Media Q&A Transcript with Federal Reserve Bank of San Francisco President Mary C. Daly

Opening remarks,
Mary C. Daly:

Thank you, Bernadette. And thank you for everyone who joined the call. I’ll just be brief this morning before we start our discussion. So at this point, it is clear that the risks to our mandated goals of price stability and full employment have come in to better balance and that monetary policy is working. But there remains considerable uncertainty about how the economy will evolve. And we have to think in scenarios as we navigate the future path of policy. Still with the information we have received today, which includes data on unemployment, inflation, GDP growth, and the outlook for the economy, I see it as likely that some policy adjustments will be warranted. As always, we will continue to navigate our policy path and make our decisions with both sides of our mandate in mind. And with that, I’m happy to take questions.

Rachel Siegel, The Washington Post:

One of the things that obviously stood out in the inflation report from this morning was progress on shelter, and then I’m wondering if you can walk us through whether you expect that will stick, if there’s a reason to think that the lags have finally worked through, and we’ll start to see more of what we’ve already seen in real-time measures.

Mary C. Daly:

It’s a great question and something obviously we think a lot about. I mean, I think that the progress on inflation that we are looking for is always going to be bumpy. And so, I’m unwilling to call that once we see a good number on shelter price inflation, we are on train to get there. But I think there are reasons to believe that we’re heading in the right direction and that it will take a little bit longer to really get where we think we need to be on shelter price inflation. So let me start with the positives. You know, we’ve seen rents coming down in different places, not physically down in terms of the number but the rental price appreciation coming down. And it’s been a question about why that isn’t feeding through. … But we’ve seen progress. And so there was a question about why we weren’t seeing it show up in the in the published statistics–that is the momentum that you would think the interest rate rises, interest rate sensitive sectors start to slow and you should see this coming down. So I think that’s consistent with what we’ve been hearing and seeing and other measures that shelter price inflation is finally coming down. On the other hand, we have a structural imbalance in the supply of housing relative to demand for housing. So I would expect that to just keep the progress a little slower relative to history. So I think there’s two sides to this. Obviously, for those who are looking for a place to live there, those lower shelter price inflation is a welcome relief. But there’s more work to do on that front to get it back into balance and not all of that work can be done by monetary policy.

Nick Timiraos, The Wall Street Journal:

Thanks. Hi Mary, you said in your opening statement that you see it as likely that some policy adjustment will be warranted. Can you explain a little bit more how you’re thinking about the timing of that? If you think a policy adjustment will be warranted, does that mean you could do it at your next meeting in July?

Mary C. Daly:

Thanks, Nick for the question. You know, I don’t like to think in timing and as I said in the opening remarks, I really think in scenarios and those scenarios are important because they help you decide to help me to decide when the policy adjustments are warranted. So when I say some policy adjustments are likely to be warranted. What I really mean is I’m looking out at how I expect the economy to evolve. And where it stands today. And my expectation is it will continue to come to a more sustainable pace and inflation will continue to come down gradually. Exactly when that happens and when it would be appropriate to make an adjustment to policy is still unclear. You know, there’s more information to gather. We’ll obviously go to the meeting and discuss and deliberate with my colleagues, see the information that’s coming in and decide when best to make that adjustment and when that adjustment would be warranted. So I think we can hold those two things as separate. I expect there’s to be some policy adjustment. I think that will be warranted. And there’s a lot more information that we’ll continue to gather and a lot more discussion to have about what the appropriate timing is. If I just may pull it out thread a little bit more, why would I expect some policy adjustment to be warranted? Well, I’m looking at the labor market, which is not only coming into better balance, but is at its historical positioning, which I mentioned before, where the Beveridge curve or the Phillips Curve, whatever measure you’d like to look at, just suggests that we’re to the point now where additional labor market slowing is more likely to result in a rise in unemployment. And so that’s a place where we obviously have to keep our eyes focused on the labor market, and then the positive prints on inflation would suggest that we’ve got that kind of gradual reduction in inflation that we’ve been watching for and looking for, which while not sufficient confidence is actually you know, increasing confidence that we are on path to 2% inflation. Putting those both together, you know, I look out into the economy and say I think some policy adjustments are likely to be warranted.

