九、关于如何平衡利率与通胀：过去大部分时间以及未来四年，我们都可能都处于利率的有效下限

观众1：好的。我赞成你所说的每一个字，特别是你提到的灵活这个词。现在我知道灵活的平均通胀目标制的名称。从有效下限看，我们从未看到如此不灵活的货币政策。利率接近为零，对经济发展变化几乎不作任何反应。这是第一点。第二，希望你澄清，当你遇到利率下降但并没有达到有效下限时，并不存在平均通胀目标。

克拉里达：第一，我们达到了利率的有效下限，不幸的是，我们在过去的12年中大部分时间都这样，并且很可能之后四年也这样。因此，这一框架的重要进展之一是接受这个有效下限，并思考需要采取何种措施来抵消对政策的限制，从而实现我们的目标。我们已经对政策进行了几次修改。一个是，我们在学术文献中所称的，一个长期的低利率政策。这一措施可以追溯到90年代当你还在美联储的时候。基本这就是我们现在做的。在满足一定条件之前，利率将持续趋于零。

第二，我们估算了菲利普斯曲线模型，认为劳动力市场表现不佳，所以我们也不会提高利率。我们实际希望通胀及通胀预期本身保持不变。正如一个月前我在布鲁金斯学会的一次演讲中所指出的，同样，我们要理解当目前的政策发生变化之后会发生什么。我们在那之后的目标是实现2%长期通胀。而将通胀提升至2%的步伐将取决于通胀预期，以及自我们达到有效下限以来，通胀与2%目标间的差距。

第三，我们相信目前框架可以为达到我们政策目标很好的服务。如果我们面临失业率上升和通胀率下降，我们将实施新一轮政策来降低失业率和提高通胀率。同样地，一旦我们达到这些目标，我们将希望确保长期通胀率恢复至2%。

主持人：我们下一个问题来自Ed Cox。

观众2：我是Committee of Economic Development的 Ed Cox，非常感谢。您能就美联储的准备金以及可能导致利率调整的条件发表看法吗？

克拉里达：谢谢。是的，显然2020年银行体系的准备金大幅上升，这反映出我们一直在购买大量的国债和MBS。最初，这些购买是为了应对市场的异常运作。为了让国债市场继续运作，我们不得不大量购买，当然这也增加了系统内的准备金。在疫情前，我们讨论过充足的准备金水平。显然，现在准备金远高于充足水平。自2008年以来，美联储按照市场利率支付准备金利息，我们还将继续如此。重要的一点是，通过支付利息，我们能够保持对利率的控制，在一个准备金趋于零的体系中，显然随着时间的推移，我们预期准备金会随着经济复苏而减少。但由于我们在春季采取的行动，它们确实增加了。

主持人：下一个问题。

观众2：请问您能否预测何时将提高准备金利率？

克拉里达：我不认为这将在短期发生，我认为当实现2%通胀目标及充分就业后，我们会考虑提高联邦基金利率和准备金利率。

观众3：Dodd-Frank Act 和 Budget Act 对金融危机中的应对行动进行了限制。你认为有必要要求国会改变对美联储施加的任何限制吗？

克拉里达：谢谢你，回答是不。我们相信，根据第33条授权法案，在不寻常和紧急的情况下，以良好的抵押品提供贷款是非常重要的。我们认为拥有这种权力是绝对必要的。我们在春季负责任地应用了该措施，甚至是创造性的和大胆的。我们曾表示，这些措施确实适用于不寻常和紧急的时期。但当新冠疫情结束后，我们预计将会收回。显然，目前国会通过的最新立法，规定了我们相关的救助措施于2021年底停止。我们尊重这一点，而且我们已经为归还了大部分国债。但重要的是，这项立法并没有改变第33条的授权法案。我知道阁下的问题中隐含了Dodd-Frank Act的一个重要变化，即要求财政部长批准并认可第33条的授权法案。我们接受这一点，我们理解这一点，我们不认为这些变化在未来会是挑战。

主持人：你预计下一任政府会重启这些救助方案吗？

克拉里达：这个和现在没什么关系。我认为，该计划的重新启动将取决于经济状况。我们非常欣慰获得了财政支持，又被称为刺激。但这确实是一个救济方案。这是一个通过失业福利保障收入的一揽子计划，而且工资保障也非常重要。我认为该计划的实施和对经济的支持是非常积极的。因此，我们甚至可能不需要考虑或就重新启动相关工具进行对话。但显然，如果有必要，我相信财政部长候选人耶伦和鲍威尔主席将会倾向于这样做。目前我并不预见这一点，但这肯定是可能发生的事情。

主持人：下一个问题 来自Eric Pulaski。

观众4：谢谢。请您对中国2021年在美国国债方面的行为及美国在这方面可承受的风险发表意见。

克拉里达：谢谢。我谈谈美国国债的全球市场。美国国债实际上是抵押品和无风险资产的黄金标准。有超过一半的国债被美国境外持有，不仅仅是中国。60年代的说法是美国作为储备货币的提供者享有极高的特权。出于流动性抵押品的原因，人们希望持有美国国债，这极大地降低了美国的借贷成本。50年来一直如此。我认为在2021年，这种情况不会有太大的改变。我不会对特定国家发表任何评论。

十、关于美元指数走势：美元大致处于过去5年来的合理区间

主持人：下一个问题 来自Jeff Rosensweig。

观众5：副主席，我工作于埃默里大学的Goizueta商学院。上世纪80年代末，您去华盛顿任职时，我有幸代替你在耶鲁讲授国际金融和货币银行学。我认为美联储并不太关注汇率，不知道现在您怎么看？

克拉里达：好久不见了Jeff。美联储的其中一个转变我认为是非常正面的，即从本•伯南克（Ben Bernanke）时代开始，在耶伦（Janet Yellen）时代继续，美联储在其沟通中承认汇率是理解经济的一个重要因素。不仅因为汇率随贸易或其他原因而上下波动，而且因为美元作为全球储备货币的作用。我刚提到一个美国的特权。但提供全球储备货币的其中一个成本是，在经济困难时，它往往成为一种安全的避险货币，这意味着，当世界经济衰退时，人们会购买美元，而这显然会使美元升值，损害敏感行业的贸易，并会压低通胀，因为这会降低进口价格。在我们对总需求预测中，我们肯定会理解并试图评估美元变动对通胀影响。你知道，有人说我们不以美元为目标，我们不会在任何有关美元外交的决定中钉住美元，也不会完全按照财政部长的权限行事。作为一名前任财政部官员，我可以提醒你这一点。当然，我们并没有忽视美元变动对总需求和通胀的重要影响。

