said and and while jim didn't mention it rick certainly did and that is concern about what's going on in europe. And and how uh much risk.

There is there for not just a little mild recession. But something much more sort of trigent than than that uh. What are you what are you seeing here have we seen peak rate hike peak inflation and maybe people glow are they gonna bring it back. Yeah.

You know rick brought up a great point. Which is is that just a basic shakeout and they're going to work it right back up us. Market and us economy versus. The rest of the globe at this point and specifically europe you know keep in mind uh.

Our economy did start from a position of relative strength. We see that in the labor market. The european economy started on somewhat of a softer footing. They didn't have the amount of stimulus in the system that we did and so and they're certainly more exposed to the ukrainian crisis and and the oil crisis than we are we are here in the us and we're seeing this flight to safety certainly in the dollar ongoing in global markets.

But we're also seeing this potential for softening global demand play out in commodity markets of course not only oil energy food grain but industrial metals copper in particular which tend to be a proxy for global economic health has been now in bear market territory and so it is interesting to see that perhaps the us. Markets by default will be a little bit of a flight to safety play. But also interesting to see that perhaps if in this scenario of a a mild recession and we certainly don't see the scope for a deeper prolonged recession. At this point markets have reflected you know with the s p down at its its lowest negative 23 mild recessions you usually get about negative 28 to negative 30 so a lot of that work to the downside has been put in but to jim's point will we get volatility ahead as some of the fundamentals catch up yes.

But keep in mind markets can bottom and even start to recover even as some of the economic and earnings fundamentals continue to soften so that's something we should watch for in the months ahead. We're also watching the dollar soften a bit after this and we should emphasize a lot of times. The real moves don't happen until 2. 30.

When we hear from chair powell or even halfway through his press conference. As his tone becomes more clear 107 for the dxy. Let's get back to steve liesman for some more color here pretty unusual to have a unanimous decision. Which this was steve yeah.

I mean. The fed has been sort of unanimous throughout this whole soul. I think swinging will the swing hold. Where will they get momentum this way that was wide open for so long.

There should have been more dissent uh. You would have thought at a fed that was really uh dealing with the issues uh that we're confronting in terms of uh gathering inflation. But i want to talk about rick's remarks which i think are really interesting. Because you can do you can go both ways with them in that he talks about this potential coming crunch in europe for both the recession and an inflation standpoint from high uh natural gas prices and energy prices in general um.

This is what we're going to be questioning uh powell about not necessarily about europe. But what does he do with a recession how much does he rely upon potential contraction of the economy. Interesting work for him um. And and i don't know that he's gained that out.

But that's certainly something that i think the traders that that rick talks about want to know about what investors want to know about if you get some softening of the economy remember that's where the federal reserve led the statement with is the softening of the economy how does that factor into policy. I can say that i'm not sure i know and the question is how much powell is willing to say he knows about how much softening changes. The policy outlook. All right folks thank you very much and thanks to our panel.

We appreciate your your insights. Today and uh as always because this is the this is the a team right here uh on fed day. We really appreciate your time uh and thank you uh so much we'll talk to you soon again all right coming up fed chair. Jerome powell's press conference 2 30.

17 minutes from now tough questions are always expected as investors look for clues on the outlook for raids is forward guidance. Even appropriate here all right so thus far as you can see kind of an interesting reaction. We saw a spike at first people liked it then we came back down and now we're going up and the question that i have in my mind. Okay is this rip gonna get back to say spy 397.

Like is it going to get up. There or are we just taking a little bit of breather from this heavy selling and then we're going to come right back down um. That's pretty much what i'm watching like high volatility. But we have had a high volatility job of kind of a good job of going nowhere.

Like like we're going nowhere real real fast um. So maybe we'll get some sort of nice trend from jerome powell. Speaking in about 15 minutes. The dollar softening.

A little bit going as expected the opposite way as the spy in the queues um first moves. The wrong move. I like it's kind of interesting like that's a common saying. But you might be scratching your head.

We'll first move on what time frame should i be looking at the minute short or the first three minutes here the wrong move. We came down or do we go to like the five minute chart. We're like oh negative. So that's the first move and of course.

