jerome h powell : opening remarks - “ community listening session " opening remarks by mr jerome h powell, chair of the board of governors of the federal reserve system, at a “ community listening session ", a fed listens event at the federal reserve bank of kansas city, kansas city, missouri, 9 october 2019. * * * good morning. i am happy to be here in kansas city for the 13th of 14 fed listens events. i look forward to hearing the perspectives of the community and business leaders participating today. the reserve banks and the board have been holding fed listens events around the country as part of a comprehensive and public review of our monetary policy strategy, tools, and communications practices. almost all of the fed listens meetings, like this one, have been open to the press and live - streamed on the internet. both the breadth and transparency of the review are unprecedented for us. one reason we are conducting this review is that it is always a good practice for any organization to occasionally take a step back and ask if it could be doing its job more effectively. but we must pose that question not just to ourselves. because congress has granted the federal reserve significant protections from short - term political pressures, we have an obligation to clearly explain what we are doing and why. and we have an obligation to actively engage the people we serve so that they and their elected representatives can hold us accountable. we have invited you here because we want to better understand how monetary policy affects your lives and the lives of the people your organizations represent. we want to hear your perspective on maximum employment and price stability — the monetary policy goals congress has assigned us. now is a good time to conduct the review. unemployment is at a half - century low, and inflation is running close to, but a bit below, our 2 percent objective. while not everyone fully shares economic opportunities and the economy faces some risks, overall, it is — as i like to say — in a good place. our job is to keep it there as long as possible. while we believe our strategy and tools have been and remain effective, the u. s. economy, like other advanced economies around the world, is facing some longer - term challenges — from low growth, low inflation, and low interest rates. while slow growth is obviously not good, you may be asking, “ what ’ s wrong with low inflation and low interest rates? ” low can be good, but when inflation — and, consequently, interest rates — are

greater synchronization in asset markets. global shocks ( for example, from oil prices and geopolitical risk factors ) that produce broadly similar effects on most economies may have become more prevalent and may tend to dominate idiosyncratic national shocks. but it also is quite possible that greater international diversification of portfolios now allows developments affecting assets in one country to spill over into markets of others - both at the level of particular industries and more broadly. if synchronization of asset price movements comes about mainly in this way, the suggestion is that excess liquidity in one country could move asset prices in another, perhaps significantly, even if liquidity was well contained in the latter. 12 in the somewhat longer run, patterns of aggregate saving - influenced, for example, by demographic developments - may also affect the path of real interest rates and, in turn, prices of assets, again complicating interpretation of co - movements. for instance, an increase in savings as a growing share of the population nears retirement may reduce real rates and raise asset prices. patterns of immigration that affect the population's demographic profile, too, can affect asset prices. in the united states, we have seen some of these effects in certain segments of the housing market. conclusions in summary, although excess liquidity has been cited as a source of general asset price instability, the support for this conclusion is mixed, at best. we do find a positive correlation between growth rates of real house prices and m3, but the correlation does not seem to hold for real asset prices more generally - including, in particular, equities. in this talk, i have suggested that we are only at the beginning of an understanding of some of these relationships. even if an underlying causal link exists between some real asset prices and liquidity, many additional factors may be influencing what we see, with potential for misleading us in interpreting simple associations or correlations. the problem obviously is complex. as a start, however, we need a better understanding of how asset prices are determined that can be translated into guidance for a policy process that uses real - time variables. to borrow a turn of phrase cited often in the physical sciences, theory tends to " explain a complex visible, with a simple invisible. " 13 in the realm of policy, of course, we need to work with simple, but reliable visibles - a requirement that makes this task all the more challenging. for that reason, i have been pleased to join this group of