Banner for 2025 Financial Markets Conference

May 20, 2025

Tuesday Evening Keynote: Mary C. Daly and Beth M. Hammack

Atlanta Fed president Raphael Bostic closed the second day of the 2025 Financial Markets Conference with a moderated conversation featuring San Francisco Fed president Mary C. Daly and Cleveland Fed president Beth M. Hammack. Atlanta Fed executive vice president and director of research Paula Tkac provided closing remarks.

Transcript

Raphael Bostic: Good evening, everyone. Thank you very much. It's really good to see you all. Welcome back for our capstone keynote panel with me, Beth Hammack, and Mary Daly. You'll note that Mary is not in the room; she is still in San Francisco, but was gracious enough to still agree to be on this panel, and I'm really excited about that. I want to also welcome folks that are watching via livestream; this should be a fun time.

I'm going to do some introductions, and then we'll get to the program. Mary Daly is the president and CEO of the San Francisco Fed, and she is a Fed veteran. Before she was the president, she served as a research director at the Bank, and she started work there in 1996. Before that, Mary was an advisor to the Congressional Budget Office, the Social Security Administration, the Institute of Medicine, and the Library of Congress. She's also been a visiting professor at Cornell and the University of California at Davis.

Now, that's all pretty typical of a central banker; but some of you may not know that Mary dropped out of high school at the age of 15 and worked several jobs to help support her family. Then she went on to earn her GED and begin her career in economics, and then she did all the stuff that I just described. It's really a remarkable background. So, Mary, thank you for joining us.

Mary C. Daly: My complete pleasure; thank you.

Bostic: We are also joined by Beth Hammack, and Beth is a Fed newcomer. She was appointed the Cleveland Fed president just last year. She has 30 years of experience in finance, capital markets, and risk management, so she's perfectly suited for the conference that we've just been experiencing. And just before joining the Fed, Beth was co-head of global financing at Goldman Sachs, where she was a member of the management committee. And Beth has also worked closely with US policymakers as chair of the Treasury Borrowing Advisory Committee, and as a member of the Financial Research Advisory Committee and the Treasury Market Practices Group. Beth, welcome; it's really good to have you as well.

Beth M. Hammack: Thanks so much; thanks for having me.

Bostic: So, to kick off the discussion tonight, I decided we're going to do this Atlanta style. And so, one of the things that we do in Atlanta is, we like to ask our panelists—and actually, we do this for all of our staffers; on the very first day, we ask them to do three things. We say, "Tell us your name; tell us where you grew up; and tell us an interesting fact about you that you don't think that people know."

So, that's what we're going to do right now. Beth, we'll have you go first.

Hammack: I get to go first? I don't know that it's an interesting fact, but my first job that I ever had was working in a video rental store, back when those existed. It was not Blockbuster, and we did—

Bostic: It wasn't Blockbuster?

Hammack: It was not Blockbuster; it was West Coast Video of Wayne, Pennsylvania—but we did have a sign that said, "Be kind, rewind." Which is very important; it's very important.

Bostic: You definitely have to do that, so thank you. So, Mary; what do you have for us?

Daly: Well, I have two things, Raphael, since you actually started with my GED. First of all, you now know I have one, but I also still have the certificate; here it is. I used it the other day at a commencement speech I gave. But the other thing you may not know is that I like to weld, and I do welding as a hobby; I make sculptures, other things. I do not take commission pieces, so please don't ask me—but I do still enjoy it, and do it regularly.

Bostic: Well, that's fantastic. Do you have a website where we can see this stuff?

Daly: No; I have a house you're more than welcome to come to. For all my friends and neighbors and anyone who comes to the house, if my wife hasn't already captured it, then it's . . . you can take it, and all I wish is that it has a happy home.

Bostic: Well, I will make sure that I come see those things next time I'm in San Francisco. That'll be great.

Daly: Thank you.

Bostic: And I guess I have to do this, too. When we did the pre-discussion, I told them I was going to ask the question; but then I realized that, when we do this with our staffers—when Cheryl and I meet our staffers on the first day—we participate as well, and we have a rule that you can't repeat an interesting fact. And so, Cheryl is here. I should have had her sitting in the back so I couldn't see her scowl if I picked a bad one, but I'm going to say: When I was a child, I was actually a model for some Plexiglas skateboards. So, there's a photo shoot with me and my sister, doing our skateboarding—

Hammack: At what age?

Bostic: I was like 11, so I was really young—and those were the days you had the big afros, and the whole thing—

Hammack: I wish we could flash that up on the screen. I'd love to see that.

Bostic: Yes, that's why we don't tell people what we're going to do beforehand, because we don't want that to happen. So now, I think we're checked in; I think that's very good, so thank you for that.

Let's start with just some of the process of doing monetary policy and preparing for that. I know you both gather anecdotal information from business contacts. We do a lot of that at the Atlanta Fed, and we've found it to be incredibly valuable. But we all do it a different way, and I'd love to just start with hearing from you about the value you see in gathering economic intelligence from the people who are actually out there making decisions and making the economy go.

And a particular viewpoint is, so how do you think about that information in today's economic environment, where there's so much that's ambiguous? And why don't we why don't we start with you, Mary?

Daly: Absolutely. So, you mentioned that I've been working at the Fed since 1996, and one of the very first jobs I had at the Fed was to captain the Beige Book for the San Francisco contribution. And the Beige Book is just an element of all this anecdotal information that we collect, and from an early time we started collating it in a way—we didn't have machine learning and textual analysis, but we certainly had RAs (research assistants) to comb through it and get out the key themes that were there.

And then we also put that with all the outreach we did, whether it's with our boards and councils that are formal, or with CEO roundtables, or simply going out into the communities and sourcing information at gatherings, or the president would give a speech and then I would go and talk to all the people at the dinner or the lunch and ask questions, and bring that back as economic intelligence. And the way we've always used it—and I think today is just an example of that—is, you can't look only backwards and figure out where to go with policy; you have to look forward.

And one of the things that our contacts tell us is not just what they did yesterday, or even what they're doing today, but what their plans are going forward—and whether uncertainty like we have today is making them a little more cautious but they're not stalled out, or whether they're stalled out and they're not moving. And I think that's the pieces of information that make it so critical.

And I was calculating this (Raphael, you may appreciate this), you and Beth together—the three of us—in our districts, make up about 40 percent of the population in the United States. So, you can see that we cover a big geographic territory just by going out and asking these questions.

Bostic: That's exactly right. Beth, how are you experiencing the intel from the field?

Hammack: Yes; we have a very similar process. We have a number of business councils that we meet with, on the FOMC cycle. We try to stay engaged with them in more casual ways. I go out and walk through the District, tour different facilities and plants; and sometimes when I go out and we have these meetings, we'll do a tour of a plant, we sit down and talk with management, we hear about, like Mary said, how they're thinking about things. But sometimes we'll also have a lunch with the employees, and understand their perspective and how they're seeing things.

And I do find that the information, particularly right now, is really valuable. We take all of that data that we have in our Beige Book, and we compile it into what we're calling "source indices"—which really tries to quantify all of it into diffusion indices about growth, employment, inflation. And what I find right now in talking to contacts is, I really started asking them more very specific questions about, how are you changing your business? What decisions are you making today that are different from what you would have made three or four months ago, or that you thought you were going to make three or four months ago?

Because I do find that with all of the ambiguity that's out there, it's really important to make sure that we're separating the emotion from the actual impact that's going to flow through in the numbers. Both are important, but I think for the data and positioning us on the forward, that's what's going to matter.

Bostic: I think that's exactly right. At our Bank, we actually have carved out a staff group that we call our Regional Economic Information Network, and their job is really just to go around and talk to people, and do it in an unstructured way—to really learn what's on their mind, what they're worrying about, how they might be thinking about reacting to it and responding to it. We've been doing that for a while; it's been super useful.

And then to your point, Beth, we're actually trying to be creative about how we compile this information, so we've actually started doing textual analyses, trying to apply AI and other methods to see if we can tease out patterns on how people are talking that might demonstrate important shifts. Because the data that we all rely on is backward-looking; it's not going to show those changes for quite some time.

So, there are ways to identify that early, that can be super useful. And in today's environment, where there's so much change that's happening—and it's unexpected change, in a lot of regards—trying to just know where people are and how they're thinking about what they might respond or react to, is super important.

Hammack: We've been experimenting with machine learning as well, on the textual analysis, and one of the things that I find really helpful is it's a good check because you can read it and you take something away from what you read. But having that analytical check, when the machine goes through and counts up the number of times that people are worried about prices or other pieces—that helps to really make sure that you're listening and hearing the real messages that are out there, not just the most . . .

Because, as you both know, some of them are pretty punchy, the anecdotes that you got through these.

Bostic: Very punchy; and you want to save those for the right moment. So, we talked about how you collect the data; now let's talk a bit about what that data has allowed you to think in terms of a policy stance. Given all the ambiguity that's out there, all the change—how do you think about your policy stance? And if you had to articulate a reaction function or an intellectual framework for moving forward, how would you do that? Beth?

Hammack: For me, it's really about understanding where we are and where the economy is headed, and trying to make sure that we are setting policy in a way that is supporting both sides of the mandate, and that we're really taking into account a variety of factors. And so, for me, it's about starting with the backward-looking data, understanding how we're entering a particular period, coupling that with the analysis, the stories, the conversations that we've had with board members, friends—frankly, people who are on other nonprofit boards I sit on, hearing the different viewpoints there.

