All right. Hello everybody. Welcome back to the channel. We are starting about 10 minutes early and we're live folks. We got the rate cut.

25 basis points. It is official and it has happened. My by Mr. Jerome Pow.

Now, there's a lot of nuance to what we're looking at here and there's a bunch of different things to discuss in regards to the rate cuts.

In fact, the rate cuts are quite frankly not even the most important part of the story.

But the Federal Reserve has cut interest rates by 25 basis points.

There was a 90% probability as of this morning. It has officially happened.

In about 20 minutes. We will have JP Pal and we'll see what he has to say.

There were nine votes for cutting 25 bips. An overwhelming majority of the Federal Open Market Committee decided to cut rates.

Two votes against cutting, one vote for cutting 50 bips.

So you had Moran who went for 50 bips. You had uh I believe Goulsby who went for the cut and or went against the cut and then you had nine votes for cutting that 25 basis points for today.

Now, the outlook by the Fed, the summary of economic projections, which is uh a bit more important here, and this is the part that's actually quite surprising, even though it's kind of not surprising,

is only suggesting one more cut in 2026 and one more cut in 2027, which would be quite incredible if that actually is the case.

But nonetheless, it seems like that at least could be what the Federal Reserve now can change dramatically. But this is what they're suggesting right here.

This is the dot plot.

Uh in 2025, the street was expecting 3.62%. That's what we're going to get. 3.625.

Uh 2026 3.375. 2027 3.12. These are on the federal interest rates.

And then 2028 also 3.123.

So the idea of getting the federal interest rate down to like 2.75% 3% by the end of next year. Maybe.

It's a big maybe because right now uh you know JPA's not going to be there in March or in May and we'll see who replaces him.

But right now, the people on the FOMC are saying that we think the most we're going to get to in 2026 is 3.375%.

That would only be another 25 basis points.

Um, which is not necessarily the best thing, but nonetheless, the market likes it.

Now, before we talk about the quantitative easing, let's just take a quick look at the markets. S&P 685.

So, you got to move right there.

Again, I wouldn't trust any of the candles you're seeing right now.

Realistically when Pal talks and when he actually starts speaking about what's going on uh in the context of interest rates we'll get a better understanding but the S&P is up.34%

pounder 188 Robin Hood 137 almost

Uber is down based on some news from Whimo we'll talk about that in a bit

Carvana that's up 1.6 Meta still down

Meta really couldn't get a pump still down on the day down 1.2

to Nebas from 93 to 96. That's moving a little bit.

Amcore continuing to do well. That's at 46 bucks.

Google breaking out based on some of the stats we got from Whimo today.

Rocket Lab, massive move, 9%. Absolutely gigantic move on Rocket Lab.

By the way, Bloomberg reported this morning, and we'll talk more about this, that Elon, in the discussions for the new secondary sales of SpaceX, we don't have confirmation if he's really thinking of going public next year,

but in the new secondary sales for SpaceX, valuing the company from around 600 to 800 billion, specifically is pitching data centers in space as part of the thesis for why the company should get a premium valuation.

Now, maybe Bloomberg is wrong about this, but you know, you had Elon literally tweeting about data centers in space last night.

If they're not wrong about this, look at SoFi up 2% 27.40.

Then Elon's taking this very seriously. And uh that is a big deal.

BMR back above 40 for the first time in a month. Look at her. That is beautiful. Back above 40.

This thing fell all the way to 24. Ethereum did hit 3,400.

And then we had BTC at 92,800 trying to get to 93,000.

Now, why is Bitcoin and Ethereum running?

Well, the biggest story of the day from this Federal Reserve meeting is that the Fed says they will begin buying Treasury bills on December 12th, which is two days away.

How much are they going to start buying?

Remember, they have been selling bonds off the balance sheet since 2022, aka quantitative tightening. um QT

and unfortunately JPOW has not really been a QT to me while he's been engaging in QT but he's much more of a QT when he starts QE

40 billion of Treasury bills over the next 30 days liquidity is entering into the system and that is going to be very very important ultimately for Bitcoin and Ethereum and a lot of the risk on assets.

For those that have been waiting for QE over the past couple years, now we have had a bull market over the past couple years.

Thank you to Nvidia. Thank you to AI.

But we weren't supposed to. And really AI is what saved it.

And in 2022, we didn't have that bull market primarily because of rising interest rates and quantitative tightening.

That's gone. Interest rates are not rising.

They're not necessarily coming down dramatically. We got our 25, but they're not rising.

and mortgages and bonds and the the host of different baskets of bonds that the Fed is going to be buying is finally coming back into the ecosystem after three years of the Fed not buying.

Here's a little bit more of an update on this Fed decision and then we'll keep going from there.

>> Though, I want to talk about some pretty big news when it comes to the balance sheet. The committee making a determination.

It is now at what it calls an ample level of reserves.

So, it plans to initiate purchases of shorter-term treasuries on an ongoing basis.

And then a separate document was specific, saying the Fed will begin buying $40 billion in bills starting December 12th.

That's just a couple days from now, and I believe that's sooner than the market expected.

And those purchases will go on for a little while at an elevated level because of seasonal demands for reserves that are out there before coming down again in April.

That's what the document says. Outlook on the economy in the statement.

GDP outlook was stronger next year in the Fed's own forecast, up a half a point to 2.4%.

So pretty big move there in the outlook for GDP next year.

The inflation outlook lower for next year by just a tick down to 2 and a half% just about hitting the the target of 2.1 in 2027.

The statement says the economy is expanding at a moderate pace.

>> So there you go. QE is back.

Um, and we have cut rates. The rate cut was not the big surprise, but I don't think the market expected 40 billion over the next 30 days, especially at the rate uh or at at the timing that they were going to start, which is in two days, December 12th,

but it looks like the Fed is officially getting ready to inject that liquidity into the system.

93,000 on Bitcoin. S&P, you have a move.

Again, when JPEL speaks, we'll have a much better understanding of what that move looks like.

0.27%. Pounder right there at 189. Robin at 136.

Bouncer did break 193 yesterday in the overnight markets.

Maybe it is a shot to get there again.

Amazon 230. I think that hit 231 this morning.

Again, Carvana is up 1.3%.

Ironically, Nvidia not doing anything. Not doing anything.

I mean, it just goes to show how annoyed the market is or how uh fearful the market is of this AI narrative, but you're getting really nothing.

I mean, I guess 182 to 18340 is is is your move.

182 is the lowest of the days low of the day but that one right now still down about 1% right now

and that is what we are seeing quite incredible uh in this ecosystem of how the market is thinking of the current state of what the Fed is doing.

Now the other really interesting thing is again you had nine votes for uh a rate cut but you also had two votes against cutting and then one which was for cutting by 50 bips.

So you had Moran who was way more bullish than what we did.

I mean well he said he was going to you know vote for 50 bips but he actually ended up voting for it.

I guess he thought there was an overwhelming support of 25 bips.

So he wanted to show that he was extra doubbish.

And you had two that actually said we shouldn't be cutting.

Again the Fed says it will buy 40 billion of treasury bills over the next 30 days.

Fed cuts the benchmark rate target range to 3.5 to 3.75% 93 vote and they will begin Treasury bill purchases starting on December 12th.

For those that are just joining, yes, we officially got a cut and that's why markets are moving.

Now, if we could get, as Doug says right here, Oracle, if we can get Oracle to give us some love, Robin right there at 137 and I'll be live for Oracle.

We'll just transition from the FOMC into the uh the market close.

Um, if Oracle can blow away earnings, give us some decent guidance.

