00:00Thanks for taking our questions, Chair Powell.
00:02Kelly O'Grady, CBS News.
00:04So consumer sentiment has dipped dramatically, but you say the economy and the hard data
00:10is still solid.
00:12What is your message to consumers that clearly disagree and don't feel that strength?
00:17Because the hard data they're looking at is their grocery bill.
00:20Okay.
00:21So, a couple things.
00:22The grocery bill is about past inflation, really.
00:26There was inflation in 21, 2, and 3, and prices went up.
00:29The current level-it's not the change in prices, it's they're unhappy and they're not wrong
00:35to be unhappy that prices went up quite a bit, and they're paying a lot for those things.
00:39So that's-I think that is the fundamental fact and has been for a long time, a couple
00:43years, why people are unhappy with the economy.
00:47It's not that the economy's not growing.
00:49It's not that inflation is really high.
00:50It's not that unemployment is high.
00:52It's none of those things.
00:53We have, you know, 4.1 percent unemployment.
00:56We've got 2 percent growth.
00:58And, you know, it's a pretty good economy.
01:00But people are unhappy because of the price level, and I do-we completely understand and
01:05accept that.
01:06And just to follow up, why are you still projecting two rate cuts this year if your own projections
01:12show inflation higher for longer?
01:15Does that mean you see a slowdown in economic growth as a real threat?
01:19So I think if you-yeah, I mean, remember we came into this with-at the December meeting,
01:26the median was two cuts.
01:28The median was.
01:29And so you come in and you see, broadly speaking, weaker growth but higher inflation.
01:35And they kind of balance each other out.
01:37So you think-and unemployment is really-there's really only a one-tenth change.
01:42So it's-there's just not a big change in the forecast.
01:44There really isn't modest, you know, meaningfully higher-sorry, growth and meaningfully higher
01:50inflation, which call for different responses, right?
01:53So they cancel each other out, and people just said, okay, I'm going to stay here.
01:57But the second factor is, it's so highly uncertain, is just, you know, we're sitting here thinking-and
02:03we obviously are in touch with businesses and households all over the country.
02:08We have an extraordinary network of contacts that come in through the reserve banks and
02:13put in the Beige Book and also through contacts at the board.
02:17And we get all that.
02:18And we do understand that sentiment has fallen off pretty sharply.
02:22But economic activity has not yet.
02:24And so we're watching carefully.
02:26So I would tell people that the economy seems to be-seems to be healthy.
02:31We understand that sentiment is quite negative at this time.
02:36And that probably has to do with, you know, turmoil at the beginning of an administration
02:40that's making, you know, big changes in areas of policy.
02:46And that's probably part of it.
02:48I do think the underlying unhappiness people have about the economy, though, is more-is
02:52more at the price level.
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