The Honorable Jerome H. Powell, Chairman of the Board of Governors of the Federal Reserve System


so we're very honored at the Economic

Club of Washington today to have as our

special guest the 16th chairman of the

Federal Reserve Board to Rome pal

also known as Jay pal Jay you were

nominated to be a chairman of the Fed by

President Trump and you had previously

served as a member of the Fed as your

predecessors had as well Ben Bernanke

and Janet Yellen both served as members

of the Fed before they became chairs now

that you've been a member and you've

been chair is being chair all that it's

cracked up to date first thank you thank

you David thanks it's great to be here

today so I did I was a governor for six

years and I think I had every job on the

Board of Governors that there is to have

other than share and it's it's a very

different job whereas I was focusing on

a million different things now I'm

really focused on the economy public

communications monetary policy and the

institution and so it's it's quite a

different thing and yes it's it's a

great job it's a great honor to come to

work every day you enjoy the job but you

don't wish you were just a memory yeah

no I do enjoy the job I really do I am

very grateful for the opportunity it's a

great honor and I do I enjoy it you find

that as a chairman your jokes are

laughed at more quickly as than a

regular member or you've got any putts

in golf that you didn't get before well

I guess we'll find out about the jokes

you know don't play much golf anymore

but no I think my jokes have always been

well-received frankly so last week you

had a very interesting interview at the

American economics Association with your

two predecessors and at that interview

you seem to say that the feds position

going forward is that you're reasonably

comfortable where you are with the Fed

Funds rate is that the proper

interpretation or should people be

reading more into what you said last

week so maybe I'll provide a little bit

of context there so 2018 was a very good

year for the US economy it's the

strongest strongest growth we've had in

more than a decade by so many measures

the labor market is very strong

historically low unemployment the lowest

in 50 years wages going up labor force

participation going up which is very

important for us and inflation staying

right near our targets so and we see

continued momentum from the data right

through the beginning of this year we

also see though we see the financial

markets expressing a view of concern

about downside risks really associated

with with global growth and with trade

so how do we put those two different

signals together so I think we're

actually in a good place I think where

that leaves us particularly with

inflation low and under control is we

have the ability to be patient and watch

patiently and carefully as we see the

economy evolve and figure out which of

these two narratives is going to be the

story of 2019 but at the end of last

year in December people thought that

perhaps two Fed fund rate increases in

2019 were part of your plan is it fair

to say that that is not part of your

plan right now today I think the better

way to think about it is that there is

no such plan we you know we we don't

actually vote on a path or a plan for

interest rates we have each individual

participant on the FOMC submits his or

her individual projections four times a

year and we did that in December and two

rate increases was the median and it was

conditional on a very strong outlook for

2019 and outlook which may still happen

but the good thing is we're in a place

where we can be patient and flexible and

we didn't see what does evolve and I

think for the meantime where we're

waiting and watching all right so I

shouldn't anticipate that your next FOMC

meeting a big increase

and interest rates you should anticipate

that we're going to be patient and

watching waiting and seeing I have no

doubt okay so by the way FOMC what does

that stand for Federal Open Market

Committee and who's on that so that

consists of all the members of the Board

of Governors which there can be seven

but there currently five those are

nominated by the president confirmed by

the Senate and all twelve of the Reserve

Bank presidents around the country who

are actually chosen by their boards of

directors subject to the approval of the

board have you thought of a better

acronym because FOMC is hard to say can

you get some other acronym for that or

you know we actually we may have to hire

a branding consultant and get some

better thinking on that but we for us

it's you know it's a very basic acronym

all right laughs yesterday the Fed

released the minutes of your last FOMC

meeting now you release your minutes not

the day after the meeting why don't you

release your minutes the day after a

meeting we release a statement which

summarizes the decision and the language

is very carefully structured to express

the rationale for the decision and then

we actually go back and read the

transcript very carefully we accumulate

the perspectives offered by 17 different

members and it takes sort of three weeks

to go through that process and we

publish the minutes we used to publish

them you know with a couple of months

delay now we publish them with a

three-week delay so they're meant to

amplify what's what's in the decision in

those meeting a minute meetings it said

that there was fair to beat about

whether you should increase interest

rates the Fed Funds rates or not but the

opinion was unanimous so was it fair to

say that it was the United view of the

FOMC that you should increase interest

rates when it turns out that the debate

was more divided than maybe the vote was

you know so I would say one of the great

things about our system is that we

really have institutionalized a

diversity of perspectives 12 different

Reserve Bank presidents each of whom has

his or her own own own economic staff

and they come in and so at every meeting

we have a robust discussion debate and

often disagreement over the past policy

and I personally think that's a great

way to reach a better decision so in the

end people

to choose to vote with the proposal or

not in this case everyone voted for

although they were disparate views

expressed at the meeting as the minutes

reflect and when people don't vote for

the proposal it's it's recorded that

they didn't vote for it that's right

they dissent and they'll often issue a

you know a statement of why they

descended and they'll explain themselves

the whole thing explain yourself

carefully to the public and

transparently and we try to put all of

that out on the record for people on

Capitol Hill when you're Committee Chair

it is said you don't call for a vote

unless you know that you're gonna win

that vote when you're the head of the

FOMC as the chairman of the Federal

Reserve Board is do you know where the

votes gonna be before that meeting

starts yes so I speak to and I think my

predecessors did too I speak to every

Reserve Bank president and every member

of the Board of Governors in great

detail before every meeting we discussed

the issues and I certainly know you know

what people will support and what they

want so the proposal that gets made is

generally one that attracts overwhelming

support but often not unanimous though

dissents are not uncommon so if you call

somebody who's a member of the FOMC and

we say we're gonna have our meeting in a

couple days and this is what I think and

they say they think different view do

you try to lobby them or you don't do

that in the FOMC nobody lobbies anybody

else I know I really don't I really

respect the right of each individual

participant to make up his or her own

mind and express that view and put it on

the record and explain it I see nothing

but value in that it's not a question of

lobbying you know we it would be more

likely that that and this if this hasn't

happened but but more likely that we

would we would adapt a proposal to be

something that that the person could

support then it would be for me to

actually lobby someone now your media

two predecessors had PhDs in economics

one from I guess a Princeton and one

from Yale actually Harvard and right and

was Harvard I'm taught at Princeton was

MIT actually MIT you're correct he was

at MIT he taught at Princeton and Janet

had hers from Yale if I recall right so

you don't have you have a law degree

from Georgetown you practice law but is

there disadvantage to not having a PhD

and is there an advantage to having a

private equity background

you know I wouldn't say there's a

disadvantage to having a PhD I've been

at the board seven years I've had a lot

of time to learn the monetary economics

you really have to do that if you're

gonna serve at the board and you're not

a PhD economist you very much got to

invest in learning and of course I've

done that but I mean my career part of

my career is doing different things and

learning different things I have an

interesting story for you as a matter of

fact I know a guy know a guy who founded

a private equity firm with no business

degree no experience and made a success

of it so it can be done sometimes


sometimes it's better to be lucky than

anything else but so let me ask you this

recently the president United States who

appointed you has been less than

favorable in some of about some of your

decisions does that bother you in any

way no so we're very very focused on our

job Congress has given us a very

specific job it's an important job we're

going to serve the American people all

of the American people try to use our

tools to achieve maximum employment and

stable prices abilities so that's what

we're focused on we don't get us

distracted by other things we do not

take political factors into

consideration either in our discussions

or in our decisions at all and that's

just who we are the president's head of

the National Economic Council Larry

Kudlow has suggested that maybe the

president will have a meeting with you

have you received that invitation yet no

invitation I will say the Fed chairs do

meet with presidents I'm not aware of

any any Fed chair in my lifetime that

hasn't met with the president these tend

to be meetings tend to be rare I think

there's only been one or two during my

time here and I'm not aware of any Fed

chair turning down an invitation from

the White House nor do I think that will

be appropriate so but I really don't

have any any news all right so if you

had an invitation to be happy to accept

it right I'm not aware of anyone not

accepting it okay so

let's talk a moment about the economy

the Fed in its land in its FOMC minutes

pointed out that there's a disparity a

little bit the financial markets seem to

be a little bit uncertain from time to

time but the core economy seems to be

doing quite nicely now how do you just

explain why the financial markets seem

to be nervous and the core economy seems

to be growing at a pretty good rate so

the financial markets really beginning

in the fourth quarter got more volatile

and and seemed to be pricing in a more

pessimistic outlook which as I mentioned

it seems to be rooted in concerns about

slowing growth and a related concern of

the ongoing trade negotiations so but if

you look at the incoming data right

through the end of the year and into the

beginning of this year you don't really

see any evidence of a slowdown and so

we're in a situation where we have

factors pointing at different directions

and by the way this is not uncommon this

is this is actually something that

happens not infrequently

and when we when we when we have that

what we do is we we apply sort of risk

management principles in other words

we're not just concerned about the

baseline case we're thinking about what

are the risks and we're we're using our

tools to address those risks so in that

case what does it mean it means first

there is no preset path for rates there

really isn't there never is there

particularly isn't now second as I

mentioned it gives us the opportunity to

be patient and watch and see what what

does evolve are we going to see the more

positive view that most forecasters have

of this year or are we going to see

slowing global growth and are we gonna

see that affect us cause if it does then

I can assure you we you know it's it's a

common thing for the economy to behave

in ways that are not exactly as we

expect and when that happens we can

flexibly and quickly move policy we can

do so in significantly as well if that's

appropriate so we'll always use our

tools to try to sustain this expansion

and and keep the labor market strong and

inflation so currently the Fed is

projecting the US economy is going to

grow in 2019 at two point three percent

I believe that's your number it

previously was a little bit higher two

point five percent I think last year

you've lowered it is that correct and

are you going to lower it again because

of the

government shutdown is that gonna affect

the economy in your view let me say

first we there is no official Fed

projection with that what 2.3 percent

was was the median of 17 participants so

they were half above and half below that

you know will will during the year not

infrequently in fact typically when we

submit new projections every quarter the

projections will change I mean it's very

difficult to forecast the economy to

that level of precision and you know so

will take into account tightening

financial conditions which we've seen

and will also you know lower our rate

path and and and try to have a monetary

policy offset weakness before it even

happens the shutdown what's the impact

on the economy in your view in in the

short term if shut if government

shutdowns don't last very long they have

typically not left much of a mark on the

economy which isn't to say that there's

plenty of personal hardship that people

undergo but if the aggregate level the

economy generally does not reflect much

damage from a shutdown a longer shutdown

is something we haven't had if we have

an extended shutdown then I I do think

that that would show up in the data

pretty clearly and I would I would say

particularly from our standpoint one of

the agencies that shut down is commerce

which has the Bureau of Economic

Analysis in the Census Bureau and some

of the pretty important data that we get

is published by them it would not be

published including retail sales and GDP

and a bunch of other things that are

coming out this month so we would we

would have a less clear picture into the

economy if it were to go on much longer

you don't gather your own information

you rely on other agencies to give you

information in most cases we're getting

information from the Bureau of Labor

Standards and B EA we do have a handful

of data series that we collect ourselves

okay and so today let's talk about the

economy going forward we were close to

the longest period of expansion since

World War two and we could break that

record do you see anything on the

horizon that would make it likely we

would go into a recession in 2019 I

don't see anything that suggests that

the possibility of a recession in the

near term is it all elevated recessions

are most often caused by two things one

is inflation that is that is high enough

that the Fed has to

brakes we don't see that and more more

common recently in the last several

cycles it's really been a matter of

mounting financial imbalances by which I

mean asset bubbles the housing bubble

the dot-com bubble or just excessive

levers if you saw it what in in the

subprime mortgage area were those those

things happen we don't see that either

so we don't see the two most basic

recent causes of recessions we don't see

those risks so I would say it's if the

possibility is not elevated at the

moment so you don't see any worry you're

not worried in 2019 about anything close

to a recession I don't see a recession I

would say that if you ask me what am I

worried about I would say the US economy

is solid as I mentioned there's good

momentum going into this year the the

principal worry I would have is is

really global growth if you look at Asia

look at Europe you're seeing slowing and

growth and the question will be how much

does that affect us it's a it's a

tightly integrated global economy in

global financial markets and we will

feel that now I'm talking about

inflation for a moment one of them feds

main jobs to worry about inflation what

do you think the inflation rate is

likely to be for 2019 I think it's gonna

be right around 2% we I think sort of a

capital asset that we inherited from

chairman Volcker and Greenspan is

strongly anchored inflation expectations

so what that means is that when the

economy's really weak inflation doesn't

go down very much and when the economy

is really strong it doesn't go up very

much so inflation tends to be rooted

pretty close to 2% historically it used

to be thought that when oil prices were

high very high that was not good for our

country's inflation rate not good for

our economy now that we're the biggest

producer of oil in the world is it good

when the OPEC prices go down or was the

better when oil prices are like $70 a

barrel because we produce so much of it

and so as you point out it's a much

closer call than you used to be we have

a very large domestic oil industry but

it's still on balance we think there's

still a modest benefit overall in the

aggregate to lower oil prices but we're

there not if you work in the oil

industry or you live in an area that

that is heavily leveraged to the oil

industry but lower then 50 or lower than

60 or any price you think it's an

equilibrium for oil prices in our

economy it's it's hard to say I mean the

question would be what is the what is

the break-even for these shale producers

and their different views on that and