Gregg Robb, MarketWatch:

Thanks for doing this. When you say policy adjustments, is it okay for us to say rate cuts? Is there something there and in your wording that’s important to you? And did you say one or was there a plural after adjustment? I didn’t.

Mary C. Daly:

I was very careful in my language, but I will flesh it out a little bit for you. The reason I said policy adjustments isn’t really about the number. It is really about the fact that when you adjust policy, you also are talking about you know, a period where we’ve been tightening for a while, that we were holding for a while, and adjusting policy sends the signal that we believe we’re at a point now where we can make some, we can start to think about normalizing policy. So I don’t want to get into a situation where I’m talking about the number of rate adjustments – cuts – because I just think it’s not right for where we are today. You know, the most common question that I get asked, the one that’s at the top of everyone’s mind, doesn’t matter if they’re a worker or a consumer or a business is, are you really going to get inflation down? So I have to stay focused on, we are resolute to bring inflation down and we have an eye obviously, on the labor market. We have two mandated goals, and you know, people want both. They want price stability and a job, and I think those are the things we’re actively working to deliver. So I’m going to avoid telling you the number because I just don’t think we know enough yet to forecast that number, to project that number in with any confidence. What I am saying though, and I think this remains an important point to make, is that some policy adjustments – looking at the data that have come in so far, and what they mean for our forecast or our projections of how the economy will evolve, it suggests that some policy adjustment will be likely, will be warranted. That’s my opinion, of course.

Beiyi Seow, AFP:

Hi, thank you for doing this interview. There’s a warning that inflation is not the only risk we’re facing and we wanted to find out you know, to what degree is your concern? You mentioned that there’s the labor market coming into better balance, you’re more likely to see additional slowing likely to bring higher unemployment. To what degree are you concerned that we should adjust policy, and as you said in your speech, to take an excessive toll on the labor market and how are you looking at balancing the risks when it comes to you know the timing and number of cuts? Thank you.

Mary C. Daly:

Absolutely. And you’re right. I said in a speech last week that elevated inflation is no longer the only risk we face and I think it’s important to underscore that, that the labor market is coming into better balance and in my response to Nick Timiraos, you know I outlined looking at these historical relationships, they’re correlations, they’re you know, they’re statistical relationships, but looking at the Phillips curve or the Beveridge curve, or just actually talking to our contacts in business and worker groups, you do hear that the labor market is definitely in better balance, and that the slowing is feeling more like a slowing that could result in an increase in unemployment. So we have to be focused on that. At the same time, and this is a very important point that gets lost often in discussions, the labor market remains very solid. If you simply came and you didn’t look at the change in the labor market, you only looked at the level of the labor market, you would see activity that felt quite solid to people, workers are still able to find jobs, even if they have to search a few more weeks. The firms are finding it easier to find workers but not easy. They’re still you know, they still have to make some effort. And so the labor market remains solid and continues to expand. So we’re looking at both what the change in the labor market means, but also where the level is. And we also look at the change in inflation but also where the level is. And that’s why the projections of where we think activity and inflation will go are so important. Right now, we’re in good position, but we have to continue to navigate policy to ensure we remain in a good position as we get that final part of 2% inflation without a significant and unwarranted disruption in the labor market. Those are the goals, and we have some more work to do to get there.

Edward Lawrence, Fox Business:

Thanks, Mary for doing this. So we saw your year-over-year inflation come down in the CPI inflation report today. That’s two months in a row now softening inflation data. Is this in your mind, consistent with the significant move towards the 2% target, and where do you see the federal funds rate as a normalization of monetary policy?

Mary C. Daly:

Let me take those two questions somewhat or completely separately. So on the good news on inflation that we’ve received in the last two prints, you always have to stack it up against the earlier part of the year, and what I could conclude, and I think it’s reasonable to conclude this, is that inflation is a bumpy process. And we had some hotter prints in the beginning of the year and now we’re having sort of the better prints that we would all like to see, those are relief. First and foremost, it’s a relief to Americans who are out trying to run businesses or purchase things that just the price inflation is falling. So those are good pieces of information, but we just need to continue to get information before we can fully take the next step on making a policy adjustment. And that’s why I mentioned earlier in this call that really this is a multi-faceted approach. We look at the data prints that we were all talking about the headline numbers on employment or growth or inflation, but we also look at all the information our contacts give us about how they see the economy going. I talk to my colleagues when I go to the FOMC meeting. We deliberate, what are you seeing, we look at models and history and data and our contact information. We put all of this together and we make a determination as we navigate to get this done. It’s always a risk-management business. But right now, it’s extremely oriented towards risk management. Managing the risks of inflation stays too high for too long, managing the risk that the labor market starts to falter. And you know, we don’t want either of those things. We really want to get to a place where inflation consistently comes down to 2% and we’re able to foster the conditions that allow the labor market to continue to be solid. Those are the goals.

