Author: Yang Chen
Wash's debut, with multiple strong signals indicating change is imminent, including a significantly shortened statement and a shortened press conference duration. Wash stated that the committee is clear and unanimous in its commitment to achieving price stability and the 2% inflation target. Announced the establishment of special task forces, one of which will review the Fed's $6.7 trillion balance sheet, studying whether monetary policy comes from interest rate tools or balance sheet tools. Wash did not submit the "dot plot" interest rate forecast; all other officials submitted theirs, with half expecting at least one rate hike this year, and half believing rates will remain unchanged or fall. Following the Fed's statement and press conference, US stocks plunged, and US Treasury yields surged.
New Fed Chair Wash announced at his first FOMC press conference the decision to keep rates unchanged at 3.5%-3.75%, stating that the committee is clear and unanimous in its commitment to achieving price stability and the 2% inflation target.
Simultaneously pushing reforms, this statement removed the long-standing "forward guidance" and announced the immediate establishment of five special task forces (Communication Mechanisms, Balance Sheet, Use of Data Sources, Productivity & Employment, and the Fed's Inflation Framework) to propose improvements by year-end.
One of the special task forces will review the Fed's $6.7 trillion balance sheet, studying whether monetary policy comes from interest rate tools or balance sheet tools.
Wash declined to submit his personal economic projections (SEP). The 18 policymakers who submitted projections showed a clear divergence on the path of interest rates. Half of them expect at least one rate hike this year, while the other half believe rates will remain unchanged or fall.
From the rate decision until the end of Wash's remarks, risk assets like US stocks fell across the board, gold plunged over $150, the 2-year Treasury yield rose 15 bps, the US Dollar Index rallied nearly 100 points, and interest rate futures priced in an additional 18 bps of tightening this year, bringing the total to 39 bps.
Adhering to the 2% Inflation Bottom Line, Stating Current Policy Restrictiveness is "Uneven"
Facing persistently high prices over the past five years, the market highly focused on the Fed's tolerance for inflation. Wash was uncompromising on this:
"Today, I announce that this committee is clear and unanimous in its determination that we will achieve (the 2%) goal.
The members of the FOMC are clear and unanimous that this committee will achieve price stability."
When asked whether the 2% inflation target would be revised, Wash dismissed market speculation with his characteristic sharp language:
"Before we re-establish our commitment and ability to achieve the 2% inflation goal, there's no need to revisit it."
Regarding whether the current interest rate level is sufficiently restrictive, Wash gave a thought-provoking assessment—"uneven." He pointed out:
"If I look at the housing market as an example, Fed policy seems to have a certain degree of restrictiveness. But if I were to describe what is happening in financial markets, it's hard to use the word 'restrictive.'"
This statement implies that the Fed has noted that the surge in asset prices does not reflect the tightening effect of current monetary policy.
Establishing Five Major Task Forces Responsible for Reviewing Fed Balance Sheet, Reducing Data Errors, etc.
To fundamentally change how the Fed operates, Wash announced the immediate establishment of five special task forces, focusing on: Fed communication, the balance sheet, use of data sources, productivity & employment (impact of AI), and the inflation framework. He expects these task forces to reach conclusions by the end of this year.
Wash stated that one of the independent task forces he is forming will "review the benefits and risks of the current abundant reserves regime and the composition of the balance sheet," studying "whether monetary policy comes from interest rate tools or balance sheet tools."
Speaking about the data task force, Wash sharply criticized the existing economic statistical methods. He argued that the old survey methods central bank officials rely on cannot truly reflect the current US economy, and data releases suffer from serious lags.
"Some of the data we receive... may just be 'echoes of history.' We need to shrink these error margins. What we're really interested in is what's happening now, not echoes of history."
Forward Guidance Removed This Time, Chairman Unprecedentedly "Refuses to Submit" Dot Plot
In this meeting, what most surprised investors was the "significant slimming" of the Fed's policy statement. Wash stated bluntly at the press conference:
"You may have noticed a difference in today's policy statement. It's shorter, more concise, and omits some of the old language. So-called 'forward guidance' is also no longer included; we were unanimous that it is not appropriate for the current policy mix."