Ethereum back at 3,400, S&P 685,

that might be the recipe we need to have a really strong day and maybe start off this potential December run.

But it also depends on what JPL is going to say.

TSM, that's moving. That's up 2%.

Amazon again at 230.

Uh, even Grab went green today.

Rubric still slightly red. Adobe, that's red.

Grab right there is at 517. That's up about 39%.

Salesforce 263.

A lot of those high beta names getting some love.

Irene still down. Nebius, I think, is still down as well.

No, Nebius went green 96.83 after being down all day.

And then Cororeweave right here, 89. That one is down 1.8%.

Wow. Rocket Lab, I mean, that's making the big move right here. 5839.

My goodness. 9%.

I mean, it's it's it's not at the 75 highs that it was at um in November or in October, but I mean, it cracks through 60, they're going to start getting a lot of people to think that it can make that run.

Here is the um the Wall Street Journal quotes by the B Jeff Bezos and Elon Musk race to bring data centers to space.

Bezos Space Center Blue Origin has a team working on orbital data centers and Musk SpaceX has pitched data center plan as part of share sale

and that's what's getting the market a lot more excited right here.

VG at 602 pounder again at 190.

Yes, JPEL will be live in about 12 minutes.

We did have our boy Tom Lee who was live about an hour ago.

Let me pull that up for those that did not see it and we'll get his take on what's happening.

Now, he predicted a rally and the reason he predicted a rally primarily was based on the idea that uh people were being too bearish expecting a hawkish cut, which is what we got.

I mean, they're saying no rate cuts in. They're saying one cut in 26, one cut in 2027.

You know, there's no way in hell Trump is going to allow one cut in 2026.

I mean, he is going to fight to make sure we get interest rates down to at least 3% next year, which would quantify to at least three cuts.

But this is a hawkish cut and JPA's probably going to qualify it being hawkish when he talks, but the market's still being able to move forward.

>> Exactly as Steve laid out, you know, Fed does a cut, but future cuts are uncertain, not even maybe until June.

Now, because that's the base case, then if that's what happens, of course, markets have already been bracing for that, you know, and and they've been bracing over it since October.

And of course there's a chance that it's a dovish cut which would be bullish as well.

>> what would what to you would be a dovish cut?

So are there projections? Are there dots dot? There is.

So we'll know right away if they come out and those projections show that they're expecting more rate cuts next year than you're you're saying you we might only get one more in the in the summer.

>> That's right. And it could also be interpreted doubbishly if they start acknowledging the balance of risks are shifting so that they then markets can realize the Fed is now acknowledging there's some underlying fragility of the economy

and of course now QE is because QT is ending it's essentially not QT which is QE

and there's you know of course the chance that there's um something positive the Fed has to say.

So, I think it is a hawkish cut, but actually I think market reaction is positive.

>> And I we're there's so much more you're queuing up here we're going to get into.

But on a top level, why why isn't it a bigger roadblock for markets?

Tom, you know, you could look at this and just say, well, we're already basically at all-time highs.

Look at the Russells and so forth.

Um, you know, and Powell's been known to not have a very favorable reaction to his commentary and he's only got a few meetings left, so maybe he's even more hawkish than usual.

I don't know.

um why don't you think that's a bigger risk and whether it's I I'm not just myopically even talking about this afternoon but you know kind of setting the tone into year end and then into next year.

>> Yeah, I mean I think part of it is just the markets now adjusted to the idea that the Fed is institutionally slightly hawkish.

Now part of it may be because uh that there could be undue pressure coming from outside the Fed and the institution wants to protect its integrity and that comes across as hawkish.

Uh but that dynamic is something the markets have been bracing for and they've reacted negatively to it like in October they did

and so I think because of that that's what people are building into this December meeting which is why it could be a surprise.

It's like when Apple always gives cautious guidance. You just cut you the stock.

>> I mean, he is right on that argument. It is a it is in the context of guidance uh for the future.

Remember JPAL was hawkish last time uh said don't expect a December cut.

We ended up getting a December cut. It is December 10th and we got a cut

rock lab right up 9%.

Maybe that's the case for 2026.

Also, I mean there's no world where the Fed can come out and be like, "Yeah, everything's fine. 2026 we're going to give you three cuts."

like that's just not, you know, even companies don't come out and and and raise guidance like that easily because then there's nothing to to surprise with.

So, uh it makes sense that they're not as doubbish, but the market's not necessarily being as uh annoyed or I guess as scared of them not being that doubbish because the market also probably knows that we're going to get these cuts and JPAL is not going to be the fed here.

S&P 500 right there 684.

Nvidia still not moving, really not making a massive move.

Palanteer and Robin Hood up about 1%.

pounds are up 4% and then TSM at 309.

By the way, Trump has officially started interviews with the new Fed candidates.

Kevin Worsh is reportedly at the White House today having interviews.

Hassid is not a lock.

There's a lot of concerns from the bond market, which let's check the tenure right now around um his independence and you know if the bond market can trust that Hasset's actually going to be able to operate without allegiance to the president.

So I think Trump I mean there's a world in which he doesn't pick acid and he picks someone that the bond market likes more but he's going to want to really confirm that they are on the side of cutting rates.

4.16. So it's not at 4.2 like it was in the morning which is good.

Um but it is down a bit more.

What are the polyarket odds?

So first of all let's bring up Kshi.

Jason was freaking texting me like a degenerate and saying that we have to bet on JPAL and all the stuff he's going to say.

So, these are all the things you can uh take a wager on here.

Some of these things are incredibly mispriced to me to the upside.

So, for example, and I don't know, maybe I'll be wrong on this, but like I don't think he's going to say Trump.

Trump is trading at 15 cents right now.

I I don't He doesn't like acknowledging Trump.

I I don't even think he said Trump's name last time.

So, he doesn't even say President Trump and stuff.

So, every time he gets a Trump question, he kind of avoids it.

I think this I would take the under on this.

Um soft landing we haven't heard in a long time. That was like 2024 2023 stuff.

I don't think he's going to say soft landing.

Stablecoin maybe if he talks about crypto.

Uh QE he's probably going to mention.

Uh beigebook he probably will mention.

AI probably has to mention

shutdown layoffs. He'll mention restrictive he'll mention.

Look at this one. Good where is it? Afternoon. Is that the one?

I think good afternoon was up there trading at like 50 cents.

I'm like, "Bro, what if he doesn't say good afternoon?"

Like, what what if what if he has a different way of greeting everybody?

Uh, let me see if it's still up there.

Yeah, there it is. And 96%.

Bro, what if he just says something different than good after?

What if he says hello everybody or something like that?

I mean, then you just lost 90 98 cents on the dollar or 95 cents on the dollar at that point.

So, I don't know.

I don't know if I would like really bet that much money that that would play out.

So, is data dependent on the list?

It should be data. No, data dependent is not on the list, but that one should be since I'll probably say that.

Look at this. Look at all these comments of people betting on what he's going to say.

This is the world we live in, bro.

How much volume is in this thing right now?

1.5 million of volume.

Look at all these $1 bets coming in in real time.

This is wild. Someone just bet $750, $800, $300. This is crazy. Absolutely crazy.

Let's finish up with uh with Tom Lee right here and then we'll keep going from there.

>> Crypto asset or or buy stocks because this is coming.

So it's important to know whether it's coming or not

>> comes from the banks.

>> Yeah.

>> But yeah, in the crypto world QT was draining liquidity.

So the ending of QT is essentially QE because if they're just holding the balance sheet flat, they are still going to be essentially adding liquidity to the system

>> to maintain the size. Yes.

