tv Bloomberg Markets European Close Bloomberg June 22, 2022 11:00am-12:00pm EDT
specifically sec staff accounting bulletin 121. this bulletin requires public traded companies, including banks, to hold digital assets in custody as an on balance sheet five ability. should it be applied to banks and bank holding companies? >> that is something that we, too, are -- saw that and understood the applications. >> they are always
off-balance-sheet. they created a framework called the prudential treatment of crypto assets that continues to acknowledge they are off-balance-sheet. if these standards of the sec's step bulletin are adopted, that would be the first time custody assets are placed on balance sheet. do you think it is smart for the u.s. to be imposing bank standards beyond international norms? >> the sec has authority over accounting rules and that is what this was. we now have to consider that exact question and that is what we're doing. i can't really say more because we are working our way through it. my understanding is the same as yours, which is custody assets are off-balance-sheet have always been, but the sec made a
different decision as it relates to digital assets for reasons it explained and now we have to consider those. >> thank you. i encourage you to consider that and appreciate that you're looking at it and are aware of it. i will turn to master accounts now. the banks have refused to provide congress and the public with transparency with regard to the application process. at its core, a master account is a public benefit. by the fed to a private institution. and since a master account is a public benefit, really doesn't the public have a right to know which institutions have master accounts and which have applied for accounts and not received them? both the fbi see and the occ publicly similar application on their websites today. could you commit as part of a
transparency project to make publicly available a list of institutions that have received master accounts as well as the institutions that have applied and not received them? >> i will be glad to look into that. you know our system well and it really is that the board, we set rules by the reserve banks really make the decisions about printing accounts public to those -- we think we can improve on that system with the current proposal we have and are considering comments on that right now as i'm sure you know very well. >> as you also know, applicants for master accounts are getting whipsawed between the federal reserve board of governors and the banks that one says that the federal reserve says that the
banks have all of the authority they need meaning federal reserve bank accounts and others have the authority they need to make these decisions and yet you go to the reserve banks and they say, oh, no, we are waiting for the board of governors. so there is a whipsaw effect and we get no answer. the black continues to exist -- the blackhole continues to exist in my frustration has long been at of willing point and continues to be at up -- be at a boiling point and continues to be at a boiling point. i want to use this opportunity to encourage you to address that. there is just no excuse. there is no excuse anymore, mr. chairman. thank you. >> the senator from maryland is recognized. >> thank you. i welcome chairman powell.
you would agree if we can get the system into place, it will save millions of americans billions of dollars, would you not? >> yes, it would. >> i want to encourage you to move very quickly. we had an earlier hearing in may and this committee and aaron klein who spent a lot of time monitoring this system shared his concern we weren't moving fast enough to hit that date and fully implement it. i just want your commitment, mr. chairman, you are focused on this and it is our priority. >> very much so. we are very focused on doing it right and also on time. that is next year. >> it impacts people living paycheck-to-paycheck who make a deposit in a bank but it does not clear and then they get tagged with all sorts of
overcharge fees and things like that. so other countries that are a lot less -- in terms of technology than the united states have figured this out, and we should be there now. i just want to turn to the issue of the day, which is this challenge in navigating between keeping a strong economy moving and low unemployment and dealing with price stability. on the good news front, i think you testified to this earlier, the united states is doing a lot better than our peer economies when it comes to economic growth and quickly reducing our unappointed rate. isn't that the case? close generally. we are further advanced in our recovery i would say. >> that is good news and we want to keep that going. we obviously want to deal with price increases and the concern which has been shared by others this morning is that many of the
causes of the price increases are beyond the control of the fed. i called in the threep's. putin, prices -- i think the challenge is, how do you navigate increases in interest rates when a lot of the drivers of price increases are beyond your concern. you would agree, would you not come increasing the supply of housing can help reduce housing rises, right? >> sure. >> what we're seeing now is with rising interest rates, obviously, new investments are more expensive. we have seen housing starts fall by 14% in may. so that means fewer housing