Moreover, as Fed Chair, Wash broke convention by explicitly refusing to submit his own Summary of Economic Projections (SEP) and dot plot. He explained:
"I reviewed the dot plot, and when I looked at the submissions, I noted that all submissions were done in pencil, you know, the kind with the big erasers... For me, that's not helpful for policy implementation."
Although Wash himself did not submit projections, the median values from SEPs submitted by other participants show: expected real GDP growth this year is 2.2%, next year 2.3%; overall PCE inflation this year is 3.6%, next year 2.3%; unemployment rate around 4.3%. The median federal funds rate is projected to be 3.8% at year-end this year and 3.6% at year-end next year.
Breaking the "Spoon-Feeding" Market Interaction, Saying AI Brings Huge Demand
For a long time, Wall Street has been accustomed to pricing based on Fed officials' remarks. Wash made it clear at the meeting that he intends to break this "spoon-feeding" market interaction. Wash emphasized:
"When financial markets do nothing but reflect what we say, then we are taking away the most important source of information and blinding ourselves to it.
I want us to build a system that removes those blinders, lets the markets follow the data they think is reliable. They will bring us better information through market prices, and we can make more informed decisions."
Regarding the market-hot topic of Artificial Intelligence (AI), Wash defined AI as "the most important change in my adult life," and pointed out that AI is generating enormous demand (manifested in data centers, electricity, etc.), but it is still uncertain when extrapolating expansion on the supply side.
"AI might be the most important change in the economy, business, and family life that I've experienced in my adult life. If we do our jobs well, we can make strong growth, low prices, and strong employment compatible with each other."
The translated transcript of Wash's press conference remarks is as follows:
Wash
Good afternoon, everyone. It's an honor, a true honor, to be back at the Fed and to take on this role at a moment of such significant consequence. I've been particularly heartened by the warm welcome from old friends and new colleagues alike. I've also listened carefully to my FOMC colleagues, absorbing many new ideas, new thinking, and a sincere willingness to move the Federal Reserve forward.
Wash
This week's FOMC meeting embodied the best traditions of the Federal Reserve: rigorous debate, open-mindedness, commitment to mission, and accountability for performance. In this business, all of that boils down to one thing: making the right monetary policy, or getting as close to right as possible—that's our North Star.
Wash
My colleagues and I are here to fulfill our statutory duties, as you've heard us say before: price stability and maximum employment. Those objectives guided all of our work in the meeting we just concluded.
Wash
As you saw a few minutes ago, the committee decided to maintain the target range for the federal funds rate at 3.5% to 3.75%. To support the Fed's dual mandate, the committee also reaffirmed its policy of maintaining ample reserves in the banking system. Economic activity has been expanding at a solid pace, albeit with increased uncertainty due to factors like the conflict in the Middle East. Productivity growth and capital investment are both strong, job gains are keeping pace with labor force growth, and the unemployment rate has changed little. We recognize that inflation has been well above the Fed's long-stated 2% inflation objective. This has been the case for over five years. Persistently high prices are a burden on the American people, but the past does not have to be prologue.
Wash
I'm pleased to report that the members of the FOMC are clear and unanimous that this committee will achieve price stability. In any institution, a change in leadership is a natural and timely opportunity to reaffirm its mission, examine current practices, and consider whether those practices best serve our objectives. My Fed colleagues and I will work closely together to explore what changes might improve the implementation of monetary policy.
Wash
On that point, you may have noticed a difference in today's policy statement. It's shorter, more concise, and omits some of the old language. This statement merely states, as best we can judge, the facts for you. So-called 'forward guidance' is also no longer included; we were unanimous that it is not appropriate for the current policy mix.
Wash
Later this afternoon, you'll also receive the regular Summary of Economic Projections (SEP). The committee's practice has been for participants to submit these projections, and I encouraged my colleagues to continue doing so. However, I myself did not provide any projections, consistent with my longstanding views about the SEP, at least in its current structure. In terms of median forecasts: real GDP growth is 2.2% this year, 2.3% next year; overall PCE inflation is 3.6% this year, 2.3% next year; the unemployment rate is around 4.3%. Participants' median projection for the federal funds rate is 3.8% at year-end this year and 3.6% at year-end next year.