And so that is why I think crypto prices have risen in anticipation of this meeting.

>> So do crypto prices keep going?

Do you have a bullish view still on small caps if we're finally going to get that rate coming down a little bit?

Where should people look for alpha or outperformance?

>> Um yeah, I mean like 2026 is a year like there's a new Fed, right?

and but a dovish tilt and at a time when the ISM's been below 50 for a record more than three years.

So that's really good for small caps and as Barry says if they deregulate banking and we were talking about this uh offline that's really good for small caps but that's also really good for the business cycle

and we we've talked about this in some of our past research.

Crypto prices are really sensitive to the ISM.

So the ISM moving back above 50 has historically been associated with actually super cycle moves in Bitcoin and Ethereum.

>> Wait, ISM going into expansion territory is positive for Bitcoin and correct.

Interesting.

>> Yeah. And so if you look at ISM and Bitcoin

uh and you drend Bitcoin essentially look at its distance from the 200 day.

It's almost perfectly correlated to the ISM.

>> Surprising.

>> And same thing with copper to gold prices.

So copper is an industrial metal versus gold is

>> right. But all of that tells you that it's basically just risk on that they're all behaving like an economy.

And is that am I over characterizing?

>> I think that's I think that's right.

I think Bitcoin's a bit of a chameleon because they're there'll probably be a time when it it acts like uh gold, but right now it acts a lot more like it's sensitive to monetary policy and the business cycle and both are about to turn up.

So that would mean anybody who thinks the Bitcoin four-year cycle means crypto prices are down next year.

We're betting against that thinking that new highs come early

like January

as a fin.

Okay, three minutes. Three minutes. Here we go.

Again, this is the reason why we invest.

None of your friends or family or anyone you care about probably knows that JPL is uh speaking in the next three minutes.

But all of us are going to be obsessed with every single syllable that he says.

I'm not saying it's healthy. Never said it was healthy. never even said it was productive.

Quite frankly, it's like a form of entertainment. It's not even market research, but it's our form of entertainment. It is our form of entertainment.

68363 0.08% on the S&P.

So, basically that move we had on the S&P pretty much went erased.

Nvidia goes down. Hood goes down again.

That's why those green candles as as amazing as the dopamine is.

Same thing with Rock Lab 59 to 57.

You just can't trust it because ultimately the price action starts I believe at 3:30.

30 minutes before the market closes. That's when we really get to see how the market's interpreting this stuff and whatever happens in between is just the action that happens in between.

Here we go. Okay, let me do one pump or dump poll in the chat.

So, this is a general pumper dump poll I guess during the FOMC meeting.

I mean, the initial reaction was a pump. It's just is that the last is the question.

And how hawkish or potentially doubbish does JPAL go during FOMC to make this actually happen?

All right, here we go. Here we go. It's exciting stuff, dude. This is exciting.

Oh, real quick. Whimo. So, updates on Whimo.

We got two minutes until we go live.

Dude, Whimo is crushing it. 14 million paid rides in 2025.

On track for 20 million lifetime rides in 2025, they're doing a million rides a month.

They're targeting a million rides per week in 2026.

20 new cities planned for 2026, including Tokyo and London.

I was wondering why Uber was down 5% on the day.

It's because of this. It's because of this.

The entire market is wondering if a business model for Uber can exist if you have Whimo with this type.

I mean, this is tripledigit growth year-over-year.

And you know, Tesla's going to get into the mix pretty soon, and this is going to be very exciting for the robo taxi res revolution.

So, we're going to see how this all plays out.

But that was the update on Google. And that's why Uber ended up going down about 5% on the day.

All right, we got one minute. One minute.

JPAL's not live yet. I will switch as soon as he's live.

And then we're going to see. We're going to see.

I'm curious if he actually says good afternoon.

I am curious if he actually says good afternoon or uh or or if it's just something so many bets during this entire entire meeting based on what JPL ends up saying here.

All right, so he should be coming live in about 10 15 seconds and then we get to stare at him.

Also, purple tie or not? What do you guys think?

Do we I think we got the purple tie last time.

Do you think we get the purple tie again?

Of course, my mic goes out. Of course.

Okay. Well, I'm just going to leave it here and then it'll go live.

Of course, my mic is going bad right before we go live.

Green tie. All right. Here he is.

>> Good afternoon.

My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.

Although important federal government data for the past couple of months have yet to be released, available public and private sector data suggests that the outlook for employment and inflation has not changed as much since our meeting in October.

Conditions in the labor market appear to be gradually cooling and inflation remains somewhat elevated.

In support of our goals, in light of the balance of risks to employment and inflation, today the Federal Open Market Committee decided to lower our policy interest rate by a quarter percentage point.

As a separate matter, we also decided to initiate purchases of shorterterm Treasury securities solely for the purpose of maintaining an ample supply of reserves over time, thus supporting effective control of our policy rate.

I will have more to say about monetary policy and its implementation after briefly reviewing economic developments.

Although some key government data have yet to be released, available indicators suggest that economic activity has been expanding at a moderate pace.

Consumer spending appears to have remained solid and business fixed investment has continued to expand.

In contrast, activity in the housing sector remains weak.

The temporary shutdown of the federal government has likely weighed on economic activity in the current quarter, but these effects should be mostly offset by higher growth next quarter, reflecting the reopening.

In our summary of economic projections, the median participant projects that real GDP will rise 1.7% this year and 2.3% next year, somewhat stronger than projected in September.

In the labor market, although official employment data for October and November are delayed, available evidence suggests that both layoffs and hiring remain low

and that both households perceptions of job availability and firms possession perceptions of hiring difficulty continued to decline.

The official report on the labor market for September, the most recent release, showed that the unemployment rate continued to edge up, reaching 4.4% 4% and that job gains had slowed significantly since earlier in the year.

A good part of the slowing likely reflects a decline in the growth of the labor force due to lower immigration and labor force participation.

Though labor demand has clearly softened as well.

In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen in recent months.

In our SEP, the median projection of the unemployment rate is 4.5% at the end of this year and edges down thereafter.

Inflation has eased significantly from its highs in mid 2022, but remains somewhat elevated relative to our 2% longerrun goal.

Very little data on inflation have been released since our meeting in October.

Total PCE prices rose 2.8% 8% over the 12 months ending in September.

And excluding the volatile food and energy categories, core PCE prices also rose 2.8%.

These readings are higher than earlier in the year as inflation for goods has picked up, reflecting the effects of tariffs.

In contrast, disinflation appears to be continuing for services.

Near-term measures of inflation expectations have declined from their peaks earlier in the year as reflected in both market and survey based measures.

Most measures of longerterm expectations remain consistent with our 2% inflation goal.

The median projection in the SCP for total PCE inflation is 2.9% this year and 2.4% next year, a bit lower than the median projection in September.

Thereafter, the median falls to 2%.

Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people.

At today's meeting, the committee decided to lower the target range for the federal funds rate by a quarter percentage point to 3 and 1 half to 3 and 3/4%.

In the near term, risks to inflation are tilted to the upside and risks risks to employment to the downside, a challenging situation.

There is no risk-free path for policy as we navigate this tension between our employment and inflation goals.

A reasonable base case is that the effects of tariffs on inflation will be relatively short-lived, effectively a one-time shift in the price level.

Our obligation is to make sure that a one-time increase in the price level does not become an ongoing inflation problem.

But with downside risks to employment having risen in recent months, the balance of risks has shifted.

Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.

Accordingly, we judged it appropriate at this meeting to lower our policy rate by a quarter percentage point.

