Transcript of Powell's Speech and Q&A

Translation of Powell's speech and Q&A at the Chicago Economic ClubOpening RemarksThank you for your introduction. I look forward to the conversation with Professor Rajan. First, I will briefly discuss the outlook for the economy and monetary policy.At the Federal Reserve, we always focus on the dual mandate given to us by Congress: maximum employment and stable prices. Despite increased uncertainty and downside risks, the U.S. economy remains on solid footing. The labor market is at or near full employment. Inflation has significantly decreased but is slightly above our 2% target.Regarding the latest data, we will receive preliminary data on first-quarter GDP in a few weeks. The data currently available indicates that the growth rate in the first quarter has slowed from last year's robust pace. Despite strong auto sales, overall consumer spending appears to have increased only modestly. Additionally, the strong imports in the first quarter reflect businesses trying to act ahead of potential tariffs, which are expected to put pressure on GDP growth.Surveys of households and businesses show that sentiment has declined significantly, with increased concerns about the outlook, primarily reflecting worries about trade policy. External forecasts for the year are declining and largely indicate that the economy will continue to slow, but will still maintain positive growth. We are closely monitoring the latest data as households and businesses continue to digest these developments.In terms of the labor market, in the first three months of this year, non-farm payrolls averaged an increase of 150,000 per month. While job growth has slowed compared to last year, low layoff rates and a lower labor force growth rate have kept the unemployment rate low and stable. Meanwhile, the ratio of job vacancies to unemployed job seekers has remained slightly above 1, close to pre-pandemic levels. Wage growth continues to slow but remains above the inflation rate. Overall, the labor market is in good shape, broadly balanced, and not a significant source of inflationary pressure.As for our price stability mandate, inflation has significantly eased from the pandemic peak in mid-2022, and there has been no accompanying painful rise in unemployment typically associated with efforts to reduce high inflation. Progress on inflation continues at a gradual pace, with recent readings still above our 2% target. Estimates based on data released last week show that over the 12 months ending in March, overall PCE prices rose by 2.3%, while core PCE prices, excluding the more volatile food and energy categories, rose by 2.6%.Looking ahead, the new administration is implementing significant policy changes in four different areas: trade, immigration, fiscal policy, and regulation. These policies are still evolving, and their impact on the economy remains highly uncertain. As we learn more, we will continue to update our assessments. The announced tariff increases so far have been much larger than expected. The economic impact may also be so, which will include higher inflation and slower growth. Short-term inflation expectation indicators based on surveys and markets have risen significantly, with survey participants pointing to tariffs. To a large extent, long-term inflation expectation indicators from surveys appear to remain rock solid; market-based breakeven inflation continues to hover around 2%As we deepen our understanding of changes in government policy, we will better understand their impact on the economy and, in turn, their influence on monetary policy. Tariffs are likely to lead to an increase in inflation at least temporarily. The inflation effect may also be more persistent. Avoiding this outcome will depend on the scale of the impacts, the time required for them to fully pass through to prices, and ultimately maintaining stable long-term inflation expectations.It is our obligation to keep long-term inflation expectations stable and to ensure that a one-time increase in the price level does not evolve into a persistent inflation problem. In taking action to fulfill this obligation, we will balance our dual mandate of maximum employment and price stability, while keeping in mind that without price stability, we cannot achieve a strong labor market condition that benefits all Americans in the long term. We may find ourselves in a challenging situation where our dual mandate goals are in tension. If that happens, we will consider how far the economy is from each goal and the potential different time frames for closing those respective gaps.As the great Chicagoan Ferris Bueller once pointed out, "Life moves pretty fast." At present, we have ample reason to wait for clearer information before considering any adjustments to our policy stance. We will continue to analyze emerging data, the evolving outlook, and the balance of risks. We understand that high unemployment or inflation can cause harm and distress to communities, families, and businesses. We will continue to do everything we can to achieve our maximum employment and price stability goals.Q&A SessionThank you very much for the Chairman's remarks, and I look forward to your further elaboration on these points over the next 40 minutes or so. I remember the last time you were here, you were interviewed by Mellody Hobson, and while I can't compete with that, I will do my best to make up for it by asking high-quality questions. As you have repeatedly emphasized, communication and transparency are very important for the Federal Reserve, and I