It's a nice nice saying but like it's not like there's actual rules sort of like oh we're talking about the first move on the minute chart. The first move on the 15 minute chart like are we talking about the first hour are we just talking about where it goes from two to four and the next day. It reverses uh. So there's a little bit of a wishy washy nature.

But here's the actual um information that just came out for release at 2pm recent indicators. The spending and production have softened that's not good nonetheless job gains have been robust in recent months. That is good in the unemployment. Rate it has remained.

Low it's that 36. Percent. A five decade low inflation. Remains.

Elevated reflecting. Supply and demand. Imbalances related to the pandemic higher food and energy. Prices and broader price pressures.

That's just them acknowledging that we just came in at a soaringly high value of 91. Percent. Russia's war against ukraine. Is causing tremendous human and economic hardship.

The war and related events are creating additional upward pressure on inflation and are weighing on the global economic activity. The committee is highly attentive to inflation risk so they're basically saying hey. Like there's still things going on that we actively have to pay attention to that's going to make battling inflation that much more difficult. The committee seeks to achieve maximum employment and inflation at the rate of two percent over the long run.

This is something that a couple months ago. They changed usually they try to do that per year. But now they're saying well we might have to like do things now and bring it down in the future like when you average. It out give us enough time type of a deal in support of these goals.

The committee decided to raise the target rate to two and a quarter to two and a half that's the 75 bips that they're talking about that ongoing increases right here ongoing increases in the target range will be appropriate in addition. The committee will continue reducing its holdings of treasury securities and agency debt and agency mortgage backed securities as described in the plans for reducing the size of the fed's balance sheet basically balance sheet normalization balance sheet runoff. Whatever you want to call it the committee is strongly committed to returning inflation to its two percent objective so before june june was the start of quantitative tightening. It was the start of the balance sheet runoff the start of balance sheet normalization whatever you want to call it june was the start they were trying to hit a 50 goal of 475.

Billion. A month june july. August. Each month.

And then double that up to their main target of 95 billion starting in september. So right here they're saying they're going to continue with that but what i find interesting and i wonder if jerome's going to talk about it the chairman of the fed pal who speaks now in 15 minutes. What's going to be interesting is in the first month. So in july you get how they did in june.

Like at the end of the month. You figure out you get that information did they do it did they not do. It blah blah. Blah that type of they weren't even close to 475 billion.

They ended up running off about 10 billion worth of treasuries like so that was good. But then they actually ended up buying like three billion dollars worth of mortgage backed securities so the net was like a change of 7 billion when they were supposed to hit 475 billion. So i wonder if they're gonna talk about that but here like their basic commentary is saying no like we're going to continue so i wonder if they were pulling that off in july. Obviously we'll find out in assessing the appropriate sense of monetary policy.

The committee will continue to monitor the implications of incoming information for the economic outlook. The committee would be prepared to adjust the stance of monetary policy as appropriate if the risk emerged that would impede the attainment of the committee's goals. The committee's assessments will take into account a wide range of information. Including readings on public health.

Um. That's kind of interesting because and cnbc was even just referring to this they just shut down part of wuhan. Again so interesting that they're bringing up public health. It's important because there are some things that could throw wrench into the whole equation labor market conditions.

Inflation pressures and inflation expectations and financial and international developments. Um. There are all people who voted there it was unanimous. There was no um.

I guess issues they all agreed on 75 bips. So that's all the information has now let's take a quick look at the market. We're bouncing back. But like once again a very good job of going nowhere um.

I would basically say this maybe the values. We should watch um. I have that as an alert because i think that's an important breakdown. But since the announcement at 2 pm also known as 14 o'clock.

I think the way to do. This is actually pay attention to the high and the low and then wait for that range breakout as of now. I've made no new position. I've had the ones that i had from earlier today.

So if you were paying attention that you're well aware of it uh. But i would say the way to play this is exactly what i just drew wait for this range breakout and or break down. That's what i think is a real how like a reasonable way to think about the current scenario. And we're almost perfectly halfway through the range as in the market doesn't know it's very neutral.

The bulls and the bears are equally i guess weighted at this point in time so i'm gonna watch the low. And the high that we've recently formed and since we're in the middle. Um. Also one thing.