And then I look at what's going on in the financial markets; and for me, looking at the financial markets—which is something I spent a lot of time doing in my prior life—is helpful because it does impact, or it can impact, households and businesses and how they're thinking about the decisions that they're going to make. Particularly when you look at things like the wealth effect, the stock market can have a big impact.

Now, you don't care about the stock market for the stock market's sake; you care about it in terms of, is that going to mean that a business owner, a small business owner who's looking at their portfolio, might make a lower investment in their business because they're more worried about where they are? And so, it's really about that transmission mechanism into the real economy and trying to tease out those differences.

Bostic: And Mary, what do you think about that?

Daly: It's interesting; I've been looking back on this, and asking—because I get asked this question a lot, and I go back to: What is the reaction function? And at a fundamental level, it doesn't change from period to period. I'm reacting to the incoming information, and what my projection says is how close we're going to be to our goals. Now, what really matters, though, in how you contextualize it to the moment—at least in this moment, and all other moments I've been through—is you have to think about how far you are from your goals when you start, and whether the sensitivities in the economy are higher or lower because of where you start.

When we were locked down at the zero lower bound and inflation was running below 2 percent, we had a lot of room to wait while the labor market went faster than we thought it could, because we didn't have the penalty of that boosting inflation. There wasn't that direct link that we were concerned about. Now, with inflation already printing above target (and having done so for a while), I'm highly sensitized to the idea that any increase in inflation, or uncertainty about inflation, could cause that to be a stickier process.

So, I would say the reaction function stays the same, and the weights on the incoming information—because of these sensitivities—change. Ultimately, right now, the way I think of it is, we could do scenarios but there are never sufficient numbers of scenarios—all the permutations that could possibly happen to cover the world. So, then, the best way we can communicate to the outside world, at least from my perspective, is to say, "Look, we're watching the data and we have a little time to be patient, because we've got policy in a good place; we're sort of in center position."

So, my reaction function is, stay in center position and then be prepared to move agilely—but not abruptly or quickly when we don't need to, because we don't have enough information to really bring those confidence bands in. And that's a longer answer than a simple reaction function one might want to write down, but I think ultimately, it's the right one for today.

Bostic: Well, I think both of you have talked a lot about context being very important, and the idea that you need to understand how a particular data item or data point or policy proposal is going to be received by the agents in the marketplace. Now, I was a psych major and econ undergrad, and I've just really been almost beaten over the head with the reality that most people do not have a utility function that they tease out before they make every decision. And that there's a mindset or a feeling or an emotion that drives how much people will take on board things, and the art of policymaking is really figuring out how much that reality and those experiences should shape or cause you to move your projections away from what a model might say you want to do.

Because as much as I hate to say this, none of us is purely "economic man," and so we all need to be thinking about where is the adjustment going to be made, and that's something that I know I struggle with and we wrestle with in our team. And then the other thing I would say is, I've moved a lot more to crowdsourcing. In our bank, I try to get the opinion of every economist, and I want to hear them deliver it in their unfiltered way—because we have a lot of smart people who are all watching it, they all have a view, and I may miss something if I don't really try to tease that out, and that's been quite important.

So, now that we've talked about framework and all that stuff, let's talk about outlook. How are you thinking about creating an outlook? Do you have one? And if so, how would you characterize it? Beth, what would you say on that?

Hammack: Right now, I'm operating in scenarios; I'm thinking about the way things could unfold. I think as we get closer to the June meeting, I'll have to start putting stronger probabilities on each one of those scenarios, so I can come up with an SEP and a modal outlook of where I think things are headed. But it's great that I don't have to do that today, because I think there's still a lot of information and a lot of things that we will learn over the coming months before we get there.

But for me, it's really about thinking about the significant amount of change that we've seen over the recent past, the strength that we have in the underlying data—we came into this period in a really good position. But the soft data that we've seen, the sentiment data, has been concerning in terms of where it's showing up. Now, that doesn't always necessarily translate into the hard data, which is why I'm trying to think about three different scenarios.

For me, the three scenarios that I'm most focused on are, one, if the tariffs that have been put in place are going to be a one-time price level move, if they're going to be reasonably static from here; and because they're at the levels they are, that could weigh more on growth and have implications for the labor market. Then it's pretty clear, as we start seeing that flow through in the data, what we need to do.

On the other hand, if it's more inflationary, it's more persistent, because you've had this on-off and businesses are starting to layer it into their prices slowly, because they say, "Well, I need to add 5 percent to my prices today; it might ultimately be 5, 10, 20, 30 percent—but I want to start with something today, so I graduate." That could be more persistently inflationary, and one of the things that we've been hearing from our contacts is that they've worked so hard to build up their labor force over the past several years, they're very loath to let them go, and so they're going to hold on to them for a really long time.

