district to come out for senators and representatives that would vote for statehood. the rights of dc should not be overridden and we deserve representation the same as those who don't live in dc. >> i would love to see dc not be a colony. having our own decision-making authority. our own powers and not having to bow to the whims of people we did not elect. people who don't live here. people who have nothing to do with dc and do not have our best interest in mind. everybody deserves the right to self-governance and the right to vote. everybody deserves the right to decide their own future. >> to watch this and all winning entries, visit our website. now federal reserve chaired jerome powell testifying on the

fed semiannual to monetary policy report before the services committee. he said economic activity expanded at a strong pace with inflation lowering, unemployment at a 50 year low and the u.s. economy performing better than other countries. he also touched on the status of interest rates. this is about three hours. we will come to order. the tears authorized to had to recess at any time.

to the committee will come order. the chair is authorized to declare recess at any time. the hearing is tied of the federal reserve semiannual monetary policy report. and inventive title he is semiannually here. without objection the legislators will have five days to submit. i will note at the outset this hearing has a hard stop at 1:00 p.m. which will be strictly observed. i see chairman powell smile. that is just three hours. i will now recognize myself her four minutes to give an opening statement. welcome back. since he last appeared before the committee in june 2023, the conversation surrounded inflation has shifted significantly. to be clear, it's not because the inflationary fire has been extinguished. from the most recent data available food costs are up 21% since president biden took office.

energy costs are up nearly 32%. shelter costs are up than 19% and you will pay 37% more for a dozen eggs in america today. as you stated in january people are still paying more for the basics of life and the prices that they are paying are still high. families are not happy about it as you know. and as our colleagues know. according to the biden administration and many of my democratic colleagues, they should be thrilled. in an attempt to score political points many in washington have decided the best strategy is to tell people what they are feeling is not actually accurate. they claim biden has brought down costs and the partisan so- called american rescue plan put the economy back on the right track. of course, we know the opposite is true since inflation skyrocketed soon after the was enacted. that was predicted by several former obama administration

economic officials. instead of working to solve the underlying issues causing high prices, the administration has played the blame game citing corporate greed. some democrats have even fired on you blaming interest rate hikes which were necessitated by democrat spending for the high cost and brazenly calling you to make cuts prematurely. it is highly inappropriate for lawmakers to attempt to influence monetary policy. i have faith that you will not allow politics cloud your judgment in the fight to tackle inflation. as i have always said you are a steady hand and i believe you are committed to the federal reserve independence as a my. just as you have rejected the outside pressures of politically motivated agendas i hope you will be just as attuned to the threats of palletization -- politicization

when the call is coming from inside the house. the vice chairman so-called holistic review of requirements and the fatally flawed endgame proposal represented concerning trend of partisan proposals taking priority over supervision. this has real-world impact as we saw one year ago this month when the supervision and regulation arm of the fed was late catching up to the effects of the acceleration of interest rates on the banking system. americans were understandably shaken by last year's banking turbulence. as we continue to monitor potential instability including bank exposure to commercial real estate it is critical that the fed keep its eye on the ball. this does not include enacting new far-reaching and ultimately harm full policy. as you know, numbers on both sides of the aisle on this committee and in congress have made clear that this proposal would be catastrophic for

families, communities, and small businesses. regulators should withdraw it and start over. i think that is the proper course was something as deeply flawed as the current proposal. additionally, given that other proposals would have to fit holistically together regulators cannot simply proceed with them as separate modules using a cut and paste approach. most importantly as this proposal is discarded or altered, i strongly urge you and other regulators not to analyze the long-term debt proposal. instead i would encourage you to stick to the task at hand and follow the data. the stakes are way too high to put politics over sound policy. with that i yield back and recognize the ranking member of the full committee, -- >> thank you, good morning everyone. welcome back chair powell.

while i am pleased about the progress the fed and the biden administration have made to tackle inflation we are not out of the woods yet. in fact, even though my republican colleagues refused to acknowledge this fact, housing is still the number one driver of inflation. based on the latest data, housing costs continue to make up nearly 70% of overall price increases, outpacing modest wage gains. this means that until we address the underlying housing supply shortage, americans will continue to pay an increasing share of their income on housing. the affordability crisis will worsen and inflation will remain too high. with that said, it's hard to understand why republicans feign concern about the economy when they are unwilling to address the key driver of inflation. housing.

in fact republicans have only put forward legislation that makes things worse for millions of americans including moving legislation to slash funding for federal housing programs including in rural america where homelessness is rising. this abysmal record on housing is par for the course for republicans. since they have been in the majority they have convened only six hearings on housing. on top of launching basement -- baseless impeachment efforts, centering members and pushing the government to the brink of multiple shutdowns it is clear that republicans are too focused on drama and chaos to deliver anything for the american people. that is not how democrats roll. when i was chair of the committee during the 116th and 117th congress, not only did we

hold 55 hearings on housing, but i and my fellow democrats enacted 12 critical housing bills into law in the last congress alone that have stymied the evictions, foreclosures and homelessness keeping millions of people stably housed during and after the pandemic unlike republicans. we don't just talk about the issue. democrats make law. as house republicans continue to disappoint committee democrats are offering evidence- based solutions to keep a fair and affordable housing agenda as the top priority in congress. that is why i and my democratic colleagues reintroduce three groundbreaking bills to address the housing crisis and bring down inflation once and for all. this includes housing crisis response act, the ending homelessness act and the down payment toward equity act. together these bills would

create nearly 1 point 4 million affordable, accessible, and resilient homes, reduce housing cost and homelessness and revive the american dream of home ownership for all. when my republican colleagues are ready to get serious about our nation's economy and inflation, democrats are ready to work with you to pass the bills into law. in fact, tomorrow at noon i, committee democrats and more than 30 housing advocates will join together at a press conference to share just how important ending the affordable housing crisis is to the state of our union. i invite all of my republican colleagues who say they care about this issue to come and join us. i look forward to discussing this critical issue with chair powell today. mr. chairman, i yield back. >> the chair recognizes the

chairman for one minute. >> runaway inflation and interest rates still have americans reeling. while the rate of price increases have come down thanks to monetary tightening, the overall level of prices remain high. the toothpaste is out of the tube and the average american family is still paying about $15,000 more for the same goods and services they were purchasing just three years ago before the biden administration. americans have suffered years of eroding purchasing power in their paychecks. while i'm pleased the fed is resolved in getting inflation under control i am not pleased by the new resolution to unjustified politicized and under analyzed regulatory proposals. the fed needs to withdraw and we propose this deeply flawed proposal especially given that 97% of public comments across the ideological spectrum expressed disapproval of the proposal. chair powell, i urge you to

