00:00The new administration is in the process of implementing substantial policy changes in
00:13four distinct areas, trade, immigration, fiscal policy, and regulation.
00:22These policies are still evolving, and their effects on the economy remain highly uncertain.
00:27As we learn more, we will continue to update our assessment.
00:32The level of tariff increases announced so far is significantly larger than anticipated,
00:37and the same is likely to be true of the economic effects, which will include higher inflation
00:43and slower growth.
00:45Both survey and market-based measures of near-term inflation expectations have moved up significantly,
00:51with survey participants pointing to tariffs.
00:55Survey measures of longer-term inflation expectations, for the most part, appear to remain well-anchored
01:00as well.
01:03Tariffs are highly likely to generate at least a temporary rise in inflation.
01:09Inflationary effects could also be more persistent.
01:13Avoiding that outcome will depend on the size of the effects, on how long it takes for them
01:18to pass through fully to prices, and ultimately, on keeping longer-term inflation expectations
01:23well-anchored.
01:25Our obligation is to keep longer-term inflation expectations well-anchored, and to make certain
01:31that a one-time increase in the price level does not become an ongoing inflation problem.
01:38As we act to meet that obligation, we will balance our maximum employment and price stability mandates,
01:44keeping in mind that, without price stability, we cannot achieve the long periods of strong
01:49labor market conditions that benefit all Americans.
01:54We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension.
01:59If that were to occur, we would consider how far the economy is from each goal and the potentially
02:05different time horizons over which those respective gaps would be anticipated to close.
02:12We continue to analyze the incoming data, the evolving outlook, and the balance of risks.
02:17We understand that elevated levels of unemployment or inflation can be damaging and painful for
02:22communities, families, and businesses.
02:25We will continue to do everything we can to achieve our maximum employment and price stability
02:29goals.
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