主持人: 杰夫帮了我一个忙，问了我留下的问题，我想关注美元近期的走势，因为美元已经走弱。这种变化对你目前的前景有何影响？

克拉里达：我知道你会问这个问题，所以我回头看了一张5年前的海外美元指数图。我在之前的工作中发现，有关美元的头条新闻往往在一个显著的价格变动后才出现，但他们经常忽略的是，在过去三年或四年美元走势的情况。因此，用广义的美元衡量，你基本上看到的是，美元目前的水平仅略低于过去五年的平均水平。当然，春季的避险需求大幅提升了美元价格，而现在随着风险偏好回升，美元已回落。总的来说，美元大致处于过去5年来的合理区间，目前我并不担心。

十一、关于全球产能过剩与通胀水平：通胀率可能会高于2%，但不会持续数年

克拉里达：下一个问题来自Joseph Bauer。

观众6：非常感谢。我在哈佛商学院工作了大约50年，大部分时间都在从事被称为制度经济学的工作。我在讨论通货膨胀时很感兴趣的是，通货膨胀来自太多的钱追逐不太多的商品。自80年代以来，在我的研究中，我所看到的是，除了一些有新产品的领域，几乎所有商品的全球产能过剩。因此，当我一直在想，货币问题的讨论是否真的只从货币方面来看通胀。在我看来，我们没有通胀的原因是大部分地区都有大量商品。您对此有何评论？

克拉里达：我认为这是一个非常好的观点。我在美联储谈过这个问题。我这样回答，美国经济在20世纪90年代中期开始出现根本性转变，直到最近才开始受到应有的重视。在60年代、70年代和80年代初，当我们有通胀的时候，我们认为通胀在不同类别的商品和服务中大致是均匀分布的。因此，商品通胀率为14%，服务通胀率为14%。Milton Friedman告诉我们，通胀是价格的普遍上升。价格总有相对的变化。90年代中期开始的美国经济的重大变化是，在Volcker和Greenspan 的领导下，通胀率一度从14%降至2%。自九十年代中期以来，美国经济已经分成了两块。其中商品生产部分基本上没有通胀。平均而言，价格正在下跌，因为国际竞争以及技术的改进，这一块约占经济的四分之一。另外四分之三是服务业经济，其通胀率从2.7%到3%左右。因此，实质上在一年内，当我们确实达到2%的通胀目标时，会发生的情况是，商品的价格下跌1%，而服务价格上涨约3%。这是我和其他人所称的非常强劲的全球去通胀的力量。在通胀如此高的时候，这一点并不明显。但现在你确实看到了贸易和技术在美国通胀中的重要作用。

主持人：更不用说我还会谈到人们的期望。由于竞争，高价格是站不住的。这确实跟我们之前讨论过的问题相关。基于疫苗带来的复苏。今年有没有可能出现一种错配，即所说的全球供应链在供给方面滞后于商品需求。

克拉里达：我认为在某种程度上这会发生。我们只是不知道这会持续多久。就我个人而言，如果今年发生的话，我倾向于将其视为一次基本的相对价格调整，这是使人们重新回到服务业并重新就业所必需的。在这种情况下，通胀率可能会高于2%，但我预计不会持续数年。我认为就时间长短而言不会太长。如果这真的发生了，我们将仔细研究。但我的倾向是我们不应该使用紧缩政策，它只是价格系统的调整。重新分配资源，使供应与需求一致。我们的经济有超过一万亿美元的超额储蓄。我们有更多的支票寄到邮箱里。因此，今年的需求将足够，供求将达到平衡。但对我而言，这并不会导致我们所沟通的政策出现任何新的调整。

十二、关于服务业衰退带来的失业：美联储非常专注并尝试衡量其严重程度

主持人：我们的下一个问题来自Melissa Saphier。

观众7：大家好。谢谢你今天的讲话。它真的很有趣，内容丰富。我是Melissa Saphier，在Bridgewater Associates工作。我要问的一个问题是劳动力市场。当我们从这场危机中走出来时，我们注意到这是长期以来第一次失业集中在服务业的衰退。这与以往的经济衰退有很大不同，以往我们看到的工作岗位主要集中在制造业。而随着企业效率和自动化程度的提高，这些工作岗位大多没有恢复。当我们从大流行中走出来，餐厅重新营业时，其中部分的服务业的工作会立刻恢复，但你认为这部分的潜力有多大？你是否担心这些服务业的工作岗位重蹈我们在过去的经济衰退中看到制造业的工作岗位的覆辙？

克拉里达：这是个好问题。我还没法判断这次经济衰退会有多大的影响。你可以用不同的方法来定义影响。我认为与你的问题相关的一个方面是服务密集型行业的人员和工作岗位的错配。其中一些工作可能不会再出现，那么如何过渡。几十年来，我们在劳动经济学中已经认识到，当行业出现冲击时，总会有调整的时候。这无疑是美联储工作人员密切关注的一件事，因为在如此多的波动中，这是一个前所未有的情况。由于该流行病我们没有太多历史事件可供观察，因此我们非常警惕这一风险，我们非常专注并尝试衡量其严重程度。

主持人：美国经济何时恢复到2020年2月的水平？有种计算是，即使我们恢复到100%，我们也会失去原本的增长。那么，我们何时能恢复到100%的第一个水平以及何时能恢复到我们在增长方面所失去的第二个水平时，您的预测是什么？

克拉里达：我在2020年12月的预测是，我们将在2021年下半年的某个时候恢复第一个水平，可能是第三季度，也可能是第四季度，视情况而定，快点的话可能是第二季度。我们2020年末经济比2019年峰值少约2%。因此，我们必然会有更高的增长。你的问题的第二部分更有趣。因为衰退之后经济总是会增长，所以实现潜在增长的真正标准不仅是回到先前的水平，而且是弥补了失去的增长。我认为现在不确定，原因如下。如果你看第二季度经济，损失大约年化30%，也带来有效供给减少年化约30%。人们不去比萨饼店，也不去看球赛等。对于正在分析增长的人士来说，在新冠疫情大流行的情况下，如何评估在2020年的损失将是一个棘手的问题。如果说因为在2019年我们增长在2%，在2020年我们就能增长2%，面对当下的流行病，这可能不是一个好的做法。但我确实认为，未来经济将重新回到之前的状态。美国经济在全球金融危机中遭受重创，但在某些方面未能恢复。虽然经济增长了，但2009至2013的短暂下滑增长基本上从未得到弥补。