With today's decision, we have lowered our policy rate threequarters of a percentage point over our last three meetings.

This further normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2% once the effects of tariffs have passed through.

The adjustments to our policy stance since September bring it within a range of plausible plausible estimates of neutral and leave us well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook and the balance of risks.

In our summary of economic projections, FOMC participants wrote down their individual assessments of an appropriate path of the federal funds rate under what each participant judges to be the most likely scenario for the economy.

The median participant projects that the appropriate level of the federal funds rate will be 3.4% at the end of 2026 and 3.1% at the end of 2027, unchanged from September.

As is always the case, these individual forecasts are subject to uncertainty and they're not a committee plan or decision.

Monetary policy is not on a preset course and we will make our decisions on a meeting bymeating basis.

Let me turn now to issues related to the implementation of monetary policy. with the reminder that these issues are separate from and have no implications for the stance of monetary policy.

In light of the continued tightening in money market interest rates relative to our administered rates and other indicators of reserve market conditions, the committee judged that reserve balances have declined to ample levels.

Accordingly, at today's meeting, the committee decided to initiate purchases of shorter term, mainly treasury bills for the sole purpose of maintaining an ample supply of reserves over time.

Such increases in our securities holdings ensure that the federal funds rate remains within its target range and are necessary because the growth of the economy leads to rising demand over time for our liabilities, including currency and reserves.

As detailed in a statement released today by the Federal Reserve Bank of New York, reserve management purchases will amount to $40 billion in the first month and may remain elevated for a few months to alleviate expected near-term pressures in money markets.

Thereafter, we expect the size of reser reserve management purchases to decline, though the actual pace will depend on market conditions.

In our implementation framework, an ample supply of reserves means that the federal funds rate and other short-term interest rates are primarily controlled by the setting of our administered rates rather than day-to-day discretionary interventions in money markets.

In this regime, standing repurchase agreement or repo operations are a critical tool to ensure that the federal funds rate remains within its target range even on days of elevated pressures in money markets.

Consistent with this view, the committee eliminated the aggregate limit on standing repo operations.

These operations are intended to support monetary policy implementation and smooth market functioning and should be used when economically sensible.

To conclude, the Fed has been assigned two goals for monetary policy, maximum employment and stable prices.

We remain committed to supporting maximum employment, bringing our inflation sustainably down to our 2% goal, and keeping longerterm inflation expectations well anchored.

Our success in delivering on these goals matters to all Americans.

We understand that our actions affect communities, families, and businesses across the country.

Everything we do is in service to our public mission.

At the Fed, we will do everything we can to achieve our maximum employment and price stability goals.

Thank you and I look forward to your questions.

>> All right, Q&A. This is where we really see some action.

>> Uh thank you Howard Schneider with Reuters.

Uh just first turning to the statement the just to be clear, we're on the same page here, the insertion of the phrase uh considering the extended timing of additional adjustments.

Does that indicate that the Fed is now on hold until there's some clearer signal from uh inflation or jobs or the evolution of the economy along the baseline outlook?

So yes, the um the adjustments since September um bring our policy within a broad range of estimates of neutral

and as we noted in our statement today, we are well positioned to determine the extent and timing of additional adjustments based on the incoming data, the evolving outlook and the balance of risks.

Uh that new language points out that we'll carefully evaluate that incoming data.

Uh and also I would note that having reduced our policy rate by 75 basis points since September and 175 basis points since last September,

the Fed funds rate is now within a broad range of estimates of its neutral value and we are well positioned to wait to see how the economy evolves.

And if I could follow up on the outlook there, it it it seems like with the additional GDP growth coupled with easing inflation and a fairly steady unemployment rate, this seems like a pretty optimistic outlook uh for next year.

Um what's given rise to that?

Is this an early bet on AI?

Is there some sense of uh improve improving productivity out there? What's what's driving that?

>> So a number of things are driving uh what's happening in the forecast?

And I would say if you if you look broadly at outside forecasts, you do see a pickup in growth in many of those now too.

So it is um it's partly that consumer spending has held up.

It's been resilient and it it to another degree it is it is that uh AI spending on data centers and related to AI has been holding up business investment.

So overall um the the baseline expectation for next year is at least at at the Fed and I think with with outside forecasters too is a pick up in growth from today's relatively low level of level of 1.7%.

I mentioned that the SEP median is 1.7 for this year growth and 2.3 for next year.

You actually some of that is due to the uh the shutdown.

So you can take 2/10 out of 2026 and put it in 2025.

So it would really be 1.9 and 2.1.

But overall, yes, um, you know, you know, for a few reasons.

Fiscal policy is going to be supportive and as I mentioned, AI spending will continue, the consumer continues to spend.

So it looks like uh the baseline would be solid growth next year.

>> uh, thank you uh, Mr. chairman for taking our questions here.

Um the uh you had previously described rate cuts in terms of a riskmanagement framework and kind of following up on what Howard was asking um is the riskmanagement phase of rate cuts over here

and uh um have you taken out sufficient uh insurance I guess against potential weakness in terms of the data we might get next week when it comes to employment?

So we're going to get a great deal of data between now and the and the January meeting and I'm sure we'll talk more about that and that will the data that we get are going to factor into our thinking

but yes we have uh if if you go back uh we held our policy rate at you know 5.4% for more than a year because inflation was high very high and unemployment when and the labor market was was really solid at that point.

So what happened is over last summer, summer of of of of 24, um inflation came down and the labor market began to show real signs of weakness.

And so we we decided as our framework tells us to do that, uh when the when the risks to the two goals become more equal, you should move from uh a stance that favors really dealing with one of them, in that case inflation, to a more balanced, more neutral setting.

And so we we we did that. We did some cutting and then we we paused for a while to work our way through uh what was happening in the middle of the year and then we resumed cuts in in September

and we've cut now three we now cut a total of 175 basis points and as I mentioned you know we feel like uh where we're positioned now puts we're well positioned to wait and see how the economy evolves from here.

If I could just follow up on the SCP, um you have a whole lot of a big increase in the growth numbers but not a big decline in the unemployment numbers and is that an AI factor in there?

What is going on in terms of the dynamic of you get more growth but you don't get a whole lot of decline in unemployment?

Thank you sir.

>> So it it is the implication is obviously higher productivity um and u some of that may be AI.

It just also I think uh productivity has just been almost structurally higher for several years now.

So if you start to thinking of it as 2% per year, you can sustain higher growth without more without more job creation.

Uh of course higher productivity is also what enables incomes to rise over long periods of time.

So it's basically a good thing, but that may be that's certainly the implication.

>> Thank you. Kobe Smith with the New York Times.

Um today's decision was clearly very divided.

It wasn't just the two official descents against the cut, but there were also soft descents from four uh others.

And I'm just wondering if um this reluctance from several people to support recent reductions suggests that there is a much higher bar for cuts in the near term

and and what exactly does the committee need to see um if things are well positioned right now um to support a January reduction?

>> Sure.

So um let me just say as I mentioned u and as I've mentioned here before the situation is is that our two goals are a bit in tension right so um

interestingly everyone around the table at the FOMC agrees that inflation is too high and that we want it to come down and agrees that the labor market has softened and that there's further risk.

Everyone agrees on that.

where the where the difference is is how do you weight those risks and what does your forecast look like and and and where do ultimately ultim where do you think the bigger risk is

and and you know it's very unusual to have uh persistent tension between the two parts of the mandate and when you do this is what you see

and I think it's actually uh what you would expect to see and we do see it

meanwhile the discussions we have are as good as any we've had in my 14 years at the Fed they're very thoughtful respectful

And you just have people who have strong views and you know we we come together and and we reach we reach u you know a place where we can make a decision.