let's talk about the Chinese economy for

a moment are you worried about the

slowing growth rate in the Chinese

economy and its impact on our economy it

is a concern something we're watching

you know the Chinese economy has slowed

down and it's it's showing up a lot in

consumer spending so weak retail

spending everyone will have seen the

Apple news last week I suspect of you

know weak sales of their phones in China

so we're seeing that where else that we

also saw too weak manufacturing and

services surveys PM eyes they're called

early last week so you're seeing some

weakness there the thing you're also

seeing though is the Chinese authorities

are are doing repeated rounds of things

to support the economy as they can do it

just over and over again different

things and so I still think the baseline

most likely baseline case for China is

going to be another year of solid growth

there I don't see there's there's no

reason to think it'll be it'll be

something worse than that do you think

the tariffs that we've imposed on

Chinese imports is a good thing for our

economy a harmful thing for the Chinese

economy and how much longer do you think

this could go on before it's gonna

really hurt our economy so I don't think

that the tariffs on either side have had

much of a visible mark on either the

Chinese economy or the United States

economy so you you in other words

Chinese exports and imports are don't

show any mark from that and we have a

20-plus trillion dollar economy that the

amount of tariffs so far just doesn't

show much of a mark so and again I we

don't do trade policy we don't give the

administration advice on that I would

never comment on the administration's

trade policy I will say this though if

this leads us to a fairer if this

process leads us to a fairer more open

lower tariff environment for trade

that'll be good for the global economy

be good for our economy if instead it

leads to a more protectionist

environment where tariffs are higher and

they're mutual and they're long-lasting

then that will lead to you know you know

a less productive economy here in the

United States and around the world

now what about brexit do you think that

brexit if it occurs or however occurs

it's gonna hurt the European economy in

the British economy and therefore hurt

our economy what is your view on that

you know with with brexit our main point

of contact has been with the US

financial institutions that have

operations in the UK and also in the

continent and we've now had you know a

quite a long time to get ready for that


and also they've had these institutions

have had supervision from US authorities

UK authorities and EU authorities so

they're prepared for the full range of

possible outcomes that's the main thing

that we've been working on I think it's

it's very possible there's no precedent

for this event so anyone should have

humility trying to predict what the

consequences would be but I would say

the base case is that there will be you

know some effect on both the UK economy

and the u economy but it doesn't need to

be very significant unless there are

real financial disruptions and we don't

expect that now in our economy we're

running an annual deficit of about one

trillion dollars or more with 21 or 22

trillion dollars of total indebtedness

internal and external are you worried at

the Fed about the enormous amount of

debt the federal government has you know

so I'm very worried about it but from

the Fed standpoint you know we're really

looking at a business cycle kind of link

that's that's our frame of reference and

the the long-run fiscal non

sustainability of the US federal

government isn't really something that

plays into the next you know sort of

medium term that is relevant for our

policy decisions

it's a long-run issue that we we

definitely need to face and ultimately

we'll have no choice but to face now as

a result of quantitative easing the Fed

bought a lot of securities and now

you're letting them roll off is that the

correct policy as opposed to selling

them you're just letting them expire is

that the correct policy in your view yes

so that we we wanted to have the balance

sheet return to a more normal level

which is a level no larger than it needs

to be for us to conduct monetary policy


sorry what level would that be a

trillion dollars don't know the exact

level it that will depend on the really

the public's appetite for our

liabilities specifically currency to us

that's a liability and the public has a

large appetite for currency and also

reserves and other liabilities so that

it'll be substantially smaller than it

than it is now but what is it now what

is their balance sheet now it's a little

under four trillion it was one trillion

before the crisis it will it's it will

be smaller than it is now but nowhere

near what it was before and the reason

as currency has currency was you know

well less than a trillion before

quantitative easing started

and now is is moving up toward two

trillion as you look back in the Great

Recession and what the Fed did with its

various policies with tarp and other

things would you're saying there's

anything that you've learned the Fed

that if you had a similar problem in the

future you would do something

differently you know um I would say and

I raised I raise concerns in my early

years at the Fed about quantitative

easing and how effective it would be I

would say if you if you look fairly back

at the record and and don't expect

perfection that the Fed did a very good

job particularly in the amount at the

height of the crisis the first

quantitative easing program and the

other things that the government did not

the Fed were successful in ending what

had all the makings of a collapse of the

global financial system that didn't

happen and it had never happened and I

think that's because of the efforts of

the people who were in government

including the fit but also including the