listen to the american people and withdraw this proposal and tell us what plans are moving forward. >> the chair recognizes the ranking member of the subcommittee on financial institutions for one minute. >> thank you for being here today. i had a chance to actually read the monetary policy report cover to cover thanks to an exceptionally long airport delay last weekend. the feeling i got again and again is that things are fairly well recovered from covid and getting back to normal. we are in the range where ordinary monetary policy and fiscal policy will allow us to satisfy the dual mandate. today and employment remains near historic lows. inflation is down year-over- year compared to a fee -- peak of 5% and stock indices are hovering record highs. gdp continues to beat expectations and the economy has added more than 14 million jobs's president biden took office. gdp is back on the trajectory

it would have been pre-covid. u.s. manufacturers have added nearly 800,000 jobs employing more workers now than at any point since 2008. lesson for that is the physical response that we engaged in was appropriately tailored and the soft landing is within sight. thank you. i yield back. >> today we welcome the testimony of jerome powell, chairman of the federal reserve board of governors. as you know, we will recognize for five minutes for summary of an oral presentation for your testimony without objection your written testimony will be made heart of the record. chair powell, you are recognized for five minutes. >> chairman mchenry, ranking member waters and other members of the committee, i appreciate the opportunity to present the semiannual monetary policy report. the federal reserve remain

squarely focused on the dual mandate to promote maximum employment and stable prices for the american people. the economy has made considerable progress toward these objectives over the past year. while inflation remains above the objective of 2 % it has eased substantially. the slowing and inflation has occurred without a significant increase in unemployment. as the labor market has eased and progress on inflation has continued the risk to achieving employment and inflation goals have been moving at a better balance. even so, the committee remains highly intensive to inflation risks and is acutely aware that inflation poses a significant hardship, especially on those least able to meet the higher cost of essentials like food, housing, and transportation. we are strongly committed to returning inflation to the 2% objective. restoring stability is essential to strong labor market conventions and benefit all.

i will review the current situation before returning to monetary policy. economic activity expanded at a strong pace over the past year. for 2023 as a whole, gross domestic product increased 3.1% bolstered by a solid consumer demand and improving supply conditions. activity in the housing sector was subdued over the past year largely reflecting high mortgage rates. high interest rates also appear to have been wayne on the fixed investment. labor market remains relatively tight with supply and demand emissions coming at a better balance. since the middle of last year payroll job gains have averaged 239,000 jobs per month. the unemployment rate has remained near historic lows at 3.7%. strong job creation has been accompanied by an increase in the supply of workers particularly among individuals age 25 to 54 and continued

strong pace of immigration. job vacancies have declined and nominal wage growth has been easing. although the jobs to workers gap has narrowed it's still exceeds the supply of available workers. a strong labor market over the past two years has helped to narrow long-standing disparities in employment earnings. inflation has eased notably over the past year but remains above the longer run goal of 2%. total personal consumption expenditures prices rose 2.4% over the 12 months ending in january excluding the volatile food and energy categories, pce prices rose 2.8%. a notable slowing from 2022 that was widespread across both goods and services prices. long-term inflation expectations appear to have remained well incurred as reflected by a broad range of

surveys of households, businesses, and forecasters as well as measures from financial markets. after significantly tightening the monetary policy since 2022, we have maintained the target range for the federal funds rate at 5 1/4 to 5 1/2% since the meeting last july. we've also continued to shrink the balance sheet at a brisk pace and predictable manner. the restrictive stance of monetary policy is putting downward pressure on activity and inflation. we believe the policy rate is likely at its peak for this cycle. if the economy evolves as broadly as expected it will likely be appropriately to begin dialing back restraint at some point this year. the economic outlook is uncertain and ongoing progress toward the 2% objective is not assured. reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and require even tighter policy to get inflation

back to 2%. at the same time, reducing it too late or too little could unduly weaken economic activity and employment. considering any adjustments to the target range for the policy rate we will carefully assess the incoming data evolving outlook and balance of risk that the committee does not expect it will be appropriate to reduce the target range until it has green -- gained greater confidence that it has moved substantially. we remain committed to bringing inflation back down and keeping longer run inflation expectations will linger. this is appropriate to set the stage for maximum and limit and stable prices. to conclude, we understand these actions affect communities and businesses across the country. everything we do is in service to the public commission. we at the federal reserve will do everything we can to achieve maximum employment and price stability goals. thank you. >> thank you, chairman powell.

i should have noted this at the outset that this is your 25th testimony before the u.s. congress as chair of the federal reserve. we thank you for your service and commitment to congressional oversight. it is very much appreciated. i will now recognize myself for five minutes. let's begin with what is top of mind. two issues are top of mind with the fed. regulatory policy and interest rates. will will will will we are in a political year. this falls heavily on all parts of the government. this is after the past three years of high inflation and the impact on american families. now that inflation is receding there has been a great deal of speculation about when the fed will cut rates. some say there will be a lot of

rate cutting this year, some say none. what say you? >> i say that really will depend on the path of the economy. our focus is on maximum employment and price stability. any incoming data will affect the outlook. those are the things we will be looking at. i can go further if you would like. >> at what point will the fed be forced to cut rates? what data would you point to and do you have any updates there? >> what we have said is the committee would like to see more data that confirms and makes us more confident that inflation is moving sustainably down to 2%. we have some confidence of that. headline inflation has moved down more than three full percentage points now to 2.4% as i mentioned. we want to see a little bit more data so we can become confident and take that step of

beginning to reduce policy rates. it is a very important step? we think because of the strength of the economy, strengthen the labor market and the progress we've made we can approach that step carefully and thoughtfully and with greater confidence. when we reach that confidence. the expectation is we will do so sometime this year we can begin dialing back that restriction. >> let's pivot to regulatory policy. as you know there have been serious concerns expressed on both sides of the aisle and across america and across industries about this basil three endgame proposal that the vice chair has proposed and the fed is taking up. the concern is on both process meaning how the proposal was developed and analyzed. the general concern of a lack of economic justification for these actions, and also on the substance. the proposal goes much further

than the committee recommended on capital requirements putting us at a great disadvantage internationally potentially. my first question is on substance. is the fed listening to these comments that have been nearly unanimous in opposition to this rule? is the fed listening to these comments on impact it will have on everyday americans? and what is the status on rulemaking and what is the plan move forward? >> you are right. we have received very substantive comments as well as the quantitative impact study we put out. we got this response is in mid- january and we are carefully analyzing them. we had asked for very specific, detailed database comments and i'm happy to say we did get that. we are just now reaching the stage where we can begin to make decisions about how to proceed. we have not made any decisions yet but i think i can say a few

things. first, we do hear the concerns. i expect there will be broad and material changes to the proposal. i will add that i'm confident that the final product will be one that does have that support both at the fed and in the broader world. as far as process, we are not at the stage of making decisions about that. that is down the road at least a bit. i will say a question that we get is re-proposal. i will say that we have not made that decision when we get to that point if that turns out to be the appropriate thing, we will not hesitate to do that. >> you will not rule that out at this stage of the game? re-proposal? >> not at all. i think it is a very possible option and will depend on how things like at the time we reach that point. >> there's a lot of concern about interplay in different parts of the role. if you change one, what does economic analysis look like for the new proposal.