I wanted to point out to you early this morning in terms of the options market. It was heavily dominated by calls heavily dominated well no i shouldn't it was like 52 calls in terms of the money. Bet. 48.

Puts uh around 12 30. That dramatically shifted right. Now. It's being dominated by puts.

Um. Apple. Two days out tesla. Two days two days two days.

We're seeing there was and actually at first when i saw it it inverted and then it was 55 put. And then it was 60 put then it was 62 put and now. It's actually getting even worse uh in terms of like there's becoming more of a more of an imbalance on the put side 66 of the money right now. And that all started shifting around 12 30.

Today. I just wanted to share that information with you does it mean something no because sometimes big money gets things wrongs too like just because you have big money doesn't mean you're right. I just wanted to let you know some of the wonkiness. I saw.

But um right now we're pretty much exactly where we were at at like 155. So as in before the announcement uh. So we saw a clear burst in volatility clear burst in volume uh bitcoin doing decent bitcoins trading at above 22 000. So watch for it to hold but then on the flip side if it goes below.

218. That might be a bit more bearish the dollar coming down. Which is actually bullish for the market commonly right now at least. We have an inverse relationship between the two so we're gonna find out a lot more in 10 minutes 10 minutes 10 minutes 10 minutes and in the meantime we could just watch the breakouts the breakdowns of the range that has been created will it break out i have no idea will it break down.

I have no idea. I'm i'm watching it here with you guys i would love to get out for break even on my like more of my bearish. Leaning plays and i set that up i needed it to push like maybe another two dollars down the spot in the queue. So in the short term.

I would love a bearish push. But then i also wouldn't mind it bottoming out i load up long and then it actually starts to push because we had some nice technical developments in the chart. Um. But let's see how it goes patients patients patients patients.

Patients patients patients can you review. Uv. Xy. It's just going to move oppositely of the spy.

Uv xy is based on the vix. The vix is the volatility of the s p 500. They they move inversely uh all right what are we doing so ever since 2 15. We've done nothing nothing nothing nothing how long are you streaming for oh.

Someone just tried to smack it but then someone buying it right back up that was a little burst of volume a little burst of volatility um how long am i streaming for it all depends on how exciting. This is if if we honestly just stay flat um. I probably won't but then if things stay how you are i'll stream. All the way till market closed it's just dependent on the market uh dollar downward trend yeah but maybe double but it's at a key level of 107 our boy jerome powell.

Going live v. Soon be soon be soon. V. Soon.

All right all right all right all right let's see what we have going on nothing yet. We got our range established now we just have to wait. And i have this up to listen to pal. The official fomc website.

Well there's probably a dmca on me all right. I have it playing in my ears just so i know when he comes live. But hopefully. I don't get kicked from youtube in the meantime.

Wait and wait and wait and nothing yet nothing. How cool will jerome be today. How cool will he be probably super cool the most the most cool senators take aim at visa mastercard. That's why uh visa got really hit at one senate votes to give a 52 billion boost to the us semiconductor industry don't forget that tomorrow we also have the gdp report it comes out at 8 30 am.

What do we have going on what do we have what do we have what do we have what do we have what do we have interesting in preparation for fmc here's how spy has moved to one standard deviation since 2002. So about 10 days. After typically like we're a little down kind of a cool graphic. I like it uh google delaying plan to end tracking cookies 2024.

Yeah. What are we doing we're waiting what way is this all gonna go looks like it was well we clearly sold off. But then there was a nice pop um now we just have to wait on. The spy you're looking at.

39750 or. 39550. So that's a huge range. A two dollar range.

That was created in basically five minutes six minutes. That's that's just ridiculous redonkulous volume calming down a little bit. Now everyone is just waiting the next four minutes. We're just waiting uh hang on i said unstable connection.

I don't believe it not for one second. What are we doing come on jerome. What are you doing to us here's the question are we putting in a higher low right here or are we just taking a breather all right just for you for all you people who watch the quick. One minute chart and need something change and change and changing watch that trend line all right three minutes three minutes three minutes your 180 second warning.