opportunities, less supply, fewer workers engaged in building new homes. if you could use that as a sort of case study of how you are going to navigate these crosscurrents? >> interest as it spending is a very important aspect of how our tools work and in the case of the housing market, what you're seeing is higher mortgage rates so you are seeing demand move down quite significantly. many, many indicators suggest fewer people are visiting homes, the wait time for selling a home is increasing, sales within down, starts are moving down. overall, it is a slowing in the housing market. i think what you will see where the many forecasts call for the increase in housing prices to slow pretty significantly now. you see very large increases in housing prices really since the
beginning of the pandemic to the point where all over the country you have people five bids above the ask the second house comes on the market. that is cooling off to a more sustainable pace. what we hope is to get demand -- that part of the economy to slow to a more sustainable pace and get housing -- get the housing market on a more sustainable path where there is a better balance between supply and demand. >> i appreciate that. i'm going to use my remaining time to push you a little further on this issue. not specifically with housing. given the fact so many of the factors driving price increases are beyond our control, and you talked about core inflation, what is your confidence level we will have what is generally referred to as a soft landing where you want overcorrect and raise interest rates to the point that it begins to really hurt our economy, workers, and
wages? what is your level of confidence for soft landing of the economy? >> the war in further problems with the supply chain. the question whether we are able to accomplish that is going to depend to some extent on factors that we don't control. i see some -- the factors that are out of control are not going to be susceptible. oil, gas, food, but the measures you are taking. and the risk is the measures taken will slow down other parts of the economy without getting
the benefit of lower prices. i think that is a big theme today and i look forward to continuing our conversation about how you're going to thread the needle. >> the other risk, though, we would not have managed to report as restore price stability and would allow the high inflation. will hurt the people we would like to help in the lower income spectrum who suffer now from high inflation. that will hurt them more than anything. we can't fail on that task. we have to get that to 2% inflation so we can have the kind of labor market that we really want. >> i appreciate that, mr. chairman. but as you now come the prices people are extrinsic most vividly day-to-day is the price of gas at the pump and the price of food at the grocery store. both of which are things you said are beyond your control. thank you. folks this editor from montana is recognized for five minutes. >> chairman, thank you.
like my colleagues, i am concerned with the inflation we are seeing in the economy and the impact on montana families. when i go back home, i hear the top three concerns is inflation, inflation, inflation. the price of gas, the price of groceries. cpi inflation group 8.6 percent year-over-year in may, the highest increase since december 1981. in montana, the mountain states, the inflation grew by 9.4% versus a year earlier. this rate of inflation is unsustainable for those in montana and americans alike. for months, republicans in congress and even some democrats like former treasury secretary larry summers, warned the massive inflationary risk of the $2 trillion march 2021 stainless
package, but that post economy. pulled up "the washington post" article from march 29 2021, remember being in the very room similar warning our colleagues about the risks of moving through a $2 trillion spending package when we had $1 trillion of unspent covid money still remaining in december of the prior year. let me quote, "summers, clinton, barack obama, drafted economic blueprint for the past two democratic presidents, was a top candidate to lead the federal reserve board and president obama as emerged as a latticed critic of president biden's approach. the harvard university professor
who advised biden warns the president stainless pan -- plan may trigger the highest inflation in more than half a century and could cost democrats the chance to make lasting prescience on the economy. there were many of us warning our colleagues of blindly jamming through that to trillion dollar package in the inflationary risk associated with it. now with inflation at a 40 year high, the same democrats are continuing their ill-advised effort to revise president biden sweeping build back broke package no matter the warning signs that are flashing right now in our faces. chairman powell, mr. summers has suggested several years of greater than 5% unemployment might be necessary to contain inflation. would you agree with that assessment? >> i guess i would say that i