So, if that's the case, then it could be that we need to stay at elevated rates for a longer period, or think about further adjustments there. But if we're in this position where we're challenged on both the inflation side and the unemployment side, then that's going to be the really difficult place of figuring out: by how much are we missing on each side of the mandate, and what's the persistence of those misses—how long do we think each one is going to obtain—to decide in what direction we need to shift policy.

Bostic: Thank you; and, Mary?

Daly: When I think about the outlook, I think like both of you, and all policymakers; I'm constantly thinking about the outlook and how it's evolving as I talk to people, but it doesn't make me data point-dependent, because we don't have to really write down a number, like private sector forecasters do, until we get to a point where we're doing the SEP. But we do have to have an outlook for the economy that we can update, and so for me, I've started with the thing that happens in every administration.

I've worked at the Fed since 1996, and been through a lot of changes in administration; every administration comes with legislative policies, and those policies can often have supporting or offsetting effects. The current administration came in with four major platforms: trade policy, immigration policy, tax policy (fiscal), and then deregulation. And so, that tells me that we can have a net effect that we don't yet know; trade policy was first a lot in the news because of the tariff announcements and the ongoing negotiations, then the fiscal situation has become more visible and more important in terms of the conversation. We have some immigration policy, but so far not the big effects that many anticipated.

And then finally, we have deregulation. I think the outlook is fairly uncertain, and it's why being data dependent—sourcing our data through contacts, but also through the incoming information that's a leading indicator—is so important. So, I said, like all of us, I think we can put scenarios together; but the real issue for me is to keep my mind open that we don't actually know what the outcome will be. We don't know what the tariffs will end up being; we don't know, then, if once the tariffs have come—so, that's the scope, magnitude—what the timing will be. We then don't know how firms will respond; will they negotiate with firms in other countries to try to split the cost difference? Will they then pass parts of it along the production chain, or will they pass it all along to consumers?

None of that we know. We don't know if consumers are so exhausted at this point from persistent inflation, that they can't pay it, and so it's a volume loss. I think those are the kinds of things we have to think about, and the information Beth said she's sourcing—and Raphael, you mentioned you're sourcing, we're sourcing—is critical. What are employers doing? Are they stalling out their investment plans? Are they changing their hiring plans? Are they keeping their employees or not, passing through prices or not? That's going to be critical.

Right now, I have an open mind with the ability, the willingness, to move as the incoming information comes in. I think in central banking, you know you could face a situation where our goals are in trade-off; but you also know there are a lot of other things that could happen, and you have to be prepared to move to either one, or any of them, as the data evolves.

So, it can be an unsatisfying answer, because everybody wants precision; but if we had precision, we wouldn't have uncertainty. So, it's about just keeping the open mind as we navigate through this. But my outlook isn't gloomy at this point; it's just thoughtful.

Bostic: I would say: I don't have a recession in my outlook today, but I think the question that I keep asking myself is, when will we be at a point when business leaders and consumers will feel comfortable enough to make the big investments that really drive a lot of the aggregate economy? And so, my outlook is, on some level, almost an assessment of when I think that point will be, or when we'll start to see elements that start to clear up.

At the beginning of the year, when I talked to businesses, they thought by this time of year there'd be clarity on a bunch of stuff: what the tariffs were going to look like, they'd have a sense of how immigration policy was going to be affecting their ability to build the workforce, they'd have a sense of some of the geopolitics sorting themselves out, and they'd see the broad contours of a deregulatory agenda, and start to see those things move. What I've heard is, they don't see that any of those has reached a point of clarity—and in fact, with the things that have been the most high profile, clarity is moving further into the future.

If you think about trade policy, these 90-day moratoriums as negotiations are happening; China got a 90-day with a different beginning point, so you're not going to have clarity there. And that has caused me to really feel like we're going to see businesses and households wait. They're going to go along as long as they can, but the big, bold investments in technologies or productivity-enhancing things won't be here. And what that means is that we're going to not have a clear direction of how the economy is going to evolve—and without that, I think it's difficult to know how our policies should evolve.

Are either of you trying to handicap the "when" we will get there, or how are you thinking about the clouds of uncertainty that are out there? Mary?

Daly: So, Raphael, I'm happy to offer something here. I've been, as we all do, touring my District in terms of talking with people. I was in Fairbanks, Alaska, and I was in Salt Lake City, and I just got back from Boise, Idaho, last week—and I've been crane counting. It's not a hobby, it's just counting cranes to see where the activity is, and it's not only the cranes that were there prior to the tariff announcements or the administration change; it's cranes that are going up and spades that are turning earth over, and you're seeing new projects. And so, I asked, "What's going on? There's so much uncertainty, why do you feel comfortable?"