it is good to hear if you will be methodical and the fed will do the role building consensus around those changes and that is your intention? >> that is right. i said this would be a thoughtful deliberative progress . it's more important that we get this right and do it fast. we understand that. this is an important rulemaking and will have potential implications for the economy and the people we serve so we will take our time to do it right. >> thank you. miss waters is recognized for five minutes.'s mac thank you very much. chair powell, i want to talk to about housing but let me address the issue of mergers. last week i wrote a letter along with 15 committee democrats to you as well as doj, occ and fdic expressing my strong concern about the lack of progress you have made in updating the bank merger review procedures.

this is critical now that we just learned of another mega merger involving capital one and discover which would create the six largest u.s. commercial bank with a major role in the credit card market. experts have raised alarm that there is a rubberstamping process for bank mergers where virtually all applications are approved. all the while, unbridled market consolidation poses greater risk to consumers and entrepreneurs. what is the status of your updates to the merger review process? and does the fed plan to convene public hearings on the capital one and discover merger? >> i believe we are in regular contact with the justice department on what is going on with their review of merger practices. we are looking at that and considering. i think on the

potential merger that you mentioned, we have not received an application so there's not much to say at. when we do get that application we will evaluate the merger as always under the factors laid out under the law. that is our commitment. >> so you do believe that your bank merger procedures are ready to do the work that is necessary when you evaluate this possible merger? >> i do. >> are you supportive of organizing community hearings on the merger? >> i have t taed about that with anybody. i will say this. we have done that in many large mergers but that's not a conversation we have had yet. we really don't even have an application for the merger. >> thank you. we will stay in touch on that. turning to the national

affordable housing and homelessness crisis. we have seen steady increases year after year in home prices and rent cost. it is the result of the chronic under supply of affordable housing. more renters and homeowners are now spending more of their income than ever on housing costs. as you know, housing costs continue to be a primary driver of inflation. do you think the fed has sufficiently emphasized the role housing costs play in keeping us from your 2% inflation goal? do you think it is reasonable to believe that monetary policy can accomplish this goal without a fiscal policy response? if you do, how long will it take to get there. >> housing services inflation is one of the three components we look at that make up the core pce index. it has been coming down from its heights of a couple years

back. it is part of the story. i think the overall story is the goods price inflation has turned negative. goods prices are coming down a bit. housing services inflation, you can see from currently entered into leases that as lisa's turnover the increases will be smaller. an hour forecast and everybody's forecast housing services inflation comes down. >> it's been reported that the methodology used to assess housing cost as an indicator of inflation is imperfect. mainly because it considers cost based on old new and old rent including owner occupied housing on a month-to-month basis. this results in stale data since housing costs typically do not change unless they move or their lease is up for renewal. to address these imperfections in the housing cost indicators, the bureau of labor statistics and cleveland fed created an improved methodology based

solely on new lease rents which is referred to as new tenant repeat rent index. has the fed incorporated this indicator into the economic investment for housing served by the fed? >> we are well aware of that and to incorporate that into our thinking. i started to mention that is the reason that market rents are moving at a slower pace is the reason why the forecast is for housing inflation to come down and that plays a role in our thinking. >> thank you. i yields back. vice chair, mr. barr, i'm sorry. >> wrong vice chair. >> wrong vice chair. the gentleman from arkansas, the vice chair of the full committee, mr. hill is recognized for five minutes. >> thank you, gentlemen. i want to recognize you chairman powell to the committee. we're glad to have you back and your expertise. i want to pick up where

chairman mchenry left off on his conversation. you made a good point saying you're not taking the whole concept or proposal as you review the analytics. you will discuss the interactivity of that rule and other rules. would they delay the long-term debt proposal, for those holding companies until they have a better understanding of what the basel end game might be? >> and that is a question that we would be asking ourselves.

>> to issue long-term debt that is expected to be issued at 6% of the risk weighted assets in an abundance of caution in case there needs to be a resolution obviously. we know the logic for it. it's being held down at the bank level and that seems redundant to me. >> that is another comment period where they ended a little while back, so once again, we're in the process of evaluating the process. we welcome comments on these kinds of things that are very important. we want to make sure we understand them correctly to evaluate, you know, what a final rule should look like. >> good. >> let me turn to the monetary outlook as the chairman noted the consumer prices are 17% higher for american households since president biden was

inaugurated back in january of 21. and yet in spite of that 17% increase in cost, real wages have actually fallen 2% over that period. so there is no doubt inflation is the biggest issue facing american households. in my view there's two principles or three principle causings, supplied disruptions, and we've had unprecedented fiscal policy laxity, you described in a recent interview as unsustainable. but we also think the federal reserve in my view and many people commented should have reduced accommodations after the pandemic sooner. that's what i want to talk to you about that they announced in august of 2020 this flexible average inflation targeting framework. right no the middle of the pandemic, which many of us did not understand why they would take that decision then, but it would give you flexible on the

2%, seeing the fed could allow inflation to rise above 2% and stay there above that level for some time because the feds had such challenges of getting the price level to 2%. that was a major shift in the fed's approach. do you think in retrospective of what we have witnessed over the past four years that that was a mistake in hindsight to change that framework? is it under review? >> so we said we would do a review on a five-year basis. that means we'll be starting that review towards the end of this year. so we really haven't started. i do think that the question you raised will be one of the questions we look at. but the bigger question really is that change in the approach was really based on the fact that we had very low interest rates and very low inflation for a long period of time, and policy was always very close to the affects of lower bound, so there wasn't any fire power for central banks. so it was a way to keep

inflation expectations anchored at 2% and not have them slide down. now where she entered a different period. the pandemic really may have changed that in a sustained way and we don't know that yet. that's the big question we'll be asking ourselves, is the affect of the lower bound to be thought of in a different way now? if it were that that would ever have ramifications for our framework, but we haven't begun the review yet. that it will begin in the end of the year and probably end late the next year. >> thank you. >> the gentleman yields back and the gentleman from new york, mr. meeks for four, five minutes. >> thank you, chairman powell for being here. and i will pick up right where we are. 2019, 2020, the entire world was under the unprecedented pandemic with covid, is that correct? >> yes. >> and that changed a lot of things because not just for the

united states, but for the entire world. it affected the economies of countries, just about on the planet. is that also not correct? >> yes. >> supply chains were disrupted. in fact i could remember many americans and people around the world could not get toilet paper or paper towels, and some of the basics. and so the prices because of, you know, supply and demand, skyrocketed, causing the inflation. not only in the united states, but basically all over the world. is that correct? >> yes. >> so therefore the feds had to do certain things because of what we were in at that particular time. we couldn't go back and act light pandemic wasn't there. we had to do something to try to make sure that we were able to get through the pandemic. is that not correct? >> yes. >> and now we are at that point where we are about to get through this pandemic. we could look at the rest of the world, what they did or didn't do at that time, but what we did at that time.

as a result of that, three years, post the pandemic, when you look around the world, i think you were correct with what you stated that by most accounts, our economy is doing well. in fact i would say our economy is doing better than most of the other countries in the world. would you say that's correct? >> i would. so i would say then some of the other countries in the world maybe should have looked at the policies that we have put in place thereafter, so they could get out of it and be, have the labor market that's strong with unemployment rate that's near a 50-year low. as you stated, inflation is also now coming down faster than any place else on the planet just about. is that not correct? >> i think that's right, yeah. >> and i think that you also recognized a mix match between the strength of the economy, that's what we're talking about, and the field. and i think ranking member ward has touched on one of those big

issues of housing of which is now, you know, we are still trying to get -- get that under control, and i think the ranking member will have some ideas on how to do that, and that may be something that you'll need to consider, so we could further get down the inflation rate. and the other would be the commodity markets because the cost of food is too high for people. that is something else that we need to get control. is that not correct? >> yes, sir. >> and can you say there is a connection, for example, between conflicts and other areas of the world like russia's war against ukraine and all the turmoil in the middle east and the economic pressures that the united states does not also go in to the reason why the cost of commodities can be still higher? is there a connection there, mr. chairman? >> certainly the war on ukraine caused commodity prices to move

up sharply. >> so what would the connection lead you to believe that there is an urgent need for us, i would think, as we're running out of time for us to do everything that is in our power in congress to support ukraine, so we could make sure that that and other strategic partners that we can help the commodity market and that would help lower the cost of some of the commodities bring in food prices down if we would be able to pass certain things that is going to help ukraine right here in the united states of congress, is that correct? >> here is where it gets outside our jurisdiction. i wouldn't have an opinion on ukraine funding. >> and it wasn't blocked by russia, things of that nature. generally, where that would help bring the cost down. the cost is higher because of the disruption and the black sea. that happened because of this war. that could help bring the cost

down. that has not been the policy here in the united states and that is the policy of what is going on with russia and we need to make sure we do something to present that if we're serious about bringing inflation down. is that not correct? >> that is correct, a full supply of grain would help with commodity prices. >> and so instead of us playing politics with this and acting like it is your fault or anyone else's fault that we would have to go and do what we did because of the unprecedented pandemic. what we did is save the economy then, knowing that we've got some problems now and now we're recovering quicker and better as a result of your policies and the policies. >> the gentleman's time has expired. the gentleman from oklahoma, mr. lucas is now recognized for five minutes. >> thank you, mr. chairman and chairman powell, thank you for testifying today. when you were before this committee a year ago, i

cautioned against raising capital requirements on commodity derivatives that ouring a cultural land energy producers would use to keep power stable for consumers. at the time you said that was a very specific concern, and you weren't sure the proposal would even address commodity derivatives. in fairness that was before the proposal was officially published. unfortunately we now know that the proposal does impact commodity derivatives. in fact they are among the most penalized financial products that banks offer. and i would note, that i very much appreciate your comments and responses to chairman mchenry about the nature of the overall proposal. congress wanted end users to be able to secure their hedges without posting margin to keep the derivative markets affordable. but i've seen the estimates that some of these types of transactions for the end users could face five times the

capital requirement. chairman powell, make me feel a little better. ease my concerns here. would you work to fix this? >> let me start by saying i want to echo the fact that our commodity markets and our capital markets are a huge national asset, and we wouldn't be functioning well with as little friction as possible. i now understand what you're referring to are the things you've done to increase the requirements for various kinds of derivative activities. i'll just say that's an area where we are aware of the concerns and it's an area where we are taking a very close look at. >> i appreciate that. i was a member of the conference committee where there is bipartisan support for farmers, ranchers, small businesses. this broad bipartisan support then and still does today. unfortunately the fed could undermine the long standing work done by congress. i would like to enter a few

letters into the record, mr. chairman, that will discuss the detrimental impact to the end users. first the joint trade association letter from the american farm bureau federation, the national cattle beef association, among seven others. next a joint energy trade association letter from the american gas association and four others. and lastly a letter from the american public power association and the national rule electric cooperative association. >> without objection. >> thank you, mr. chairman. >> chairman powell? >> i would now like to focus on how the proposal is set to significantly disincentivize banks from offering clearing services. congressman dated central clearing as a way to reduce risk in the system. the number of banks that cleared derivatives has reduced over time. making it harder for users to find a bank to offer this service. there are some estimates that will increase this by 80%.

i'm worried that this will make it harder to find a bank to clear their hedges and when they are friends at the securities exchange commission has just finalized a rule in december that will increase clearing and the cost in those markets. this will have a real impact on market access and liquidity, not just in commodity, but the $26 trillion treasury market that will play a critical role in the world economy. will you work with them to address this problem? >> again, i'll say that we are aware of those concerns and we're prepared to work with other agencies and also to make sure that our capital proposal appropriately addresses them. >> the strength of central clearing is entirely depending on banks willingness to participate and problems with the game will warrant a full reproposal to give us time to appreciate the consequences and

there are real consequences as you and i both know, mr. chairman. i yield back the balance of my time. >> the gentleman from texas, mr. green is recognized for five minutes. >> thank you, mr. chairman. >> and welcome again, mr. powell. it is an honor to have you before us today. i always enjoy hearing your commentary. as you know, recession and inflation, these are buzz words. they are used in some circumstances to cast a dim light for others who are working to end some of these troubling circumstances we are dealing with. are you now at a point where

you believe that there will not be a recession that was much talked about recession? and many people worry that we would find ourselves having to negotiate our way out of a recession. what is your position currently on the recession? >> so it was excess in 3% of what we were seeing continued solid growth. my expectation and that other forecasters of my colleagues is that we will see continued growth at a solid pace. i will say that there is no evidence and no reason to think that the u.s. economy is in or in some kind of a short-term risk of falling into a recession. having said that though, there is always a possibility, a meaningful possibility that an economy will fall under a recession. i don't think that possibility is always elevated at the current time. >> thank you. i appreciate you saying this