Honestly so. The reaction is one thing so like basically from 2 to 215 makes sense. That's the digestion of the report that's already come out to us uh this movement from like 215 to 230 like what the hell are they they're not basing. It on anything.

It's the report was already priced in and now you're in that like weird 10 minute no man's land. Where you're just waiting for jerome powell to talk a little bit of bullishness higher low. Now let's see if it's going to go to a higher higher. What's going to break the upside range or the downside range.

What's it gonna be can you play the die die die audio. I don't know the market has been absurdly strong today and i just don't like what it's weird because the market rips. So much today so i think about it like this. What could he say that would be even better and continue to push it but also what would he say that could like destroy it so like i don't know it's going to be interesting this we had a volatile reaction.

But no trend was really created off of this but we're going to find out more in about a minute 30. Ideally when he comes on just. I'm listening to the weirdest elevator music. The things i do for you folks.

August special meaning. They wouldn't do that now that wouldn't be declared as of now just so everyone knows the reason. We're talking about a special meeting is um. As of now.

There's no planned fomc meeting. In august july. Next one september um. But even if they had one which i really don't think that they will right now um.

Unless. The next cpi report is awful. I don't think they would do an emergency rate hike. Oh is my hair up sorry sorry all right where are we at dollar showing some weakness got a wedge going on.

But if it pops be careful about a dixie pop bitcoin reacting well above 22 000. I think you look at the market in a vacuum disregarding any geopolitical implications uh. No. What time is that old fart coming on he should be on in 10 seconds.

I'm just waiting wait and wait and wait oh jerome where are you oh. Jerome where are you oh here. He is big man on campus. Oh can't see the best contrast here good afternoon.

Yes. We're just not going to do that then 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 mark has just took a little hit they don't like the look of this pace apparently resilient. It is essential that we bring inflation down to our two percent goal.

If we are already as soon 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 three quarters 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'll have more to say about today's monetary policy actions. After briefly reviewing the dollar. Popping.

Hard whoa recent indicators of spending and production. Have softened. Growth and 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 it's like we're going below the range.

The unemployment rate near a 50 year low job vacancies. Near historical highs and 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 labor first participation rate. Little change since january overall. The continued strength of the labor market. Suggests that underlying.

Aggregate demand remains solid inflation remains well above our longer run goal of 2. Percent. Over the 12 months. Ending in.

May total pce. Prices. Rose. 63.

Excluding the volatile food and energy. Categories. Core. Pce prices rose.

47. Percent. In june. The 12.

Month change in the consumer. Price index came in. Above expectations at. 91.

Percent and the change in the core cpi was 59. Percent. Notwithstanding. The recent slowdown in overall economic activity.

Aggregate demand appears to remain strong supply constraints have been 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 fez monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the american people. My colleagues and i are acutely aware that 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 two percent objective at today's meeting.

The committee raised the target range for the federal funds rate by three quarters of a percentage point. Bringing the target range to two and a quarter to two and a half percent and we're continuing the process of significantly reducing the size of our balance sheet. Which plays an important role in firming the stance of monetary policy. Overcoming months.

We will be looking for compelling evidence that inflation is moving down consistent with inflation returning to two percent. It's so like ongoing increases in the target range for the federal funds rate will be appropriate all over the map. Today the pace of those increases will continue to depend on the incoming data and evolving outlook for the economy. Today's increase is the tar in the target.

Range is the second 75 basis point. Wow. 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 and communicate our thinking as clearly as possible as the stance of monetary policy tightens further it likely will become appropriate to slow down while we assess how our cumulative fields 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 two percent and to keep longer term inflation expectations well anchored making appropriate monetary policy in this certain 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 in what is already an extraordinarily challenging and uncertain time we are highly attentive to inflation risks and determined to take the measures necessary to return inflation to our two percent 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. Hi chair. Powell.

Thanks for taking our questions. Rachel siegel. From the washington post. Wondering if you can walk.

I just dumped everything around the decision not to go for a full percentage point increase um. We saw a ramp up after the may cpi report came in hotter than usual and then obviously the june figure. Did too was there any discussion of a stronger hike at this meeting. Thank you sure so we did judge that a 75 basis point increase was the right magnitude in light of the data uh in the context of the ongoing increases in the policy rate that we've been making.