don't want to comment on other forecasts generally, but my assessment is it is going to depend to a significant extent on factors like how long does the war run and how long does it take supply chains to approve that kind of thing. there is a lot of uncertainty. i would have a lot of humility about trying to predict with any clarity exactly where the economy is going to be in the next three years, for example. my assessment is that they are passed to get inflation down to 2% with outcomes that are substantially less troubling than what you just read. >> you have characterized planning is getting back to 2% inflation while keeping the labor market strong. what is your confidence the fed
can achieve this goal without causing a recession? >> that is our goal. that is our intention. i think it is going to be very challenging. we have never said it was going to be easy or straightforward. it is going to be challenging and the events of the last few months have certainly made it more challenging. nonetheless, there are pathways through which that can happen. in particular, what we saw in the early part of 2021 when inflation went up was very strong demand surged against unanticipated supply-side constraints and the result was prices went up much more than can be explained adjust the increase in demand. in principle, if demand can move back down, then inflation can move back along that path as quickly as it went up, in principle. the idea is this is not -- there
are relationships in the economy for how quickly inflation would move compared to demand moving. this could be an unusual situation because we have or have had what is in effect a vertical supply curve where there is a very steep supply curve so you get really sharp increases in prices. you could get sharp declines for the same reason. that could be a difference. i think we will find out, ideally, but ultimately we need to see progress on the supply-side. we are not waiting for it. our job and our tools work on demand. and that is what we are working on now, getting demand down to a more sustainable level so the supply can catch up and is in better balance with demand. >> thank you. >> sender all soft -- ossoff? >> welcome back. we stated in the outset you have been assured nearly challenging
job and extraordinarily complex times and much of what you are responding to and adapting to is the on your control. your success is the country's success, to an extent, the world's success. i appreciate your continued efforts. i would like to ask you to specify, if you can, what transmission and is him you believe -- mechanisms are needed in the change of monetary policy. what forms of consumption you expect to be most sensitive to it and the extent to which you anticipate that some of the effects that you hope to have on aggregate demand through the increase in rates transmitted via financial markets. and if so, how? >> i guess i would say three basic channels through which our tools work. the first would be intra-sensitive spending so that is durables, including cars and things like that, durable goods,
housing for example. so when rates go up, spending on those purchases which tend to be financed with debt will be restrained. that is one major channel. the second is asset prices generally across the economy. when interest rates go up, it raises the cost of holding assets. they can cause assets broadly across the economy to either moderate their growth or decline somewhat in value, and that has an effect on the economy on spending, on everything. the third channel is the exchange rate, would you can think of as another asset price but that also has the effect of pressing down on inflation. we look at all of those starting with the first one, you can see -- we just talked about the housing market. it is a classic part of the economy that is very sensitive to interest rates. you're going to see a moderation in housing demand.
you're going to see declining or slower increases at least in housing prices. those are the three main channels i would point to. >> in terms of asset prices and how financial markets are responding to the fed's stance, i consistently have ask you and secretary yelling -- yellin to talk about financial stability, risk of financial contagion, where you are moving swiftly and markets are volatile, there are perhaps institutional trades that could rapidly unwind or exotic and integral instruments that no longer function -- financial term is that no longer function well, what you feel parts of capital markets now or the phenomena in capital markets that present the greatest risk to financial stability as the fed takes the aggressive action you're taking? >> i would say the banking system is very strong.
highly liquid, does much better job of understand the risks and managing them before the global financial crisis. that is a reflection of the work that regulators, the banks did so that part of the financial system is critically strong and we saw that through the pandemic and we see it now. do your point, though, capital markets did show real periods of liquidity during -- illiquidity during the immediate aftermath of the pandemic. we have been looking at ways, as a broadly, the regulatory community has been looking at ways to address that. >> you remain concerned about money markets? >> money markets, that is a part of the economy which it has become illiquid because the assets they were invested in were not able to be turned into cash quickly to fund depositors awning to take their money back.