And someone described it this way. There's business that's ordinary, and it just keeps going. It continues to go; I'm in a three- to five-year project plan, or I'm in a two- to three-year window of building this new building, so I'm going to continue to do that because the city's poised for growth, people are coming—this was in Boise, Idaho—there's a good reason for us to invest in our future.

And then there's projects that are more risk taking, and in order for those to pencil out, growth has to be X and the economy has to be ready today or in the next six months. And that was a really important lesson for me, is that the reason I think we're seeing some ongoing strength or solidness in the economy is because there is regular work to be done that pencils through any of these changes, and you don't have to wait for clarity in order to keep moving.

And then there's work that can only be done if we get that clarity, so it started helping me realize: I don't have to put a number on when the clarity emerges, in order for me to count the activities. And then, I think one of the things I'm trying to do is unpack that. How much of activity, that we're depending on for the economy to grow at a reasonable pace, and the labor market to stay healthy—how much of that is already happening, or are we waiting for that clarity? Because I'm not hearing much on the clarity side from my contacts, but I'm not hearing much on the stopping side, either.

Bostic: So, I would say two things on this. One, we are also hearing that if a project has started, if the plan is in place, they've got to keep doing it. That's almost like some cost to just keep moving, but they will at some point work their way through and be done.

And so, the question is, what does that next thing look like? And that's the question I worry about, because—Beth, you said this earlier—coming into the year, the bones of the economy were sound. The fundamentals were solid, so working through these plans and projects is a continuation of that. I think that's one of the reasons why we've seen, in the data, some residual strength.

But at some point, you need that next thing to start to move forward; and I think that that's something that I've definitely been focused on. So, Beth, I'll say—and just for folks in the audience here, we are going to take questions, so I'm checking our board and we don't have any yet. But if you do have a question, please use the Cvent app that you have for the program, and I just want to make sure we get you thinking on those things.

So, Beth, you said earlier that one of the scenarios that you have is one where we have the two sides of the dual mandate intention. Can you take us through the way you're thinking about what a thought process should look like, if we're in that? And I know you said something in the speech like, you'd rather be slow and move in the right direction than move quickly but then find out you've moved in the wrong direction; walk us through your process there.

Hammack: Yes. For me, again, it's about understanding where we are, how things are moving—and I think Mary is exactly right, in terms of there is some business that just needs to keep on happening. And at some point, even though there is this great fog and there's all these clouds out there, businesses will have to make decisions, and they'll have to move forward. They're going to have to make choices, and so we'll see that start playing through in the data. I don't know exactly when, to your question; my guess is it's going to take a bit more time, and so I think we are well positioned to be patient.

And because I'm not really sure which way is going to be more impactful—I don't know which is going to be the bigger mess, on the employment side or on the inflation side—I do want to wait. I am a person of action; I think you know that about me. I'm always inclined to do the thing, but right now I think the best action we can take is to sit on our hands and really carefully go through the data, engage with our communities, hear what they're thinking about, hear about the choices that they're making, and see how that all comes together in the aggregate data so that when we do have evidence of where we are, then we can make the right choices.

Bostic: And Mary, how would you think about the tension that could arise? I have to say, I've gotten a lot of questions on this, and I've been thankful that over the last six or seven years they've not been in tension, by and large. This is one where I do think that we're seeing more people fear that that is the outcome we're going to get. How would you talk about approaching that?

Daly: Well, when our goals are in conflict, it's the worst position for central bankers; but I'm always also recognizing, it's the worst position for the American people. So, it's the people we serve who are actually struggling if we get in a position where inflation is printing above target, and persistently so, and we have a weakening or softening of the labor market that is moving us below full employment.

That's a hard position to be in, and we're always prepared to manage in that situation by balancing the risks; so, you have to take in the information: Where do you think that we're missing the most on our target? How do we bring both of our targets closer to their goals, without getting too far afield from one or the other? And we can make those decisions as we go. I will say that this is one of the reasons that independence of the central bank is so important, because we have to make those decisions independent of considerations, other than we have two goals—Congress gave them to us—and we have to balance them.

Right now, I don't see us in that position, though, as you've said. And I just want to reiterate, we could be in that position, absolutely—but we could be in the other scenarios that Beth marched through, or any of the other ones that anyone in the audience can think of.

There are many situations that don't look like trade-offs that do follow what economists love to call the divine coincidence, where you use one tool and you accomplish both of your goals. But we could be in that awkward situation where that's not the case; and ultimately, then, we just have to do the job we've been given as gently as we can, to make sure we get to both of our goals, ultimately.

People care a lot about inflation at this point, and they have been suffering from it for quite a while.

Bostic: They sure do; and they sure have.