十三、关于新一轮财政刺激法案：将在下次议息会议上进行讨论

主持人：下一个问题来自Peter Cooper。

观众8：我来自德意志银行。非常感谢你在这发表的的评论。我的问题分两部分。本周发生了很多事，比如佐治亚州选举，许多预测据此有所修订。你的观点有没有改变？这是否会影响你对控制联储资产负债表的思考？这个问题的第二部分是进一步展望，我们最终会看到通胀率上升，而这可能会在不久的将来发生。但你何时会对通胀的程度感到不安？

克拉里达：是的，问题有两部分。在我2020年12月的第一次预测中，我已经假设会有某种财政方案。该法案是在我们12月的会议后通过的。有人认为年底9,000亿美元的财政支持就已落地。我已经或多或少地把这纳入了我的研究。然而，佐治亚州的选举结果确实增加了额外一揽子计划的可能性，或对那些认为会有额外一揽子计划的人而言，这可能会增加潜在的规模。我还没有真正开始分析。我们将在下次会议上举行讨论。但我现在还没形成自己的观点。但就规模而言，我们清楚地知道会如何变化。关于通胀我不需要考虑更多。我认为重要的是，我们今年很可能会有一些相当大的相对价格变动。许多人士预测，通胀率会在2%以上。鲍威尔主席提到了这一点，我今天也提到了。但我不会担忧太多，因为我并不认为这是一个潜在的持续性因素。我们已经制定了一套非常具体的政策条件。我们希望通胀率为2%，并希望接近最高就业率。我们希望达成的2%的通胀率不是稍纵即逝的，而是保持在一个可持续的水平上。我认为现在关于2%的目标太高或太低的讨论是没必要的，这取决于冲击。因此，我将考虑薪酬、生产力、市场预期、基于调查的通胀，并试图在所有这些因素中形成一个观点。

英文原文

Clarida: First, please allow me to offer a few remarks on the economic outlook, federal reserve, monetary policy, and our new monetary policy framework. In the second quarter of last year, the covid pandemic and the efforts put in place to contain it, delivered the most severe blow to the us economy since the great depression. But economic activity rebounded robustly in the third quarter, and appears to have continued to recover in the 4th quarter,although at a pace so much slower than we saw in the third quarter.Household spending on goods, especially durable goods, has been strong and moved above its pre pandemic level, supported in part by federal stimulus payments, expanded unemployment benefits.


In contrast, spending on services remains below pre pandemic levels, particularly in sectors that require people together contact intensive services, including travel and hospitality. And we saw some evidence of that this morning in the payroll report. In the labor market, more than half of the 22 million jobs that were lost in March and April have been regained. As many people have been able to return to work. Inflation following a large decline in the spring picked up over the summer, but has leveled out more recently. For those sectors that have been most affected by the pandemic, price increases remain muted. Normal GDP growth in the 4th quarter down shifted from the once in the century, 33 % rate in the third quarter. It is clear to me that since the spring of 2020, the economy has turned out to be more resilient in adapting to the virus, and more responsive to monetary and fiscal policy support than many predicted at the time.

Indeed, it is worth highlighting that in the baseline projections of the summary economic projections that the committee released, most of my college and I revised up our outlook for the economy over the medium term between September and December, and project a relatively rapid return to levels of employment and inflation, consistent with the fed‘s statutory mandate, and certainly, as compared with what we saw following the global financial crisis. In particular, the median participant projects that by the end of 2023, a little less than 3 years from now, the unemployment rate will have fallen to around 4%, (PCE) inflation will return to 2%, and following the GFC(Global Financial Crisis) it took more than 8 years for employment and inflation to return to similar levels.

While the recent surge in new COVID cases and hospitalizations is a serious cause for concern, and clearly a source of downside risk to the very near term outlook. The welcome news on the development of effective vaccines indicates to me that the prospects for the economy in 2021, once the vaccines can be efficiently and widely distributed, and the downside risk to the outlook have diminished. The two new SEP charts that we released for the first time in our December meeting speak to these issues, ruin uncertainty by providing information on how to risk and uncertainties that surround our outlook have evolved over time. More nearly, all participants keep continue to judge that the level of uncertainty about economic activity remains elevated. Fewer participants saw the balance of risk has weighted to the downside compared with September. Although a little more than half of participants judge the risk to be broadly balanced for economic activity, a similar number continue to see the risk weighted to the downside or inflation.

Let me talk now about our recent FOMC decisions and our new monetary policy framework. At our most recent meeting, the committee made important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate and asset purchases, and that also provided unprecedented information about our policy reaction function. As announced in the September statement and repeated in November and December with inflation running below 2%, our policy will aim to achieve inflation outcomes to keep inflation expectations anchored at our 2% longer run goal. We expect to maintain an accommodative stance of policy until these outcomes, as well as our maximum employment mandate are achieved. We also expect it will be appropriate to maintain the current target range for the federal funds rate until labor market conditions have reached levels consistent with our assessment of maximum employment, until inflation has risen to 2%, and until inflation is on track to moderately exceed 2% for some time.

In addition, in the December statement, we combined our forward guidance to the fund rate with enhanced outcome based guidance about our asset purchases. We indicated that we will continue to increase our holdings of treasuries by at least 80 billion per month, and our holdings of MBS securities by at least 40 billion per month until substantial further progress has been made towards our national employment and price stability goals. The changes to the policy statement that we made over the fall, bring our policy guidance in line with our need for framework, outlined in a revised statement of longer run goals that the committee approved last August. In our new framework, we acknowledge that policy decisions going forward will be based on the committee's estimates of shortfalls of employment from its maximum level and not deviations. This language means that going forward, a low unemployment rate in and of itself will not be sufficient to trigger a tightening of monetary policy, absent any other evidence that inflation is at risk of moving above mandate consensus levels. With regard to our price stability mandate, while the new statement maintains our definition, that the longer one goal for inflation remains 2%, it elevates the importance of keeping inflation expectations anchored at 2%. In a word, in which an effective lower bound constraint is binding on monetary policy.