We made a decision today.

We had you know nine out of 12 supported it. So fairly broad support.

Um but it's not like the nor normal situation where everyone agrees on the direction and what and what to do.

It's more it's more spread out and I think that's only inherent in the situation

in terms of what it would take. you know, we all have an outlook in terms of what's going to come, but I think ultimately uh having cut 75 and you know that the effects of the 75 basis points will only begin to be coming in, as I've said before a couple times, we're well positioned to wait to see how the economy evolves.

We'll just have to see and we will get, as you know, quite a bit of data.

I should mention on the data, as long as I'm talking about it, that um we're going to need to be careful in assessing particularly the the household uh survey data.

Uh there there are very technical uh reasons about the way data are collected in some of these measures both in you know inflation and in uh in labor in the labor market.

uh so that the the data may be distorted and not just not just sort of more volatile but distorted and and that's it's uh and that's really because data was not collected in October and half of November.

So we're going to get data but we're going to have to look at it carefully and with a somewhat skeptical eye by the time of the January meeting.

Notwithstanding that we will have a lot of the December data by the time of the January. So, we expect to see a lot more, but I'm just saying that the what we get for, for example, CPI or for the uh for the um uh uh household survey, uh we're going to we're going to look we're going to look at that really carefully and and understand that it may be distorted by very technical factors.

>> Going live right now.

>> Um one more question on desense.

Um I mean you talk about in a very positive way just given the complicated nature of the situation we're in economically but is there any point in which those descents become counterproductive either to you know the Fed's communication and the messaging around the policy path forward?

>> I wouldn't I don't feel that we're at that point at all.

I don't I I would say again these are these are good thoughtful respectful discussions and you hear people say and you'll hear you hear many many outside analysts say the same thing.

I could make a case for either for either side. I mean I I could make that case.

It's it's a close call.

We have to make decisions and uh we you know we always hope that the data will will give us a clear read.

But in this situation you you have you have competing as if you look to if you look through the SCP you'll see that a very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation.

So what do you do? You've got one tool, you can't do two things at once.

So, at what pace do you move, how how what what size moves do you make and that kind of thing? And what what's the timing of them?

It's it's very it's a very challenging situation.

I think we're in a good place to, as I mentioned, to wait and see how the economy evolves.

>> Nick Timos of the Wall Street Journal.

Um, Chair Powell, there's been some discussion recently of the 1990s.

In the 1990s, the committee did two discrete sequences of three quarter point cuts.

One in 199596 and one in 1998.

And after both of those, the next move in rates was up, not down.

With policy now closer to neutral, is it a foregone conclusion that the next move in rates is down,

or should we think of policy risks as genuinely two-sided from here?

>> So, I don't think that um a a rate hike is anybody's base as the next thing is anybody's base case at this point.

And I'm not hearing that.

What you what you see is um some people feel we should stop here and and that we're at the right place and just wait.

Some people feel like we should cut once or more this year and next year.

But the the but when people are writing down their estimates of policy of where it should go, it it is is either holding here or cutting a little or cutting more than a little.

So I don't see that as I don't see the base case as involving that.

So of course you know a data set of two now three is is not a big data set but I you're you are right about those two uh three cut times in in the 90s.

If I could follow up, the unemployment rate has been rising very gradually for the better part of two years, and indeed the statement today no longer describes the unemployment rate as remaining low.

What gives you confidence it won't continue rising in 2026, especially when housing and other rate sensitive sectors still appear to be feeling restrictive policy from the uh notwithstanding the 150 basis points and cuts prior to today.

So the the I think the idea is that with with now having cut 755 basis points more now and having policy you know I'd call it in a broad range of of plausible estimates of neutral that that will be a place which will enable the labor market to stabilize or to only tick up one or two more tents but we won't see uh you know any kind of a sharper downturn which we haven't seen any evidence evidence of at all.

At the same time, uh, policy is still in a place where it's not accommodative and and we feel like we feel like we have made progress this year in non-tariff related inflation and it as tariffs come through as they flow through that'll show through next year.

But, as I said, we're we're well past well placed to to wait and see how that turns out.

That is our expectation. But, you know, we're going to start to see the data and it'll tell us whether we were right or not.

>> Claire Jones, Financial Times.

Um, a lot of people interpreted your comments at the October meeting that, you know, when there's a foggy situation, we slow down to mean that, you know, there won't be a cut now, there'd be a cut in January instead.

So it'd be good to get a sense of why did the committee decide to move today rather than to move in January instead. Thank you.

>> Right. So in October I said um that there was no certainty of moving and that was that was indeed correct.

I said it's possible you could think about it that way but I was careful to say other people could look at it differently.

So why did we move today?

You know I would say point to a couple things.

First of all, gradual cooling in the labor market has continued.

Unemployment is now up 3/10en from June through September.

Payroll jobs uh averaging 40,000 per month since April.

We think there's an overstatement in in these numbers by about 60,000.

So that would be negative 20,000 per month.

Um and also just to point one other thing, surveys of households and businesses both showed declining supply and demand for workers.

So I think you can say that the labor market has um uh continued to cool gradually maybe just a touch more gradually than we thought.

um you know in terms of inflation um we are it's get come in a touch lower and I think the evidence is is uh kind of growing that what's happening here is services inflation coming down and that's offset by increases in in in goods

and that goods inflation is entirely in sectors where there are tariffs.

So that does build on the story and so far it's only a story that this is that that the goods inflation which is really the source of the excess at this point that that uh mo almost more than half the source of the excess inflation is goods is tariffs

and you've got to say then so what do we expect from tariffs um

and it's I would say that is to some extent down to looking for broader economic uh you know uh heat

you know do we see a hot econ economy.

Do we see constraints?

Do we see what's going on with wages?

You saw the ECI report today.

It doesn't feel like a hot economy that wants to generate, you know, Philips curve kind of inflation.

So, we look at all those things um and we say that this was a decision to make.

It obviously wasn't uh unanimous and um but overall that was the judgment that that we made and that's the action we took.

>> That is just reserves point.

How concerned were people around the table about some of the tensions we've seen in money markets?

>> I wouldn't say concerned.

So, what what really happened is this um uh balance sheet shrinkage, sometimes called QT went on.

We had a framework in place for monitoring it and nothing happened.

The overnight reverse repo facility went down pretty much close to zero.

Uh and then beginning in in September, uh the federal funds rate started to tick up within the range, right?

And it ticked up almost all the way to uh Intertorm reserve balances.

There's nothing wrong with that.

What that's telling you is that we're actually in reserves in an ample reserves regime.

So, you know, we we knew this was going to come.

When it finally did come, it came a little quicker than expected, but we were absolutely there to take the actions that we said we would take.

So, and we those actions are today.

So, you know, we we announced that we're resuming reserve management purchases.

That is completely separate from monetary policy.

It's just we need to keep an ample supply of reserves out there.

Why so big?

The answer to that is uh you know, if you look ahead, you'll see that that April 15th is coming up and our our framework is such that we want to have ample reserves even at times when reserves are at a low level temporarily.

So, that's what happens on tax day.

people pay a lot of money to the government, reserves drop sharply and temporarily.

So this seasonal buildup that we'll see in the next few months was going to happen anyway.

It was going to happen because April 15th is April 15th.

There's also a secular ongoing growth of the balance sheet.

We have to keep reserves call it constant as a as it relates to the banking system or to the whole whole economy.