I'd say that we wouldn't hesitate to make an even larger move than we did today if the committee were to conclude that was that that were appropriate that was not the case at this meeting. There was very broad support uh for the move that we made you mentioned that the june meeting. We had said many times that we were prepared to move aggressively more aggressively if inflation continued to disappoint and that's why we did move to a more aggressive pace at the june meeting as we said we would do at this meeting. We continued at that more aggressive pace as inflation has continued to disappoint in the form of the june cpi reading.

Thank you so much for taking uh our questions colby smith uh with the i'm now long against the fact that we are likely to see some persistence in core readings. In particular and given that potential tension and signs of you know 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 um.

I guess i'd start by saying. We've we've been saying we will move expeditiously to get to the range of neutral. And i think we've done that now we're at 225 to 2 and a half and that's right in the range of what we think is neutral. So.

The question is how are we thinking about the path forward. So one thing. That hasn't changes that it won't change is that our focus is continuing to is going to continue to be on using our tools to bring demand back into better balance with supply in order to bring inflation back down that will continue to be our overarching focus. We also said that we expect ongoing rate rate hikes will be appropriate and that will make decisions.

Meeting by meeting. So what are we going to be looking at um. You know we'll be looking at the incoming data as i mentioned and that that'll start with economic activity are we seeing the slowdown that we the slowdown in economic activity. We think we need and there there's 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 be looking closely at inflation. You mentioned headline and core. Our mandate is for headline of course.

It's not for core. But we look at core because core is is actually a better indicator of headline and of all inflation. Going forward. So.

We'll be we'll be looking at both and we'll be looking at them for those both really for what they're saying about the outlook. Rather than just simply for for what for what they say but we'll be asking do we. See inflationary pressures. 420 is the next target actual readings of inflation coming down.

So in light of all that data. The question will be target is where the 307 policy. We have is sufficiently restrictive to bring inflation back down to our two percent target dollar coming down and also worth noting that crushing. It meta reporting after the money today.

They've come quickly. And it's likely that their full effect has not been felt by the economy. So there's probably. Some additional tightening significant additional tightening in the in the pipeline.

So where are we going. With this. I think the best. I think the committee broadly feels that we need to get policy.

Too what's the spy at 400. That's very important level key level. And maybe i've raised data for that 400 wrote down in our scp. We might be getting the gap bill today.

I think the entire 4015 would have been between uh. Three and a quarter and three and a half and then people wrote down uh 50 basis points higher than that for 2023. So that's even though that's now uh six weeks old. I guess that's that's the most recent reading of course.

We'll update that reading at the at the september meeting in eight weeks so that's how we're thinking about it as i mentioned as it relates to september. I said that another unusually large increase could be appropriate. But that's not a decision. We're making now it's one that we'll make based on the data.

We see um and we're going to be making decisions meeting by meeting we think it's uh. We think it's time to to to just go to a meeting by meeting basis. And and not provide you know the kind of clear guidance that we had provided on the way to neutral. Nick tamaros of the wall street journal.

Uh. Chair. Powell. You've said that your policy works.

Through influencing. Expectations. And that 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 scp. But then lower them uh a few months later next year are these expectations consistent with the need to keep financial conditions tight in order to moderate purchasing power. I'm team this so i'm going to start by pointing out that it's very hard to say with any confidence in normal times.

Look at that normal matters. What the economy's going to be going to be doing in 6 or 12 months and to try to predict where what the appropriate monetary policy. Would response response would be i mean of course. We do that in the scp.

But nonetheless you've got to take any estimates of what rates will be next year with a grain of salt because there's so much uncertainty these are not normal times. There's significantly more uncertainty now about the path ahead than i think there ordinarily is and ordinarily it's quite high so again. I i would the best data. The only data point.

I have for you really is the june scp which i think is just the most recent thing. That the committee's done since then inflation has come in higher economic activity has come in uh weaker than expected. But at the same time. I would say that's probably the best estimate of where the committee's thinking is still.

Which is that we would we would get to a moderate moderately restrictive level by the end of this year. By which i mean somewhere between three and three and a half percent. And that we the committee. Sees further rate increases uh in um in 2023 as i mentioned.