Wash
Now, allow me to say a few words about a key step we announced today. I will appoint a special task force in each of five areas critical to the broad implementation of monetary policy. First, Federal Reserve communication; second, the Federal Reserve's balance sheet; third, our use of and reliance on existing data sources; fourth, productivity and employment in a time of transformation; and finally, the Federal Reserve's inflation framework.
Wash
These topics are timely, important, and in my view, worthy of re-examination. My colleagues and I had a vigorous and purposeful discussion of them over the past few days. For each independent task force, I'm recruiting some of the very best talent, including from inside and outside the economics profession. They'll be supported by subject-matter experts among our excellent Fed staff and will have a clear charge.
Wash
Start from first principles, ask tough questions, examine current practices, consider alternatives, and ultimately propose next steps for policymakers. Since last summer, my colleagues have discussed possible ways to improve the form and function of Fed communication. This new task force will build on that work, and I expect it to propose thoughtful changes, including to the SEP I just mentioned. The second task force, on balance sheet policy, will review the benefits and risks of the current ample reserves regime and the composition of the Fed's balance sheet. They will evaluate alternative frameworks for implementing and operating monetary policy.
Wash
The third task force, the data task force, will evaluate new sources of information and consider methodological changes to improve data collection, aiming to provide policymakers with more accurate, relevant, timely, and perhaps most importantly, actionable information about the state of our economy.
Wash
Fourth, the productivity and employment task force, will examine the pace, scope, and economic impact of new general-purpose technologies, including artificial intelligence, and explore its potential implications for the Fed's pursuit of its employment and inflation mandates.
Wash
The final task force, the inflation framework task force, will study the drivers of inflation. Fundamentally, explore ideas for achieving price stability in an ever-changing economy. In the coming weeks, you'll hear more about these task forces and this overall initiative. For now, a simple statement suffices: each task force will serve a goal shared by everyone in the System, everyone I sat around the table with the past few days—a Federal Reserve with a clear-eyed sense of its mission, aligned with its objectives, and focused on the future. Alright, thank you for your attention, and I'm happy to take your questions.
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Speaker 2
Hello, Chair Wash. Good to see you again, and welcome back. With so many things launching so quickly, what's the timeline you envision for each task force?
Wash
I imagine it will vary by task force. It also depends on how urgently we need clear answers. My expectation—I'm still in the process of recruiting and finalizing members—is that the task forces will begin work in the coming weeks. We'll start getting more from them about how they're framing the issues later in the summer. And hopefully, most, if not all, can reach conclusions by the end of the year.
Speaker 2
Specifically on the inflation framework, you talked about first principles. Does that include a review of the 2% target itself? You've mentioned the digits to the right of the decimal don't matter. Does that mean starting from the premise that '2% as a point target is overly precise'?
Wash
Let me break that into two parts. First, on the inflation framework review, its charge is: what are the drivers of inflation? To what extent is the Federal Reserve responsible for inflation? How do we measure inflation? But that will overlap somewhat with my data task force. On the 2% inflation target, that is the Fed's long-held 2% objective. You've heard me say before, I tend to focus on the digits to the left of the decimal. Well, 2 is now the digit to the left of the decimal, zero to the right. I think until we re-establish our commitment and ability to achieve the 2% inflation goal, there's no need to revisit it. So that's not within the scope of this work.
Speaker 3
Cobie, thank you very much. I'm Cobie Smith from The New York Times. You've said before that inflation is a choice. The policy statement includes that commitment to achieving price stability you reiterated today. But looking at the SEP, most of your colleagues expect core PCE to be around 3.3% by the end of this year, and the 2% inflation target not reached until 2028. So I'm wondering, at this juncture, how much patience can the Fed have in waiting for one-off inflation waves to pass, and for inflation to come down after being elevated for so many years? Under what circumstances would you support the Fed taking action and raising rates?
