Press conference exchange between VICTORIA GUIDA and Fed Chair Jerome Powell:

user: Hi. Victoria Guida with Politico. I wanted to ask, first of all, if you could clarify. You were talking about how tariffs were a good part of the uptick in the inflation forecasts, and I was just wondering what that specifically refers to. Is that the tariffs that have already been put in place? Is that anticipating some of the tariffs that might be coming on April 2? And then also, if you wouldn’t mind talking a little more about the balance sheet decision and what drove that. Did that have anything to do with expectations of how the debt ceiling—raising the debt ceiling might affect the reserve supply?

assistant: Yeah, so, in the SEP, you’ll see that there’s not further progress on core inflation this year. We’re side flatlining, going sideways. We don’t ask people to say—to write down how much of this is from tariffs and how much of it is not. But some of it is from tariffs. We know that tariffs are coming, and we know that they’re probably already—all, all forecasters have tariff inflation affecting core PCE inflation and core CPI inflation this year, without exception. I’m not aware of an exception. So it’s in there. I can’t tell you how much of that it is. In terms of the balance sheet—so, yeah, we—I think—I guess the way I’d say it is, you know, it was the flows in and out of the, the TGA that got us thinking about it, but as we, you know, as we thought about it, we really came to the view that this was a good time to, to make the move that we made. And, broadly, Committee came around—came around to the view that we, we would do the same thing we’d already done, which is, once we—I guess in June, we— was it June? Whenever it was, we, we lowered the pace of QT, and we’re just going to do that again. We’re going to cut it roughly in half. And the sense of that is, if you’re cutting the pace of QT roughly in half, then the runway is probably doubled, okay? So it’s going—it’s going to be slower for longer. And people really liked that. People thought, “That’s, that’s a good idea.” You know, it’s like a plane. You can think of it like a plane coming in for a landing. As we get closer and we—by the way, we still think that reserves are abundant, although you begin to see some of the—some of the things we look at begin to react a little bit, but we still think that they’re abundant. And, of course, now, the TGA is emptying out, so reserves are, are higher now, so you can’t really see the underlying signal. So we came around to the view, and, and it had a lot of appeal, and so we did it. It really—it has no implications at all for monetary policy. It has no implications at all for the ultimate size of the balance sheet. It isn’t sending a signal in any hidden way that you can try to tease out. It’s just not there. We’re, we’re basically—it’s very consistent with our plans and our practices that we’ve published and that we’ve followed since we began this—what is a very successful, you know, rundown of the balance sheet. Again, this is the second time that we’ve slowed the pace. And we’ve said that we would stop when we were somewhat above the level of reserves we judge as ample. And, clearly, we’re not at that level yet, but we’re going to be approaching it more slowly. It’s a commonsense a— kind of a thing, and it had—it had pretty broad appeal, I will say.