To this end, our new statement conveys the committee's judgment that in order to answer expectations at the 2 % level, we will seek to achieve inflation that averages 2% over time. And  therefore, following periods and inflation has been running below 2%, appropriate policy will likely aim to achieve inflation moderately above 2 % for some time. As chair Powell indicated in his whole remarks, we think of our new framework as an evolution from flexible inflation targeting to flexible average inflation targeting. While this new framework represents a robust evolution in our monetary policy strategy, the strategy is in service to the dual mandate goals of monetary policy assigned to the federal reserve by the congress, and these remain unchanged. Our interest rate and balance sheet tools are providing powerful support to the economy and will continue to do so as the recovery progresses. It will take some time for economic activity and employment to return to levels that prevailed at Business cycle peak reached in February. We are committed to using our full range of tools to support the economy, and to help ensure that the recovery from this difficult period will be as robust as possible.

Steve: The questions, as Kerry said earlier, which I want to start off with the events in Washington on Wednesday. To what extent does the political instability that was shown to exist on Wednesday and really erupted out into the public. Does that change or have an effect on the outlook, as far as you're concerned to what extent is democratic stability, a cornerstone or a very important aspect of the outlet for US growth?

Clarida: And I think it's fair to say that like all Americans, I was angry to see the chaotic images of mobs storming the capital and occupying halls of congress, determined disrupt the constitutional process, but I was thrilled and pleased to see that the house and the senate have ratified the election results for the calendar and for the law, and I'm sure my colleagues look forward to working with the Biden's economic team when they take office on January 20th or soon, thereafter. You're absolutely right, however that confidence about the economy and our system is important, factor in economic activity. I'm hopeful that we can get past this episode and look ahead as the new administration comes in and, as we work together to put in place the economic policies that can support the recovery.

Steve: Continue to instability, wound that cause you to change your outlook on either the potential of growth or actual growth in the United States?

Clarida: hypothetically, if that were to continue, then obviously, any instability that erodes confidence, capital spending and investment. And consumer confidence is something that we have to look at. I don't think that will be the case. But obviously, if it were, we would have to factor them. But let me be clear. I don't perceive that as being a challenge.

Steve: I hope you're right about that. Let me ask you about this morning payroll report. Came in down 140,000, the first declines in April. Did you expect this? How much more weakness do you expect? In the payroll, part of the economy right now.

Clarida: I think the overall picture was a little bit more balanced than the headline number which was disappointing. You never like to see a contraction and employment in the economy, especially when we have a deep hole to fill. That said the job losses were really concentrated in leisure and hospitality. Not surprisingly, we did see nice pickups, and employment in construction and manufacturing. And so I think it's not surprising, given the surge in new cases and hospitalizations, and the natural inclination for people to hunker down during the holidays. I also would know that there was some positive region revisions to prior months. So if you add all that together, clearly a setback in December with the sluggish or decline the perils. But right now not something that, I would expect to continue into the new year.

Steve: That's sort of a nice opening to talk about the outlook overall. You talked about the positive developments of the vaccine. When do you expect that to show up in the economy? When do you expect a greater normalization of both, the unemployment rate, and the overall economy?

Clarida: I think as we've learned, vaccines first have to be developed and they have to be approved and they have to be distributed. So the good news is that there are some pioneering research, these vaccines are now developed, and by all accounts, very effective. They have been approved. The distribution of the vaccines thus far has lagged behind projections. That's obviously concerned. It's my expectation that as we move throughout the spring and end of the summer, that vaccinations will become widely available, and that will be take up on that. And then I think at that point roughly in the summer, we'll begin to see the economy moves past the the Covid pandemic and return to, I think, not only trend, but above trend growth. As I said, with the SEP projections, we see pretty robust declines in the unemployment rate. In this year and, I think other forecasters are similar. But we acknowledge the next several months because of the surgeon, the virus and hospitalizations is going to be challenging. Obviously, until we get the details, worked out of distributing vaccines, that's also a challenge. But as we move out through end of the year, I do expect those challenges to be met and for the economy to turn in a very impressive growth performance and decline in unemployment this year.

Steve: I don't know how deeply you and Fed delve into this issue but thank you for that answer. What are the risks around vaccine distribution? You're not the first forecaster I spoken to, who has said that vaccine distribution is the absolute key to getting to the spring rebound that they forecast. What are the risks in terms of timing, is it, something that could come 3 months or 6 months later or is it, something that you think is a matter of weeks when you look at the risk around what we know about the problems with distribution.

Clarida: I don't really follow it more closely than what I read in the newspapers. It brings specifically on the epidemiology. But I will say is I think the key thing is the development of the efficacy is the most important. And I just have faith in the American system and the American government's ability to distribute a life saving vaccine. It may take a bit longer than we hoped. But I think we are going to get it done.

Steve: Let me move on and I will ask you some more detail about the issues of asset purchases. As you pointed out, you guys made a pretty big change in bringing the guidance about asset purchases more in line with the guidance about interest rates, but not exactly. Could you talk about the differences? You told us that interest rates will remain a low while you're looking for 2% inflation, and indeed, actually trying to exceed 2% inflation. But we have this kind of thing until further substantial progress when it comes to asset purchases. And several of your colleagues have suggested that maybe asset purchases, what might end this year? What can you tell us about both of those questions?

Clarida: First of all, you're right. We view our outcome based guidance on rates on balance sheet is very complimentary. We also believe that the guidance on our balance sheet, which indicates substantial further progress, means that we are committed to providing a very ample amount of recovery this year. It is outcome based guidance. And so the duration of the program will depend on some extent on how rapidly the economy recovers. In terms of the difference in the guidance, it really reflects the fact that as we observed in the last cycle, when this bed was using both large scale purchases and rate guidance, that it initially cut rates to zero with input in place to outset programs. If then eventually brought the outset programs to an end before it hiked for the first time. So we've essentially said that we would expect this process to be broadly similar that we're doing. We coverage to zero. We're doing both now, large scale asset purchases and rates. At some point, it will be appropriate, but I think that's down the road. It'll be appropriate to begin to slow the pace of the increase in our balance sheet. And then finally, once the economy has met the conditions that we laid out in September, we will begin to hike rate. So it's basically a sequential process. But let me emphasize that I think that time is some ways off. And I certainly think that it could be quite some time before we would think about tapering the pace of our purchases, the way I look at the data and I'm a relative optimist on the economic outlook, but we were in a deep hole. Substantial further progress means not only patting ourselves on the back because of the improvement in the labor market, but we want further progress in the labor market and moving towards our 2 % inflation objective. So I think that's some ways away before we declare victory on that in terms of the balance sheet.

