Press conference exchange between STEVE LIESMAN and Fed Chair Jerome Powell:

user: Steve Liesman, CNBC. Mr. Chairman, you talked about higher rates, perhaps from an expectation of higher growth. You didn’t talk about it in terms of expectations of higher deficits. Is that something you think might be behind the recent rise in interest rates, and is that—are rising deficits a concern to you?

assistant: So we don’t comment on fiscal policy, and, again, I don’t have a lot more to say on, on what’s driving bond yields. In terms of, of policy changes, though, let me give you a sense of how this, this works in the ordinary case. Let’s say Congress is considering a rewrite of the tax laws; it doesn’t matter what’s in the content. So we would follow that. At a certain point, we’d, we’d think we see the outline, so we’d start to model it. And then we’d wait, and we’d wait, and, at a certain point, the staff would brief the FOMC and say, you know, “This is—these are the likely effects.” There’s lots and lots of literature on the effects of tax policy changes on various parts of the economy. So we’d, we’d try to get smart on that. And then the law actually passes, and, you know, you’d start to put it—you’d probably run an alternative simulation before that happens, just to keep people trying to understand it. Then, then when it actually passes, it goes into the model, along with a million other things. So, you know, these—we have a very large economy. Many things are affecting it at any given time. And, you know, a law change of some kind would go in there, but—it would go in, but it would—you know, it’s a process that takes some time. Clearly, the legislative process takes a lot of time. And, of course, the real question is not the effect of that law. It’s all of the policy changes that are happening. What’s the net effect and, you know, the overall effect on the economy at any given time? So I think that’s a—that’s a process that takes a lot of time and that we go through all the time with every Administration, constantly. And I just—this will be no different. But, you know, right now, we’re—there’s nothing to—there’s nothing to model right now. It’s such an early stage. We don’t know what the policies are, and once we know what they are, we won’t—we won’t have a sense of, you know, when they’ll be implemented or, or all those sorts of things. So I think I would just say—

user: If I could just follow up on Nick’s question—are the current rates something you feel like you need to lean against, in that they go against the direction of policy by being—adding restriction to the economy? Or do you just take them as a given or perhaps a signal that you should do less?

assistant: I—look, I just think—the first question is, how long will they be sustained? If you remember the 5 percent 10-year, people were drawing massively important conclusions only to find, you know, three weeks later that the 10-year was 50 basis points lower. So, you know, it’s material changes and financial conditions that last, that are persistent, that really matter. And we don’t know that about these. What we’ve seen so far? You know, we’re watching it. We’re reading. You know, we’re doing the decompositions and reading others, but right now it’s not a major factor in, in how we’re thinking about things.