we stepped in and had to provide that liquidity a second time. there are reforms going on at the sec which should address that and they are in the process of being considered and implemented, so that should help on that front. i was thinking more of the treasury market, for example, which became illiquid in the beginning when people wanted nothing but cash. the treasury market has been functioning all through this period when we significantly changed the stance of monetary policy. markets have been functioning well, reasonably well. >> i time is running short and i appreciate but will probably follow up to talk my about financial risk. with my remaining few seconds, how would you characterize the share of responsibility, if you will, on the supply-side versus the demand side for the elevated price levels over the last year? to what extent do you believe -- imagine the supply curve being
steeper than expected and so the increased durable good and consumer demand having a greater than expected effect on prices. right now is the principal driver of the increase in the price level elevated consumer demand, elevated demand or is it supply constraints? i know we are facing both, but i'm asking you to allocate as you can timeshare to each phenomenon. >> i would say it is clearly both factors are principally at work here. you did not get this kind of high inflation without strong demand and you certain could not get it without the kind of supply issues we have had both in the labor market reflected in high wages and the goods market reflected in what has happened with durable goods. cars, and particularly, driven by the semiconductor shortage. >> thank you. >> mr. chairman, thank you for your presence here today. let me start by making certain i
tell you something i think i need to say on behalf of kansans. i have never seen the level of anxiety, uncertainty, concern for the future as i see today when i have conversations with folks in my neighborhood and across kansas. there is a sense that something is not right. inflation is a significant component of that feeling and the inability to know what is around the corner is terribly damaging to folks both financially but also mentally or psychologically. there is a real circumstance out there that i want you as the chairman and your colleagues to know exists. i think it is uncertainty in what the future holds is one of the most damaging things when people try to figure out their lives and how comfortable they are. i also want to highlight particular kansas but middle
america across the country issue of agriculture. i was on a farm on saturday participating, observing harvest of wheat. we live in a world in which people are starving and more are going to starve if we are unable to fail to get more grain into markets from ukraine and russia but from the united states as well. agriculture has a lot to do with being able to feed people who are now desperate. part of the concern in regard to agriculture is the interest rates have a significant consequence to the profitability, to the survivability of users. and profit margins get squeezed if interest rates continue to decline -- climb. we face declining or lower land
values, that creates greater access to credit challenges. tell me how you see, one, how i can assure my kansans that -- and americans that things are going to be better and, two, how can i assure farmers and ranchers their future will be brighter based upon the activities of the federal reserve? >> i take the sort of very low confidence readings that we are reading about and your comments about kansas citizens as being directed to high inflation. i think people have not seen it. you and i are old enough to remember what it was like, and it is something -- it really does destroy public confidence in the economy and a kind of thing. so we need to get inflation back down to 2%. all i can say is we are using our tools to do that.
the public should believe we will get inflation back down to 2% over time. there are factors we don't control but those factors do tend to wash out over times, things like commodity prices don't tend to keep going up. they may remain high but essentially there volatile over time. that is what the record shows. we are doing what we can to get inflation down. the parts we can address. for whatever that is worth, that is what we can do and will do. in terms of the agricultural patch, as you know, including your kansas fed president, we have terrific people, reserve bank president to give us a good sense of what is going on in the agricultural sector on an ongoing basis. it is a very difficult time with fertilizer prices and difficulty getting all kinds of inputs. it is a very challenging time in the agricultural world. we do understand that. our part is to do what we can to
get inflation back under control. i no higher interest rates are painful, but that is the tool we have to moderate demand and get demand and supply back into balance so that inflation can come down. >> is your chairman, in a conversation we had on the phone, you indicated you -- as you did today, there are certain aspects of inflation you have little control over. one i think you mentioned was energy. let me be reassured that there are -- that there will not be actions by the federal reserve to make lending to fossil fuel producers a component of the policies of the federal reserve. you say you have little to do with it, you could cause great damage if you decide to go down a path that was at least contemplated by a number of nominees for the federal reserve board. i would love to be reassured that is not a component that you would pursue and that we would
not see resulting increasing cost of fuel as a of federal policy, federal reserve policy. >> five you and i think -- i view certainly is it is not our job to allocate credit to, for, or away from any particular sector of the economy. that is a job for elected officials or for markets, but it is not a job for the federal reserve, which has a mandate to pursue maximum employment price stability, well-regulated banking system, and a sound payment system. >> thank you. >> senator warnock. >> thank you very much, mr. chair. thank you chairman powell for being here again today. georgia is in a serious housing crisis. the federal reserve bank of atlanta is designated only home in alanna as unaffordable to the average homebuyer.