administration at that time now what

about the unemployment rate where do you

think that's headed for this year so

right now it's three point nine percent

and we've been under four percent since

I think for the last nine months again

that hasn't happened since the mid-60s

so it's 50 year low if we get this world

that that is sort of our baseline case

of growth to the range of two to two and

a half percent then unemployment should

move down and another couple of tenths

something like that

so how do you relate to let's say

thought the administration you don't

meet the president regularly Fed chairs

don't typically do that but do you meet

with the Treasury secretary regularly or

other people the White House how do you

communicate with them and vice versa so

it's it's it's important that we have

relationships with all the other parts

of the government including the

independent regulatory agencies

including Congress and including the

administration so by long tradition many

decades tradition the Fed chair has

regular meetings which wind up being

breakfast and lunches mostly breakfast

between the secretary of the Treasury

and the Fed chair that can happen weekly

unless it gets cancelled which is

sometimes it does for travel and that

kind of thing where do they have them at

the Treasury or the alternates

alternates we also have the Council of

Economic Advisors where's the food


Treasury trust me there so we meet with

I meet with the you know with the head

of an equity National Economic Council

the Board of Governors actually meets

with with the Council of Economic

Advisors and these are very important

relationships very important and very

standard because you know we need to

have a working relationship it'll come

in handy at time so if a member of

Congress calls you and says I'd like to

meet with you what do you do do you meet

with any member of Congress that wants

to meet with you or how do you decide I

don't decide I just meet with them I do

I think it's very important you know we

they come to visit you or you go visit

them I visit them quite a lot but we

also we have we have visitors I have

visitors over for breakfast and lunch

and groups and things like that I can't

I can't stress how important it is in

our system of government our

accountability to the American people

runs through Congress to the to

oversight committees Senate Banking

Committee House Financial Services

Committee and also through the through

leadership so we spend I spend and all

my board colleagues also spend lots of

time explaining what we're doing and why

we're doing it we seek transparency we

seek accountability it's a big part of

what we do some of your predecessors

were known to speak in what they would

call I would call fed speak which is to

say it's very difficult to understand

what they're actually saying Alan

Greenspan would be the master at that I

think he would take pride in Bradley

yeah so you don't like to speak in fed

speak so how do you get out of speaking

in fed speak when you have all those

good people around you

I so what I'm trying to do is I'm trying

to explain what we're doing and why

we're doing it in a way that is

comprehensible to the interested public

and that's what I try to do it jørgen

economic jargon has a real place it's

it's the way economists say exactly what

they mean and exactly what they don't

mean it's not appropriate for use in in

with the public because it's just

annoying when people start using these

technical words that that don't mean

anything to them it's just irritating so

I try hard not to use it or lapse into

Latin for that matter okay now speaking

of Latin and an interesting use of

language you have a skill that you have

perfected since college which is you can

take a word and pronounce it backwards

so like take Rubenstein you can say that

backwards is that right yes actually it

was something I was born with I can

spell I can see your name spelled

forward and backward in my head I've

been able to do that since I was since I

could read so sir any advantage in life

and having this skill or it has been

surprisingly lucrative at times really

so what else do you do for relaxation

yeah you're a guitar player right I'm an

amateur musician yes and and you sing as

well or just I sing badly I tried I try

to accompany people who sing well okay

and you used to be a golfer you're not a

golfer now I can't play a lot of golf

these days but I ride my bike I'm a you

know I've been a road cyclist for many

many years is that safe when you're the

chairman of the Federal Reserve Board

you know I'm afraid to go across the

street sometimes when I see bikes coming

and so forth is that safe we're gonna do

that you know so I do I do try to keep

it in a safe way so we have a weekend

house on an island and I ride around the

island over and over again where I ride

my stationary bike at home I don't get a

right I don't get out on the streets of

DC so much anymore okay and talk about

the pleasures of the job what is the

great pleasure of the job what's the

least pleasurable part about this job

other than the interview that you have

to do with something like

I actually I actually enjoy meeting with

people and and meeting with the public

it's it's a little bit like your your

statement of the you don't find any

deals in the office you used to say so I

you know in my case getting out of the

office going to Capitol Hill I really

enjoy engaging with people also we have

lots of groups that come in I met with a

group of students from DC last week high

school students it's really a lot of fun

also I I just um Magritte honor and

privilege to do this that you know I I

never go to work thinking this isn't a

great job in a very special time in my

life let's go back to your career you

grew up in the Washington area I did and

you went to undergraduate at Princeton

and what did you study economics er I

took micro and macro and majored in

politics there so I did not really

