00:00inflation expectations as well anchored, but has your confidence
00:03in that assessment changed at all, given the increase
00:05in certain measures and the high degree of uncertainty expressed
00:09by businesses, households, and forecasters?
00:12So on inflation expectations, of course,
00:13we do monitor inflation expectations very,
00:15very carefully, basically every source we can find in, you know,
00:19short-term, long-term households, businesses,
00:22forecasters, market-based.
00:24And I think the picture broadly is this.
00:26You do see increases widely in short-term inflation expectations,
00:32and people who fill out surveys and answer, you know,
00:36questionnaires are pointing to tariffs about that.
00:39If you look in the survey world, if you look a little further out,
00:44you really don't see much in the way of an increase.
00:47Longer-term inflation expectations are mostly
00:51well-anchored.
00:52If you look at the New York, for example.
00:54Then you have market-based, and it's the same pattern.
00:56You know, people in markets are pricing in break-evens.
01:01Some higher inflation over the next year must be related
01:04to tariffs, we know from the surveys.
01:07But if you look out five years or the five-year,
01:10five-year forward, you'll see that break-evens are either flat
01:14or actually slightly down in the case of the longer-term ones.
01:17So we look at that, and we will be watching all
01:20of it very, very carefully.
01:22We do not take anything for granted.
01:24It's at the very heart of our framework,
01:25anchored inflation expectations.
01:27But that's what you see right now.
01:29And how much weight do you put on the deterioration
01:32in consumer confidence surveys?
01:34You said recently that this is perhaps not the best indication
01:39of future spending, but I'm curious, you know,
01:42what you think is behind this deterioration,
01:45and to what extent it could be a leading indicator for hard data.
01:49So let's start with the hard data.
01:51You know, we do see pretty solid, hard data still.
01:54So growth looks like it's maybe moderating a bit,
01:58consumer spending moderating a bit, but still at a solid pace.
02:01Unemployment is 4.1 percent.
02:03Job creation, most recently, has been at a healthy level.
02:06Inflation has started to move up now, we think,
02:10partly in response to tariffs.
02:11And there may be a delay in further progress
02:15over the course of this year.
02:17So that's the hard data.
02:18Overall, it's a solid picture.
02:20The survey data, both household
02:22and businesses, show significant rise in uncertainty
02:26and significant concerns about downside risk.
02:28So how do we think about that?
02:29And that is the question.
02:31As I mentioned the other day, as you pointed out,
02:35the relationship between survey data
02:38and actual economic activity hasn't been very tight.
02:41There have been plenty of times
02:42where people are saying very downbeat things
02:45about the economy and then going out and buying a new car.
02:47But we don't know that that will be the case here.
02:50We will be watching very carefully for signs
02:52of weakness in the real data.
02:53Of course we will.
02:55But, you know, given where we are, we think our policy is
02:58in a good place to react to what comes.
03:02And we think that the right thing to do is to wait here
03:04for greater clarity about what the economy is doing.
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