because we want to, at some point, eliminate the great deal of fear associated with just the term recession. and the next point. december fomc projections showcase a slightly lower unemployment rate than last june's projections and slightly higher gdp suggesting the soft landing. it will remain light likely. are you at the opinion that we're headed to a soft landing, mr. powell? >> i will just say that what we have seen so far is an economy that is growing at a solid pace. we are seeing a labor market that is still tight, still strong. wages are moving up. but the labor market is coming into better balance between the supply and demand, and inflation has come down sharply really since the middle of last

year. those are the conditions that we will see and we are trying to use our policies to keep that growth going and to keep that labor market strong while also achieving further progress on inflation. that is our goal. and do i think we could achieve all that while keeping them strong? yes, there is a possibility, indeed that's what we're trying to achieve. >> and a soft landing could be difficult to identify. what could possibly have a soft landing and miss the point in which that landing took place. and how do you define the soft landing such that a member of the public, a late person would understand that we have indeed been there with a soft landing? >> so we would really think about it in the terms that i discussed, which is that we want to keep the economy

growing. we want them to remain strong. and 3.7% is pretty near the historical lows as we want inflation to continue to move down closer to the objective where we have made that over the past year. so we want to continue those conditions. i don't want to put the label on. other people can do that. but i'll just say that we are using our tools to keep a strong labor market of strong growth while making further progress on getting them down for the benefit of the public and that is the economy that we are trying to achieve and i think that we are on a good path so far to be able to get there. >> and well, i concur, but i would ask this as my last question. will there be some announcement at some point that we have had a soft landing? because we have people who will indicate that we are not having

a soft landing, that there is a possibility of a recession. is there some official statement that will give them some comfort? >> i don't think by us, no. that we're going to keep our heads down and do our jobs and try to deliver what the public is expecting from us. we wouldn't be, you know, declaring victory like that. >> the gentleman's time has expired. >> thank you, mr. chair. >> you are now recognized for five minutes. >> chairman, welcome back. i think we enjoy this. i hope you do too. and that there is some things about all the things that are available to us and you to dance or i have learned a long time ago on the campaign trail, every problem can be solved on the campaign. reality is a little bit different and welcome back and looking at the monetary policy report on march 1, 2024. as i review this, i would like to focus on the term that i

would say high prices are here to stay because what i have heard you say today and in this report, you've got everything under control, but we are going to keep the high prices. i think the high prices really take a toll on the american people as you are hearing from our colleagues no matter if they will be republic or democrat. page seven of your report that you don't have to go focus on. and while current services, core service price inflation has been slowing, but remains elevated. it does. labor costs as you know and energy costs are a driver to your monetary policy. the question that i have is because you began referencing policy. two weeks ago or so, the

president announced that he was going to slow down the gifting of opportunities in texas for natural gas to be able to continue the expiration. and this in texas is a trillion dollar answer problem to us. because if we do not constantly go find through these new fines, but also through the process, we are in trouble. but we are also putting in trouble our contracts that we would have with germany and a lot of other countries. this is going to mean also that business in america continues to have high prices. as you know, wages are already high and now energy is high and there is no resiliency to continue this and see the american people win.

you would talk about policy. so what is your advice to policy about energy and what this administration is doing on the policy perspective? >> we have, you know, broad significant important responsibilities, but we are really not responsible for energy policies as we would try to avoid commenting. >> it will have a huge impact on this report. and it will keep prices high or that it means that business is not, while they are making money and while households and people do buy that, it is diminishing their advantages to make progress. so you're going to leave that alone? >> it is really not appropriate for us to comment and if i'm commenting on everything. that we would have a mandate, which is that ability, that we would take them by the legislature and that administration as a given.

we are not in charge of second guessing them. it is not our job. >> and let's say that we are not going to second guess them that i believe we will and that the democratic party have supported or they are causing a huge boom in prices staying high and that they will not come down that boom and attacking the energy industry jobs that are associated with it and that foreign policy that we have signed with those countries, giving up the natural gas market and on the world market to qatar that it will have a huge impact on whether we are going to keep prices high or control these prices. it will have a huge impact on i think your monetary report about how many houses would get built and filled, whether we

would have jobs in place or whether we will continue to have more jobs available than workers that are there because that regulation is having a lot to do with the nervousness not only on this panel, but also by the american people and it will be my hope that you would pass some sort of a memo and tell them that you have no opinion, but you want them to see what the impact is and thank you for being here, i yield back my time. >> you're recognized for five minutes. >> and thank you for being with us today. and i have a question that i want to start by acknowledging what has been a remarkable soft landing. because they are still feeling the affects and in some instances. and i think that it will be fair to say that they would

have never predicted the conduct of this economy. that you said it in the final press conference of 2023 when you set a very high proposal, predicting the weak growth or a recession. not only did that not happen, but we would have a very strong year. so i want to acknowledge that and acknowledge your commitment to monetary policy and because i'm still burdened with the policy of the facts that truth and facts matter that i want to point it out and listening to my good friends talk about that energy market and we are producing more oil and natural gas than any other country of the planet and the number one energy producer. i could spend my entire five- hundredths pointing out facts and the facts that i want to point out here, which is that inflation is joe biden's fault is fiscal policies fault first and it is faulty because half the fiscal stimulus that occurred in the face of the pandemic would happen under the previous planet, donald trump,

and it has faded. and this report will make the case, and i quote from it, the prices that have been declining as supplied bottleneck ease and import price inflation. so mr. chairman, i don't want you to comment on that because it will get political and i do think that it is important to keep some foot on the plain facts. but i want to ask you a question because i always worry about risks, risks that we will see and that we don't see. i want to use the remainder of my time to talk about a risk that you're conscience of. and that they identified commercial real estate as perhaps the risk to the financial systems and $6 trillion in loans, half of that on balance sheets. and in the interview a few minutes ago, you characterized

distress and as sizable, but manageable. do you still feel like that risk is manageable? do you feel like you've got the visibility in that transparency and tools to address it? it will make me nervous because they will have echos of 2008 and 2009 when those rates were declined? we are not seeing that right now. and how do you feel? do you have the tools to manage that? >> i would say yes to that and that it is manageable, working hard for management for some time now really. you know, what it really is, it's a lot of downtown real estate where there is too much office supplies because of work for home and work from home and also, you know, the kind of downtown retail that is no longer profitable and things like that are in the heart of it. what we have done is we have looked at banks that have significant concentrations and