hope you can elaborate on some of the points you just made. As a former central banker, the only reminder from the Economic Club is not to get caught up in central bank bureaucratic jargon, so I will try to avoid that.Let me start by mentioning that you have led the Federal Reserve through several difficult periods, including COVID, the liquidity crisis in March 2020, severe inflation, and the SVB bank crisis. Over the past year, the possibility of a "soft landing" guided by the Federal Reserve has been increasing. Now, it seems that everything has changed in just a few months: JP Morgan now estimates the probability of an economic recession this year to be about 60%. What are your thoughts on this?Powell:First, thank you for being here today; it is truly an honor to be with you. In fact, my appearance in that previous speech was my first as Chairman seven and a half years ago, so it is great to be back today. I agree with your observation that these seven years have indeed been eventful—putting it mildly, I have always been waiting for three months of calm, yet that has never come. (Laughter) As for your question, I would like to first review the situation for 2024:In 2024, the economic growth rate is expected to be 2.4%, with the unemployment rate remaining low at around 4%, close to the mainstream estimate for full employment, and the inflation rate declining to about 2.5% by the end of the year. That is the economic situation at that time, and I cannot make any evaluations about it, but that is the fact.Regarding the significant policy changes the government is implementing, especially in trade, as I mentioned in my speech, their impact may lead us to deviate from our goals. Therefore, as the economy slows down, the unemployment rate is likely to rise; at the same time, due to the implementation of tariffs and the eventual passing of some tariff burdens onto the public, inflation may also rise. This is a very likely scenario, and I hope we can weather the storm and get back on track, but we will always be committed to achieving full employment and price stability, which is our responsibility. I believe that for the remainder of this year, we may deviate from these goals, or at least not make any progress, and then we will restore progress as much as we can.Question:Let's talk about tariffs again. You have acknowledged that some effects of tariffs will be one-time and temporary, but you have also said that tariffs may provide pricing power for many companies. As you mentioned, the prices of dryers and washing machines have risen due to tariffs, and even without tariffs, the prices of dryers have risen in tandem. How do you view the impact of tariffs on inflation? What could make them more persistent? And what do you think will affect economic growth?Answer:A simple starting point is that imposing tariffs will lead to price increases, thereby raising the inflation rate, but this is only a one-time effect. Therefore, the price level rises, and that’s it. However, this may occur in certain cases, depending on many factors that we are not yet clear about. I would like to point out a few, or rather three. First is the degree of impact. As I mentioned, the tariffs are higher than the expectations of forecasting agencies, certainly higher than our own expectations, even in the best-case scenarios we envisioned, we considered a range of situations. That’s one. Second is how long it takes for tariffs to impact inflation. The longer it takes for the impact to materialize, the higher the risk that the public begins to experience higher inflation and forms expectations about it, as well as companies starting to form expectations, which increases the risk of inflation. The third point is what I mentioned in my speech, the need to keep inflation expectations stable. If we can control these three points, we can ensure that prices only experience a one-time increase and do not evolve into a persistent inflation process, which is an important part of our work.Question:What about the impact of tariffs on quantities? For example, with the current level of tariffs imposed on China, there are concerns that supply chains may be disrupted, and companies may not be able to import related products from China because prices are too high. If this evolves into a supply shock, would the Federal Reserve's response differ from situations where prices are the main concern?Powell:In fact, I had dinner last night with many directors from various departments of the Chicago Federal Reserve Bank, many of whom are CEOs of significant companies, and they generally feel uncertain, with the impact of imported components on their products being a huge issue. However, if you look back at the pandemic period, you will remember the semiconductor shortage that led to a shortage of cars, while the demand for cars was extremely high at that time. The shortage lasted a long time due to production not being able to keep up, which is one of the reasons for the prolonged existence of inflation. Therefore, when you think about supply disruptions, you think about situations that may take some time to resolve and could lead to a one-time inflation shock extending or even becoming more persistent, and we would be concerned about that. In this case, you can look at car companies, whose supply chains are likely to be severely disrupted, and you would worry that this process could last for years, potentially prolonging the inflation process.All of this carries a high degree of uncertainty. We are actually thinking about how tariffs might affect the economy