it is not just a city problem, it is urban, rural. a county with a population of less than 30,000 is also rated as unaffordable. in the midst of the housing crisis, the federal reserve bank which has a tough mandate and a tough time of managing inflation has raised the federal funds rate by 0.75%, which means mortgages are about to get a lot more expensive. chairman powell, as the fed raises interest rates, what is the fed doing to prevent this rate increase from further exacerbating the housing crisis? chair powell: by raising rates, what you are seeing is a slowing housing market because of higher interest rates, mortgage rates
have gone up substantially and eu are seeing a slowing in the housing market. that should mean that housing prices should stop going up so rapidly. since the beginning of the pandemic, we have had a hot housing market all around the country. what should take place is as demand moderates, demand for new and existing homes, you should see prices stop going up quite so fast. you will also see fewer home sales and a lower rate of activity in the market. chair powell: what needs to happen is that supply and demand need to get back into better alignment. the part of that that we control is by moderating demand so that prices stop going up quite so
much and that we can get back to a housing market -- we do not control supply. there are issues around housing supply. it is harder to get land and lots, harder to get people to work. there are supply-side constraints. builders will tell you we have a longer-term issue around creating enough housing supply. that is not something that we can do anything about, but it is important. >> my understanding is that mortgages are about to get more expensive. it seems to me that what would be helpful would be if congress would pass my down payment towards equity act to help first-generation homebuyers for their first home. what do you expect fed interest rate increases will have -- the federal reserve helps enforce the fair housing act and equal
credit opportunity act. what plans you have to ensure that interest rates increase, everyone still has access to a reasonably priced mortgage? chair powell: higher interest rates do not change our obligations under federal credit laws that we enforce. weight will continue to enforce those transparently and aggressively -- we will continue to enforce those transparently and aggressively. mortgage rates have gone up and down demand. there is pain involved in that. some will priced out of the market, but that is ultimately what needs to happen if we are to get back to price stability and to a place where wages are not enough by inflation. the greatest pain would be if we allow hyperinflation to continue. >> my point is that folks on the
margins of the market place, the issue is how do we protect them? to that, secretary yellen stated that the federal reserve needed to be "lucky" to ensure a soft loud -- landing. i do not like counting unlock, which is why -- counting on lock, which is why i have introduced a couple of bills to lower prices of everyday goods and medications. i have held the white house accountable to pursue investigation of price gouging and have supported bipartisan legislation. how can congress lower costs for georgia families? what steps can congress take to
so report the fed and ensure a soft landing? chair powell: i would be reluctant to give advice. we are trying so hard to get inflation down, but i think those are authorities that those you who run for elected office have and we do not as appointees. >> but you would agree folks at the margins of the economy are feeling the most pressure and pain? chair powell: that is always a the case. in the case of inflation, if you are spending every dollar that you are in taking on their essentials and the cost was up 10%, you are in trouble right away, whereas people better off have some ability to deal with it. that is why it is such a
priority to get on top of inflation before it does become entrenched. inflation has no been around -- it did not start until march of last year. it is not too late to get this job done and get back onto the kind of path we went to the on. >> i am concerned about this and it is why i have introduced bills to lower the costs of gas, groceries, medication. >> senator cinema -- sinema will join virtually. >> thank you for joining as. congratulations on your reconfirmation. inflation continues to be concerning. this is the number-one one issue i have been hearing about. families and small businesses need relief from soaring inflation. but this is not only a u.s.