we have been in touch with them to make sure they have a plan to deal with that and some losses by some banks and it is medium and small sized banks. it is a problem that we will be working with for several years. the idea is that you need enough liquidity and a plan to, you know, take the losses that you will probably take and so that is what we are doing and we are very active in this space with small, medium. >> let me ask you about that and sorry to interrupt. silicon valley bank, inside the bank, on the part of corporate treasurers who would put so much on the deposits and that they would have that to do it because the supervisors of the bank were not doing what they should have been and so we might be a bit spectacle of claims being on this and what has changed in the context that

will give you the confidence that they will be on top of this? >> i see it with my own eyes. but you know frankly there is a risk to overreact. as significant as that and that it is not like we would have reacted very strongly to that and silicon valley bank and we have. so i know that our supervisors are out there, you know, we are hearing back from, you know, the reports that we have been engaged with the medium and small bank, so confident confident that we are doing the right thing there and that i do believe that it is a manageable problem and if it changes, then i will say so. >> thank you, mr. chair, you are recognized for five minutes. >> thank you, mr. chairman for being here today. i would like to associate myself in regards to the proposed long-term debt requirements that are based on the risk waiting of assets in

the thought out proposal and hopefully your position on this could be able to advise them and guide them that this is going to be held up until we actually get a rule. on october 23, and 2023, the board would show the regulation. and that they will show that they have significantly harmed access to free checking and the other banking services for the country's citizens. yesterday i introduced the secured payment act, that would prohibit the final rule making until the feds among other things and that rule and will complete that impact analysis as it relates to affordable banking services for low income americans understanding that they are facing the litigation, but urge the board to proceed with extreme caution, many type

of proposals, especially since the first generation will be harmful. and chairman powell, learning the hardship caused by the consumers, does it give you any pause? >> as you know that this rule is out for comment. we extended that comment period to may 12, so we don't have all the comments yet. we will evaluate them carefully. you know, we will make an assessment. that the law does assign us a special job, which is to assess whether the fee received by the large debit issuer for processing the transaction is reasonable to issue the cost. this is the obligation that congress has bestowed upon us, not something that we thought we sought, but that's our obligation under the law, and we don't know what else to do other than to keep doing it for as long as that's our assignment. >> hopefully you'll study this and understand that from the

previous types of rules along this line, they were very detrimental to a lot of low and middle income folks. as you know the price reductions that were promised during the instance, that it went to the largest retailers rather than going to the consumers as they were talked about. 98% was one of the studies that showed they kept all the money instead of lowering prices as they were telling us that it was going to happen. so what is the legal basis for updating your regulation? you talked about it. do you believe there is something in the law that says you need to be doing this all the time or should you be studying it before you propose the rule to make all these things more appropriate? >> well again, i think our reading of the law is that, you know, that is something you would do once and leave it there. it is suppose to be reasonable

and to issue the certain identification issues or cost, the implications that are being there. but that is our reading. we waited a long time to change it. it's been many years since we did change it. we do quite a bit of change to make this assessment, and we will review the comments. >> we hope that you will consider it as a fact that even though it is suppose to be on $10 billion and up. stuff all rolls downhill. as the last study shows, the smaller banks, the community banks, they are also feeling the affects of this. so be sure to consider that when you start talking and thinking about this. i appreciate that. one of the things, yesterday i had two different foreign bankers, ceos in my office and they brought up the subject to me, which is very concerning with regards to the artificial intelligence. being able to impact the financial institutions in this country and in our banking system. and i tell people, i said, you know, think about this for a second. you find some individuals who

is a well-known individual perhaps dave ramsey of bloomberg, then you see a facebook post and this person says look, we've got a hundred banks that have a problem today. now that individual did not do this and it is artificially produced. i've seen the commercial already that you couldn't tell the difference between that individual and the real thing. we have come through the silicon valley situation. and if you have real-time payments, the feds now where you could transfer money and you have people scared to death through the artificial intelligence situation. china is watching this like a hawk. they are ready to pounce on this situation. to me, i've got some bills that actually would solve the problem. do you think there are some issues here that we need to be taking a look at? >> yeah, i think that we are very focused on ai and it is very challenging that you paint

a picture there. >> the gentleman's time has expired. >> and thank you. >> we will now go to the gentleman woman from texas. >> thank you for being with us this morning. it's a delight to have you before us. chair powell, the february congressional budget office report estimated that the u.s. economy will grow an estimated $7 trillion for the next decade thanks to in large part to the surge of immigration, creating a larger labor force. immigration also increases demands for goods and services. and i know you mentioned in your record that the growth during covid was held down due to some restrictions in covid and in e restrictions of immigration. can you detail how immigrants have been fueling our national growth and did you consider

this report from the cbo in this current report? >> so i am very familiar with that report and i read the democratic projections, so i do understand what they did. >> so you agree with the $7 trillion growth? >> i have no judgment on that, and i have not tried to make the assessment, but i'm familiar with the assessment. what they are doing, they are saying that more people, they are working bigger economy. and if it makes it bigger. and that a percentage of them will work and there will be more output and that is what they are showing. i just want to be very clear though that we don't make immigration policy, we don't comment on immigration policy. >> i'm not asking that you do

that. do you agree that the immigration surge has added to our strong labor force, which is necessary, and i think you said that we will expect a continued growth and a solid pace to be able to continue on the solid pace, then we would need that labor force, don't you agree? >> so last year we would get a big increase in workers, and it came from two sources, one is participation increase from people who are already here with that significant increase and many of those people will take part in the working economy. and so there is a big increase in the labor supply, which would have increased the output. they will have all kinds of economic affects. i'm just reporting the facts there and i won't say that anything is need, but it is reporting the facts to say that

immigration and labor force both contributed to the very strong economic output growth that we would have last year. >> right, is it possible for the feds to conduct the formal assessment into the positive impact immigrants have on our economy? >> no, that's a job for the cbo. we wouldn't -- that is precisely what the congressional budget does, not what we do. >> the other question that you have addressed is do you consider the cbo's assessment that the growth in the next ten years will be $7 trillion and about $1 trillion in added revenues. was that considered in this report? because that was the february report in this i believe is through february 29. >> and so the answer to your question is can your growth protections not have those big implications really for the current stance of monetary

policy. but i will say that the immigration that we saw was a notable factor of the 2023 and 2024 economic outcomes. of course, we are aware of that and that will play a role in our appropriate policy on the path of the economy. >> okay, thank you for that. and related to that, i know the last time that you were here, we would talk about diversity and diversity, inclusion efforts, both at the feds, and i applaud you, and well, i applauded the president for his appointment of kubler. i expected to visit with them this week. what other strategies and programs are you using in the fed, to ensure that there is diverse, equity, inclusion? >> and in terms of intake of people when we go to higher a

new president, they are very focused on having the diverse applicant pool. you'll see the results of that more and more over the years. that happens. we don't have any role in appointments of the governors, so that is not our job. the administration does that. >> the gentleman's time has expired. >> we are focused on having an inclusive place to work and also in hiring, we work hard. >> the gentle lady's time has expired. >> the gentleman from michigan is recognized for five minutes. >> chairman powell, good to see you in person. i've got to make a comment here. it is very different than not a healthy alternative to the regular economy. basing that on an illegal work force that is not legally able to work ultimately will fail. that is not a strategy to my colleagueses the other side.