before they take effect, which is why we are waiting to see what the final policies are so that we can better assess the economic impact.Question:Let's talk about immigration issues. You mentioned that the labor market is currently in a reasonable state of balance. Of course, what we have seen in the past few months is that the number of immigrants has significantly decreased during the last months of the previous administration and has continued under the current administration. How do you think this will affect the labor market?Powell:Part of the reason for the strong economic growth over the past few years has been the large number of immigrants who entered the workforce, and the economy enabled them to gain employment when demand was high. We are still digesting the effects of labor shortages. As you mentioned, since the previous administration changed its policies, the number of immigrants has sharply declined, so the growth of the labor force has effectively stopped and has actually stagnated. But at the same time, demand is also decreasing, and the demand for workers has also declined, so the creation of wage jobs has decreased as well, and they have declined in some way synchronously, which is why the unemployment rate has remained quite stable for about a year. Therefore, to some extent, the demand and supply of workers may have coincidentally decreased.In terms of the impact on the labor market, we are still in a state of full employment, the labor force participation rate remains high, and wages have fallen back to a level that is currently quite sustainable, assuming productivity. Therefore, the labor market is in good shape. In the long run, the impact of immigration is generally considered to have little effect on inflation, as the impacts of demand and supply tend to offset each other, so we do not expect it to have a significant impact on inflation.Question:In recent weeks, there has been a lot of talk about government layoffs and research institutions and universities freezing positions. How quickly and to what extent will this situation affect the labor market?Answer:It's too early to say, but what I can say is that, of course, government layoffs are significant for those who are laid off. We don't know how large the layoffs will be. Currently, the scale of layoffs is not enough to have a substantial impact on the 170 million workforce. In terms of funding cuts in fields like science, we are indeed seeing a large number of layoffs and significant impacts on employment in cities with many universities, research hospitals, and research institutions. I don't know what the total number will be. Of course, in addition, cuts to scientific research could impact economic growth, productivity, health, and various other aspects, but these are difficult to estimate in real-time.Question:Given that we are talking about the future, you may face higher unemployment rates and potentially higher inflation rates in the near future, and of course, the policies required for each situation may differ. You briefly mentioned how the Federal Reserve would view and respond to these two situations from the podium, and now I give you another opportunity to elaborate.Powell:Most of the time, when the economy is weak, inflation rates are low, and unemployment rates are high, both situations require lowering interest rates to support economic activity, and vice versa. Therefore, most of the time, these two goals do not conflict, and in fact, they do not conflict. The labor market is still strong, but we are experiencing shocks, the pulse we are feeling is higher unemployment rates and higher inflation rates, and our tools can only address one of these two things at a time, so this is a difficult situation for central banks. In terms of what to do, the best thing we can do is actually have a small clause in our consensus statement, which we voted on, to reflect how we handle these issues. We are talking about how far the economy is from these two goals, and then we will ask ourselves whether the speed of achieving these goals might be different. We will focus on these matters and think about them, and undoubtedly, we will make very difficult judgments. We are not facing this situation now, but as I mentioned in my speech, we are likely to encounter this situation.Question:I want to bring up a term that has been frequently used today: "uncertainty." As one respondent in the Dallas Federal Reserve Bank survey said, “In my 40-plus years of career, I have never felt so uncertain about my business.” Today's warnings are not just about direct policy uncertainty, but about a fundamental shift in the philosophy of the U.S. economy, not just policy uncertainty, but structural uncertainty. As you pointed out, one of the impacts of higher levels of uncertainty is that companies will delay investments. For example, even after tariffs stabilize, companies considering relocating production facilities back to the U.S. may hesitate because they do not know whether tariffs will be lifted in the future, perhaps by the next administration. How do you consider this long-term uncertainty in policy?Powell:Let me first agree on this point, we strongly feel, and you all will understand this, these are very fundamental changes in the long-standing policies of the United States. And there is no real experience to draw on; I mean, the Smoot-Hawley Tariff was not on such a large scale, and that was 95 years ago. Therefore, there is no modern experience on how to think about this issue, businesses and households in surveys indicate that they feel