Hammack: Can I just add one more thing? I would say, the other thing that gives me comfort is that we have seen inflation expectations stay reasonably well anchored, and that gives us the ability—I think that shows that the public has confidence in us, and knows that we're focused on these dual mandate goals, and knows that we are going to do our best to deliver for them (as we should). If we start to see that become unanchored, that would be more concerning, and that might be a signal that we need to do something more urgently; but right now, I do think we have a lot of time.

Bostic: Expectations are critical, and I talk about that pretty much every time I go out. So, we're at a financial markets conference, so let's talk a bit about some financial markets issues.

I'll start with you, Beth; you have a great background, coming from Goldman. There are numerous proposals floating around that would reshape the Treasury market, and central clearing has been a very prominent one of those. Now, there have been fits and starts in moving that forward, but there seems to be a lot to recommend it. Can you talk a little bit about what you think about central clearing in Treasury markets—the pros, the cons, and where you think we should go?

Hammack: Yes; I'm very excited to see that we've gotten a little bit more time before that's going to be implemented in the markets. There was a delay put in, so it'll be middle of next year that central clearing will begin. I thought the discussions that we had yesterday and this morning were excellent in really working through a bunch of the issues in what's been happening in the Treasuries market.

Obviously, it's a critically important market, for all of the public. It really is the baseline rate, against which all borrowings and savings are measured. For me, when I think about the move to central clearing, I think some of the pros and cons are: on the pros side I think you see the most benefits in the repo market, because the repo market is one that's a credit-sensitive market. In the cash market, those tend to be much quicker settling trades, and so you have a very short period of time where you have that exposure, where the trade hasn't been completed.

And so, I'm a little bit less convinced of what the benefits are in the cash market, but it may be that cash clearing is a necessary requirement to move towards the repo clearing, in which case I think it makes a lot of sense and I think it will help us. There was great conversation, I thought, today about the ceiling tools that we have, including the discount window and the Standing Repo Facility, and making sure that those are as effective as possible as we're operating in this ample reserves regime. And for that, I would think that as the market moves towards clearing, that might be something we should look at for our tools as well.

Bostic: All right; my iPad froze, so there are actually a lot of questions here that I didn't see until two seconds ago. So, let's just jump right into questions. This is my technology thing; it's the curse. If you've seen me often enough, you know this happens all the time.

All right; I'll start at the top, and this is a question about a couple of scenarios—and in fact, the proposal last week from former chair Ben Bernanke to have the FOMC publish an in-depth economic review four times a year, which would include potential monetary policy reactions under multiple scenarios. Mary, what do you make of that proposal?

Daly: You know, without speaking of former chair Bernanke's proposal specifically, but I'll just speak in terms of communicating scenarios: it's interesting. I worked on an advisory board for the Social Security Administration, and we took this on to think about, could we publish scenarios, instead of just the most likely case for the Social Security fund—could we publish scenarios?

And so, then we brought in groups of people to look through the scenarios, the public. They were highly confused by the scenarios, because we weren't as clear about the probability weightings on the scenarios as they wanted us to be. So, I think one thing we would have to think deeply about is, when you put out scenarios then people look for the next piece, which is probability weightings on how likely you think they are.

And ultimately, I go back to, I like the idea of sharing more information; it makes sense, but I also recognize that we have to go back to a fundamental question: What are we trying to accomplish? Do scenarios help, if we have an equal weight on how they could evolve, or if we pick a modal one and then the tails evolve? Does that make people feel confused?

I really think we have to go back to, what are we trying to accomplish? I think of transparency as a complete, open-thought process of everything we're thinking. It's not as helpful as a really well-reasoned, "here's something if this extreme happens, here's something if this middle thing happens, here's something if this other tail risk happens."

But then, of course, you have to help people understand the distribution of risks attached to those. So, I guess I need to do more thinking about this; but we've been thinking about this at FOMC, as you all know from reading minutes and transcripts for a while, and it's a hard thing to do. It makes a lot of sense in practice, but as Beth just walked through, she's got three scenarios that you started, Beth, I think by saying, "these are my main scenarios." But then we can easily get to a place where we can think, and I'm sure you'll do this over dinner and drinks, where there's other things that can fill in that fabric.

So, I'm just offering that it's a hard thing to do, even though I think it could be the right thing to do.

Hammack: I think the conference at the end of last week was great, in terms of just putting out some really provocative ideas and getting me to think differently about how we can communicate more effectively to the public. And I do think it would be helpful if we had some tools to do that; I think practically, getting the committee to agree on one consensus forecast, or even a couple of different scenarios, is going to be really challenging—and I do worry that just putting out lots more information might not actually guide the public in the right way. To Mary's point, they may not be able to process it, they may not be able to understand it.

And so, it may actually leave them more confused than where we are. But I'm always open to ideas about how we can be more transparent in our process, because I think that's really important.