Wash
Okay, several questions there. Let me try to unpack. First, we have the capability and commitment to achieve the 2% price stability goal. That's exactly what we're going to do. In the Fed's reviews of its strategy over the past several years—including the January review whose strategy we're still bound by—the Fed statement says inflation is primarily determined by monetary policy. Of course it is. I've said for years that inflation is a choice. Of course it is. Today, I announce that this committee is clear and unanimous in its determination that we will achieve this goal. The rest of your question sounds like an invitation to give forward guidance. We've dispensed with forward guidance. Some on the committee, I think, dispensed with it, I suspect from our discussions the past few days, because it felt inappropriate to provide forward guidance at this moment. Others had a different view, that as a general proposition, forward guidance is not a business we should be in. But that will be for the communications task force and my policymaker colleagues to handle. We'll take expert advice seriously, and then make our own determination. But I can't give any forward guidance about our next step. The good news is we'll meet again in six weeks.
Speaker 3
Then, I want to follow up, on the current policy setting, given the data flows we're seeing and the projections, how restrictive do you view current policy?
Wash
I've heard various descriptions, both inside and outside the Fed. I'll give you my own take: uneven. If I look at the housing market as an example, Fed policy is not the only thing determining housing market conditions. But broadly speaking, I think Fed policy there seems to have a certain degree of restrictiveness. If I were to describe what is happening in financial markets, it's hard to use the word 'restrictive.' So I said it's uneven. That may be a function of different transmission mechanisms of monetary policy, whether monetary policy comes from our interest rate tools or our balance sheet tools. The good news is we have a task force on that too, the balance sheet task force will look more deeply at that question.
Speaker 4
You say you don't like forward guidance, removed it from the statement this time. But the dot plot shows nine members say they want rates higher by the end of the year, and the market has already taken that as forward guidance. So what does that mean for how you steer the market and the future of the dot plot?
Wash
I have to give you the same answer I gave Ms. Smith. We have a task force on that. Let me say a little more. I reviewed the dot plot, and when I looked at the submissions, I noted that all submissions were done in pencil, you know, the kind with the big erasers. That is to say, I think the colleagues here, when they submit their dots, understand the world changes quickly, and they don't feel bound six weeks from now, or six days from now. In case things change... I'd also point out a couple other things. What I heard at the table was, when they submitted their model-based projections—to be clear, this isn't saying this is more likely than other possibilities, it's merely saying more likely than other scenarios. So I didn't hear great confidence. I heard a humility that I think we should have. I didn't submit dots. For me, that's not helpful for policy implementation. I suspect, as I mentioned in my opening remarks, by year-end, there will be a review of all aspects of communication—the press conference, the dot plot, the meetings, the transcripts, the minutes. This will be part of that. I don't want to prejudge the outcome, but I'm quite open to what might come. And I've been incredibly impressed over the past few days, frankly over the past three weeks, with how open my colleagues are to change and to the easy change with risks attached. But our primary objective is to get monetary policy right. The way to get monetary policy right is to fulfill the mandate Congress gave us, to achieve price stability, and there's no disagreement on that.
Speaker 4
Probably get the same answer on the task forces... On communications, what are your thoughts on these press conferences? Do you think you'll continue to hold them after every meeting? Do you find them useful? What is the future of Kevin Wash communication?
Wash
Well, we might have another 15 or 20 minutes on this one, so I don't want to prejudge. Press conferences can be a very useful way to communicate with families, with businesses, and more broadly through media like yourselves. I had a great, late mentor named George Shultz whose maxim was press conferences are useful, but when you hold them, make sure you have something important to say. Today, I think we had something important to say: our commitment to price stability, our commitment to rethink practices with an eye toward moving the Fed forward. And for you and the American people to feel that these aren't pipe dreams, but concrete ideas, we're going to seek the best talent—whether it's the best thinking inside the Fed, or the best people I know in business, economics, academia, technology—to share their views. That's what we're going to do here, pursue the truth. I think we'll come up with something new and interesting. We made some changes today. I expect more changes, and some of them may merit a press conference.
Speaker 5
Hello, I'm Chris Rugaber from the Associated Press. Thanks for taking our questions. Could you tell us about your longer-term view on inflation? I know you may not comment on short-term ups and downs, but is this driven mostly by energy prices and the Iran war? Or do you have any concerns about underlying inflation pressures in the economy? Thanks.
Wash
I can't improve on what the committee just did, so let me reiterate. Inflation remains elevated relative to the committee's 2% objective, partly reflecting supply shocks that have boosted prices in some sectors, including energy. The passage goes on to say, but to be clear, the Fed will achieve price stability. My own judgment is the committee spent a considerable amount of time, not just these two days, but over the course of weeks, discussing this. That's what we prepared to say on inflation. But the commitment to achieving that goal is firm, unanimous, and clear. I think that's an important message that's been missing for five years, and we're going to correct that.
Speaker 5
Okay. And on your data task force and others, I mean, broadly, I think the sense is the Fed has considered all the data. Certainly that was the sense before. Is there any data you feel isn't getting enough attention? I mean, you've mentioned 'mean reversion' trends before, but again, that's well known to most Fed members. So what is this task force looking at? What might be the outcome? I know you don't want to prejudge, but are there examples of data you expect will get more focus? Thanks.
Wash
So, you're asking my questions. Let me say, I don't want to prejudge the outcome. I also don't want to telegraph too much what they'll do, because I have a call or two to make before I finalize who's going to lead. I'm interested in outside expert views on this. I'll put it this way: generally, most of the data consumed by US central bankers and other government officials come from old-fashioned survey methods, are based on national accounts... The description of the US economy looks vastly different from the US economy in 2026. Response rates to survey methods aren't what we need them to be, the questions asked may have been perfectly applicable a generation ago and less so now. So even within official statistics, I'd be open to how, if the task force and our own best thinking propose, we could elevate those official statistics with new analytical methods to the standard of our time. I'd also say, almost every private company CEO running their own business is using real-time information that doesn't go through massive revisions, that tells them what just happened then. As you know, there are normal, long, and variable lags in the implementation of monetary policy. We're really interested in what's happening now. We're less interested in echoes of history. You can hear from my answer that some of the data we receive, like the wage index we wait for the first Friday of every month or other data, may just be echoes of history, useful as they are on their third revision. We need to shrink those error margins, because we have to make difficult decisions in real time. I'm very confident we can learn a lot from new data sources from the private sector, from reforms in the official sector, and from new analytical techniques that are far more sophisticated than simply asking a question about whether something is core or non-core.
Speaker 6
Thank you. Welcome, Mr. Chair. Fox Business here. So, if you don't provide a lot of ongoing forward guidance, won't markets have more volatility? Shouldn't Americans know more about what you're thinking going forward?
Wash
I think financial markets perform best when they are reacting to incoming data. I think they are less efficient when financial markets ask, 'How will the Fed react to incoming information?' The more markets focus on what's happening in the real economy, judging what is good data, what is poorer data, the better financial markets can price what's most likely and the tail risks. Financial market prices may be the most important source of information guiding central bankers. But when financial markets do nothing but reflect what we say, then we are taking away the most important source of information and blinding ourselves to it. I want us to build a system that removes those blinders, lets the markets follow the data they think is reliable, they'll look at the data, we'll look at the data. They'll bring us better information through market prices, and we can make more informed decisions. But ultimately, the goal I set at the beginning—achieving the price stability goal Congress directed us to—is the thing we have to set about doing.
Speaker 6
If I could take you back into the meeting a bit. This is your first meeting. The board members seem fairly hawkish. When you listened to them broadly, was there any discussion of future rate cuts?
Wash
Today? There was only one proposal on the table. There was no discussion of any other proposals. The discussion on that proposal, I'd say, was fairly limited. There was unanimity and clarity on that. The convention at this central bank and others is to have a set of alternatives. Today, we had one. I think the further discussion deepened the understanding, clarified what we need to do and how to get there. I don't want to prejudge what will happen in the future, but there was only one material topic for us. We took it up. We had a couple good days of internal debate on it, and in the end I think we're in a better place.
Speaker 7
Thank you very much, I'm Claire Jones from the Financial Times. You know, in reading this very brief statement, which I think we all here appreciate, one might wonder, given what you've said here about US inflation risks and your mandate, why not hike today? I want to ask, why not? What would you need to see to take a hike action? And second, on your task forces, would you consider borrowing any best practices from other central banks? Thanks.
Wash
I'm glad they're used to letting you ask two questions, because my answer to your first question will be very brief: I have nothing to add to the statement itself. In response to the question I got earlier about the market's reaction to our unfiltered words, I think it's more helpful than improvising after releasing the statement. On best practices for task forces, that's a topic I've thought about some. I've also been on a task force or two in my life. Best practices are: find the smartest people; ensure the task force has people of different backgrounds and dispositions so they can have some internal debate too; make sure that when you set up a task force, the team receiving the information also feels they have skin in the game. That's why we're looking for—haven't finalized the list yet—some of the most important talent in our building and in the reserve banks across the country, in each area, and in a sense, second them to this group for a few months. So the task force leader can understand what the world's most analytically capable central bank thinks about this, and can reflect that in the ultimate best practices. We're not outsourcing decisions to anyone. The Board of Governors and the successive reserve bank presidents chose the 19 people at the table. These will be our decisions. We can agree with some recommendations, disagree with others, and have good internal debate about it. But their output, I hope and believe, will make our internal discussions better, stronger, more dialectical, so that we can ultimately achieve the price stability goal.
Speaker 7
Quick follow-up on that market view you mentioned. If you look at the two-year Treasury yield, it essentially suggests the market thinks more tightening is needed. Is that also your read of what the two-year yield is signaling?
Wash
Hmm? We were in a good state. I guess that's why we don't take a third question. I'm not going to comment on market reactions over the past 30 or 60 minutes. What we gave the market was a new chapter for the central bank, some new thinking. What we gave the market, and families and businesses, I think, is a commitment to ask ourselves hard questions so we can deliver on promises made before. That's a lot of change for financial markets to digest. I wouldn't be particularly interested in their initial minutes or even days of reaction. I think what matters most is that financial markets, and at least as importantly, families and businesses know that this central bank will achieve price stability.
Speaker 8
Hello, Chair Wash. I'm Brian Cheung from NBC News. Thank you for taking our questions. So when you say we've dispensed with forward guidance, to the average person that might sound like the Fed will say less, or provide less insight into where its borrowing costs are headed. So, for those people you might bump into at the grocery store, where price tags are rising faster than their wages, how would you explain this era, this chapter of the Fed? I don't know, maybe 'task force' is the answer. But how would you communicate this era, this chapter of the Fed?
Wash
If I told someone at the milk aisle that I have a task force on that, I think that would go poorly. So I appreciate the question. If I bumped into someone at the grocery store, I'd say to them: We don't have a very large impact on particular prices, like the price of oil today, or even a dozen eggs. That's not a first-order effect on what we do. But we have a very important task there, which is to make sure that these changes in oil, beef, eggs, or milk don't diffuse through the economy, don't have second- and third-round effects. That's our job, our commitment, our capability, and we will achieve it.
Speaker 8
Is the Fed's relationship with the Treasury also under review? There's usually a breakfast with the Treasury Secretary. Do you intend to continue that? And have you spoken to the President since you were sworn in?
Wash
On the President, I have nothing to tell you. On the Treasury Secretary, he's been posting pictures of breakfast. So I guess I can't deny the long tradition of weekly meetings between the central bank chair and the Treasury secretary. I think we've had three so far. I believe he's overseas this week, so this week will be an exception. I think those discussions are very useful. The central bank's goals and our role and responsibilities are fairly clearly delineated from the fiscal authorities. In my view, monetary policy is independent in what we do. But that doesn't mean we're uninterested. What happens in the fiscal authorities, the way I think about it, this central bank needs to be broad in vision but narrow in responsibility. We need to be fairly interested in what's happening in the world. I'm not going to break news here to say we're pretty interested in what's happening in the Middle East. That does have some bearing on our day-to-day work. That doesn't mean it's our responsibility, but I think we'll maintain a broad vision. My meetings with Secretary Besant so far have been helpful in broadening that vision. So we can be aware of things that might affect our daily work, even if it's not our direct charge.
Speaker 9
Steve Liesman, CNBC. Mr. Chair, thank you. Thanks for taking my question. You've said, before you were chair, that you thought productivity was a reason the Fed could cut rates. Do you still believe that now?
Wash
The committee discussed productivity today. AI was mentioned. My previous view on this, and from socialized conversation, is that artificial intelligence, the latest generation of general-purpose technology, might be the most important change in the economy, business, and family life that I've experienced in my adult life. It's full of enormous opportunity and risk. I take both very seriously. You may have heard me say AI is shorthand for American ingenuity. That doesn't mean it will be easy. It certainly doesn't mean it won't be disruptive. But over the long run, my belief—and I heard considerable support for this in the committee today—America is the winner, and America will ultimately be better off as we go down this road. Now, back to the implementation of policy, the timing, magnitude, speed, impact on output and employment, that's one of the things we set up a task force to do.
Speaker 9
If you don't mind a follow-up from another angle, that's when you see strong job growth, high inflation, GDP seems to be doing well, the stock market seems to be soaring. You look at this economy, do you feel the federal funds rate is restrictive?
Wash
So that's your second question. I'll give the same answer as before. I said, when I think about policy implementation, it's the effect of policy that matters, not what we say, but what happens. The best way I can describe it is uneven. I do see some restrictiveness in areas like housing. But it's hard to use the same description anywhere else. Let me add one more thing. You talked about one of our dual mandate legs and the employment side. I don't think we face a cruel choice. I disagree with the view expressed a generation ago that a Fed chair stood at a podium like this and said you have to choose, you have to decide if you're willing to tolerate higher inflation to get more people employed. I don't believe that. What I believe is, if we do our jobs well, we can make strong growth, low prices, and strong employment compatible with each other. So what you heard from the committee today is, we have some work to do on price stability.
Speaker 10
Thanks, I'm Nick Timiraos from The Wall Street Journal. Chair Wash, you've said repeatedly that credibility is earned by delivery. If credibility needs to be earned by delivery, then the action should be tightening, or at least threatening to tighten. Now, you didn't do that today. Why?
Wash
That judgment you expressed was not expressed by any of the 19 people here. We'll meet again in six weeks, will take that question up again.
Speaker 10
If I could ask about AI. Infrastructure buildout is creating massive demand. Capex, data centers, electricity, the productivity payoff might be further out. So in your judgment today, is AI adding more to demand or supply?
Wash
That's a good question for central banking and for the economics profession. We spend most of our time counting demand. That's easier, we can see it, count it, check it, revise it. But what we have to do is infer supply. You'll notice, in the second paragraph of what one of your colleagues described as a very brief statement, we had a sentence about the demand side, and a sentence of equal length about the supply side. Both matter, just because we can count one better doesn't mean we'll favor it over the other. On AI and the growth of data centers and related infrastructure, we are counting the demand side, no question that's showing up in the GDP data. When we are inferring the timing and magnitude of expansion on the supply side, we are less certain. Maybe intuitively, the supply side will expand, but takes longer. I'd describe it this way: there's a race between supply and demand. Milton Friedman said the only thing we know in economics is there's a supply line, a demand line. They'll eventually intersect. What does that mean for policy? The good news is, we have a task force on that.
Speaker 11
Thanks, Mr. Chair. On the data task force, it sounds like you're considering overhauling the national accounts system, the way the government measures the economy. Is that your goal?
Wash
One-word answer: no. A few-word answer: most of that data collection happens in other government agencies, for which we have great respect and deference. But if in the process, we come up with suggestions—and Fed staff have already started developing some—about what they could do to help us as policymakers get information, we won't hesitate. Again, I don't want to try to define the four corners of what the data task force studies. But I do think there will be a review of official statistics, and at least as importantly, consideration of bringing in private-sector best practices and new analytical tools enabled by AI. So we can integrate them to give us better real-time information. So that, as I mentioned earlier, when we make decisions, we're making them on genuinely contemporaneous data, not what we call contemporaneous data but is actually an echo of history.