extremely high uncertainty. Some research from the Federal Reserve suggests that this indeed leads businesses and households to forgo decision-making, which is certainly reasonable. And you hope this is a phase you will go through, and then you will know things become more certain, so people can resume normal economic activities with an understanding of what the new normal is. What I mean is, your question is actually, what if this uncertainty persists? I think that is a difficult environment. I believe that people's expected rate of return must be higher, and I think people will weigh the impact on investments; overall, if the U.S. becomes a jurisdiction with structurally higher risks, that will reduce our attractiveness to investors. We do not know this yet, but I think that would be the ultimate impact.Question:Okay, let's turn to the financial markets. We have seen some volatility, especially in the stock market. I mean, the VIX index has risen to levels seen in the early days of the pandemic and has now retreated. Some people believe that if the stock market crashes, the Federal Reserve will intervene, which is known as the "Fed put," are they right?Powell:I would say "no," and let me explain. I think the market is digesting what is happening, which is actually policy, particularly trade policy; the real question is how this situation will develop and ultimately resolve, and we do not know yet. Until we know this, you cannot make an informed assessment, and there will still be a lot of uncertainty. Once you know what the policy is, the economic impact will still be very uncertain. Therefore, the market is grappling with a lot of uncertainty, which means volatility. But even so, the market is still functioning. In this challenging situation, the market is methodically playing its role as it should, and it is functioning well, as you would expect.Question:We have also seen volatility in the bond market, and typically when there is a flight to safety, we see yields on German bonds and Japanese government bonds decline, but we see U.S. Treasury yields rising. What do you think is causing this?Powell:I would say the same thing; I think it is difficult to understand concretely. I have a lot of experience, for example, when there is significant volatility in the bond market, people will form a narrative, and then two months later when you look back, you find that narrative was completely wrong. Therefore, I think it is too early to say exactly what is happening now. Clearly, hedge funds are undergoing some deleveraging in leveraged trades. And similarly, the market is digesting a historically unique situation, and there is a lot of uncertaintyI think you may see continued volatility, but I am reluctant to explicitly say what exactly is causing it. I just want to say that the market is orderly, and in this highly uncertain period, it operates in a way that is quite similar to what you would expect.Question:Therefore, the Federal Reserve slowed down the pace of reducing its balance sheet at the last meeting. Is this because of the uncertainty regarding how much reserves and liquidity the market needs, and do you want to take more time to understand this? On the other hand, you said the market is orderly; would the Federal Reserve intervene if the market becomes chaotic?Powell:We believe that reserves are still ample, so we think we are not close to the point of stopping QT. However, the situation we face is that for other reasons, there will be significant inflows and outflows of reserves, which are related to the debt ceiling and the Treasury's general account, and this makes sense for those involved in the Treasury market. However, when these large flows of funds occur over a six-month period, we actually cannot see evidence of whether we are approaching or not approaching a level of reduced reserves. Therefore, we decided to slow down. We considered pausing, but we debated this, and it was one of the great debates we had at the Federal Open Market Committee (FOMC), and we decided to slow down. People are really starting to see the benefits of doing this, as we slow down, the balance sheet can shrink without causing chaos, and we hope this process continues, and now the pace is very slow. Therefore, we think this is a very good thing, which means it can last longer, and we will be able to very carefully reach what we believe is an appropriate level of reserves, still with ample reserves.Question:What about the dollar-based international system? In all this chaos, are you prepared to provide dollars to central banks as you did in the past during a global dollar shortage?Powell:Absolutely, of course. To give everyone an understanding, we have established standing dollar swap lines with the five major central banks, which flow into the vast economies of overseas dollar financing markets. In fact, these are overseas markets, for example, European or Asian institutions are purchasing asset-backed securities supported by loans to American consumers. Therefore, these are actually loans to American consumers, and we support this, and we want to ensure that dollars are available; they need dollar financing to hold these dollar assets. Therefore, the way it works is that when needed, we lend dollars to the central banks, they repay us in dollars, and then they pay us in their local currency, and they lend out in dollars, so we do not take on any credit risk or similar risks, which supports the dollar financing market. The dollar financing market is very sensitive during crises, and this is very helpful. The reason