Steve: I will give you one more opportunity, Mr. vice chairman, to join your colleagues and suggesting that guidance or the reduction could come this year.

Clarida: I guess speaking for myself, there's 18 folks on the committee. My economic outlook is consistent with us keeping the current pace of purchases throughout the rest of this year. Obviously, if the outlook changes, we have outcome based guidance that would change for right now. I think maintaining the current pace of purchases throughout the remainder of this year is my expectation.

Steve: Can you tell me one of the risks that many people talk about out there? When they look at the forecast, and this is obviously an upbeat forecast. You know what they say, I'll be happy for these kinds of problems. It is the issue of inflation that the man could come back stronger, especially with a recent stimulus bill that's out there, the possibility of vaccine. How much concern do you have about inflation this year? And is policy right now at the current levels of zero interest rates? the current level of asset purchases, Is it well attuned in a good place as you guys like to say when it comes to the possibility of inflation later this year?

Clarida: I do believe that because of some year over year basic facts, we will see a move up in inflation, perhaps above 2% in the spring and the summer. Essentially, as you compare a price in 2021 to a price in 2020, because prices were falling, you will get mathematically up boost to inflation. I think chair Powell discusses this at his press conference in December, but I would expect that to be transitory. And indeed, our views by the end of the year, inflation will be higher than it is today, but somewhat below are 2 % objective. We made a fundamental change in our framework and in our guidance, so what we've said is that we are not going to lift off until a three-part test is met, inflation is at 2%, that the labor market is consistent with our view of maximum employment, and that inflation is sustainable at 2% actually may move above. And so I think that guidance is important for your viewers and for folks on this symposium. To remember, I also pay a lot of attention to inflation expectations, not just market based measures, but also survey based measures. I think we went into this, we went into the Covid pandemic with inflation expectations at the low end of a range that I consider consistent with our price stability mandate. So I think we have policy positions exactly where we want it. Right now, we do expect some move up in inflation this year, but we think it will to some extent be transitory. Then as we move into next year, we'll still be running somewhat below our 2% inflation objective.

Steve: I'm guessing you know where I'm going after that, which is part of the rise and inflation has shown up in a higher bond yields. The 10 year being over 1% is that cause you concern that interest rates are working, at least in the bond market, there are working against what the federal reserve helps to happen, or hopes to accomplish with low rates in the broader economy.

Clarida: It is true that rates moved above 1%, but you've been covering markets for decades. The 1% yield on a 10 year treasury was until February of this year never achieved, so rates are still incredibly low. The natural conditions are supportive of the flow of credit. By myself, I'm not concerned with a 10 year treasury yield, just a touch above 1%. I think it's important for your viewers to understand at least the way that I look at the bond market and yields, as you have to try to understand why yields are moving up. And if yields are moving up, because people are more optimistic about growth, about a vaccine, are more confident that we'll be able to achieve our 2% inflation objective. Then that is not something that that troubles me in the context of the overall picture. So where I think we need to be focused is not so much rates moving up in down, but trying to get a sense of why they're doing so. And I still know the real cost of borrowing is negative to your treasury yields are well below the rate of inflation rate rates of these levels are not a concern for me.

Steve: I'm assuming we have a fairly sophisticated audience here at the CFR, but I'll just explain my next question a little bit. More in detail, which is that one of the tools you have while keeping asset purchases the same, is to buy more on the long end and sell some on the short end that could depress the long end of the curve. Clarida, I don't know the extent to which you can give us some detail about what kind of levels. First of all, do you support that at this time? If not, what kind of levels might trigger? You're concerned about high bond yields and be something that would motivate you to support that kind of operation where you would try to specifically depress interest rates on the long end.

Clarida: That is certainly an option that is available to us, it's in our tool kit. The chair Powell referred to that in his December press conference. But let me say, right now is the first week in january 2021. We like the current setting of policy, I myself would have no inclination or think there's any need to think in the near term about adjusting the duration and the maturity of our purchases. In terms of a particular level, I think is a fed policy maker that's something I'm not going to get into. But what I did say is right now, rates are still very accommodating, they're reflecting, I think, improve growth prospects. Some sense that we've avoided a deflation outcome. And so I think those are all developments consistent with where we would like to see the economy go, but I'm not going to, give you a particular level. I don't think that will surprise you.

Steve: We have 6 minutes of this one on one area. I got 60 minutes additional questions. So I'm going to move on. Let me talk about another risk. It's out there and how much concern you have about levels of the stock market. Jobless claims come out and 800 and something thousand and the job market goes on and the stock market goes up. Turmoil in the streets in Washington DC siege of the capital. The stock market goes up. I guess we have a small decline today, but in general, pretty flat market on a decline and in the number of jobs that are out in the market. Are you concerned that this loose monetary policy has led to a bubble light conditions in the stock market?

Clarida: It's obviously something we monitor as part of our financial stability, surveillance. It's not something that sitting here today is a particular concern to me because you also need to know that with regards to the stock market that and forecasters as economic prospects have improved, have revised up their earnings estimates quite a bit. Obviously, stocks are going to be a function of earnings as well as the the discount rate. And obviously, we understand that with rates low that's supporting stocks and bonds. But I think one thing it's important for the participants to appreciate is that the us is part of a global economy. There are very powerful global forces that are driving down riskless rates. Our federal funds rates at ten basis points. Rates are negative in Europe and Japan. And so there is a global decline in riskless interest rates. And that's going to be reflected in asset valuations. And what that senses is that although there are things, individual central banks can do, that influence that there's also substantial global element to that as well, but no. To answer your question specifically, I'm not concerned because I think market valuations are reflecting a quicker rebound of profitability than folks thought was possible in the Spring. And obviously the vaccine has been very good news and probably also additional fiscal support given the election outcome.

Steve: One criticism, a persistent criticism of the Federal Reserve is how low interest rates which have helped the stock market end up exacerbating inequality. I wonder, if there's a reason, I'm never quite sure what the answer or the response to be from the federal reserve, which is hard to imagine that higher rates would increase the equality. But that be, in the case, I want if you might respond to the impact of low rates on inequality in the way that policy doesn't fact exacerbate that.

Clarida: Obviously, the Fed has a very powerful set of tools, but it's a pretty limited tool kit. We basically can either adjust rates or the size of our balance sheet, or our guidance. When we do that, it has we hope and indeed the record shows you can have positive impacts on supporting employment, business formation, the ability for people to refinance or to buy a home. So those are all positive for both employment and the income distribution. But lower rates also tend to boost equity valuations and other valuations, so I think the pictures are a complex one. We acknowledge that the setting of our tools impacts the economy in a complex set of ways, but our mandate from the Congress is really maximum employment and price stability. And if we thought we could increase employment by raising interest rates, we would but we don't. And so the reason why in 2019 is the economy slowed, we made a downward adjustment in rates was to support the labor market. We had the lowest unemployment rate in 50 years. We had good way wage gains, especially at the lowering distribution. So it is true that low rate supports equity valuations, but it's true more brightly they also support employment and other important things in the economy.

Steve: I think it is worth mentioning that the change to be looking at needing to see for better or worse, the whites of the eyes of inflation before raising rates to let the unemployment rate sink to a place, certainly a measure that works against inequality. I did hear one of your colleagues talk about actually looking at the black white unemployment rate gap as one measure of how close to full employment you are. Do you endorse that idea?

Clarida: I think what the idea I do endorse and clearly that's one that my colleagues look at is the labor market is a very complex. And I think it's fair to say, in the past, communication from the fed has focused on one indicator of the labor market, which is the unemployment rate. I do think that a feature of the Fed that I've observed now, and inside for 2.5 years is that even though we sometimes speak in shorthand about the unemployment, we're looking at a broad range of measures, including differential unemployment rates, different racial groups. And I think it's clearly the case that our Fed listens event is part of our framework with you, really reinforced to us, something we probably understood anyway, but it reinforced the point that we talk about economic recoveries as though they're sort of all alike. But the reality is, in most economic recoveries, most of the gains at the lower end of the income and education distribution that a crew actually recruit towards the end. This idea of running a hot labor market and the word hot labor market. Some sort of inflation pressure is chair Powell and others have indicated before the pandemic. What we found out in 2019, and after February of 2020 is that the US economy can operate at a much lower rate of unemployment without concerning pressures on inflation. And if we were able to do so, then that's going to actually be able to benefit groups, such as you mentioned, not only by racial, but other educational opportunities.

Steve: Well it's one of the single biggest changes I've seen in a couple decades to cover in the Federal Reserve. Clarida and I have one more question I'm going to say for maybe a little bit later maybe one of the members of the audience will pick up on it. But right now, I'll be right now I'm going to turn it back to Carrie who is going to bring in our audience questions.

Carrie: Ladies and gentlemen, as a reminder to ask questions please click on the raise-hand button on your zoom window. When you are called on, except the unmute now button, and proceed with your name affiliation and question. To view the roster of CFR members registered for this meeting, please click on the link in your zoom chat-box. We will take our first question from Larry Meyer.

Audience 1: okay. Hi Clarida.  I will give you remarks. As you know, I hang on every word you say and the word it is hunting me up is flexible. Now I know flexible average inflation targeting is the name, but the sum is characterization there. We've never seen such an inflexible monetary policy when starting from the effective lower bound. The policy rule is equal to zero, not responding to any changes in the economic development, except for. That’s number one. And number two, it’s temporary and it doesn't imply, you have to clarify it, when you get to a situation where there’s a decline in the fund rate it doesn't get to the effective lower bound. There is no average inflation targeting in place. So, clarify that for me. You are the author.

Clarida: a couple of points on this. First Larry we are at the effective lower bound and unfortunately have been there for most of the past 12 years and are likely to be there for four more years. And one of the important advancements in this framework is to take on the effect of lower bound head-on and to say what do we think we need to do to offset that constraint on policy so that we can achieve our mandate objectives. And we've come up with several changes to our policy to do that. One is essentially we are implementing what has been called in the academic literature a lower for longer policy that goes all the way back to work in the Fed I think when you were there in the 90s. and basically this is over what we said as we're doing a version of lower for longer. The rates are gonna be zero until these conditions for lift-off have been met. We also have a related condition that we are not going to pre-emptively raise rates simply because I particularly estimated Phillips curve model says that the labor market is too tight. We are actually going to be looking for the inflation and inflation expectations stay there itself. It's also important as I pointed out in a speech at the Brookings institution a couple months ago to understand what this regime looks like once we lift off. Once we lift off the goal is to bring inflation back to 2% because 2% is our long run goal. And what we’ve said is that the pace which will bring inflation to 2% is going to depend on things like measures of expected inflation and also by how far inflation has fallen short of our 2% average goal since we hit the effective lower bound. The third point I would say, Larry. is that our framework we believe is certainly a framework that can serve us well.And then that case I think it would look very similar to what we have described. If we have a downturn with elevated unemployment and a fall in inflation, we are gonna run a round of policies that brings the unemployment down and the inflation up. And similarly, once we achieve those objectives will want to make sure that in the long-run inflation returns to 2%. So, I would argue indeed you pick up on this in some of your writings. I would argue that in terms of a reaction it's actually somewhat simpler than under the prior inflation-targeting regime. That would be the way I would describe it to you.

Carrie: we will pick up the next question from Ed Cox.

Audience 2: Ed Cox from the Committee of Economic Development. Much appreciated Clarida if you would comment on the level of reserves held at Fed and what conditions might cause an adjustment of the interest rates and so on.

Clarida: Thank you Ed. Good to hear you virtually. Yes, obviously the level of reserves in the banking system has surged this year and that reflects the fact that we have been purchasing a lot of Treasury and mortgage back Securities. Now initially those purchases in a screaming world for market functioning and we had to buy a lot in order for the Treasury market to continue to function and of course that added to reserves in the system. Before the pandemic we would talk about an ample reserve regime.  Obviously, reserves are well above ample at this level. In terms of remuneration since 2008 The Fed has paid the market rate of interest on reserves and we continue to do. The important point is that by paying interest on reserves it enables us to maintain control over interest rates even with a system that is a wash in reserves and obviously over time we would expect reserves to decline as the economy recovers, but they certainly did increase in response to the crisis actions that we took in the spring.

Carrie: our next question.

Steve: Excuse me Carrie I just want to follow up very quickly. Clarida can you foresee a time when you have to increase that level of interest on reserves in order to sterilize what's going on out there.

Clarida: That I don't think that's on the near-term horizon. I think that at the point that we've achieved our lift-off goals which is 2% inflation and full employment, what we will of course need to start thinking about raising rates and at that point would raise the rate on reserves. But I don't foresee a need to do that before that time.