Bostic: I agree with both of that. This is a really difficult thing; we want to make sure that the new information is actually information, and not just stuff that just adds to the mix of things floating around—and when you have a committee of 19 people, getting to one forecast that everyone would agree to speak to, I think is a huge challenge. And we'd have to figure out how to even talk about these things in ways that would be useful.

All right; so, next question. We all have offered reasons why it's valuable to wait until we have more information and uncertainty resolves. What developments could prompt you to act while uncertainty remains high—or, are there any?

Hammack: I think, for me, there are moments when it's great to be preemptive and to be forward-looking in policy action; and I think 2020 was a moment for that, where it was very clear that you were shutting down the economy in large part, and that you were going to have major unemployment and major challenges from there. That, to me, is a great moment, when you know you can really be focused and take decisive action.

While we have the uncertainty that we currently have, I think it's very difficult; so, I don't know that there is something amidst this uncertainty. My guess is the longer that we live in this period of policy fluctuation, I guess I'll call it, we will start to see businesses making decisions, and that will flow through. And so it may still feel like you're at this high level of uncertainty, but underneath businesses are going to continue to make choices, and we'll see that flow through; and so, that will be a signal for how they're handling it and how they will likely continue to handle it (at which point, we could start to take appropriate action, if we knew which way to go).

Bostic: All right; thanks, Beth. Mary, I'm going to go to a different question for you, because this is one that I think is actually quite interesting. Can you speak to the difficulties in the labor market for recent high school and college graduates—the folks that are seeking that first rung on the ladder? Is the market for young people more frozen than for others? And can you contrast skilled trades versus English majors?

Daly: Sure. I just was in Boise, Idaho, giving a commencement speech at the College of Western Idaho, which is a technical college that also has business degree-granting programs, associate degrees. One thing I learned while I was there is, most of their students—the vast majority—have jobs coming out of their degree programs or their certificate programs. The issue is that they get jobs that might be a little bit below the first rung they thought they would grab, because the economy is slowing, the opportunities are changing, and firms are being more picky.

And so, the main message is, they have to keep going. The career ladder might start a little lower than you thought, but yet you have to get on it and then keep moving yourself forward. I did hear, as I've heard across the Twelfth District—which is the nine western states, in case you're not a Fed watcher of the map; but all in, they're just a very diverse set of states, that's why I bring it up—that the students who are getting technical trade skills are doing better right out of the gate than the students who might have a general business degree, et cetera, where those employers are being a little more picky as they move forward about when they invest in a workforce, an expansion of their workforce.

I still think it's a solid labor market, but when students compare it to a labor market from three years ago or four years ago, when the labor market was clearly very frothy, I think they're feeling a little bit nervous and even disappointed; but there are jobs out there to be had. They're just not coming in the flow that they once were, and people have to be a little more patient in getting that, and a little more patient in getting that build-up on the early career.

That's what I've been hearing, and I'm seeing it in the data as well.

Hammack: Yes, I would agree with that. What we hear in the Fourth District—which is all of Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia—what we're hearing is that business services has been challenged, so graduates with English and other liberal arts-type degrees are having a tougher time, because you find that that business' professional services has been slowing because they've seen their business slow. That's one place where things have been cut back.

But in the more technical areas, people that are coming out from often community college certificate programs, even vocational high school degrees, are doing really well. And we've spent some time—I was out in Lorraine County, where that community college, LCCC, has an amazing program where they have clean rooms and they're teaching kids how to actually operate in clean rooms, how to work on this really skilled technology. And when they leave, they leave automatically into jobs.

But not just, as Mary says, that first-run job; there's a plan for how they're going to complete their associate's degree, a bachelor's degree, and all the job progression that comes with it. So, we're trying to work within the region to find those types of opportunities, those types of programs, and try to amplify them.

Bostic: And I actually spoke at Augusta Technical College graduation last year (not this year); and to just see the diversity of degrees that they have, and all of them going to jobs that have career ladders—it was actually quite inspiring. So, there is a future out there.

Last night we were talking about AI, and its ability to potentially disrupt different parts of the workforce and job categories; we will have to watch that moving forward, and I think that'll be an important thing. But a lot of these technical jobs, I think, are going to be resilient in the face of that, which should be quite interesting.

Hammack: And can I just give a shout out to one tool that we've developed alongside the Philly Fed, which is called the Occupational Mobility Explorer, which actually allows both individuals and businesses to look at, in their region, in their area, what jobs the skills that they have, they're eligible for or should be thinking about, and the progression that they can look at. So, there are tools out there and resources to help people find their way, and find that path.

It also helps employers, to figure out how they should be marketing opportunities, what areas should they be looking for new employees. So, great work that's being done on that.

Bostic: That's very good. We have 90 seconds left—well, I was told that we're the last thing before dinner, and it's 7:45 and we're supposed to get out at 7:45. So, I will ask this question, and I'll open it up to whichever of you would like to answer. What are the conditions in which a central bank should intervene to stabilize government bond markets?