we do this is that it is really good for our consumers, so we will continue to do this, as part of the dollar's role as a reserve currency, and most importantly, we will do thisQuestion:You mentioned that one of the issues you are concerned about is the fiscal situation in the United States. Clearly, U.S. sovereign debt continues to rise. What are your views on the long-term impact on interest rates and economic stability? How much more can our national debt increase before it reaches a long-term unsustainable level?Powell:The federal debt in the United States is on an unsustainable path, but it has not yet reached an unsustainable level, and no one really knows how much further we can go. Over time, other countries (debt levels) have gone further, but we are currently operating with a very large deficit at full employment, and this is something we need to address as soon as possible, the sooner the better. If I can speak from my past experience dealing with these issues, this is not a Federal Reserve problem, but if you look at the pie chart of federal spending, the largest and fastest-growing portions are Medicare, Medicaid, Social Security, and now interest payments, so this is indeed where efforts need to be focused, and these issues can only be resolved on a bipartisan basis; neither side can find a solution without the involvement of both, so this is crucial. All domestic discretionary spending, which is usually the focus of discussion, constitutes a small proportion of federal spending, and over time, its share of federal spending is declining. Therefore, when people focus on cutting domestic (discretionary) spending, they are not actually addressing the problem; domestic discretionary spending has been declining, and I just want to point this out because much of the dialogue provided by politicians is about domestic discretionary spending, but that is not where the problem lies.Question:Okay, let's turn to stability and regulation. Turning to the U.S. financial sector, we still have concerns about non-performing commercial real estate loans on bank balance sheets; have these loans been adequately addressed? In addition, over the past few years, various forms of private credit have grown very rapidly, but it can be said that they have yet to be tested through a comprehensive recession. How do you assess the current resilience of our financial institutions and their ability to cope with potential uncertain times?Powell:I believe our banking system is well-capitalized, liquid, and currently has considerable resilience to various shocks it may face. I believe that in terms of commercial real estate, we have actually been working on this for four or five years; some banks, primarily smaller banks, have a higher concentration in commercial real estate, and some of these have issues. We have been working to ensure that these banks have plans, capital, and the ability to absorb the losses they are experiencing, and this situation has been ongoing for some time. The largest banks tend to have lower concentrations, so we know this issue will take years to resolve, but we have made good progress in addressing the problem. As for the non-bank financial sector, the growth of credit provided by non-banks has been very rapid, but most of it is funded by structures similar to private equity, where limited partners are committed for 10 years, and general partners invest this capital; they are not depositors who can withdraw funds, so this financing model is resistant to runsBut this is not a natural law, and you are indeed starting to see short-term financing gradually coming in. However, as you mentioned, this rapidly growing and now quite large private credit sector has not actually experienced any significant credit events or major incidents. It has indeed developed since the pandemic, so for this reason alone, and because it is growing so quickly, we are keeping a close eye on it. It is not subject to credit regulation like the banking system, so we are watching it carefully. As I mentioned, for institutional investors with long-term contracts, this is a more stable source of funding, but we are watching it closely.Question:In fact, putting on my banking research hat, banks have also been actively involved in financing these institutions. We do know that the current government wants to relax regulations in many areas, one of which is likely to be the banking sector. Can you tell us anything about the so-called final Basel III framework?Powell:Currently, the framework mainly focuses on additional capital for large banks. The Federal Reserve's view is that we should continue to complete Basel III, and we must do so, and we look forward to working with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) to complete it. But our view is, I think the banks' view is also that we should get this done. You need international minimum standards, which is a common interest, and we are actually not bound by these standards. The U.S. has enough investment in the content of these agreements, so our view is that we should strongly complete these agreements, and I think we can do it relatively quickly. We are not far from what I think would be a good outcome.Question:Okay, let's talk about something more technical, and the new tool of cryptocurrency. How do you view the potential for more favorable regulation of cryptocurrencies and the risks that may pose to the system?Powell:We have gone through a wave of failures and frauds that have made headlines for years. I think what you are seeing now is, by the way, during that