Oh sorry. I was so focused on answering your first question, I forgot about the Federal Funds Rate. You know, I think that’s a really useful question to be thinking about. But when you know, so there’s been a lot of discussion about whether the neutral rate of interest – real neutral rate, r-star, for those who follow that – has gone up or not. In my own judgment, you know, I think that we should allow some room for it to have risen, but in the range of estimates that seem to be that, there’s no consensus on this of course, but they’re coalescing, if you will, among it hasn’t risen at all, it remains at point five to maybe it’s risen to one and so I have a range in mind of a real Fed Funds Rate between 0.5 and 1 and you put 2% inflation on that and that gives you 2.5-3 as the settled rate for the nominal neutral.

Scott Horsley, NPR:

Thanks, Mary. You said obviously not everything on the shelter front the housing front can be addressed by monetary policy. Can you elaborate a little bit there on what you think monetary policy can do on housing? What are some of the other factors? And then more broadly, what are other things in the inflation equation that you can or can’t exercise some control over?

Mary C. Daly:

Absolutely. And so, let me start with housing. So housing is an extremely interest-sensitive sector, and we saw house price appreciation slow almost immediately, especially in the really hot markets, and I have a number of them in the 12th district. Boise, Idaho, was really one of the fastest-growing housing markets in the country, and then as the interest rates started to rise, or even when we talked about raising the interest rate, that market started to slow and ease. So I do see monetary policy playing a large role in slowing housing or shelter price inflation, but the larger point is, you know, I get asked quite a lot, should we expect this to come down to its pre-pandemic inflation rate? And should we expect house prices to come down? You know, literally the prices of housing fall. And there, I think the information, monetary policy can’t do all of that because we do have this long-standing now housing imbalance where the demand for housing is higher than the supply of housing. And this is something that no matter where I travel in the nation people are deeply aware of. There’s a lot of work being done, of course, on the part of communities and builders and employers to try to get more housing supply in place, but that is going to take a little bit of time. In the meantime, though, it doesn’t mean the policy can’t do anything. And I think policy has done quite a lot and will continue to put downward pressure on housing price inflation, just because it becomes more expensive for people to build and to buy. So those are the housing parts. You know, I’m sorry, I should have written it down. I wrote down the first question you asked me and I didn’t write down the second one. So can you repeat that, Scott?

Scott Horsley, NPR:

Yes. Are there other factors that have been driving inflation that you may have less control over with rates that we should also be thinking about?

Mary C. Daly:

So where I focus of course is on the things that I think that we have, we really need to see happen for inflation to come down and we needed goods price inflation to come down and that has. Now monetary policy played a small role in that, but you know, you raise the interest rate, durable good purchases become less – those are interest rate sensitive. But the big number or the big development there was just improvement in supply chains. So that is that’s really important, and it’s already occurred. The second thing that, of course, has to happen is that that core services have to come down and I’d like to divide that into to housing and other services and on the housing, we just talked about. On the other services, this supercore ex housing, that is something that I see as a very welcome signal that we really are seeing inflation come down. That had been sticky. Most of last year it started to come down at the end of last year, it has risen in its stickiness again earlier this year, and now we’re seeing some of the traction there and I think that’s a very good sign. Of course, we don’t have a lot of control over healthcare price inflation and other things. We don’t have a lot of control over many things over the course of inflation, over history. So what I’m really looking for is where do we have some influence, where does monetary policy have an influence and will continue to have an influence. And I see it’s continuing to have an influence in supercore ex housing. In housing, I think there’s still more room for a policy to have an influence on housing and I would expect it to continue to come down, even though we don’t have full control over the housing market. And of course, I think in the goods price inflation as interest rates remain restrictive, as policy remains restrictive, you’d expect, you know durable good purchases to be restrained because of that relative to what they would be if interest rates were closer to neutral. So those are the factors I’m looking at and today’s report was positive news.