We'll update that of course at the september uh meeting but um i you know that's really the best. I can do on that you said inflation had been right coming up to our first actual changed resistance june. So i wouldn't say. It was i think we didn't expect a good reading.

But this one uh this one was was even worse than expected. I would say um. I don't talk about my own personal estimate of of what the terminal rate would be um. I do i will write down that in uh.

It's going to evolve. It's obviously it has evolved over the course. I think for for all participants. It has evolved over the course of the year as we learn you think how tomorrow perhaps geopolitical developments.

Who knows it'll be it'll be a lot. It's it's an eight week intermediating period. So i think we'll see quite a lot of data. And we'll make our decision at that meeting based on that data gina come on get this breakout.

Go go go go go. The queue is trying to break out right now you kind of alluded to this earlier. But i wonder 307 50s the next several months of very weak headline inflation numbers because oil prices are coming down so much but square inflation continues to be stronger resistance. If we get above this.

I'm calling out 401 to deal with that technically 401. I just would say this. We you know we would look at both and we would have we'd be asking ourselves are we confident that inflation is on a path down to two percent. That's really the question and we'll be making you know our policy stance.

Number one will be set at a level ultimately. At which we are confident that inflation is going to be moving down to two percent. So you would you know it it would depend on what's going on let's go let's go let's go and core inflation is a better predictor of inflation going forward headline inflation tends to be volatile so in in ordinary times you you look through volatile moves and commodities um. The the problem with the current situation is that that if you have a sustained period of supply shots.

Let's get this break out those can actually start to undermine um or to work to work on de anchoring. Inflation expectations. The public doesn't distinguish between core and headline inflation in their thinking. So it's something we have to take into consideration here we go policy come on even though our tools don't don't really work on uh on the uh.

Some aspects of this which are the supply side issues steve leesman cnbc thanks for taking my question. Mr. Chairman steve earlier this week. The president said we are not going to be in a recession.

So i have two questions off of that do you share the president's confidence in 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 or is there some amount of contraction of the economy. The committee would be willing to abide in its uh effort to reduce inflation so as i as i mentioned um. We we think it's necessary to have uh growth slow down and slow growth growth is going to be slowing down this year for a couple of reasons.

One of which is that your column was freaking. Very high almost freaking out the reopening year of 2021 um 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 so that the supply side can catch up we also think that there will be in all likelihood some softening in labor market conditions and and those are those are things that we expect uh that and we think that they're probably necessary if we were to have uh to get inflation. We were to be able to get inflation back down on a path to two percent ultimately get there.

The question was whether uh you see a recession coming in how that might or might not change policy. Thanks. So we're going to be again. We're going to be focused on getting inflation back down.

And we as i've 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 all want to get back to the kind of labor market.

We had before the pandemic where uh differences between you know racial and and gender differences. And that kind of thing were at historic minimums. Where participation was high where inflation was though we want to get back to that. But that's not happening.

That's not going to happen without without restoring price stability. So that's something we see as as as something so you won't answer. It must do and we think that in the we don't see it as a trade off with with the the employment mandate. We see it as a way to facilitate the sustained achievement of the employment mandate in the longer term all right come on turn this back around.

Howard schneider with reuters particularly in regards to expectations. It's been said the last few months that the risks of doing too little uh outweighed uh. The lis the risks of doing too much does that remain the bias. So we're we're trying to do just the right amount right we're not we're not trying to have a recession and we don't think we have to we think that there's a path for us to be able to bring inflation down.

While sustaining a strong labor market as i mentioned along with in all likelihood some some softening in labor market conditions. So that is that's what we're trying to achieve and we we continue to think that there's a path to that we know that the path has has clearly narrowed. Really based on events that are outside of our control. And it may narrow further um.

So you know i i do think as as i said just now that um restoring price stability. Is is just something that we have to do there's 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 to actually have a strong a sustained period.

Very strong labor market conditions so of course. We serve both sides of the dual mandate. But we actually see them as well one minute showing a bit of weakness macd just crossed over certainly and the sort of paradoxical downside. I've been getting if you're going to make a mistake would you rather make.

The mistake on doing too much raising too much and raising too little yeah. We're trying not to make a mistake. We let me put it this way. We do see that there are two sided risks.

There would be the risk of doing too much and and you know imposing more of a downturn on the economy than than was necessary. But the risk the risk of doing too little and leaving the economy with this entrenched inflation. It only raises the cost. If you fail to deal with it in the near term.

It only raises the cost of dealing with it later to the extent people start to see it as just part of their economic lives. They start to factor high inflation into their decisions. When that on a sustained basis. When that starts to really happen and we don't think that's happened yet.

But when that starts to happen it just gets that much harder and the pain will be that much greater so i i really do think that it's important that we that we address this now and get it done. Uh. Thanks. Chair.

Powell. Neil irwin. From axios um. To build a little bit on on what steve was asking um.

Do you believe. The united states is currently in a recession uh will the gdp reading tomorrow affect that judgment one way or the other and has your assessment of the risk of recession changed any in recent weeks. So i don't i do not think. The us is currently in a recession.

Um and the reason is they're just too many areas of the economy. That are that are performing uh. You know too well and of course. I would point to the labor market in in particular uh as i mentioned.

It's true that growth is slowing autofill and for reasons that we understand really the growth was extraordinarily high long on cue calls look at the labor market you've got growth. I think payroll jobs averaging 450 000 per month that's a remarkably strong level for for this state of. Affairs the unemployment rate at near a 50 year low at 36. Percent.

All of the wage uh measures that we track are running very strong so this is absolutely incoming. 40144. This is the magic gap the line that we've had this one that was created between june 9th and june 10th going for this gap. Bill i don't think the us.

Economy is in recession. Right now ah haven't seen it and and we'll just have to see what it says i don't um. I mean 401. 44.

Magic magic lines do have a tendency to be revised pretty significantly uh it's just it's just it's very hard it's very hard to accumulate us. Gdp. It's a large economy and you'd pump it a lot of companies pumped into that but one dollar first gdp reports. I think with uh with a grain of salt.

But of course it's something we'll be looking at victoria hi sherpal victoria guido um. I wanted to ask about the new conflict of interest rules that you all rolled out um. Some senators have written asking for those rules to have more teeth and to have sort of more transparency about fed's finance. The fed officials financial activity um.

I was wondering if you could speak to that dollar died on uh you know toughening those rules anyway so those are those are the toughest rules in place. You know at any comparable institution that i'm aware of we think you know we we thought that thought about this carefully and we put them in place. And we're building the infrastructure. So that so that uh you know the enforcement will be tight that actually you won't be able to make trades.

Unless they're pre cleared and um and and the amount the amount of trades you make will be they'll have to be 45 days or more before any fomc meeting. It's just 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 and uh again. We're just we're just now the system is just now up and running and i'm proud of what we did come on go go go go go go go go. Go.

Katarina sarivo. Bloomberg news. Um pump it pump it pump it pump it pump it pump. It five basis points.

Versus 50 versus. 25. Um. Can you talk a little bit about what um.

What kind of goes into your thinking for um. 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 a hundred basis points. And then kind of along those lines is there any sort of weakness in the economy. Outside of inflation measures that um would lead you to slow your hiking pace.

So i'm gonna i'm gonna take that as a question about the next meeting and thereafter so um as i mentioned. We're gonna be and i also mentioned that as this process now that we're at neutral as the process goes on at some point. It will be appropriate to to slow down. And we haven't made a decision yet when that point is but intuitively that makes sense right we've been front end loading.

These these very large rate increases and now we're getting closer to where we need to be so that's how we're thinking about it and we're you know in terms of september. We're going to we're going to watch the data and the evolving outlook. Very carefully and factor in everything and make a decision in september. Almost power hour and i'm not really going to provide any specific guidance three minutes out might be uh so ah you know but i mentioned that we we might do another unusually large rate increase.

But that's not a decision that we've made at all so we are you know we're going to be guided by the data. And it i think you can still think of the the destination as broadly in line with the september. Sorry the june s. Ep.

Because it's it's only six weeks old and sometimes sometimes scps can get old really quick. I think in this one this one i would say uh is probably the probably the best guide. We have as to where the committee thinks it needs to get at the end of the year and then into next year. So i would point you to that chris uh hi uh.