time, we have been working hard with Congress to establish a legal framework for stablecoins, which would be a good starting point, but we have not succeeded. I think the climate is changing, and what you are seeing is a sort of mainstreaming of the entire industry. Therefore, Congress is once again focusing on the legal framework for stablecoins in both the Senate and the House, depending on the content, which is a good idea, and we need it now. Stablecoins are a digital product that can actually have quite broad appeal and should include typical consumer protection measures and transparency. This is the direction that the Senate and the House are working towards, which is a positive thing. I also think we have taken a very conservative approach, and other banking regulators have taken a more conservative stance on the guidance and rules we impose on banks. I think there will be some relaxation, and I think we will try to do this in a way that maintains safety and soundness while allowing and promoting appropriate innovation, but in a way that does not expose consumers to risks they do not understand and does not make banks less safe and sound.**Question:The Federal Reserve is advancing its five-year policy review. Recent surveys tell us that there seems to be a distinction between rising price levels and the rate of price increases; the public appears to be very concerned about rising price levels, and while they certainly worry about the rate of price increases as well, the Fed is more concerned about the inflation rate. Therefore, even if we drop to 2%, people still remember that prices rose more than 20% over the past few years. So, when you start considering the policy review, have you thought about how to address this challenge, that the path of prices is as important as the rate of change?Powell:First of all, I think you are right, and I think the public is right. When we say that the inflation rate has fallen to 2% to 2.5%, we think that is a good thing, but if you are paying 20% more now than you were in 2021, that doesn’t help you much; you are still paying a lot more for necessities than you did in the past. This is just another way of saying that people hate inflation, and it’s easy to understand why. What we can really control is a world where prices do not generally fall (deflation), and unless in extreme circumstances, we do not want to take that risk. Therefore, I think it is impossible for us to create a framework where we will reduce prices by about 10%; that is not something we are going to consider. We are basically looking for the best way to promote 2% inflation over time. You know, the changes we made in 2020 were actually innovations around what to do when we were close to the zero lower bound. Now we are far above the zero lower bound, and we may still need to find a way to deal with this situation in our framework, but perhaps the main scenario is no longer dealing with the effective lower bound, and it will look more like the framework we had before 2020.Powell:One of the tools you introduced to deal with the zero lower bound was quantitative easing, but you also used quantitative easing to address turmoil in the financial markets. Can you be more specific about what your goals were in using quantitative easing during the review?At the outset, we almost always used it for financial market functionality, and that was the case during the global financial crisis and the pandemic. And we did try to explain ourselves during the pandemic, and our explanations did change, but I think it is fair to say that we could have done a better job of explaining why we did it, and that is something we have realized and are considering.Question:No discussion about artificial intelligence is complete. With the rapid development of artificial intelligence, it may affect productivity, it may affect employment, and some say we will see technological unemployment in a serious way for the first time with artificial intelligence. What are your thoughts on this? How will it affect the future development of the Fed?Powell:Like everyone who has come into contact with what it can do, it is beyond my imagination. I mean, I initially thought it was like a better version of Google, but it is not; it is like a better person (laughs), I mean, it can do amazing things.Therefore, the question is, in 250 years of technological innovation, technology continues to evolve, and people worry that it will replace human labor, leading to unemployment, but that is not the case. Or it may be so in the short term, but in the long term, what it does is enhance human productivity, thereby improving living standards. ** So, will this situation eliminate more jobs than it creates? We just don't know. I mean, 20 years from now, will it be that people are more efficient at work because of artificial intelligence? Or will it be that artificial intelligence has replaced many people? I think it's hard to say, but what it can do is truly remarkable. And, you know, we recently had a professor from Wharton School come in for a presentation, and talking to it is like talking to a person; it responds like a person, and what it can do is really amazing. By the way, this is still in the early stages, and they say even in the coming years there will be more astonishing breakthroughs. Therefore, I think it is one of the two or three factors most likely to bring about significant changes to the economy worldwide in the next 20 years, and I think it's hard to say how it will develop.Question:Let's talk about your job. An important figure once