Speaker 11
Okay, thanks. The other thing I wanted to ask about is the building renovation. Are you considering any changes to the renovation project? Given it's become something of a political football over the past year.
Wash
I've heard something about that. I think I'm not breaking news, but my view is when you come into a new institution, you should go see the inspector general, just good practice. I hope to continue that practice. I've already had one meeting with the inspector general. He told me what I think the world knows, he'll be issuing a report later this summer on the building and the building project. I'll be interested to read that report. From my perspective, with a forward-looking eye, what can we do or should we do from now until project completion to be the best stewards of taxpayer funds we can be, and make sure we deliver on the promises made. There's some work to do. You may not be surprised, in the initial few weeks I've been somewhat occupied with other matters, but I'm committed to taking a comprehensive look at all of the Fed's tasks in the coming weeks.
Speaker 12
Victoria Guida, from Politico. I know you didn't submit projections, but you are the person authorized to speak for the FOMC. So I'm wondering if you can tell us, in the SEP, the rise in inflation expectations, is that all because of the Iran war? What was the discussion like around rising inflation expectations and potential growth slowdown?
Wash
My read of the meeting discussion was—and I must caveat, the SEP shows half the colleagues think, given all developments, the policy rate should be at current levels or lower from now to year-end; the other half think it should be higher. The 19th voter is me, and I didn't submit. There was a range of views on the question of first- and second-round effects, no consensus or firm view. But we'll meet again in six weeks. I think we'll know more then, and I think my colleagues will be very focused on new developments between now and then.
Speaker 13
Could I follow up quickly on the SEP, you said you still encourage your committee colleagues to submit projections, even if you don't. So what do you see as the benefit of them doing that, even if you don't?
Wash
It's a commitment the FOMC made, and a commitment I hope we can honor. The commitment we made is to achieve price stability. I expect we'll deliver on it by year-end. As I mentioned, I wouldn't be surprised if there's a new communications framework. There will be some changes. On the SEP, that was a committee discussion, a spirited one. I think we'll have that discussion. I'm confident we'll come up with a better communications mix to deliver on our promise. But I don't want to prejudge what those are. But in the meantime, I'll continue to expect colleagues to submit their SEPs. Some of them, I think, think the current practice structure is okay, but I heard a lot of interest in real reform on all these topics. You didn't ask, but I'll answer. The past few days have been very gracious, and the past few weeks have been quite warm. This institution wants to figure out how we can do better. Institutions returning to first principles. I'm encouraged that what we did in the statement, the changes we're considering on the SEP, that instinct to turn a new page is real. By year-end, I hope we'll have something to show for it in form and substance.
Speaker 13
Could you outline some of the principles that guide your own reaction function and tell us something about the conditions under which you think the Fed should react?
Wash
This is going to be a very unsatisfying final-answer answer. The Fed has many responsibilities, not just monetary policy but supervision and regulation, consumer affairs, and payments. My own view is our credibility comes from delivering on what we say in everything we do. In my initial three weeks, I've spent more time on monetary policy than all other things combined. But, the more we deliver on our promise as good regulators and supervisors, the more benefit we get, the more our credibility on monetary policy is enhanced. Look, when we achieve our price stability goal—and we will—the American people will feel the hardship they've experienced from inflation the past five years is behind them. And that credibility will yield dividends in what we do. This institution will come to press conferences like this with the momentum of reform, with the momentum to do better. But we'll get something done.
Speaker 14
Labor data across regions. How do you sum up the labor market?
Wash
The labor market now, do you see it as stable, or could it be a source of inflation? Thanks. Okay, yes. If I were to capture the committee's view, the committee sees the labor market as stable. Some on the committee think the trend is better than that. The trend is more important than the data point. What happens over three or six months is more important than any single data point, any single release. I'd say the jobs data have been moving in a good direction. If there's one other thing I heard on this topic over the past few days, it's that strong productivity-led growth is not something we fear, it's something we embrace. Thank you all very much.