Hammack: That's a great question, Raphael.

Bostic: Should I go to another question?

Daly: I think it's more uncertainty, I'd love to say, if Beth wants to answer the government bond question.

Hammack: Okay; I will take this question, because I was a market participant for a lot of years; and I will tell you that market participants are prone to see volatility and to see a change in liquidity, and immediately say, "Oh my God, the Fed needs to get involved." If you looked at what happened in August—August 5th, of last year, when the Japanese markets had a big wobble—there were plenty of people who said the Fed needs to get involved.

I think there has to be an incredibly high bar for us to intervene in the markets. It needs to be a level of dysfunction where participants are unable to conduct business, banks are unable to lend credit—because, again, our role is not to focus on the financial markets; it's to focus on the real economy, and so when we need to help support the financial markets is when there can be meaningful transmission into that real economy. And to me, that's where that bar is.

Bostic: Well, you answered, and...countdown, two, one, zero; so, we are done. Please join me in thanking my colleagues for a great discussion. And now, I will call up our research director, Paula Tkac, for some closing remarks.

Paula Tkac: Well, thank you all. That was a lot of fun, and I didn't hear "uncertainty" too many times during that presentation, so that was also fun. I'd like to just briefly close out the conference, in a spirit of appreciation and gratitude. For me, the last two days have been full of really insightful discussions, thought-provoking presentations, and meaningful connections, and I really hope that all of you have experienced the same thing. I think we all know this would not be possible without the collective effort and enthusiasm and engagement, by a lot of different groups of people.

So first, I would like, on behalf of the Federal Reserve Bank of Atlanta, to express our appreciation to all of the speakers for bringing their expertise, their engagement, up to the discussions on the panels, to educating all of us. I think we have an awful lot to take home with us, including our esteemed panel of presidents here, which gave us a lot to think about as we begin to prep them for the next FOMC meeting. So, if you would join me in a round of applause for all our speakers.

Secondly, I'd like to thank all of you here in the room. Our conference would not be what it is, these discussions and meaningful interactions, without all of you putting your questions in Cvent, presenting them to the panels, challenging each other, and engaging outside of our conference sessions—and again, taking back what you've learned, to interact, both with us and with your colleagues and stakeholders, as you move forward. So again, thank you all on behalf of the Federal Reserve Bank of Atlanta. We're very, very grateful for your attendance here and your participation.

Also, I would like to make sure that we recognize all the folks at the Federal Reserve Bank of Atlanta that made this possible behind the scenes. So first, I'm going to start with the planning committee. These are folks from our Research Department, economists who put together this wonderful program, and sought out each of you expert speakers and panelists, and responded to all kinds of inquiries to curate what was really a wonderful program. So, I'm going to shout out some names here, and if folks—if you are so inclined—please stand up to be recognized: Mark Jensen; Camelia Minoiu; Kris Gerardi; Nikolay Gospodinov; Brian Robertson; and Larry Wall. Well done.

Secondly, we also are incredibly grateful to the folks behind the scenes who pulled off all of the AV, the tech, the law enforcement, the events management, the wonderful food on the tables, the moving the reception inside the other night when it was very, very hot—they've done amazing work, not only on site, but quite honestly for the last year, and they will continue to do so (already prepping for next year, starting tomorrow). So, I would like to thank all of our staff from the Jacksonville Branch and the Federal Reserve Bank of Atlanta for their help.

And finally, I know many of you who are on the program have interacted with our conference coordinators, and many of you participants in the room as well—things related to travel organization, prep calls, all manner of logistical things—and so I really want to call them out specifically. They are our primary cat herders, our problem solvers—our magicians, in some cases; and those folks are: Sandra Ghizoni, Kim Zeh, and Jenny Cater. So, thank you so much, ladies; really appreciate it.

Awesome. Okay; some logistical things that I've been asked to get across. Tomorrow, breakfast will be served from 6 to 10 a.m.; shuttles to the airport are available at 4 a.m. (see the registration desk if you would like to sign up). We would love to get your feedback on the conference, and ideas for next year; there is a survey in your app.

At the Federal Reserve Bank of Atlanta, we have a tradition of having a closeout question in our meetings, and oftentimes we ask—every day, on the regular meeting participants—to say, what did you notice during this meeting? So, I ask you, as you think about responding to the survey: What did you notice here? What did you particularly appreciate? What might be different about this conference that you would really like to see continue? What are some suggestions for improvements that we could do to make this an even better experience for you, as our audience?

And then, last but not least—next year: please put it on your calendars. We will be reconvening here, May 17th to 20th, for our 30th Financial Markets Conference. So, we look forward to seeing all of you back again next year. Thank you.