And that alone calls for us to increase about 2025 billion dollars per month.

So that's a small part that that's going on.

It's also happening in the context of a temporary few month uh frontloading to get to get reserves high enough to get through the you know the tax period in in in midappril.

So that's what's happening there.

>> Andrew. Um thanks Mr. Chairman.

Um uh this is the last post FOMC press conference uh before an important Supreme Court uh hearing next month.

Can you talk about how you're hoping the Supreme Court will rule and uh I'm just curious why the Fed's been so reticent on such a pivotal matter.

Big question.

>> It's not something I I want to address here, Andrew.

Um you know, we're not uh we're not legal commentators.

It's it's before the courts and uh we think our we we don't think that we help matters by trying to engage as a as a as a as a public discussion of that.

I'll give you a mulligan though.

>> Thanks.

That means I get three questions but uh

>> just one just one more.

I I guess I wanted to come back to the the 1990s question and and like do you see that as a useful model for thinking about uh what is happening in the economy right now?

>> I don't think it rises to that level.

So I did think that in in 200 was it 19 where we cut three times

but you know this is such a unique situation.

We this is it's not um uh it's not the 1970s let's put it that way

but we do have tension between our two goals and so that's that's just unique in in my time at the Fed and I think going back a long ways we haven't had that in our framework.

Our framework, as you know, says that when that's the case, then we try to, you know, take a balanced approach to to the two things and we look at how far they are and how long it would take to get them back to each of them back to the goal.

That's a very subjective analysis really, but it just tells you you've gota and I think ultimately what it says is when they're broadly equally threatened or equally at risk, you should be kind of neutral because if you're if you're either accommodative or or or tight, you're favoring one or the other goal.

And so we've been trying to we've been sort of moving in the direction of neutral.

Now we're in the range of neutral.

We're in the high end of the range of neutral, I would say.

And that's what we're doing now.

it it's so happened that we we've cut three times that you know we have we haven't made any decision about January but as as I've said we think we're well positioned to uh wait and see how the economy performs

>> Edward thanks Mr. Chairman Edward Lawrence uh with Fox Business.

I wanted to ask you um the inflation expectations uh has has come down in your SCP report.

Um do you see the tariff price increases as passing through in the next three months?

Is it a six-month process that we're looking for that to end?

And then because of that, is jobs the threat to the economy?

>> So with with tariff inflation, you know, it takes there's the announcement of a tariff and then there's, you know, they start to take effect and then it takes some months.

goods may have to be shipped from other parts of the, you know, it may take, you know, quite a while for an individual tariff to take its full effect.

But once it's had that effect, then the question is, isn't that just a one-time price increase?

So, we've actually we actually look at it all of the announcements and and and and what you get from all that, you see sort of a for each one of them, there's a time period and then then it's fully in.

So if there are no new tariff announcements and we don't know that but let's assume there are no major new tariff announcements inflation from goods uh should peak in the first quarter or so right or roughly you know we haven't been able to predict this with any precision no one is but call it the first quarter or or so of next year should be the peak and from here it should be it shouldn't be big it should be a couple tenths or or even less than that we don't really have precision on this but and after that again if there are no new tariffs that that are being announced that will take nine months to get fully in.

Nine months is also an estimate.

Um then you should start to see that coming down in the back half of next year.

>> And and I want to see if I could address sort of the elephant the room.

The president's been talking openly about um a new Fed chairman.

Does that hinder your current job right now or change your thinking at all?

>> No.

No mulligans for it.

Michael Michael McKe from Bloomberg radio and television.

Uh tenure rates have are 50 basis points higher than when you started cutting back in September of 2024 and the yield curve basically has been steepening.

Uh why do you think that continuing to cut now, especially in the absence of data is going to bring down the yield on the thing that will move the economy the most?

>> So we're looking at the real economy and focusing on that.

And you have you've got when the when the long bonds move around, you've got to look at why they're moving around.

If you look at inflation compensation, it's very con you that's one part of it is is inflation compensation break evens

and you know they're at very comfortable levels, they're at levels consistent past the once you get out past the very short term now break evens are at a you know at at quite levels that are quite consistent with 2% inflation over time.

So there's nothing happening with rates going up out there that suggests concern about inflation in the long term or anything like that.

I mean I look I look at these things pretty regularly.

Same thing with surveys.

Surveys are all saying that uh the public understands our commitment to 2% and and expects us to get back there.

So So why why are rates going up?

It has to be something else.

It must be, you know, an expectation of higher growth or something like that.

And that's that's a lot of what's been going on.

I mean, you saw a big move, you know, toward the end of last year, which was not to do with us.

It was to do with other developments.

>> Well, you just mentioned that um we're the public is expecting you to get back to 2% and Americans overwhelmingly are citing high prices, inflation as their number one concern.

Can you explain to them why you're prioritizing uh the labor market, which seems relatively stable to most people, instead of their number one concern, inflation?

So we um as you know we have a network of contacts in the US economy which is really unmatched if you go through the 12 reserve banks.

Uh so we hear loud and clear how people are experiencing um really costs.

It's really it's really high costs and a lot of that is not the current rate of inflation.

A lot of that is just embedded higher cost due to higher inflation in 2022 and 23.

Uh so that's what's going on.

And so the best thing we can do is restore inflation to to to to its 2% goal and our policy is is intended to do that.

But also have a strong economy where real wages are going up, where people are getting jobs and and earning money and and uh we're going to need to have some years where real compensation is higher.

You know, it's positive, significantly positive.

So wages, nominal wages are higher than inflation for people to start feeling good about affordability, the affordability issue.

And you know, so we're we're working hard on that.

We want to we're trying to keep inflation under control, but also support the labor market and strong wages so that people are earning enough money and and feeling economically healthy again.

>> Victoria, he's been dovish so far.

Hi, Victoria Aguido with just to follow up on that.

I mean, this is now the third time that you've cut this year and inflation is around 3%.

So, is the message that you're sort of trying to send with that that you're okay with where inflation is for now as long as people understand that at some point you still want to get back to 2% because inflation is relatively stable where it is.

>> Everyone should understand and the surveys show that they do that we're committed to 2% inflation and we will deliver 2% inflation.

But it's a complicated, unusual, difficult situation where the labor market is also under pressure where job creation may actually be negative.

Now supply of workers has also gone way down.

So the unemployment rate hasn't moved that much, but um you know it's it's a labor market that that seems to have significant downside risks.

People care a lot about that. That's their jobs.

That's their ability if they get laid off or if they're entering the labor force to find work.

So that's that's really important to people.

Um the story with inflation and uh you know we're well aware that this is a story at this point is that the if you get away from tariffs inflation is in the low twos right so it's really tariffs and that that's causing the most of the inflation overshoot and we do think of those as likely to in the current situation as likely to be a one-time you know one-time price increase.

Our job is to make sure that it is and we will do that job.

But right now you you've got this difficult balance and there risks to both sides.

There's no risk-free path.

If we were if we you know if it was just inflation and the labor market was just really strong and then we rates would be higher as they were for more than a year.

You know we didn't have to worry about inflation sorry about the about the labor market.

Uh because the labor market unemployment was very low if you remember when inflation was very high.

Uh there was a labor shortage.

So we could focus entirely on on inflation.

Now it's different. We actually have risks to both.

And I think we're we're doing the best we can for people.

They also care about their jobs.

They do care about affordability.

And the best thing we can do there is to is both to support economic activity, but also, you know, um make sure that when tariff inflation goes down and disappears, inflation lands around 2%.

>> Elizabeth, thanks so much. Elizabeth Schelsey with ABC News.