so just ask any farmer who will have a regulator come in and find them for employing people who are not legally able to be here in the country. that's growth within this economy that is not sustainable. chair powell, last fall i sent vice chairman barr expressing my concern of the pending rule makings, what they will have on consumers. affirm amount of time spent on basel iii, including the fed, and the number of pending or final rules is frankly just staggering. regulators last year finalized new rules for the community reinvestment act. they are also looking at, which in my opinion, would unintentionally undermine recent significant progress in bringing low and moderate income consumers into the

mainstream banking system. just yesterday, they unveiled a rule that would cap late fees for banks. i literally walked out of a meeting with my credit unions who are very concerned about those things that may be in their future as well. i think it is critical that we don't look at these rules in a vacuum, and to consider their total impact. i'm going to ask you a question that i asked some of the other regulators. how much do you as the fed and you personally consult with them? do you coordinate and talk? >> i don't believe that area of our business. and that there is a lot of talking and i'm not sure. >> and there is always a lot of talking that i'm concerned about the coordinating. and when a rule is finalized under the other regulator, are you mandated or have any kind

of a policy to look back at your purview to see if changes need to be made because of the other agency's rule makings? >> there is no mandate like that and that we would do it. >> we would have some sort of a review of that. >> i don't think that there is a formal review, no. >> okay, i heard repeatedly the elements of basel iii overlapped with the fed's annual stress tests. what are you going to do to address that overlap? >> so i mean we're in the middle of just the beginning of deciding what to do about basel iii. a part of that may be the interaction with the stress test. so i haven't gotten anything on that for you today, but that's certainly an issue that will present itself. >> i want to touch on the bank failures last year very quickly. do you think the banks that ultimately needed the government bailout will lack sufficient capital or more of a management problem?

>> so it wasn't really, could they have used more capital? they were actually raising capital and it is something that triggered that run and everything, so you could argue that it needed more capital. and i would not say that's the approximate cause really. it is about too much concentration. >> and many of us, i'm asking the question because many of us are concerned that the failures are being used as an excuse to raise capital standards across the board. and because they just released their climate disclosure rule this morning. and i'm going to touch on the climate related question for you. and the chair has repeatedly stated that the climate change is a threat, presumably a threat that is what's going to affect banks and financial institutions of all sizes. why then have member regulatory

agencies including the fed limited their guidance on climate related risks, only to large financial institutions? why not everybody? >> well, it's a new thing. >> it's a heck of a new thing, yes. >> and you know, this is something that needs to be handled by the elected representatives. so we are starting this very carefully with large constitutions who are already doing it, by the way. the things that we're doing. they are doing this because they will remain interactively and they have to do this. they understand it. imposing it on the smaller banks, it is not something that i'm for. >> the gentleman's time has expired. we'll be following up on the taylor rule. >> the lady from michigan is recognized. >> thank you so much chair powell for being here. do you agree with the april federal reserve report that compensation incentives contributed to silicon valley's bank failure? >> i'm sorry?

>> so the april federal reserve report is said that compensation incentives contributed to the silicon valley's bank failure. would you agree with that? >> i would say it is a factor, but it probably had something to do with it. for me. >> so that is no? >> that is very small. >> okay, so it did. do you agree the rule could have reduced the likelihood of silicon valley's failure, maybe? you know, if they didn't take off? >> i don't think so. >> i don't think it is a first order of question for silicon valley. a lot went wrong there. >> they actually blame you guys. >> sorry? >> they blame the oversight. even though they didn't respond to your correspondences. >> that's okay. we took our medicine. >> do you think it has something to do with the fact that section 956 of the dodd frank rule hasn't been finalized by you? >> no, i don't. >> you don't think it's the reason? >> i don't. >> you don't think it's because people made money off the

failure? you don't think money drove them to do what they did? >> i didn't say that. but they made money from it. it was a lottery from them, right? >> i do not think that compensation arrangements were at the heart of the silicon valley bank failure, no. >> okay, do you support the rule making, chairman? >> you don't? >> i'm sorry? >> do you support robust rule making for executive compensation? >> that is the law as i understand it, the agencies are looking at doing something. it's been 12, 13 years, right? >> yeah, multiple agencies. >> it has been hard to get it done. i lived through the last episodes, trying to get it done. >> so do you believe in that robust rule making policy? >> i do, yeah. >> that is awesome. will you commit to helping to

finalize the section of 956 this year? it's been 12 years, chairman. >> yeah, no. >> they played a role in the bank failure, chairman. >> if i could answer. what i would like to do -- >> so you don't want to do it this year? i mean i'm being serious. you're saying no. >> if the member will allow the witness to answer the question. we've had a good day today and he's trying to answer the question. >> i would like to understand the problem we're solving, and i would like to see a proposal that will address that problem. >> okay. do you believe people should profit off of bank failure? , the executives that made those decisions? >> no. >> they should not profit? >> the executives that are responsible for the failed banks, absolutely not. >> so they get to walk away with compensation based on their failure? >> you're asking about a

different rule that you have clawbacks and things like that. that's something i know you've been looking at for a while and that is certainly an appropriate thing to look at. >> yeah because it will continue to happen is my opinion. if they knew they were not going to walk away with not the bonuses, and for their bank failure. do you believe the impact will pose a risk? have you been talking about that more? >> i believe it is real and poses a risk, sure. >> there have been some that say it makes it more difficult to build out the renewable energy projects and other investments required to prevent climate impacts. do you believe that to be true?

