Fed Chair Jerome Powell: The 2024 60 Minutes Interview

Jerome poell the chair of the Federal Reserve may have just rescued the economy from inflation without throwing Millions out of work when Americans were suffering through the highest inflation in 40 years pow's fed raised interest rates 11 times to cool the economy economists expected a recession but now inflation is tumbling while employment is near a 50 year high Thursday we met poell for a rare interview to talk about interest rates remaining dangers and the one question that's on everyone's mind the story will continue in a moment is inflation dead I wouldn't go quite so far as that uh what I can say is that inflation has come down really over the past year and fairly sharply over the the past 6 months we're making good progress the job is not done and we're we're very much committed to making sure that we fully restore price stability for the benefit of the public but inflation has been falling steadily for 11 months right you've avoided a recession why not cut the rates now well uh we uh we have a strong economy uh growth is going on at a at a at a solid Pace the labor market is strong 3.7% unemployment with the economy strong like that we we feel like we can approach the question of when to begin to uh reduce interest rates carefully and we you know we want to see more evidence that inflation is moving sustainably down to 2% we have some confidence in that our confidence is rising we just want some more confidence before we take that very important step step of beginning to to cut interest rates we just want to see more inflation has fallen from just over 9% to about 3% near the fed's ultimate goal of 2% why is your target rate 2% interest rates always include uh an estimate of future inflation if that estimate is 2% that means you'll have 2% more that you can cut in your in interest rates the central bank will have more ammunition more power to fight a downturn if rates are a little bit higher are you committed to getting all the way to 2.0 before you cut the rates no no that's not what we say at all no um we're committed to returning inflation to 2% over time I've said that we we wouldn't wait to get to 2% to to cut rates we met Powell in the Federal Reserve boardroom where this committee meets every six weeks or so to set the so-called federal funds interest rate which influences most loans last week Powell announced the rate would stay at its 23-year high about 5 and half% unchanged for 6 months you disappointed a lot of people on Wednesday I can't overstate how important it is to restore price stability by which I mean inflation is low and predictable and people don't have to think about it in their daily lives that's where we were for 20 years we want to get back to that moving too soon would set off inflation again you could or you could just halt the progress I I think more likely uh if you move too soon you'd see inflation settling out somewhere well above our 2% Target and what is the danger of moving too late if you move too late then you might you might uh policy would be too tight and that could easily weigh on economic activity and on on the labor market maybe a recession right and we have to we have to balance those two risks there there is no you know easy simple obvious path was the fed too slow to recognize inflation in 2021 so in hindsight it would have been better to to to have tightened policy earlier we thought that the economy was so Dynamic that it would fix itself fairly quickly and we thought that inflation would go away fairly quickly without an intervention by us and so in the fourth quarter of 21 it became clear that inflation was not transitory in the sense that I mentioned and we pivoted and started tightening and as I as I said it's it's it's essential that we did that it was CR critical that we did that and that's part of the story why inflation's coming down now we wondered about an interest rate cut in the next committee meeting in March I think it's not likely that this committee will reach that level of confidence in time for the March meeting which is in 7even weeks the next committee vote then would be in May how would you characterize the consensus around this table for rate Cuts is everyone on board almost all almost all of the uh 19 participants who sit around this table believe that it will be appropriate in their most likely case for us to cut the federal funds rate this year Cuts in the federal funds rate would likely be a quarter maybe half a percentage point at a time as long as inflation data remain good we just want to see more good data along those lines it doesn't need to be better than what we've seen or even as good it just needs to be good and so we do expect to see that back in 2021 little seemed good inflation ignited after pandemic disruptions and when the federal government spent $5 trillion to keep the economy afloat many in Congress questioned Powell's rapid rate increases and predicted disaster and I hope you'll reconsider that as you drive this before you drive this economy off a cliff thank you Mr chairman but strangely when rates went up the economy added more than five million jobs Powell told us that's because of the odd dynamics of the pandemic car sales for example there was a semiconductor shortage because uh so many people were buying goods that that involved a lot of semiconductors so while demand for cars was spiking because people didn't want to ride public transportation for example and they're moving to the suburbs while that's happening you can't get semiconductors you can't make cars so there's a shortage so what happened is inflation just spiked and but as as the semiconductor Supply came back prices the inflation has moderated a great deal so it really these unique features of the pandemic did reverse in a way