Thank you uh chris ruggard associated press. Um. I wanted to ask about um right now. There is a sort of growing gap between the fed's preferred measure of inflation uh.

The pce pce index uh and the one that's followed by the public. The cpi of course um. How do you expect to handle this divergence. If the pce starts to come down enough for you to consider slowing rate hikes uh.

Even if the public is still seeing much higher uh cpi ratings. Thank you so it's interesting situation of course. We've we've long used pce because we think it's just better at capturing the inflation that people actually face in their lives. And i think that that view is pretty widely understood that said the public really reads about cpi and 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 demand.

However over time they tend to come together. Um. You know we we were given the importance in the public eye of cpi. We are calling it out and noticing it and everything like that but remember we we do target pce that is because we think it's a better measure.

They will come together eventually the typical gap was really about 25 basis points for a very long time and if it went if it got to you know 40 basis points. That would be very noticeable now. It's it's now. It's much larger than that because of the things.

I i mentioned always has been pce at least since i think we some 20 plus years ago moved to pc. I'd like to leave a couple of things together. Mr. Chairman michael mckee from bloomberg tv and radio uh.

You said that the destination pretty much remains the same uh in terms of your end of the year target. But where are you in the journey uh we've now seen the federal stimulus programs and you mentioned consumer spending business investment have slowed are they moving at right pace you would expect i'm gonna report is demand still great uh then supply too much greater than supply that you need to do significantly more and i ask because uh 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 how do you know where you are and where you think uh you need to get to well just talking about demand for a second as i mentioned um in my remarks.

You do i think you pretty clearly do see a slowing now in a second consumer spending business fixed investment housing places like that i think you know people widely looked at the at the first quarter numbers. And thought they didn't make sense and might have been misleading in terms of the overall uh direction of the economy. Not not true of the second quarter. But at the same time you have this labor market.

So there are plenty of experiences. Where gdp has been reported as weak and the labor market is strong and the economy has gone right through that and been fine so that 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 along just fine. And it turned out to just be measurement error.

It was called residual seasonality. We don't know the situation. The truth is though we think that demand is moderating. We do how much is it moderating.

We're not sure we're going to have to watch the data carefully there there are there is a great deal of money on people's balance sheets that they can spend the unemployment rate is very the labor market is very hot. There are many many job openings. Wages are high. So.

It's the kind of thing. Where you you think that the the economy should actually be doing pretty well in the second half of the year. But we'll have to see we don't know that because you do see a marked slowing in the second quarter. That does that is fairly broad.

So we'll be watching that we'll be watching that of course as i mentioned. We do want to see demand running below potential for a sustained period to create slack and and give it inflation a chance to come down nicole mother. Hi. Thank you chairman the colder kind cnn business um when does the committee expect to see a meaningful slow down in the labor market and how much weakness will it accept with regard to slower job growth and higher unemployment before it pauses or begins to think about cutting rates.

So i think you're already seeing you've seen in the labor market. What you've seen is is a a decline from very high levels of job creation last year. And earlier this year to modestly slower job creation. Still still quite robust as i mentioned so you're seeing that you're seeing some increase some increase in initial claims for uninsurance.

Although that may actually have to do with seasonal adjustments. We're not sure that that's actually real there's some evidence that wages per. If you look at average hourly earnings they appear to be moderating not so yet from the other wage measures and we'll be getting the employment compensation index measurement. I think on friday i guess and that's a very important one because it adjusts for comp compensat composition.

So i i'd say you you and also anecdotally. You hear much uh. The sort of um level of concern on the part of businesses. They simply can't find workers is probably down a little bit uh that from what it was at say for example late in the latter parts of last year.

So there's there's a feeling that the labor market is moving back into balance. If you look at if you look at uh job. Openings or quits you see them moving sideways or perhaps a little bit down. But it's it's only the beginning of an adjustment.

But i think most uh also if you look at i mean once you start deciding these things you can't stop if you look at the uh household survey. You see much lower job creation and household survey can be much more volatile. But it has wanted to be able no jobs created in the last three months so that might be a signal that uh job creation is actually about 65 k.