Chris Rugaber, AP:

Hi, thanks. President Daly I just wanted to follow up on the recent comments. I mean, Chair Powell said yesterday I think in his testimony that the job market is no longer really a source of broad inflationary pressure. You’re seeing housing cool as you mentioned and again, I know you sort of touched just on this, but it doesn’t seem like there are any sources of inflationary pressure. Other people are pointing out that, you know, inflation expectations seem to be mostly in check. So, you know, is there any sort of source of inflation pressures left? And if not, then perhaps, more than one cut or some ongoing easing is possible?

Mary C. Daly:

We will make that determination as we get more information. I would say that inflation is still not 2%. So we still have inflationary pressure somewhere and I think there are sources of inflationary pressure that we have to continue to allow restrictive policy to pull down exactly how restrictive policy has to be to get that job done. I’ll determine that with my colleagues at the meetings of the FOMC that we have and collect all the information we’ve already talked about, but I will you know, I’ll say I’ll just repeat what I said in the opening, I do think with the incoming information on inflation, growth, and the labor market, some policy adjustments are likely to be warranted.

Megan Leonhardt, Barron’s:

Hi Mary. Thanks so much for doing this. I appreciate it. I’m curious, you mentioned that adjusting policy includes sending signals as sort of the forthcoming rate changes. So how far in advance do you think it’s appropriate to send a signal that changes are coming before actually implementing it? So I guess essentially, how much of a heads up if you will, is necessary, particularly in the case of the sort of much anticipated rate cuts that we’re hoping for?

Mary C. Daly:

That’s a great question and I guess I’m just going to put it in the parlance that it’s often used in, is that how much forward guidance should we give and how prescriptive should the forward guidance be? So there are different kinds of forward guidance and different kinds of transparency. At this juncture and I’ve been public about this before, I think prescriptive forward guidance, which would include the number and timing of rate cuts is not actually optimal. It’s not appropriate because we don’t have that kind of crystal ball that tells us exactly when we would do one thing versus another. What we do have is the type of forward guidance or transparency that says, here’s how we’ll be looking at the economy and here are the scenarios, and here’s how we would respond should those scenarios occur. And so if you walk through the scenarios, you can have a scenario where inflation stays stickier. And if that should occur, then you would, conditional on the labor market not faltering, you would hold policy for longer, restrictive and higher for longer. If inflation comes down more rapidly than projected or if the labor market starts to falter in a way, then you would see policy adjust more rapidly to ensure that we didn’t, you know, get too far on and on bringing inflation down or disrupt the labor market in an unnecessary fashion that leaves people out of work. The one that is so far occurring is the one where inflation gradually comes down and the labor market is gradually slowing and has come into better balance. And that’s the one where you make policy adjustments, more or less along the lines that you saw projected in the summary of economic projections at the last round, which was, you know, to my mind suggests t that one or two would be appropriate path. Now, of course, those aren’t set in stone. That’s a projection, it’s not a promise and it’s why all of us I think, have repeatedly said that we have to be data dependent, look at the scenarios, and think more about communicating our reaction function. I expect to your broader question, I expect that that stance of policy or that stance of communication, rather, to be necessary for the foreseeable future.

Jennifer Schonberger, Yahoo Finance:

Thank you so much. President Daly, we’ve seen the unemployment rate tick up for two consecutive months, still low obviously by historical standards, but up from 3.4% over the past year. What on the job market side would cause you to say we need to cut rates? Is it an increase in the unemployment rate to a certain level? And then secondly, if you don’t cut rates by September or November, do you risk the soft landing? Thanks.

Mary C. Daly:

So let’s think about the labor market dashboard and what are leading, lagging and coincident indicators of labor market strength or weakness. Really if you see it in the unemployment rate going up rapidly, it’s too late to have pretty prevented that from happening. So that’s why you know, really starting back in the aftermath of the financial crisis long ago, we really broadened our view and look at a dashboard of indicators and we have so much information on the labor market. You can look at initial claims, continuing claims, the number of people who say it’s harder to find a job, the number of firms who say it’s easier to find workers. You look at all the regular things you would look at the quits rate, the job vacancy, wage growth, etc. So you’re looking at that whole range of indicators, historically, really where you get the biggest information set is looking at initial claims for unemployment insurance. They come out frequently. They’re a really good indicator of how firms are thinking about their workforce. And importantly, you get even additional information if you talk to individuals. As many of us have said many times, one of the benefits of having Reserve Banks or regional Reserve Banks is that we spend enormous amounts of time out in our community asking businesses and you know, worker groups, what are you hearing? What do you seeing? What are you doing? What are you doing or what are you going to do? That’s the really important question. And so far, we are hearing that things that are consistent with having a solid labor market. They’re continuing to hire, they’re not over emphasizing their payrolls. So if you think about when unemployment was 3.4%, we had firms trying to get workers in even if they didn’t have ready positions for them just to make sure they had enough if their demand would grow. We don’t see that behavior anymore. That was a time period where people were characterizing the labor market as frothy, and workers were characterizing it as frenetic. Right now, we’re hearing things like solid, healthy, good. I think those are words we’re hearing now, and I’d certainly be looking at those words to change in order to get me get an early warning sign about this. And so you’re absolutely right, I think your first part of your question was one we have to grapple with, which is the unemployment rate has risen, but it’s still low relative to historical standards. The labor market has softened, but it’s still solid relative to our metrics for full employment. So balancing those two things, instead of giving you timing about the rate cut, I will say that absolutely we have to adjust policy before we get to a point where the labor market turns from balancing to weakening, and we have to adjust policy before we get to a point where inflation hits 2%. If you wait until it hits 2%, you’re really too late, that’s too late in adjusting policy from a historical perspective. If you wait until unemployment starts rising rapidly, you’re too late, and that is something I committed to not doing.

Courtenay Brown, Axios:

Thanks, President Daly for doing this. So Chair Powell has said quite frequently and recently there’s a risk of cutting too little, too late and risking the economic expansion. And of course, the flip side is you know, we’re seeing a resurgence in inflation. I wonder is there any evidence that the former is already the case, that the Fed is already late in lowering rates, and it might be a risk to the economy?

Mary C. Daly:

I don’t see that actually myself. I see the time period over which we need to really think about should we adjust the policy rate is now closer than it was six months ago. But I don’t see that we’re late in thinking about that. You know, you can look at the commentary from Chair Powell’s testimony and clearly his mind is focused on the labor market and taking that into account. I gave a speech last week at the Commonwealth Club where the focus was on we have to keep our eye on both sides the mandate. Those statements are a recognition, I think, that we are absolutely looking at both sides of our mandate because they’re in balance. But if I thought that we were behind, then I would be calling for adjustments immediately, and I don’t see that as being the case. And you know, you said this right at the beginning of your question, we do have we have one tool and two goals, price stability and full employment. Both of those are relatively balanced. The risks of those are relatively balanced with each other and we have to navigate to fully restore price stability and do so without putting the labor market into a weakened and challenging state. So that’s the that’s the goal and adjusting policy accordingly is really critical.

Jeanna Smialek, The New York Times:

Thank you so much for taking our question. This kind of follows up on Courtney’s question that just to make sure that we understand your reaction function. I wonder why wouldn’t you cut rates in July at this point? Like it seems like that employment rate is ticking up. Job openings are down as you’ve obviously talked about quite a bit. Core inflation is just barely budging on a monthly basis. And then you’ve got some economists saying that, you know, good risk management might be making policy a little bit less tight than it is, not like loose, but less tight. And I guess I wonder why not just sort of get moving already?

Mary C Daly:

It’s a fair question. I think it’s a fair question about whether you go one meeting or another meeting at any point when you’re about to make you know, when you think that adjustments are going to be warranted. I want to start with this because it’s true and I think it’s really important that we talk about it, but I don’t but this isn’t the main point. I’ll follow up. But the really important point is that it’s de minimis on the economy, whether we would make an adjustment in one meeting versus another. It just doesn’t have a tremendous effect on the economy. What matters is that people understand and this is based on historical information and research and practical experience. What matters is that people understand where we’re like likely to be headed. And what I would say is that I was watching the data, if you just watch the data releases that come out, the labor market report comes out, the pricing on the most likely outcome for policy changes, the CPI comes out today, the Chair did his testimony for the Tuesday and Wednesday, and you see the communication translating into helping individuals and those are market participants and Fed watchers, but they’re also households and businesses. And this is something I’m very aware of because I’m on the meetings with CEOs and others and they’re saying oh yeah, I saw the Chair’s testimony. I saw the labor market report. I saw the CPI and now I’m seeing what is most likely given the incoming information. So I think that’s actually really important. And it means that, you know, being specific about is it July or is it September or is it some other time at a later date is less relevant than saying here’s how the data will affect the decision making and here’s how we’re already thinking about it. I would say it’s a fairly big communications signal that you hear so many of us now and Chair Powell importantly talking about how important the labor market is and that the dual mandate is right there in front of us. For so long, we have been focused on bringing inflation down and restoring price stability, and now with the labor market in better balance, and it’s very clear that it is, then you’re hearing us talk about that. That already sends a signal to hopefully to people and I think it is working, sends a signal to you know, Americans that we understand that both sides of our mandate are important, and we will have policy that’s calibrated to get there. So many people will debate about whether one meeting versus another was the right thing, but I think this is fundamentally a different conversation than the one we were having before we started the rate raising campaign, which was you know, is the Fed behind I think there’s a real understanding now among us that you know, we were we wanted to get this right but we do have two goals and one tool.

Greg Quinn, MNI:

Hello, I wonder if you could talk a bit more about how restrictive you see monetary policy at this point, given I guess, I guess you could say inflation slowing and you know, the smokiness around the neutral interest rate.

Mary C. Daly:

Well, you know, it’s very interesting that there’s a lot of conversation about whether policy is restrictive enough, and I’ve long pointed to reasons why I thought policy was restrictive. I think at this point, I don’t see any evidence that policy is not restrictive. We have the labor market slowing, we have inflation coming down, and it’s coming down in interest rate sensitive sectors, so it’s not all driven by goods price inflation. So all the evidence coming along is that policy is restrictive and in fact, we have to think about when we might start to normalize or adjust policy so it doesn’t put too much restrictiveness on the economy. So I think that, you know, from my mind that discussion is probably behind us. And really now it’s about, when do we loosen some of the restrictiveness? When do we loosen the reins to ensure that we don’t overtighten or keep the economy too bridled as it reaches its sustainable pace?

Colby Smith, Financial Times:

Thank you so much for doing this. At the Congressional hearings this week, Chair Powell did not make much mention, if at all about the segments to inflation. So I’m wondering if you no longer saw those upside risks either and how does that more broadly impact the magnitude of cuts that you think will eventually be warranted over time?

Mary C. Daly:

I’m sorry, Colby, the first part of your question cut out and I heard Chair Powell didn’t make much mentioned and then I didn’t hear the rest. Sorry about that.

Colby Smith, Financial Times:

It did not make much mention if at all about upside risks to inflation. So I’m just curious if you no longer saw those either. And then I’m just curious how your view of that impacts the magnitude of cuts you think will eventually be warranted?

Mary C. Daly:

Yeah, I don’t think we should take, you know, let me let me distinguish upside risks to accelerating versus risks that it will stay stickier than we would like. So I think, you know, the potential for upside risks to it accelerating have diminished over the course of the year. There was a concern about that, I think, early on in the year when the prints were coming in high and when it didn’t look like the housing market was going to slow and it looked like the labor market was quite strong, stronger than we had expected it to be, if you think about it, and many forecasters expected it to be. But subsequent to that, you saw the prints on inflation come down and we got the good news on shelter price inflation today. It’s one month of data, but it’s still better news that if it stayed sticky, and the labor markets come back into better balance. At this point, I do think of it as we have to keep our eye on inflation, as it comes can be a bumpy ride, and we have to keep our eye or we have to keep our mind open to it could get sticky again, so we have to focus on that, but I don’t see a lot of momentum for it reaccelerating, if you will. So I’d say there’s a risk that it remains stickier than we would like. There’s increasing information and it is actually coming down gradually. And we just have to think about those things in the scenarios. So you know, if you put the scenarios out: inflation stays stickier, inflation comes down gradually, or inflation accelerates more quickly than we’ve projected. You know, I see right now, the scenario having modestly more probability that it comes down gradually than it stays stickier. But again, you know, those modest changes in probabilities, if you thought they were roughly equally weighted, that modest change in probability could be reversed on the next inflation print so that’s why the scenario thought process is so important.