display my father's requests I did not

become an econ major did my daughter by

the way and you then went to Georgetown

Law School is that right saying you were

editor-in-chief of the Law Review yes it


and then you clerked and so you had a

great legal career and you practice law

Davis bulk for a while why didn't you

abandon the practice of law it's funny

it's just so going to law school led me

to practice law obviously although it

didn't didn't lead everybody there and

then practicing law led me to want to go

into Investment Banking because they

were the clients and it seemed like they

were having more fun so I I wanted to

investment making more money first and

that led me to two other things and so

you Altima T went to Dylan read and

there you worked for man Nick Brady who

Oakland became Treasury secretary he

recruited you to Washington DC is that

right that's right now and you became

under secretary for finance under him

under George Herbert Walker Bush is that

right that's correct yeah and then you

decided to go back to Dillon read for a

while is that right yes and then you

decided that the high point of your life

would be if you went into private equity

and so as so many people know you join

Carlyle and you were there for about

eight years so is there any doubt that

private equity is the highest calling of


so let me say I somehow that was the

path that made sense to me along the way

you know didn't leave me in a private

equity it was it was a you know it was a

great way to make a living I really

enjoyed my time there so when you left

Carlisle you did something very

interesting and this brought you to the

attention of President Obama and might

explain us to people you joined in there

for a while the bipartisan policy center

and you went up to Capitol Hill and

lobbied for the increase in the debt

limit you're a Republican and a lot of

Republicans on Capitol Hill didn't want

that Obama was arguing for it why did

you do that so I went to bipartisan

policy center to work on fiscal policy

and I was there for two years it was two

great years and I saw the debt ceiling

crisis coming and I wrote this big study

that would that showed pretty much what

would happen with some precision if the

debt ceiling weren't raised and you can

actually look at what bills are doing

what day with the federal government you

look at something called the daily cat

Treasury cash statement and I started

briefing people on this and it really

went viral that went by and I wound up

briefing the whole Republican caucus in

the House and the Senate

and and playing a real role in that and

I think the Obama administration and so

I think Boehner Majority Speaker Boehner

and and Cantor Eric Cantor thought that

I had played a real role in turning

around the house caucus on that told

that to the President and I the next

thing I know I'm getting a call from

from Tim Geithner wondering whether I

would come over to talk about being on

the Federal Reserve Board and you said I

don't want to do that or you said maybe

you're I said I'd love to be considered

for that okay so you were paired with a

Democrat so therefore a Democrat

Republic were put up and so when you got

on the Fed did you think that the people

there didn't know as much as you did

about policy or that they knew more than

you did and what do you think when you

first got on the Fed you're not an

economist so I had nine months nine

months between I got getting that phone

call and actually walking in the front

door and being sworn in and I used that

time to just study economics and study

you know through textbooks and also

through lots and lots of papers and

speeches I just used that time and then

I got them in the real education I

assumed that I had a lot to learn I

spent a couple of years really hitting

the books in fact I sat next to Janet

Yellen in those days and she used to

come on in my office and go are you

coming out today so I hit it really hard

there I felt like I had a lot to learn

and I did so you were there when Janet

Yellen was vice-chair that's when she

was vice-chair but she became chair and

you were there and also Ben Bernanke so

who was the better chair it's a tie okay

so when the opportunity came for you to

be appointed as a chair as I recall

there were several candidates that were

considered by the president had you ever

met the president before I never had met

the president I met him for the first

time when I had my interview for chair

and how long did you spend with him less

than an hour I can't remember exactly

how long it was but me and so after it

was over you said I got that I did that

pretty well and I'm gonna get this job

or you didn't know I didn't know I felt

like I felt like the interview had gone

well that's really all I knew so who

called you to say it went well I

actually don't remember who would have

called me but I would have heard from my

other contacts in the White House

whether or not but you know it was a it

was a process that went on and on there

were various people being interviewed I

had no expectation at that point that I

was going to be chosen okay

so today as the Fed works generally well

if you could revise the Federal Reserve

Act what would you change

it was drafted you know 105 years ago

what would you change so the Federal

Reserve Act the the Fed the Fed was

founded the law passed in 1913 but the

act was very deeply amended in 1935 and

what you see with the Federal Open

Market Committee involving the 12

Reserve Bank presidents and all the

governors that is really the product of

the 1935 Act and I would say that it's

been remarkably durable we're really not

looking for any changes as I mentioned

earlier you we have guaranteed

institutionalized diversity of

perspectives for monetary policy and

having grown up in a lawyer's family I

mean attuned I'm inclined to believe

that hearing opposing points of view

debated actually helps you get to a

