Press conference exchange between COLBY SMITH and Fed Chair Jerome Powell:

user: Thank you. Colby Smith with the New York Times. You just described inflation expectations as well anchored, but has your confidence in that assessment changed at all, given the increase in certain measures and the high degree of uncertainty expressed by businesses, households, and forecasters?

assistant: So our inflation expectations—of course, we do monitor inflation expectations very, very carefully—basically, every source we can find, and, you know—short- term, long-term, households, businesses, forecasters, market-based. And I think the picture, broadly, is this: You do see increases widely in short-term inflation expectations. And people who fill out surveys and answer, you know, questionnaires are pointing to tariffs about that. If you look—in the survey world, if you look a little further out, you, you really—you really don’t see much in the way of an increased longer-term inflation—inflation expectations are mostly well anchored, if you look at the series maintained by the Federal Reserve Bank of New York, for example. Then you have market based, and it’s the same pattern. You know, people and markets are pricing in and, and breakevens, some higher inflation over the next year must be related to tariffs. We know from the surveys. But if you look out five years or five-year, five- year forward, you’ll see that breakevens have—are either flat or, actually, slightly down in the case of a longer-term one. So we look at that, and we will be watching all of it very, very carefully. We do not take anything for granted. That’s at the very heart of our framework: anchored inflation expectations. But what—that’s what you see right now.

user: And, and how much weight do you put on the deterioration in consumer confidence surveys? You said recently that this is perhaps not the best indication of future spending. But I’m curious, you know, what you think is behind this deterioration and, and to what extent it could be a leading indicator for hard data.

assistant: So let’s start with the hard data. You know, we, we do see pretty solid hard data still. So growth looks like it’s maybe moderating a bit, consumer spending moderating a bit, but still at a solid pace. Unemployment’s 4.1 percent. Job creation, most recently, has been at a healthy level. Inflation has started to move up now, we think partly in response to tariffs, and there may be a delay in further progress over the course of this year. So that’s the hard data. Overall, it’s a solid picture. The, the survey data, in the case of both household and businesses, show significant rise in uncertainty and significant concerns about downside risks. So how do we think about that? And that’s—that is the question. As I mentioned the other day, as you pointed out, the relationship between survey data and actual economic activity hasn’t been very tight. There have been plenty of times where people are saying very down—downbeat things about the economy and then going out and buying a new car. But we don’t know will be the case here. We will be watching very carefully for signs of weakness in the real data. Of course we will. But I, I—you know, given where we are, we think our policy’s in a good place to react to, to what comes. And we think that the right thing to do is, is to wait here for, you know, for greater clarity about, about what, what the economy’s doing.