Colby Smith, Financial Times:

And just following up on the idea of how this translates to your opinion about the number of rate cuts in general. I know you don’t want to be specific here but any kind of color you can provide on your thinking there would be helpful.

Mary C. Daly:

I guess the thing that is really kind of resonating for me right now is that if inflation is coming down gradually, but we have a risk that it could be stickier as it gets closer, if it just has moments of stickiness, then taking a gradual approach to policy adjustments conditional on the labor market remains solid, and just slowly or gradually coming into balance or gradually getting even more balance, that would be the appropriate of thing. So there’s a question about do you adjust policy going down as quickly as you adjusted it going up, and at this point, I see no evidence that that would be necessary because we have inflation gradually coming down and we have the labor market slowly softening.

Ann Saphir, Reuters:

Thanks for taking the question. I think one clarification and it’s the question that Greg asked. I just really couldn’t hear at the end of your sentence when you said that some policy adjustments will be warranted. Was there an ‘s’ on the end of the word adjustment or not? And my actual question is, you said you need more information to be fully sure of the next step in whatever adjustments that make, is there even enough data that even potentially could come before July? In other words, I don’t see why you’re not just ruling July out there, doesn’t seem to be enough between now and then you to get more confidence. Thanks.

Mary C. Daly:

Okay, so I think, you guys are really good about trying to push me into telling you whether the policy adjustment means one or two or three, but I’m not going to do it because I don’t know. Right? When I’m saying I don’t know, I really…

Ann Saphir, Reuters:

Did your word adjustment, when you said that sentence, did it have an ‘s’ on the end of the word or not? I just couldn’t hear it.

Mary C. Daly:

No, I know Ann. I understood what you asked me, but I’m just trying to clarify it for the whole group because it’s come up more than once, and so I just want to be super clear about it, so it’s not mischaracterized or you know, by accident. So when I say policy adjustments, I am not counting the number of rate adjustments. I am talking about the path of policy over a long course of time, and so when I say policy adjustments will be necessary, I think you can easily just look at the SEP and you can say what did the SEP say? It said could be one, could be two this year. Don’t know there’s a lot of uncertainty. There are scenarios. Over time these things will take place. So I said policy adjustments, but I want to be crystal clear that didn’t have a number of rate adjustments this year attached to it. It was talking about the path of policy, so that’s the clarification I wanted to make sure I had. And then you know, I think that my view on meetings is they should never be off the table. Every meeting is a live meeting for making a determination about policy, where the determination over the span of history can be a rate hike, standing pat, or lowering the interest rate. Standing pat is a decision, staying where you are is a decision, and how you communicate about standing pat is a decision. So far, we’ve been communicating that we need more information to be sufficiently confident, and I think that’s where I sit today, but I’m going to go to the meeting, and I will get additional information. The second point I want to make is that it’s a really important point that’s hard I think to get people to focus on, but data is a plural word and, you know, a part of the data we collect is the headline numbers and you can look at the release dates and you could say, wow, there’s no more information left. But another really important part of the information set is all the meetings that all of us have, all officials have with businesses, with workers, with community groups, with people making decisions about how the economy will evolve, not in the next two weeks, but in the next six months to a year. And those things also affect us because as you know, if we only look backwards, we’re behind. We really need to look forward. It’s really our projections about where we think the economy will go that make a determination about what the policy adjustments should or shouldn’t be. And so, there’s a lot more information that I personally will collect. And I expect all of my colleagues to be collecting similar information or you know, from similar sources, and we’ll go to the meeting, and we’ll discuss, deliberate, debate and we’ll do our best to come up with a policy path that serves the American people. That’s what we do, so every meeting is live.

Ann Saphir, Reuters:

Thank you so much for that. I just really need to know the spelling of the word adjustment. Do I put an ‘s’ on the end of the word adjustment or do I not? I understand your point.

Mary C. Daly:

Yes, it’s an ‘s’.’ Okay. It’s an ‘s.’ Policy adjustments. I’m going to go home and practice my diction.