better decision and we get that at every

meeting because of the reserve bank

system so I think it works but you were

supposed to have

seven members of the Federal Reserve

Board for many years now we haven't had

seven we only have five do we really

need seven well we have seven seats and

we'd love to get two more two more

people to fill the hall up it has rarely

been the case that we've had all seven

governors have tended to serve you know

and then leave and but right now we're

at five which is which is a good number

we were before we were at three for

quite a while and that was that was a

lot of a lot of work so in terms of

communicating what the feds position is

in the old old days the Fed didn't

really communicate the market kind of

figured it out but now you're much more

open is there anything you can do to be

even more open than you already are so

the old theory really was that we were

supposed to be mysterious in about 25 30

years ago a lot of work was done in the

economics field to suggest that actually

if you're really transparent and the

market understands your reaction

function how you'll react to incoming

data then kind of markets and market and

and and people in business will do the

feds work for you in a way you don't

understand so it's it's generally

thought that we should be as transparent

as possible and so you know chairman

Greenspan did some and and I have a

number of things I'm doing so I'm having

press conferences after every FOMC

meeting on every other not every other

one we've published new reports laying

out our framework for financial

stability that's a new thing we had

never put that on the record for the

public to comment on and criticize same

thing in bank supervision

we're actually this year for the first

time in our history doing something that

other central banks some other central

banks have done which is we're inviting

public comment on the whole way we

conduct monetary policy our strategies

or tools and our communications we're

engaging the reserve banks are engaging

and all of us are engaging with the

public we're gonna have a conference

around this in in this June so and also

just the whole effort to to do more on

Capitol Hill in the effort to speak more

plainly I would put those on that list

okay so today is the feds shut down

because the government shut down or you

have your own money know the fitness

benefit is self funding so we have you

know I mentioned we have excuse me you

know close to four trillion in assets

which are government securities that

earn interest we also have liabilities

offsetting those some of which don't

earn any interest for example to us we

1.7 trillion and currency that does we

don't pay interest on so we effectively

are in a spread and we give that money

to Congress and along the way we pay for

our own operations like you pay for your

own operations you fund your own

operations why can't you increase your

salary in the Congress but say it's your

business set in statute Oh

so what is your salary I want to say

it's a hundred it's in the range of one

hundred eighty thousand something like

that something like that okay you think

it's fair for that cop for work they're

doing I do very fair very fair okay so

today if people want to come see you

let's suppose bankers want to see you

community bankers what's the best way to

get a meeting with you so I'm very easy

to find you can even people can find me

quite easily by calling the Fed and

you'll get you'll get put through to

public affairs or even to my office and

I the the thing I try to do though is I

try to make sure that I meet with people

across the entire spectrum of the

American public so I meet with community

groups and community bankers and all

different kinds of interest groups as

well as you you would expect I meet with

you know with with larger banks and

representatives larger banks and also

market participants and businesspeople

and also you know academics for that

matter so I try to make sure that I'm

then I'm meeting with and we actually

reach out to groups across the whole

spectrum of American life the way I

introduce you before I said your name is

Jerome Powell but people call you J why

don't you use the name Jerome why use

the my dad was a Jerome and it was

decided before I had a vote on it it was

decided that they didn't want to

Jerome's or to Jerry's and my mother

would call my father Jerome when when he

was in trouble so so I'm J okay so and

you're never in trouble with that title

or that name right correct so if if the


lots of times people in life say I made

a mistake I'm sorry how does the Fed

ever say I made a mistake

you know I did something wrong how do

you actually kind of do that you don't

actually ever admit a mistake if you

ever make a mistake you know we monetary

policies forward-looking so what we do

is we we we try to change course I mean

history you got a judge of the city

by what you know at the time and so

quite often events after a decision will

decide whether it looks like a good

decision or not but realistically you're

making that decision in forward motion

based on what you know at the time and

then you're focusing on the next

decision and you're focusing on as I

mentioned we we're very flexible in

adapting our policy if the economy moves

as it often does in ways that we don't

expect so that's how that's how we

really think about it I mean I think

we'll look back and Ben Bernanke looked

back in the pre-crisis era and and and

pointed out that all right all bank

regulators and supervisors including the

Fed were a little too complacent about

the you know about the robustness of our

regulatory system so that's that's

confession of error now under the

dodd-frank legislation you have a vice

chair for regulatory right Randy Quarles

and how does that operate he operates

completely separately from what you're

doing in some ways no he has well his is

his statutory responsibilities as