problem. countries around the world are also seeing high inflation. how is he u.s. positioned relative to other countries with respect to inflation -- the u.s.? chair powell: our level is broadly comparable to that of other countries. canada's numbers not far from ours, same with western european democracies and the u.k., but there are different compositions. to generalize, in the u.s., our inflation has more of a demand driven component, whereas in europe, it is more driven by high energy prices. although, the u.k. has a mix of both. we also have high energy prices. the levels are similar, but the composition is different here in
the u.s. >> crypto markets have experienced financial volatility. has the fed been tracking these events? what implications do they have for health the fed is making decisions with respect to monetary policy? chair powell: we are tracking events carefully and not seeing significant macro economic implications so far. but i think the principal implication is what we have saying for some time my which is that in this very innovative new space, there is a need for a better regulatory framework -- the same activity should have the same regulation no matter where it appears. that is not the case right now, because of it this because a lot
of digital finance products are similar to products in banking and capital markets, but they are not regulated the same way. that is the main takeaway. >> what is an appropriate proportion of the current u.s. inflation to assign it to russia's illegal invasion of ukraine? how are you thinking about these events in the context of monetary policy? chair powell: the increase in commodity prices are clearly connected to ukraine. that part of inflation would be certainly much lower than it is without the war in ukraine. our tools work on demand. there is a job for our tools, there is a job to moderate demand so that it can be in
utter balance with supply, but we do not think we have too higher oil prices due to the global situation. >> the fed tracked the consumption index closely when thinking about monetary policy. many trends in our economy accelerated during the first year of the pandemic. it is possible that indicators need to be revised to measure inflation. we all know inflation is high, but how high matters to ensure an appropriate response. congress and the fed should make decisions based of the best in felt that most accurately reflects challenges. have you given fact to this issue? chair powell: yes. in the sense that we look carefully at the way that we
measure inflation. we use personal consumption expenditures, which is a better approach, re-think, then the consumer price index. this is a change we made 22. economists generally think pc inflation does a better job of measuring what people are experiencing. we keep it updated that the government agency keeps it updated on a regular basis. we think that is in the right approach. we look at cpi as well, but we have chosen to make pc inflation our principal measuring stick. >> thank you. my time is expired. i yield. >> senator menendez of new jersey is recognized. >> thank you, mr. chairman. karen powell, i want to start on
diversity at the fed. i have a letter that recently yesterday. it was signed by nine senators, including five wonders of this committee, urging you to undertake a number of reforms for the process of selecting bank presidents and class b directors. that has to include meaningful transparency and public engagement we are ever going to have leadership that truly represents the public. i will wait for your written response. we just sent the letter -- your response on the details of those proposed reforms, that can i have your commitment that you will provide a substantive response by july the second? chair powell: yes. >> also, will you commit to work with me to put in place will, meaningful changes to the
process so we can have a broader array of voices to the fed leadership? chair powell: i will commit to having a frank discussion about that. we are opening to ideas about how to improve. it is not like we have not made tremendous strides as it relates to directors in the course of the last 10 years. the diversity numbers are impressive for the bnc directors. the directors left side, but those are appointed by the bankers. >> but it is worse than "lless so." you do not have one bank president in the history of the fed that has been hispanic. chair powell: i was talking about directors, but you are right. >> there was a tremendous
opportunity and it did not happen. i feel like i am the low effort on this, but it is 62 million hispanic americans who represent domestic purchasing power deserve a seat. these are some of the most important economic decisions. we look forward to the engagement that you have is that you are willing to trade in for am trying to find out there is no question that high inflation is affecting every family, but in order to develop the right response, we need to understand underlying factors behind price increases. you have said that russia's invasion of ukraine, pandemic- related supply chain issues, and the energy issues from russia's invasion are perhaps some at least biggest factors in
inflation, but how is it that raising interest rates on the underlying causes of inflation ultimately going to change it? energy is still energy, supply chain is still supply chain, russia's invasion of ukraine is a continuing challenge, but there is nothing about interest rates that is going to affect any of that. chair powell: now, but there are major parts of the economy where demand exceeds supply meaningfully. that is where our toes have a job to do, where we can moderate demand and give supply temperature to recover say they get back into better balance and inflation >> -- and inflation comes down. >> we can all recognize that raising interest rates is a blend tool, but it is essential
to be mindful of the effects that your actions will have on unemployment, particularly for those groups hit hardest by the pandemic. the latest monetary policy report states that employment blocks phonics not only the night -- blacks and hispanics not only declined more than for whites and asians but also recovered more quickly. now that we are entering a period of larger and more frequent interest rate increases, what do you expect will happen to the unemployment rates of black and hispanic workers? chair powell: it will depend on the overall unemployment rate. our goal is to percent inflation while still keeping the labor market strength. that is our intention. >> i appreciate your intention, but i would venture to say that
what we will see is what we have seen in the past, that in crisis after crisis, disproportionately, americans help the response to inflation that continue that trend. it is woefully wrong that one group disproportionately faces consequences of policy decisions versus the rest of americans. this is another reason to have people at the federal reserve who represent this community to share those insights with the fed as you determine these macro policies that will affect our communities disproportionately. >> senator tellis. >> in response to the question from senator warner and a question from senator sinema,
senator warner more or less said we are all in the same boat, but you made the point on two different occasions that what is driving inflation not in your comment last the u.k., has to do with spiraling energy prices. could you talk a about yen pain at the gas pump and the increased cost of transportation, -- i believe europe is where they are -- this is not for you to comment on, because they moved total aggressively and did not look at resiliency with some of their energy inputs that were largely affected by the russian invasion, but could you talk a bit about the other commodities that are affected by rising interest rates? we are talking about housing and we know that pipes and other
input have gone up. could you talk about the market basket of other commodities that are influenced by increasing energy prices? chair powell: energy prices go into a lot in the economy, including as an input into manufacturing goods of all kinds and plastics particularly. it is a big contributor to inflation, beyond just actual energy prices. >> a closing thought -- we are unilaterally hamstringing your ability to bring inflation down. you do not have to respond to this. -- by artificially increasing the cost of energy in this country. if we is somebody would recognize that there is a way to get to a transition to green renewable energy and make the right path sustainable, we could
easily separate ourselves from the rest of other western democracies with respect to that tool, which is not in your toolbox. public, we can get to that discussion and embrace -- hopefully, we can get to that discussion and embrace the idea that transition is inevitable and a matter of resiliency. the press conference wrote out a 100 basis point increase. is that a long-term view or based on the circumstances as you see them today? would that be something potentially on the table with -- if the measures you are taking now do not work out? chair powell: i would never take something off the table for any and all purposes. the committee will make whatever rooms it believes appropriate to restore price stability. chair powell: -- >> i am that
you are at the helm. i have a lot of confidence in you, but we will be submitting questions back on the points i made at the opening statement about transparency. there is a bipartisan frustration in terms of questions we are asking and not answers to. thank you, chair powell. >> thanks, senator tellis. -- tillis. i have a series of questions i have not asked. after my questions, we will adjourn. you said that russia's aggression and bit lockdowns, in china especially, permitted to higher prices. consumer spending continues to be strong. most americans probably worry about inflation about the
strengths of the american economy and see positive signs of prices stabilizing. chair powell: consumers are overall in a shape financially. there is a very substantial accumulated quantity savings plan balance sheets, less so at the bottom of the income spectrum but right across the spectrum to support spending. you are seeing spending hold up pretty well. >> are there positive signs of prices stabilizing? chair powell: in terms of prices stabilizing, what we are looking for is compelling evidence that inflation is coming down. nothing i could pointed to says we have that, but core pc inflation is a pretty good indicator of where underlying inflation is running.