Carrie: Next question from William.

Audience 3: The Dodd-Frank act and budget act put limitations on the potential actions in a financial crisis. How do you see a need to ask Congress to change any of the limitations that have been put on the FED.

Clarida: Thank you for that and the short answer is no. We do believe that our section 33 Authority in order to lend against good collateral in unusual and exigent circumstances is very important. We think it was absolutely essential to have that Authority. We deployed it responsibly and, if I might say, creatively and boldly in the spring, but we've also said that these facilities really are for unusual and exigent times. As we move past the Covid pandemic, we would expect to put them away. Obviously right now the recent legislation that passed the congress dictated that any equity investments in our 33-facility in corporate and main street programmes cease lending at the end of this year. We respect that and we already returned most if not all of the treasury equity for these programmes. But importantly this legislation did not change our 33-Authority I owned. I would know and I think it's implicit in your question sir that one important change in Dodd-Frank was to require going forward the treasury secretary to affirmatively approve and endorse any 33-facility. We accept that, we understand that, and we don't think that is in any way going to be a challenge if they need to be deployed in the future.

Steve: Would you like to see, Clarida, those programs start again under their administration?

Clarida: That’s certainly not something that is relevant right now.  I think whether or not the program's restart is going to be really a function of where the economy is. We were very gratified that we did get the fiscal support and again sometimes called stimulus. But this is really a Relief package. It’s a package to protect income support through unemployment benefits, and also paycheck protection is very important. And that program I think being put in place and beginning to support the economy now is very positive. So we may not need to even think about or to have conversations about relaunching facilities. But obviously I'm sure that's something that the treasury secretary-designate Yellen and chair Powell will be inclined to if that is needed. Right now I don't foresee that but that's certainly something that is possible under the existing statue.

Carrie: Next question from Eric Pulaski.

Audience 4: Thank you. if you might comment on how you see a Chinese behavior in the coming year with regard to our treasuries and what the range of risks that are available to the US in that in that regard

Clarida: Thank you Eric. I think I would broaden the answer beyond China that there's a global market for treasuries. The US Treasury is really the gold standard for collateral and risk-free assets. More than half of all Treasures are held outside the US and not just in China. So obviously that you know there's an old saying going back to the 60s that the US enjoys an exorbitant privilege and one element of that as the provider of a reserve currency is that people want to hold treasuries and for liquidity collateral reasons and so that does tend to lower borrowing costs. But that's fairly been a fact of life for 50 years and I don't see that shifting or changing broadly in 2021. I won't have any comments on particular countries.

Carrie: next question from Jeff Rosensweig

Audience 5: Vice-chairman, I’m at Emory University's Goizueta business school. I had an honor in the late 1980s you were demanded in Washington so I substitute for you at yale and taught International Finance and Money and Banking. And at the time I don't think the Federal Reserve looked at exchange rates very much. And I wonder now if it's on your dashboard? For instance, effective inflation expectations. I wonder what the role of exchange rates is?

Clarida: Hi Jeff, long time no see. One of the evolutions at the FED I think was very positive is that began under Ben Bernanke but certainly continued under Janet Yellen, for the Federal Reserve in its Communications to acknowledge the exchange rate as an important factor in thinking about the economy.  Not just because exchange rates go up and down because of trade or whatever, but because of the role of dollars as global reserve currency. I talked about exorbitant privilege a moment ago, but one of the cost of providing the global Reserve currency is that it tends to be a safe haven currency in times of distress, which tends to mean that when the world economy is going sour people buy dollars and that tends obviously to appreciate the dollar and that hurts trade in sensitive sectors and tends to lower inflation because it lowers import prices .I think we certainly understand and try to assess how movements in the dollar impact our inflation in our aggregate demand forecasts. You know that being said we don't target the dollar, we are not pegging the dollars in any decisions on Dollar diplomacy or squarely the purview of the treasury secretary. As a former treasury official I can remind you of that. Certainly, we are not oblivious to the important effect that movements in the dollar can have on aggregate demand and on inflation. We do try to understand that in the context of our forecast for projection.

Steve: Jeff did me a favor of asking the question that I had left over there. But I do want to just follow up with the recent movement of the dollar which has been to be weaker. How does that change in effect your Outlook right now?

Clarida: I thought you would ask that, so I went back and looked at a chart of abroad dollar index going back 5 years. What I often find and I did in my prior work spending more time in markets is that headlines about the dollar tend to show up after there's been a noteworthy move but what they often neglect is what preceded that move in the prior three or four years. So what you basically see with broad measures of the dollar is that it's level now is just a bit below its average level over the last five years. What happened of course is that we had a big move up in the dollar with a flight to Safety in the spring and that has retraced now as a risk appetite has returned. So broadly speaking the dollar is more or less in a range that it's been in for the last 5 years and it's not something that causes me any concern right now.

Carrie: Next question from Joseph Bauer

Audience 6: Thank you very much. I have been at Harvard Business School for about 50 years and most of my time I've been doing what used to be called Institutional economics. One of the things that's fascinated me in the discussion of inflation has to do with this old idea that inflation was too much money chasing not enough goods. Since the 80s in my research what I've seen is except in a few areas where there are new products there is over capacity across the world in almost all goods. So, when I've been wondering is that the monetary discussion really looks at inflation solely in those terms. But it seems to me the reason we're not getting inflation is there's a surf of goods in most areas.  Could you comment on that?

Clarida: I think it’s an excellent point. I thought about it and spoke about it at the FED and I would put the answer in this way. A fundamental shift in the US economy began to emerge in the mid-1990s and only recently it began to receive the attention it deserves. And it's the idea that in the 60s and 70s and early 80s when we had inflation that it was more or less dispersed pretty evenly across different categories of goods and services. So, goods inflation was 14% and services inflation was 14%.  Of course, Milton Friedman taught us that inflation is a general upward movement in prices. There is always relative price changes. The big change in the US economy beginning in the mid-90s is that once under the leadership of Volcker and Greenspan inflation fell from 14% to 2%. Since the mid-nineties you've had two economies, you've got the goods producing part of the US economy in which there is basically not only is there not any inflation. On average prices are falling because it's disposed of International competition and also tends to reflect technological improvements. That's about a quarter of the economy. Three quarters of the economy is the service economy where inflation has been running about 2.7% to 3%. So, in essence in a year when we exactly hit our inflation target of 2%, what happens is that good prices are falling by 1% and services prices are going up by around 3%. That's a manifestation of what I and others called these very powerful Global disinflationary forces. That were not so evident back when inflation was so high and it tends to obscure those. But now you really do see the role of trade and technology having a major input and impact on US inflation.