Just to follow up, you keep talking about job growth being negative.

Why do you think job growth is so much worse than some of the official data?

Why do you think job growth is to follow up on your comments about job growth? Why is it so much worse than the official data is suggesting?

>> Oh, well, we just we know I think it's it's um this is I don't think this is particularly controversial.

There's a it's very difficult to to estimate job growth in real time.

They don't count everybody.

they have a survey and there's been something of a systematic overcount

and so we we expected and they correct it twice a year.

So the last time they corrected it we thought the correction would be eight or 900,000.

I won't get the numbers exactly right and that was that was exactly what happened.

So we think that that has persisted and uh so there's there's an overcount in the payroll job numbers we think continuing and it will be corrected.

I don't have the exact month in my head right now, but and that's just I don't again I think forecasters generally understand that.

So and we think it's about 60,000 a month.

So 40,000 jobs could be negative 20 and you know that could be wrong by 10 or 20 in either direction.

But in any case and but the thing is that's um that's job creation in a way that's job that's demand.

Labor supply has also come down quite sharply.

So, you know, if you had had a world where there just there's just no growth in workers and you really don't need a lot of jobs to have a to have full employment, some people argue that's what we're looking at.

But I think a world where job creation is negative.

I just think we need to watch that situation very carefully and be in a position where we're where we're not, you know, pushing down on job creation with our policy.

When we're talking about supply, we have seen major American employers like Amazon site AI and job cuts.

How much right now are you factoring in AI into the current weakness in the job market?

>> So, it it's probably part of the story.

It's not it's not a big part of the story yet.

And we don't know whether it will be, but um you know, for example, if you look at you can't miss the big announcements of layoffs and and also companies uh saying that they're they're not going to hire anybody for a long time and they cite AI that that's all clearly happening.

At the same time, um, people are not filing for unemployment insurance and, uh, since job creation, job finding rates are extremely low.

If there were big numbers of layoffs, you you'd expect the the continuing claims to go up and you'd expect new claims to go up.

It really haven't much.

So, it's it's a little bit curious.

Longer term though, you know, the question is what are we going to see here?

And we don't we don't know but it's you know there's a it may be that in past technology really significant tech technology uh uh innovation eras you have seen some jobs destroyed and other jobs made.

Ultimately what's happened for a couple hundred years is when you get through all that you have higher productivity and you have you have new jobs and there are enough jobs for people.

This is a this may be different.

You know, it's every time we have a wave of technology, we think, "Oh, this could this could put a lot of people out of work.

What are they going to do?"

In the past, there's always been more work and higher productivity and incomes have risen.

What will happen here, we're going to have to see, but right now is such early days.

We don't think we see much.

Uh, it's certainly not showing up in in layoffs yet.

>> Thank you, Chair. Endur Bloomberg News.

Given the breadth of views on the policy committee, why is there such a division of views between the policy what

>> on the committee?

>> Thank you.

Why is there such a division of views between the presidents and the board members?

>> You know, it's it's not so stark is that there there's de there the views are are more varied on each in each group as well.

There's some of that, but I would say they're also governors and and uh and and they're they're they're people in in both on both sides in both groups.

I wouldn't put too much in that.

>> Okay. And just to follow up is given your growth upgrade um how would you factor in or what would be the economic impact if the Supreme Court is to strike down the tariffs that they're currently hearing please in terms of growth and inflation. Thank you.

>> I I really don't know it would depend um it would depend on a whole bunch of things we don't know so I can't really help you there.

Christine, thank you.

Thank you, Chair P. Christine Romans, NBC News.

I wanted to ask you about how the higher income households are really driving spending right now.

They're backed by home equity and stock market wealth, but lower-income consumers are really struggling with the accumulation of five years now of rising prices.

It's price levels, not really the inflation rate, holding some of these families back.

How sustainable is this so-called K-shaped economy?

and and what are the Fed's thoughts on whether that's a risk going forward?

>> So, we do um through our vast network of contacts and just through our observation of what's going on in the economy, we hear about this a lot.

Uh if you listen to the earnings reports for consumerf facing companies that tend to deal with low and moderate income people, they'll all say that we're seeing people, you know, tightening their belts, uh you know, changing products that they buy, buying less and that sort of thing.

And so it's clearly a thing.

It's also clearly a thing that you know asset values, housing values and and and and securities values are high and they tend to be owned by people more at the higher end of the income and wealth.

So as how sustainable it is, I don't know.

Most of the consumption does happen by people who have more means.

Uh I think you know the top the top third accounts for way more than a third of the consumption for example.

So um it's a good question how sustainable that is.

Uh you know the best we can do is to is to have a you know price stability and a strong labor market.

What we saw um for example what we saw at the end of the you know the very very long um expansion that ended with the outbreak of the pandemic.

We saw that it was 10 years and 8 months or something like that. The longest one in recorded history.

In the last two years, most of the job, the largest part of of the wage gains were come going to people in the bottom cortile, the bottom part of the lower low and moderate income.

So, you know, a having a a strong labor market for a long period of time is really really good from a social standpoint.

It it's helping people at the lower income levels and that's what we all want to get back to.

But we got to we got to have price stability and we got to have uh you know full employment, maximum employment.

>> And just quickly, you mentioned the housing market remains kind of weak with these rate cuts that we've seen.

Is there a chance we're going to see more affordability in the housing market so more people can maybe enjoy that part of wealth creation?

I mean, the average age or median age of a first-time home buyer is now 40 years old. That's the highest on record.

>> Yeah. So the housing market faces um some really significant challenges and uh I don't know that you know a 25 basis point decline in the federal funds rate is going to make much of a difference for people.

Um you know housing supply is low.

Many people have very very low low uh uh low rate mortgages from the pandemic period and they kept refinancing and caught the the really low.

So it's made expensive to them to move and you know we're we're a ways away from that changing.

Also we're just we haven't built enough housing in the country for a long time and so a lot of estimates suggest that we just need more housing of different kinds.

So housing is going to be you know a problem and and you know really the tools to address it are are we can we can raise and lower interest rates but we don't really have the tools to address you know a secular housing shortage a structural housing shortage.

Chris. Uh, thanks Chris Rabber, Associated Press.

Um, you mentioned on inflation, uh, services inflation being low, goods inflation looking like maybe it'll peak.

Uh, we had the wages report you mentioned today showing uh, moderating wage growth.

Where are the inflation risks?

It looks like inflation is cooling in your view.

At the same time, you have potentially negative hiring.

Why not uh why aren't we hearing more about maybe more cuts in this environment?

>> Well, I think the risk risk inflation is pretty clear to see and that is you know we we see um higher inflation the as I mentioned most of the inflation overtarget is from goods and we think we estimate we expect most of us that that inflation will be a one-time price increase and then come down.

We just came off an experience where um inflation turned out to be much more persistent than anyone had expected.

Is that going to happen now?

Uh you know that so that's the risk.

The risk is is either that that that tariff inflation just turns out to be more and more persistent maybe because uh uh companies who are now holding back from passing through the tariffs will just keep doing that.

So you'll see you see that.

Um I think the other possibility is is less likely and that is just that uh you know the labor market gets tight or the economy gets tight and you see you know just just traditional inflation.

I I don't see that as particularly likely.

But uh so I I think you know again uh you know all across the committee uh people see the the picture pretty similarly but see the risks quite differently.

And some people do see the the inflation risk and I I wouldn't dismiss that case.

I I don't dismiss that case but you've got to you got to make an assessment and this is the assessment we made.

>> Hi Sure. Neil Irwin with Axios.

Um, so this has come up a couple of times today, but to be clear, do you believe that we're experiencing a positive productivity shock whether from AI or policy factors or whatever?

Uh, and how much of that is how much is that driving the higher GDP projection in the SCP?

>> So yeah, I mean it uh I never thought I would see a time when we had, you know, five, six years of 2% productivity growth.

This is this is higher, you know, this is definitely higher.

And it was it was before before it could be attributed to AI.

I think you I I also think if you look at what AI can do and if you use it in your personal life, as I I imagine many of us have, you can see the prospects for productivity.

I think it makes people who use it more productive.

It may make other people have to find other jobs though.

So, so it could have productivity implications while also having, you know, social and labor market implications that we don't have the tools to deal with.

But yes, I think we are seeing we're definitely seeing higher productivity.

I don't I think it's a little quick to be saying it's it's generative AI, but um I don't know, you know, the pandemic may have induced people to do more automation and do more things with computers to replace people and that raises productivity, you know, output per hour.

Does that does that imply a higher does that imply a higher neutral rate and therefore the policy might be a little easier than it seems?

>> All you know all things equal yes but all things aren't equal.

There are many uh many things pushing in in different directions on where the neutral rate would be.

But yes, that that argument does come up.

>> Uh Matt, thanks Towel. Matt Eaggan with CNN.

Um after today, you only have three more meetings at the helm of the Fed.

Since becoming Fed Chair, you've seen multiple trade wars, the pandemic, COVID reopening, period of high inflation.

I know your term's not up as chair until May, but I'm wondering if you've given any thought to what you want your legacy to be.

>> My legacy?

I my thought is that um I really want to turn this job over to whoever replaces me in with the economy in really good shape.

That's what I want to do.

I want I want inflation to be under control coming back down to 2% and I want the labor market to be strong.

That's what I want.

And uh all of my efforts are to to get to that place.

they have been all along.

But ultimately that's that's what and it's you know I don't have time to think about the bigger things.

I have I have I hope many years ahead to worry about that but there's enough to do.

>> Relatedly um have you given any more thought and can you tell us any more about your plans on whether or not you plan to stay on the Fed board of governors even after your term as chair expires?

>> Again I'm I'm focused on I'm focused on my remaining time as chair.

I haven't got anything new on that to tell you.

>> Go to Mark for the last question.

Chairman Mark Hamick with Bank Rate.

Uh even while many price levels remain elevated, the reductions in the federal funds rate means that savings rates or yields to be more precise have peaked while key borrowing rates remain elevated.

And that's as we've discussed here as many Americans struggle with liquidity or emergency savings challenges.

Is that just collateral damage or an unintended consequence because your tools are limited in addressing individual or household liquidity constraints, insufficient money in the bank?

>> I don't know.

I would I I wouldn't um agree that that's collateral damage of our of our um

I mean over time over time we do what we do in order to create price stability and maximum employment and those things are hugely valuable to to all the people we serve.

um when we raise rates to bring inflation down, you know, that does work by slowing the economy, but we've moved back our rate our policy back down to where it's not it's certainly not strongly restrictive at this point.

I think it's sort of in the range of neutral.

Um so that's what we're trying to do and uh I would want people to understand to understand that

I think what pe what people are feeling is the effect of higher prices.

There was a global wave.

Sort of every large economy in the world, sort of every every large open economy, market-based economy in the world had a wave of inflation that looked an awful lot like ours.

We actually came through better than any other country, substantially better.

We had higher growth.

We had better labor market.

And this is really due to the American economy.

We have an extraordinary economy.

And uh you know, people are innovative.

They work hard.

And uh so you know we all of those all of us who work in economics jobs are really fortunate to have to have the US economy.

So thank you very much.

All right that was Mr. Jpal for the December FOMC meeting that we have all been waiting for.

Thank you everybody for being here.

I've got Neil who's joining me to break down what happened with the Fed.

Also, we will be transitioning right into the market close in about 30 minutes.

We will have Adobe and Oracle.

So, we got a lot to talk about in terms of those earnings.

And then I believe we'll be listening to Oracle's earnings call at 5:00 PM Eastern.

Neil, I'll just give you the floor. What was your raw takeaway from that meeting?

>> I mean, I think it's the first time in a long time that I've heard a dovish Powell.

I think it's fair to say it's been it's been quite I mean, less less bearish and negative and quite Yeah. quite more positive on AI, job creation, the economy, growth.

Strange. Maybe maybe he felt the pressure. I don't know.

Um would be strange for him to crack 6 months before he's anyways out of the job.

So I guess even with the missing data because we didn't get the data uh because of the government shutdown and next week we should be getting more data.

He seems comfortable saying what he just said.

I mean, a 25 basis point cut was a given.

Let's be honest.

Whoever whoever made money on on Poly Market or Calia from from a month ago when this thing was 50/50, congrats.

Easy easy money.

But yeah, I mean, dovish dovish Jerome Powell.

I did not have this on my uh bingo card today. That's for sure.

>> Yeah, this was one of the most dovish FOMCs that we've had, I think, all year.

And the consensus view was that it was not going to be doubbish.

The consensus view was that this one was going to be a hawkish cut.

And I mean, I guess you can say it was hawkish from the perspective of uh they aren't really guaranteeing a rate cut next year.

They're saying maybe one cut, maybe one cut in 2027.

But folks, if if you miss some of the key quotes, there's two major quotes that as soon as he said this, I mean, we were going up, we were going down, we were going up, we were going down.

The next 30 minutes is really going to define how the market thinks of it.

3:30 to 4 p.m. Eastern is when we really see what the market thinks.

As soon as he said this, which is a bit of a summary, but essentially the gist of what he said is inflation is coming in lower and tariffs may not be running the economy hot.

That's when we saw the S&P make a move.

We got all the way up to 68850, which is very close to 68970, which is our all-time high.

Obviously, a lot of us are seeing, can we break that all-time high?

Right now, we're at 688.

And then after that he said if we didn't have tariffs inflation would be in the low twos which is part of the Fed's target 2%.

And then he said but we think tariffs are a onetime thing.

So he said hey tariffs are the issue which is why we've had so much inflation.

Without tariffs we wouldn't have any of this inflation concern but we also think tariffs are not running the economy hot.

We think tariffs are not going to be the biggest thing.

Essentially he said tariffs are transitory without saying they're transitory.

And that's when the market really got excited because if he's right about that or at least the perception is that the Fed is not assuming that tariffs are going to be as big of a deal going into 2026 and you've got the labor market continuing to weaken.

They can say we're only going to cut once in 2026, but it's kind of obvious they're not going to cut only once.

And I think the market is pricing that in right now and that's why we're getting some of this momentum.

Neil, any thoughts on what he said about inflation and I guess how that relates to to tariffs in the labor market?

I mean I the last time he used I mean the last time they said transitory didn't work out for them.

Um this time I mean I guess tariffs for now I if we go back to what was mentioned back in April or maybe March and April so far they have not destroyed the economy.

Inflation has not soared to to five 6 7 8%.

So so far I guess so good.

the it's not as bad as expected could get much better in 2026 as we lap these let's say difficult uh periods

tariffs are or the effects of it are probably going to go away because even even today we are not at the same rates as before uh they've been adjusted down

still waiting for some deal with China I don't know when that's supposed to happen but I guess it will happen eventually um on a broader broader deal

But I don't know. I I was I was quite surprised with some some of the questions of people saying, "Oh, now now now you are paying more attention to the job market.

Why you why you paying less attention to inflation?"