that brought inflation down Jerome Powell turns 71 today after a career in Investment Banking he was appointed to the fed by Barack Obama made chairman by Donald Trump and retained by Joe Biden Powell often travels to listen to the country and we met him at Spelman College in Atlanta where the talk was of higher prices inflation is one thing prices are another and I wonder if there is any reason to believe that people will see the prices of things decline so the prices of some things will decline others will go up but we don't expect to see a decline in the overall price level um that doesn't tend to happen in economies except in very negative circumstances if you think about the the basic necessities things like you know bread and milk and eggs prices are substantially higher than they were before the pandemic and so that's we think that's a big reason why people are have been relatively dissatisfied with what is otherwise a pretty good economy but those prices will not soften short of something like a recession things that are affected by commodity prices like for example gasoline prices have come way down some food prices that that incorporate the price of Commodities grains and things like that those can come down but the overall price level doesn't come down the Federal Reserve was empowered in the Great Depression to regulate the economy by controlling the supply of money and setting interest rates it also regulates commercial banks for safety something still challenged by the effects of the pandemic the value of commercial Office Buildings across the country is dropping as people work from home those buildings support the balance sheets of banks all across the country what is the likelihood of another real estateel banking crisis I don't think I don't think that's likely we looked at the larger Banks balance sheets and it appears to be a manageable problem there's some smaller and Regional banks that have concentrated exposures in these areas that that are challenged and you know we're working with them you believe it's a manageable problem we're not going to see bank failures across the country as we did in 2008 I don't I don't think there's much risk of a repeat of 2008 certainly there will be some banks that have to be closed or or merged out out of existence because of this that'll be smaller Banks I suspect for the most part just last year there was a panic at the 16th largest bank a Federal Reserve report blamed bank mismanagement but also in supervision by the FED itself you seem confident in the banks and yet the Silicon Valley Bank second largest failure in US history did the FED miss that so yes we uh we did and we forthrightly uh saw that we needed to do better so we've spent a lot of time working on ways to make supervision more effective and also to to to adapt regulation to to a more to a modern context in which a bank run can happen so much faster than it could have even 20 years ago another economic hangover after the pandemic is a sharp increase in the national debt 30 years from now it is projected to be $144 trillion or $1 million per household how do you assess the national debt we mostly try very hard not to comment on fisal policy and and uh you know instruct Congress on how to do their job when actually they have oversight over us but is the national debt a danger to the economy in your view in the long run the US is on an unsustainable fiscal path the US Federal government's on an unsustainable fiscal path and that just means that the debt is growing faster than the economy I have the sense this worries you very much over the long run of course it does you know we're effectively we're borrowing from future Generations it's time for us to get back to putting a priority on fiscal sustainability and and sooner is better than later what would you say is the single most important factor for the future of American Prosperity with your permission I'll name two things one is I think we need to just remember that we have this Dynamic Innovative flexible adaptable economy more so than other countries and this is the big reason why our economy has come through so well the other thing I'll point to for the United States is really since World War II the United States has been the indispensable Nation supporting and defending democracy uh security Arrangements economic Arrangements we've been the leading voice on that and is clear that the world wants that and I would want the United States to know people in the United States to know that this has benefited our country enormously it benefits our economy so much to have this role and I just I hope we I hope that continues Jerome Powell has about two years in his current term as chairman he suggested to us the likely time for the first interest rate cut would be the middle of the year a few months before the election your decisions inevitably are going to have a bearing on this year's election and I wonder to what degree does politics determine your timing we do not consider politics in our decisions we never do and and we never will it's not easy to get the economics to this right in the first place these are complicated you know risk balancing decisions if we if we tried to incorporate a whole another set of factors in politics into those decisions It could only lead to bet to worse economic outcomes so we simply don't do that and we're not going to do it we haven't done it in the past and we're not going to it now there are people watching this interview who are skeptical about that you know I would just say this uh Integrity is priceless and at the end that's all you have and we we we plan on keeping ours

Channel: 60 Minutes

Views: 876,666

Keywords: 60 Minutes, CBS News, federal reserve, jerome powell

Id: ImrKxlLJCEY

Length: 13min 21sec (801 seconds)

Published: Mon Feb 05 2024