it has moderated over the course of this year, recently significantly, from where it was late last year. still had the need to be, -- still higher than it needs to be, but it has been earning at a rate that is lower than it was still on too high. we are looking for that and not seeing it and there are lots of stories about how this should happen. but it is clear that it will. but until we see it happen, we needed to keep moving. >> from your comments today, say the economy is not the point a recession? correct? chair powell: i do not see the likelihood of a recession as elevated right now.
no one is good at forecasting recessions very far out. no one has been able to do that regularly. i would say that the u.s. economy for now is strong, spending is strong, consumers, businesses are in good shape. financial conditions have tightened. you are seeing growth slow from the elevated levels of last year. you are seeing the beginnings of job growth slowing to a more sustainable levels. there is risk in that. of monetary policy is famously a blind tool and there is risk and that weaker outcomes are possible, but they are not our intent. >> as i said earlier, our economy is growing faster than china's. two questions about guest prices
-- we have heard a lot about guest prices. this president biden set gas prices? chair powell: no. >> does congress set gas prices? chair powell: not as far as i know. >> is the chair of the federal reserve set gas prices? chair powell: no. >> can you tell the committee what goes into the price of the pump and not only what toes you have but also other government agencies to bring the price down? chair powell: the price of oil is set globally, largely by the actions of larger, oil-producing countries. it is in the refining spread, what it costs, what refiners can charge before the public consumes that refined data. those are the two pieces.
our troubles do not work and to address either of those things. -- our tools cannot work to address either of those things. >> several have asked about the cost of housing for renters and aspiring home owners. last year alone, rounds went up more than 11%, faster than wages -- rents went up. what are the effects in the economy of more and more monthly income goes to housing? chair powell: it will crowd out other spending. the very vast increases in housing prices over the last couple of years have been broad, unsustainably high. >> that speaks to the importance of building more housing. last question, we have seen cryptocurrency values collapse by some $2 trillion and markets
crashing. consumers losing money, workers losing jobs. the monetary policy report highlighted the risk of stablecoin and digital assets. attack for a moment about the financial stability and monetary policy risks that these assets. how are stablecoins different? how are they different from the u.s. dollar which has the faith and credit of the u.s. behind it? chair powell: it is an instrument that is backed up. there is a reserve that has securities in it that are meant to assure the value of -- and, let us say it is a dollar stablecoin they are meant to ensure that your interest is actually worth a dollar. that sounds like a money market with great transparency about
what is in the reserve in order to preserve that one dollar value. the world is stablecoins is new and emerging. it does not have the sort of regulatory scheme that it -- that it needs to have. there is something you have been hearing from a number of federal agencies, including treasury, which is been leading an effort to put in place and many members of congress have proposed regulating digital assets. that seems wise. >> fcp, cfpb, other agencies, the fed's role in regulation of your mind is what? chair powell: that is one of the issues, who has authority? that is something congress would
need to clarify. we have a 30 over what banks can and cannot do -- we have authority over what banks can and cannot do. part of this will be sorting out, deciding what these banks are and how they should be regulated. there are also stablecoins eased in connection with crypto trading platform spread as most of what happens now with stablecoins, but there are also more that will be used in payments. that would be two different types of regulation. it is an area where congress is investing bandwidth and looking at proposals. it is a healthy process that should leave overtime to make something that has bipartisan support and puts in place appropriate regulation. >> what -- if congress does not act, i understand what you said
about s.e.c. is it a fed directly involved in any of these regulatory actions regarding cryptocurrency? chair powell: we regulate banks, supervise the banks. we have a say in what our banks, what reserve bag -- reserve regulated banks do with crypto on their balance sheets. we are at that table. >> does that suggest that a number of american banks are cautious because of your oversight on crib go? chair powell: american banks are very much exploring profitable opportunities to serve customers in this space. we are saying let s be sure that that takes place in a way