said about your job, "This is the best job in government; you go to the office once a month and say let's see, flip a coin." And then everyone talks about you as if you were a god. What do you typically do in the office every day? Is it satisfying? I dare say, is it enjoyable? Do you really feel like a god? (Awkward laugh)Powell:I agree; I think this is the best job in government, and I agree with that. I really enjoy it. Yes, I love this job, and I feel honored to serve the country, which is very humbling because, you know, everyone makes mistakes; it's just that the economy is very difficult to predict, and all of that is true. And, you know, I do what everyone expects me to do; we actually read more than typical executives, and my colleagues and I include reading in our daily routine. As for feeling like a god, I would say we are fortunate to have many well-paid critics who tend to diss us. Therefore, we do not feel like gods.Question:Okay, let's talk about more mundane things. In that office, what key indicators do you primarily focus on? What data sources do you look at to help you make decisions?Powell:You know, I start with the labor force. You know, labor market data is more abundant, better, and more reliable than anywhere else. And the volume of data is huge; you know, there are new jobs, non-farm payrolls, wages, participation rates, and you can break all of these down into different categories, with a million different things. Therefore, the volume of labor market data is vast. If you are going into the field of economics, this is a great area because there is so much to do. Then we also look at inflation data. You know, I closely monitor global developments, and I regularly talk to my global peers to understand what is happening. Financial markets are very important; you know, ** you can, and recently we have been very focused on what is happening in the money market, fixed income market, and stock market, as you would expect** For me, my background is more in the private sector, and as an investor, it has accounted for a large part of my career. I have to talk to outsiders to understand what they see and deal with, so that I can really connect all the dots. You know, I can only look at so much data, but to really understand the story and the narrative, it’s more about talking to outsiders, and you know, anecdotal data really helps to connect things.Question:Yes, you mentioned talking to business people last night to understand what’s happening in the Midwest.Let me talk about the independence of the Federal Reserve. You reiterated your intention to continue serving until the end of your term, which certainly reassures many in the financial markets. What means do the government or legislature have to exert pressure on the Federal Reserve? Should people be concerned that the independence of the Federal Reserve will be threatened after you leave?Powell:Our independence is mandated by law. In our regulations, we cannot be dismissed without just cause, and our terms are long, seemingly endless (laughter). So we are legally protected. You know, Congress can amend this law, but I don’t think there’s any danger. The independence of the Federal Reserve has broad bipartisan support, and there is widespread support in both chambers. Therefore, I don’t think this is an issue. There is a case before the Supreme Court that people may have read about in today’s newspaper, where the Supreme Court may rule on whether the general authorization law for independent agencies can include a provision that prohibits the president from dismissing commission members without just cause. People are talking a lot about this case. I don’t think this ruling will apply to the Federal Reserve, but I don’t know; it’s a situation we are closely monitoring. Overall, the independence of the Federal Reserve is widely understood and supported in Washington and Congress, and that is what really matters. The key is that we can make our decisions, and we will make our decisions solely based on our best analysis of the data and what is the best way to achieve our dual mandate goals in order to best serve the American people. That is the only thing we are here to do, and we will never be influenced by any political pressure. People can say whatever they want, and that’s fine; it’s not an issue, but we will strictly do what we need to do without considering politics or any other irrelevant factors.Question:Okay, I have time for one last question. I know what you all are thinking, and that is what action you will take on interest rates next. But I’m not sure you know, and I’m not sure even if you know you would tell me. So I’m not going to ask that question. The question I want to ask is a more personal one: after a long, tiring day in the office, after tossing a coin all day, what do you most want to do at home?Powell:You know, I play my guitar, I have Zoom calls with my kids and grandkids, and I also go to the gym regularly to stay healthyHost:We need you healthy, we need you healthy. Thank you very much, Chairman Powell.Allow me to express my gratitude to Chairman Powell and Dr. Rajan for such an excellent dialogue on behalf of the Chicago Economic Club. You are a treasure to the nation, and I hope we all can see the important role Chairman Powell plays in our business and personal lives. Thank you for sharing your valuable insights.This article is sourced from: Zhibao Mikko, original title: "Transcript of Powell's Speech and Q&A"Risk Warning and DisclaimerThe market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at your own risk