>> i believe we need to do our job that you have assigned us, which is a maximum employment in price stability. we do it through interest rates. it's not our job to consider the affect on climate change of that. i think any affect on climate change of that would be kind of minuscule. >> okay. last question, chair powell, who do you see as the major winners and losers from high interest rates in terms of income groups, age groups, and racial other demographics? >> so the point is to bring inflation under control as you know are people on a fixed income who are in trouble when the cost of transportation, food, energy. they don't have the financial resources to deal with. we are accountable to provide the price. they benefit the most over time from stable prices. >> the gentle lady's time is

expired. >> i thank you, mr. chairman. thank you chair powell for your service. i want to associate myself with mr. heinz as i'm concerned about commercial real estate exposure. i do hope they are doing everything they can to ensure what the bank has. this is a looming crisis out there given the workplace changes and dynamics. chair powell in remarks of bloomberg, during the obama administration, and i quote, "it would be much more productive for our central bank to be focused on the question of real estate portfolios in the banks they supervise than some of the more abstract and politically driven arguments about various kinds of capital charges on the largest banks." do you agree, sir, that it

would be more productive for fed supervisors and regulators to keep their eye on the ball? in this case, commercial real estate and other real estate investments? >> i absolutely think we need to keep our eye on the ball on commercial real estate. yeah, i think we're doing that. >> i hope so. according to your semi annual report, the median of members on your monetary policy committee estimate that your target overnight interest rate will average 4.1% in 2024. does that mean that the median number of members anticipate that you will be cutting interest rates some time this year by as much or more than a full percentage point? >> no, it doesn't mean that. actually the same, some of the projections will show a median of the december time. this is now three months old. showed three rate cuts this year. that would be 75 basis points.

three quarters of one percentage point. you're quoting next year's numbers, so you would add that on. that was through 2025 i believe. >> so are you anticipating that there will be more cuts? >> and that we are making economic projections. so we would write down the path of growth, what's happening in the labor market and what happens with inflation and what will go with that forecast is inappropriate monetary policy and the appropriate interest rates. so we would expect inflation to come down and the economy to keep growing and the labor markets to remain strong. if that is the case, then it will be appropriate for interest rates to come down over the coming years. and that is what will happen though that it is actually what the economy needs and that they will do something different from that and that is what will happen. >> 15 members of congress including myself, ranking member sherman, chairman barr, and ranking member foster sent

a letter to the prudential regulators regarding the impact that basel will have. the letter highlighting critical areas of our u.s. markets including securities underwriting, derivatives that will be severely impacted by the basel proposal. this was also a common theme represented throughout the comment file on the basel proposal. over 95% of them. considering that 75% of financing and the u.s. has done through our capital markets, which are the deepest and most liquid in the world. why would the fed continue to pursue this flawed proposal instead of reproposing a rule that would not have such a drastic impact on the u.s. economy? >> well, in fact the capital markets concerns you raised are among those that i raised myself in our open board meeting when we would put this out for comment.

>> you said you wanted broad support. and some of your governors, the fdic, others. so how are we coming on it and how do we recognize? >> and so we're working our way through the comments. we are coming to the point where it will be appropriate for us to evaluate what changes are appropriate and that they will be broad in material. and that is where that is. where she not made any decisions yet, that we just got the comments. >> and the subcommittee, i've seen them push the envelope in terms of rules and regulations that will go well beyond the congressional mandate, even encroaching on the jurisdiction of the financial regulators. what is the fed's response to another agency encroaching on its jurisdiction? >> we do not comment on other agencies regulation. however, if they were to take your hypothetical at face value and they were to come in to our jurisdiction -- >> it is more than a hypothetical.

>> and we would react. >> good, i hope you do. i yield back. >> the gentle lady from new york, ms i velasquez is recognized for five minutes. >> thank you, mr. chairman. right here. thank you for being here, chairman powell. property insurance rates are becoming prohibitly expensive or inaccessible for home open ebbers and p homeowners in my community. it's an increasing risk, and i recently raised this issue with secretary yellen. is the fed monitoring the rising cost of insurance and its impact on micro economic? >> is his mic off? >> we will pause the clock.

have staff take a look at the microphone. >> the clock being frozen is out of respect for ms velasquez or out of good luck. i'm not sure. >> the clock. we will get staff to listen and suspend for a moment. >> we need to invest in infrastructure for this committee. >> we're trying to do electronic voting. >> this is not voting. no. it is hard enough to just get the microphones to work. madam clerk. thank you. thanks. so all the photographers have left. so photos for this will be less awkward.

any luck? we are getting a new mic. it may not be better, but it's a different one.

>> now this one is back. okay, great. it doesn't want to be replaced. okay. >> we will start over and restore the clock. thanks for your indulgence. >> mr. chairman, i was asking you about the property insurance rates becoming prohibitively expensive or inaccessible for homeowners and developers in our community. a new report identifies property insurance rates as an increasing risk.

i recently raised this issue with secretary yellen. and its impact on macroeconomics? >> yes, we are very much aware of the increases in insurance, including property insurance. it has been adding meaningfully to inflation. it's not something we have any o control or authority over. insurance generally, prices have gone up a lot. >> so when we talk about the y lack of affordability when it comes to housing, the insurance, the rising cost of insurance is an important factor that is affecting the availability of affordable housing in our communities. and i hope that there are some discussions among the feds, because it is an increasing

risk, and it's going to have a dire impact on our economy. chairman powell, i know you spoke with chairman mchenry a little bit on inflation and interest rates. can you explain what evidence you are looking for before inflation has returned to 2%, and interest rates can be called? >> we are not looking for inflation to go all the way down to two percent. what we want is just more evidence that will give us more confidence that inflation is on a path down to 2% sustainably. t that will come in the form of good inflation readings, be really. we want to see just a bit more evidence so we can be confident. we don't want to have a situation where it turns out that the six months of good inflation data we had last year, that that didn't turn out to be an accurate signal. we are just being careful.

because the economy is so strong, we think we can and should be careful as we approach that decision. >> what evidence? >> we'd like to see more good, relatively low inflation readings. were not looking for better inflation readings than we've had, what will happen is, as we go forward, the inflation will continue to drop. because it will be lower than early last year. >> thank you. mr. chairman, i would like to pick up on where mr. lee left off. the importance of the rulemaking on section 956. this is an issue that i also raised with vice chair bar, chairman bloomberg, actiq controller sue. and i told them, when they came

before this community, that i would be asking for the status update on the rulemaking of every future hearing, because it is well past time -- 12, 13,n 14 years -- if you are employed in a company and given a task, i would think that you would be fired if you don't get it done, and it has taken 12 long years. you are the chairman of the fed. i was the fed working with other agencies? >> there's a lot going on. my understanding on 956 is un there are discussions between the regulatory agents these, and i think it's more like six agencies that have to agree. i have not seen a proposal. i think something is under consideration, but it is not something that is gotten to me yet. >> i will ask the next time, and believe me, i will be here.

thank you. >> the gentleman from kentucky. mr. barr is now recognized for five minutes. >> you have said numerous time that the capital framework is about right, and banks are well- capitalized. you still believe this? >> i do. >> and given that you believe that and given the fact that the proposal dramatically increases capital requirements on banks, would agree proposal that implemented a capital neutral way -- could it do so without jeopardizing financial stability? >> hypothetically, yeah. >> according to nathan watkins, 90% either opposed, called for every proposal, or expressed substantial confirms about the proposal. those negative comments came from across the