Steve: Not to mention I would say the expectation that people have. To pick up on what Jeff was saying that high prices won't stand because of the competition. It does raise the question which we had talked about earlier. You can have this demand resurgence based on the relief that's out there, based on a resurging of vaccines. Is it possible that there could be a mismatch this year where the supply side has a little more trouble coming back in that global supply chain that Jeff was talking about lags behind the term disability to fulfill the demand for goods.

Clarida: Steve I could happen. I think to some extent it will happen. We just don’t know how long it will last. If that does play out this year, speaking for myself, I would tend to look at it as essentially a one-time relative price adjustment that's needed to get people back in and employed in the service sector. As it's happening it might show up as inflation above 2%, but I wouldn't expect it to persist for several years. I think it'll be pretty compressed in terms of the length of time. If it does happen, we will have to study it closely, but my inclination as if we see that is that not to do that as something that we should try to lean against where to tighten policy because it's a bad development it's just the price system working to reallocate resources backwards services and to get supply in line with demand. We've got more than a trillion of excess savings in the economy. We got more checks coming into the mailbox with this recent package. So there's going to be enough demand this year. Supply and demand will come into balance. But to me that's not something that I would anticipate will cause any adjustment in the policy that we've communicated.

Carrie: Our next question from Melissa Saphier

Audience 7:  Hello. Thank you for the talk today. It's been really interesting and informative. I’m Melissa Saphier and I worked at Bridgewater Associates. One question I had for you in regard to IS the labor market. as we emerge from this crisis it is striking that this is the first recession in a long time where job losses have been concentrated in the services sector. It’s a very different pattern from past recessions where we saw the job lots of primarily concentrated in manufacturing and then those jobs just mostly didn't come back as businesses got more efficient and automated. Of course, as we emerge from the virus and restaurants reopen some of those service jobs come right back, but what do you say is the potential? How concerned are you that some of those services jobs just won't come out the same way we saw manufacturing businesses figure out how to operate without those Jobs in the past recessions?

Clarida: Well Melissa it's a great question. I've not made up my mind on how much scarring there will be from this recession.  You can define scarring in different ways. One way I think relevant to your question is the mismatch in the labor market between people and jobs in service intensive sectors. Some of those jobs may not come back and then what point do you transition. And we’ve known in labor economics for decades that when you have sectoral shocks then there’s some time for adjustments. It’s certainly something FED staff has been following very closely because it’s an unprecedented situation in so many waves. With the pandemic we don't have a lot of historical episodes to look at so we're very alert to that risk and we're very focused on trying to come up with measures of how significant that can be. But I'll just have to leave it at that.

Steve: When does the US economy get back to the levels that it left in February? Part of the calculation of that is even if we get back to 100, we will have lost the growth that we would have had. So, what's your forecast on when we return to the first level of 100 and the second level of getting back to what we lost in terms of growth?

Clarida: My forecast in the December SEP is that we would close that first Gap that you mention sometime in the second half of this year, maybe the third quarter, maybe the fourth quarter, depending on the situation can be the second quarter. We ended the year about a little more than 2% below the prior peak. So obviously you know we will have to have some more growth, but I think growth in a plausible range to get that. The second part of your question is more interesting and a harder one. Because the economy is always growing in good times away from recessions then the real metric for achieving potential is not just you got back to the prior peak but that you've recouped the lost growth. I think it's a little bit murky at this time for the following reason. If you look at the collapse in the economy in the second quarter. Yes, it was 30% annualized, but it also results in a roughly 30% annualized decrease in effective supply. People weren’t going to the pizza parlors and they weren't going to the baseball games and so on. There is going to be a tricky issue for growth people who do growth analysis on how you view the lost output in 2020 given the pandemic. One simple thing to say well in 2019 we grow in 2% so in 2020 we grow in 2%. But conditioning on the pandemic, it might not be a good outcome. But I do think now going forward the relevant considerations going to be getting back to the previous energy. The US economy took a big hit in the global financial crisis and by some measures never recouped that lost gap. It grew but the short falling growth from 2009 to 2013 is essentially never recouped.

Carrie: Next question from Peter Cooper

Audience 8: Hi Clarida. calling from Deutsche Bank. Thanks very much you're very thoughtful remarks here. Sort of a two-part question. A lot has happened this week. The last shuffle is the Georgia election which does have significant implications for the macro outlook. a lot of forecasts are revising up. Has that shifted your view at all? Has that been worked into the baseline you’ve been discussing? Does it influence your thought about the timing of starting to taper on the balance sheet? Second part of this question is a look out further and we do eventually get to inflation rising which could happen sooner now. But what level of inflation do you begin being uncomfortable with? Two and a half or above the particular line of the extent to which we've been below for so long.

Clarida: yeah so the two parts that question. So on the first of my December SEP projections, I had made an assumption that there would be some sort of fiscal package you know that that bill passed after our December meeting. Some sense the fact that we got that 900 billion dollar bill right at the end of the year. I already more or less thought that was my Baseline case. It is true however that with the election outcomes in Georgia that does increase the likelihood of an additional package or for those who thought there would be an additional package potentially increases the potential size of that. I've not really begun to analyze that. You know we will be having our briefings going into the next meeting and I'm sure that'll be something that we will be discussing. But I haven't formed a view on that right now. But in terms of the magnitude, we clearly know the sign. In terms of inflation here I'll have to be a little bit pedantic, but I do think it's important. We very likely will get some pretty big relative price moves this year with a year-over-year based effect. I think a lot of private forecasters have con PCE inflation moving above 2% on a year-over-year basis. Chair Powell indicted it and I indicted it today. That's not something that would cause me to concern because I don't view that as an underlying persistent factor. We’ve laid out a very specific set of conditions to lift off. We want inflation to be 2% and we want to be in the vicinity of what we agreed is maximum employment, and we want to have some confidence that it's not a fleeting engagement at 2% but that inflation is at that level sustainably. I don't think it's productive now to get into what level is too high or too low. It depends upon shocks. So, I'll be looking at compensation, productivity, market expectations, survey-based measures of inflation, expectations and trying to navigate among all of those to form a view.