distinct from what he actually does

every day but in statutory

responsibility is to recommend you know

policies to the full board but he

actually has super he has personally he

has oversight over the whole Supervisory

apparatus which is many thousands of

people out through the Reserve Banks and

also takes the lead in he testifies by

statute a couple of times a year on

Capitol Hill and takes the lead in in

negotiating a lot lots of the rules that

we do for banks are multi-agency rules

so there's a negotiation between us FDIC

and OCC he does all of that it's a it's

a very big job hey and so today when you

testify and members ask you questions

that you think are not so great maybe

like some of the ones I'm asking you how

do you politely tell them that the

answer question wasn't so good but

you'll give him a good answer I haven't

a question it wasn't that wasn't good

yet but if I if I did you know I think

you try to try to engage with the sense

of what people ask you try to be as

responsible some people in Congress have

been pushing for a long time the audit

of the Federal Reserve you have a view

on whether that's a good idea or not you

know the thing is the Fed is audited and

you know we have a big four accounting

firm that audits us our business model

is actually very very simple it's

simpler than it than a than a commuter

Bank as I mentioned we have assets that

are government securities and we have

liabilities that are you know things

like currency so it's it's a pretty

simple business model and we are audited

from a financial perspective what what

the term audit means in this context is

a review of policy and there's there's

one area at the Fed that Congress has

exempted from that audit and that would

be by the general Accountability Office

and that is monetary policy everything

else that the Fed can be audited at any

time but what that really means is

reviewing policy as to whether it was

correct and whether it was well handled

and I think you know if central banks

and governments around the world have

decided to separate monetary policy from

that sort of review by by outside

parties so and that's I think that's a

wise decision and one that we have made

now people would like to know what the

FOMC is going to do before you publicly

announce it so how can you be sure that

somebody isn't in bugging the meeting

room or hacking into your computer

system what kind of assurance can you

give people that you are as tight as

possible in terms of maintaining the

secrecy of what you're doing before it's

public you know I'm sure many of you

faced similar cyber issues so you know

we know that we're a high-profile target

for cyber attacks and that sort of thing

and you know we we put an awful lot of

resources into defending against that

kind of thing and of course we sweep the

building all the time before the FOMC

meeting for listening devices and that

kind of thing but it never feels like

you're doing enough you know yeah it

always feels like there's no such thing

as perfection but you know we we put a

great deal of resources into that and

and and I think we have excellent people

working on it and very committed people

and you know there's also a lot of other

expertise around the government in some

agencies and we tap into that as well so

if you don't use certain code words or

something you might tell us what they

are some there's no special code words

that keep things secret I'm not at

liberty to

there are not there are not we you know

we rely on having sent your

communications in that country so when

you're appointed to the member of the

Fed you typically a Fed pointment is a

14-year appointment is that yes although

the terms are running in statute so more

likely you'll be dropped into a term

that's already running so you know your

term doesn't start the day so when I

started my term had two years left then

I was read on nated and reconfirmed into

a full 14-year term okay and the

chairmanship is a four-year term that's

right that's correct so you can

technically be on the board even if

you're not chair but that's never

happened really it hasn't happened in

the modern era it did happen it happened

in the past that someone who was no

longer that chair remained on the board

now the most famous quote that I'm aware

of by a Fed chair was by William

McChesney Martin who was Fed chair under

President Johnson among other things and

he used to say the job of the Fed is to

do what well to take away the punchbowl

just from the pork before the party gets

good or just when the party is getting

good yeah so do you guys try to take it

away the punch bowl or that's not what

you're trying to do we have the punch

bowl locked up right now no seriously

it's it's it was a it was a that there

was a time when inflation was not under

control and inflation reacted very

strongly to the level of slack in the

economy so when the economy got tight

inflation would go up and it would stay

up so that's not this era we don't we

have a very different and very favorable

inflation dynamics as I mentioned

earlier where whereby inflation doesn't

react as much to you know to changes in

slack in the economy by which we mean

high unemployment or you know empty

factories and that kind of thing so on

the whole to summarize and conclude

you're very happy with the job of being

feted chair you enjoy serving the

country in this way and is there

anything that you would rather change

about the job that you currently have or

right now you're pretty happy with what

you're doing I'm very happy with what

I'm doing and with the great honor of

doing this job so I want to thank you

for coming today I want to give you a

gift we have a first printing of the

Federal Reserve Act which is I think now

105 years old I think I have right here

and this is cost less than $50 because


take any different for more than $50 so

this is $49.99 I think but that's great

thank you very much