Jerome Powell

For a long time, we've been

working on the hypothesis really that tariffs would lead to a one-time price increase and that that would go away over time.

In other words, that there would be no further change.

So measured inflation wouldn't reflect that higher level going up more and more.

And it's time for that to happen.

We really do expect that to be happening in the next two quarters.

So we'll be watching very carefully to see that what we've thought all along would happen.

That's kind of critical part of the forecast.

We need to really see that.

With energy, it's so hard to say.

I mentioned in sort of the textbook, you would look through an oil shock because they tend to be short-lived and they tend to revert.

And monetary policy works with long and variable lags.

you wouldn't necessarily react right away.

I think that is all the more true given that we're several years above 2% inflation and that we're already looking through the tariff shock.

So I think we're going to be very cautious about that.

But the question about looking through energy really is not in front of us right now.

It hasn't even peaked yet.

And I think we'd want to see the backside of that and progress on tariffs before we even thought about reducing rates.

Sure.

So, you know, my concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors.