1
00:00:00,000 --> 00:00:02,320
Speaker 1: Heading into the opening, let's turn to the Federal Reserve.

2
00:00:02,400 --> 00:00:05,440
Speaker 1: The newest Federal Reserve Governor, Stephen Myron, making the case

3
00:00:05,480 --> 00:00:09,000
Speaker 1: for aggressively luring interest rates to avoid damaging the economy,

4
00:00:09,320 --> 00:00:12,960
Speaker 1: diverging from some other FMC members, and pleased to say

5
00:00:12,960 --> 00:00:15,400
Speaker 1: that joining us this morning life from the Federal Reserve

6
00:00:15,680 --> 00:00:18,600
Speaker 1: is Governor Myron himself. Governor, Welcome to the program, sir.

7
00:00:18,680 --> 00:00:21,160
Speaker 1: We've got tons of time to talk about what's going

8
00:00:21,200 --> 00:00:23,639
Speaker 1: to happen next, your force on the labor market, the

9
00:00:23,680 --> 00:00:26,079
Speaker 1: balance of risk, the broader economy. I actually wanted to

10
00:00:26,160 --> 00:00:28,720
Speaker 1: lead the conversation with this one. Governor. What was your

11
00:00:28,760 --> 00:00:32,280
Speaker 1: experience like, I'm sure this was unexpected twelve months ago.

12
00:00:32,320 --> 00:00:34,400
Speaker 1: What was it like walking into the room and was

13
00:00:34,440 --> 00:00:35,800
Speaker 1: it different to what you expected?

14
00:00:37,000 --> 00:00:38,839
Speaker 2: Good morning, and thanks for having me. It's great to

15
00:00:38,840 --> 00:00:41,680
Speaker 2: see you again. Look, you know, walking into the room,

16
00:00:42,360 --> 00:00:45,000
Speaker 2: you know I had had a good briefing ahead of

17
00:00:45,040 --> 00:00:47,320
Speaker 2: time about what the meeting would what the meeting would

18
00:00:47,320 --> 00:00:49,440
Speaker 2: be like, and so that was very helpful. But I

19
00:00:49,479 --> 00:00:53,120
Speaker 2: will say that everyone was extremely friendly and welcoming and

20
00:00:53,200 --> 00:00:56,640
Speaker 2: kind and collegial, and I really appreciated that. And you know,

21
00:00:56,680 --> 00:00:59,600
Speaker 2: it's important to understand that the FMC is a body,

22
00:00:59,640 --> 00:01:01,720
Speaker 2: the Federal Open Mark Committee as a body that makes

23
00:01:01,720 --> 00:01:06,039
Speaker 2: decisions by arguing on the merits of the economics and

24
00:01:06,080 --> 00:01:10,119
Speaker 2: the economics and the merits of policy. And that's how

25
00:01:10,120 --> 00:01:13,520
Speaker 2: it was, and everyone was very collegial and airing their views,

26
00:01:13,600 --> 00:01:17,279
Speaker 2: and I the same, and that's how it will continue

27
00:01:17,319 --> 00:01:18,760
Speaker 2: to be. You know, we make policy, as the chairman

28
00:01:18,760 --> 00:01:21,600
Speaker 2: said last week, by persuasion, and so I will continue

29
00:01:21,600 --> 00:01:23,560
Speaker 2: to try to lay up my views and make the

30
00:01:23,600 --> 00:01:24,480
Speaker 2: case as best as I can.

31
00:01:24,680 --> 00:01:27,679
Speaker 1: Governor, I essentially got the opportunity to articulate your argument.

32
00:01:27,800 --> 00:01:30,160
Speaker 1: Just how much daylight did you sense was there was

33
00:01:30,200 --> 00:01:32,520
Speaker 1: between you and everyone else on the committee?

34
00:01:33,680 --> 00:01:35,160
Speaker 2: Well, I mean, you know, it's sort of funny. If

35
00:01:35,200 --> 00:01:38,039
Speaker 2: you look at the dots and the summary of economic projections,

36
00:01:38,080 --> 00:01:41,840
Speaker 2: you know, obviously there's a divergence between my projection for

37
00:01:41,880 --> 00:01:46,040
Speaker 2: appropriate policy for twenty twenty five versus where the weight

38
00:01:46,160 --> 00:01:48,520
Speaker 2: of everyone else's is. But if you look at next

39
00:01:48,600 --> 00:01:50,720
Speaker 2: year in the year after, you know, I'm sure I'm

40
00:01:50,760 --> 00:01:54,000
Speaker 2: still on the low end, But you know, there's not

41
00:01:54,040 --> 00:01:56,160
Speaker 2: really that much daylight between all the rest of the

42
00:01:56,160 --> 00:01:58,640
Speaker 2: dots and myself and following years. So it's really just

43
00:01:58,680 --> 00:02:01,520
Speaker 2: about the speed where which we come down to what's

44
00:02:01,560 --> 00:02:02,400
Speaker 2: closer to neutral.

45
00:02:02,480 --> 00:02:04,480
Speaker 1: Well, let's get into the neutral argument. I think that's

46
00:02:04,520 --> 00:02:06,400
Speaker 1: what separates you from a lot of people. So you've

47
00:02:06,400 --> 00:02:08,480
Speaker 1: got it in the mid twos, governor, and you think

48
00:02:08,480 --> 00:02:10,880
Speaker 1: we should get there quickly. Can you just build out

49
00:02:11,120 --> 00:02:12,880
Speaker 1: why you believe that's the case and why we should

50
00:02:12,880 --> 00:02:14,080
Speaker 1: get there so fast?

51
00:02:15,440 --> 00:02:17,880
Speaker 2: Sure? So, look, you know, I discussed a number of

52
00:02:17,880 --> 00:02:20,160
Speaker 2: forces which have kicked in over the course of this

53
00:02:20,280 --> 00:02:22,920
Speaker 2: year and which are I think can start contrast to

54
00:02:23,120 --> 00:02:26,240
Speaker 2: where they were last year. So I've argued that neutral

55
00:02:26,320 --> 00:02:28,520
Speaker 2: was higher in the past than it is now, and

56
00:02:28,560 --> 00:02:31,480
Speaker 2: that neutral was higher for a variety of reasons. But

57
00:02:31,520 --> 00:02:35,560
Speaker 2: I've highlighted recently fiscal policy, you know, sort of driving

58
00:02:35,600 --> 00:02:39,480
Speaker 2: up net national borrowing, decreasing net national savings, as well

59
00:02:39,520 --> 00:02:43,760
Speaker 2: as immigration policy driving what was the biggest positive population

60
00:02:43,840 --> 00:02:45,880
Speaker 2: growth shock in my lifetime and has now turned into

61
00:02:45,919 --> 00:02:49,120
Speaker 2: the biggest negative population growth shock in my lifetime in

62
00:02:49,320 --> 00:02:53,560
Speaker 2: very rapid succession relative to how changes in population growth

63
00:02:53,840 --> 00:02:57,480
Speaker 2: you normally normally occur in the data, and so to me,

64
00:02:57,800 --> 00:03:00,959
Speaker 2: when you have huge swings in that national safe driven

65
00:03:00,960 --> 00:03:04,519
Speaker 2: by fiscal policy and you have huge swings in population

66
00:03:04,600 --> 00:03:07,280
Speaker 2: growth driven by changes to border policy. It would be

67
00:03:07,320 --> 00:03:10,120
Speaker 2: bizarre for me to think that that wouldn't have implications

68
00:03:10,639 --> 00:03:13,400
Speaker 2: for the fundamental structure of the economy that gets reflected

69
00:03:13,680 --> 00:03:17,080
Speaker 2: for montey policy in the neutral rate. So my view

70
00:03:17,120 --> 00:03:19,520
Speaker 2: is that neutral was higher last year because of these reasons,

71
00:03:19,560 --> 00:03:21,840
Speaker 2: and so last year policy was not as tight as

72
00:03:21,880 --> 00:03:24,799
Speaker 2: a lot of people believed. And now neutral has come

73
00:03:24,880 --> 00:03:27,639
Speaker 2: down or is in the process of coming down, and

74
00:03:27,680 --> 00:03:30,600
Speaker 2: now neutral and now policy is more tight than people believe.

75
00:03:31,000 --> 00:03:34,639
Speaker 2: And this has happened recently. You know, these policies didn't change,

76
00:03:34,720 --> 00:03:36,480
Speaker 2: you know, sort of overnight. They've been kicking in over

77
00:03:36,480 --> 00:03:39,400
Speaker 2: the course of the year. And that means that policy

78
00:03:39,440 --> 00:03:43,600
Speaker 2: is becoming tighter every day as these policies continue to

79
00:03:43,640 --> 00:03:46,760
Speaker 2: kick in. And my view is not one of enormous

80
00:03:46,800 --> 00:03:49,160
Speaker 2: economic pessimism. You know, I don't think the economy is

81
00:03:49,200 --> 00:03:50,720
Speaker 2: about to create or I don't think the labor market's

82
00:03:50,720 --> 00:03:53,360
Speaker 2: about to fall off a cliff. However, the neutral rate

83
00:03:53,400 --> 00:03:55,800
Speaker 2: is drifting down, and as a result of that, it's

84
00:03:55,840 --> 00:03:58,760
Speaker 2: in comment upon policy to adjust in response. And the

85
00:03:58,840 --> 00:04:03,040
Speaker 2: longer that policy stayed isccessively excessively restrictive, the greater the

86
00:04:03,160 --> 00:04:06,000
Speaker 2: risks to the downside for the economy. If policy stays

87
00:04:06,000 --> 00:04:08,480
Speaker 2: excessively restrictive for too long, then you do get to

88
00:04:08,520 --> 00:04:10,400
Speaker 2: in a situation in which you have a meaningful and

89
00:04:10,480 --> 00:04:14,240
Speaker 2: meaningful increase in unemployment rate and a failure of the

90
00:04:14,240 --> 00:04:15,080
Speaker 2: employment man data.

91
00:04:15,120 --> 00:04:17,400
Speaker 1: So, Governor, that's the tension. I think in your view,

92
00:04:17,400 --> 00:04:20,120
Speaker 1: that's worth exploring just a little bit more. On the

93
00:04:20,120 --> 00:04:22,200
Speaker 1: one hand, you don't think the economies at risks are

94
00:04:22,240 --> 00:04:24,839
Speaker 1: breaking down, but you also think we are excessively tight

95
00:04:24,880 --> 00:04:27,279
Speaker 1: at the moment and getting tighter. There are some people

96
00:04:27,320 --> 00:04:29,400
Speaker 1: who would say, and we've had this conversation around the

97
00:04:29,400 --> 00:04:32,200
Speaker 1: table this morning, if we were as tight as you're suggesting,

98
00:04:32,560 --> 00:04:34,880
Speaker 1: why is the market within one percent of record highs?

99
00:04:34,920 --> 00:04:37,560
Speaker 1: Why credit spreads super tight? And why does this economy

100
00:04:37,600 --> 00:04:38,400
Speaker 1: still doing Okay?

101
00:04:39,920 --> 00:04:42,360
Speaker 2: Yeah, so that's a perfectly natural thing to ask. Sorry,

102
00:04:42,400 --> 00:04:44,640
Speaker 2: and let me see, let me say two things. One,

103
00:04:45,240 --> 00:04:48,760
Speaker 2: I don't think that all financial conditions are universally loose

104
00:04:48,839 --> 00:04:50,760
Speaker 2: like that. In particular, if you look at the housing market,

105
00:04:50,800 --> 00:04:53,479
Speaker 2: I think it's in quite a different state than you know,

106
00:04:53,520 --> 00:04:56,200
Speaker 2: sort of some financial markets and you know, sort of

107
00:04:56,400 --> 00:04:59,680
Speaker 2: security markets. So I don't think that that's necessarily a

108
00:04:59,680 --> 00:05:02,480
Speaker 2: whole stick look at the world of financial conditions in

109
00:05:02,520 --> 00:05:06,160
Speaker 2: the economy. But even that aside, I think that, you know,

110
00:05:06,400 --> 00:05:08,680
Speaker 2: people in financial markets tend to focus a lot on

111
00:05:08,720 --> 00:05:11,839
Speaker 2: monetary policy because interest rates are you know, sort of

112
00:05:12,400 --> 00:05:15,360
Speaker 2: huge tradable instruments, right, But there's so much more that

113
00:05:15,400 --> 00:05:17,880
Speaker 2: goes into determining economic growth and the state of the

114
00:05:17,960 --> 00:05:21,919
Speaker 2: economy and inflation and employment than monetary policy. And I

115
00:05:21,960 --> 00:05:25,640
Speaker 2: think that attributing all changes in financial assets to monetary

116
00:05:25,640 --> 00:05:28,400
Speaker 2: policy can be a mistake. And in particular, that's what

117
00:05:28,400 --> 00:05:31,240
Speaker 2: I tried to do in my speech, you know, was

118
00:05:31,560 --> 00:05:34,160
Speaker 2: to draw out some of these some of these effects

119
00:05:34,200 --> 00:05:37,039
Speaker 2: from non monetary policies that are affecting the economy and

120
00:05:37,080 --> 00:05:40,359
Speaker 2: of course therefore also financial markets. And so if you

121
00:05:40,440 --> 00:05:43,919
Speaker 2: have changes in tax policy, right, like significant incentives for

122
00:05:44,000 --> 00:05:46,560
Speaker 2: investing that lower the effective tax rate on capital, of

123
00:05:46,640 --> 00:05:49,200
Speaker 2: course that's going to get reflected into capital assets. If

124
00:05:49,279 --> 00:05:52,880
Speaker 2: you have significant changes to the regulatory environment where you're

125
00:05:52,880 --> 00:05:57,880
Speaker 2: removing barriers to operations that companies can make more more cheaply,

126
00:05:57,960 --> 00:06:01,040
Speaker 2: which by the way, is disinflationary pushes at the apple gap,

127
00:06:01,360 --> 00:06:04,000
Speaker 2: then of course that's also going to be reflected in

128
00:06:04,040 --> 00:06:07,279
Speaker 2: asset markets. So I think it's a mistake to conflate

129
00:06:08,160 --> 00:06:10,960
Speaker 2: the state of financial conditions with monte policy. They're connected,

130
00:06:11,120 --> 00:06:13,880
Speaker 2: they're related, they affect each other, but they're not exactly

131
00:06:13,880 --> 00:06:16,120
Speaker 2: the same thing. And in the speech, I go line

132
00:06:16,160 --> 00:06:18,720
Speaker 2: by line through these different items. And the reason why

133
00:06:18,760 --> 00:06:21,280
Speaker 2: monetary policy doesn't have to react to the hawkish side

134
00:06:21,400 --> 00:06:24,520
Speaker 2: in response to these act into these policy changes is

135
00:06:24,600 --> 00:06:26,520
Speaker 2: because they push out the supply side of the economy

136
00:06:26,640 --> 00:06:28,960
Speaker 2: at the same time that they push out demand. And

137
00:06:29,040 --> 00:06:31,440
Speaker 2: so if you're increasing supply and demand at the same time,

138
00:06:31,600 --> 00:06:33,640
Speaker 2: there's no change to the apput gap. And of course

139
00:06:33,640 --> 00:06:35,920
Speaker 2: it's Montari's policy job at the end of the day

140
00:06:36,000 --> 00:06:38,680
Speaker 2: to be balancing the apple gap, to be balancing aggregate

141
00:06:38,680 --> 00:06:42,440
Speaker 2: supply and aggregate demandity economy so it doesn't overheat or underheat.

142
00:06:42,600 --> 00:06:44,000
Speaker 3: I think there are a lot of people, Governor Myron,

143
00:06:44,040 --> 00:06:46,880
Speaker 3: who'd agree with you that probably the neutral rate is

144
00:06:47,000 --> 00:06:48,680
Speaker 3: quite a bit below where we are now. You said,

145
00:06:48,680 --> 00:06:50,839
Speaker 3: even the other FED governors did seem to agree with that,

146
00:06:51,400 --> 00:06:54,560
Speaker 3: but not necessarily the speed. And I'm still unclear why

147
00:06:54,600 --> 00:06:57,400
Speaker 3: do you think it is so important to get rates

148
00:06:57,480 --> 00:06:59,880
Speaker 3: down by one hundred and twenty five or one hundred

149
00:07:00,000 --> 00:07:03,799
Speaker 3: five one hundred and fifty basis points more this year

150
00:07:04,000 --> 00:07:06,599
Speaker 3: if inflation is still running hot and you're not seeing

151
00:07:06,760 --> 00:07:08,880
Speaker 3: anything alarming in the underlying economy.

152
00:07:10,040 --> 00:07:12,080
Speaker 2: Yeah, so this year is merely a function of where

153
00:07:12,080 --> 00:07:15,400
Speaker 2: the calendar is. So my view is that policy is

154
00:07:15,480 --> 00:07:18,160
Speaker 2: quite restrictive, and so I'd like to adjust quickly to

155
00:07:18,160 --> 00:07:20,680
Speaker 2: get back to a more neutral area. Right, that just

156
00:07:20,720 --> 00:07:22,640
Speaker 2: means a series of fifties until you get until you

157
00:07:22,720 --> 00:07:24,720
Speaker 2: get much closer to zero. The fact that it's this

158
00:07:24,840 --> 00:07:27,240
Speaker 2: year is just a function, just to function of the calendar.

159
00:07:27,440 --> 00:07:29,440
Speaker 2: But again it comes back to the longer that you

160
00:07:29,640 --> 00:07:32,280
Speaker 2: stay restrictive, the greater the risks. And let me put

161
00:07:32,280 --> 00:07:34,360
Speaker 2: it this way, like it was just a few years

162
00:07:34,400 --> 00:07:38,320
Speaker 2: ago that we were having endless conversations about declining population

163
00:07:38,440 --> 00:07:41,080
Speaker 2: growth rates in the whole world's becoming Japan in terms

164
00:07:41,120 --> 00:07:44,360
Speaker 2: of interest rate profiles. Right, those forces are still real,

165
00:07:44,400 --> 00:07:47,720
Speaker 2: those dynamics are still real. They didn't go away. Those channels,

166
00:07:47,760 --> 00:07:50,880
Speaker 2: you know, those channels by which population growth affects neutral

167
00:07:50,920 --> 00:07:54,480
Speaker 2: rates didn't disappear. I would rather react, I would rather

168
00:07:54,520 --> 00:07:58,040
Speaker 2: act proactively. Right, And sort of we know that we

169
00:07:58,160 --> 00:08:02,000
Speaker 2: just had the biggest population growth shock in many people's lifetimes,

170
00:08:02,080 --> 00:08:05,200
Speaker 2: mine included. I would we know what the consequences of

171
00:08:05,240 --> 00:08:08,480
Speaker 2: those are Economically, I would rather act proactively in lower

172
00:08:08,560 --> 00:08:11,000
Speaker 2: rates as a result ahead of time, rather than wait

173
00:08:11,040 --> 00:08:14,680
Speaker 2: for some giant catastrophe to occur, because you suddenly wake

174
00:08:14,760 --> 00:08:17,120
Speaker 2: up and find out that you are sort of resuming

175
00:08:17,160 --> 00:08:19,960
Speaker 2: those dynamics. In my mind, if you wait to sort

176
00:08:19,960 --> 00:08:22,119
Speaker 2: of to see the result of that, you have waited

177
00:08:22,160 --> 00:08:24,000
Speaker 2: too long, and there will be there will have been

178
00:08:24,000 --> 00:08:29,000
Speaker 2: a potentially quite material downside myst to the employment mandate.

179
00:08:29,240 --> 00:08:31,640
Speaker 3: A lot of people on the show have been wondering

180
00:08:31,680 --> 00:08:33,920
Speaker 3: what the reaction mechanism is going to be for a

181
00:08:33,960 --> 00:08:37,720
Speaker 3: federal reserve. This does start to see inflation as transitory.

182
00:08:37,800 --> 00:08:40,320
Speaker 3: Once again, the idea that we have been above two

183
00:08:40,360 --> 00:08:43,080
Speaker 3: percent the two percent target for the federal reserve for

184
00:08:43,160 --> 00:08:46,800
Speaker 3: fifty three consecutive months, for more than four years. If

185
00:08:46,840 --> 00:08:50,000
Speaker 3: there is an upsurge in inflation, how long are you

186
00:08:50,000 --> 00:08:52,720
Speaker 3: willing to look through that? If you are cutting rates

187
00:08:52,800 --> 00:08:55,120
Speaker 3: before you say, hold on a second, maybe we need

188
00:08:55,160 --> 00:08:55,600
Speaker 3: to stop.

189
00:08:57,120 --> 00:09:00,559
Speaker 2: Yeah. So I would want to understand why there was

190
00:09:00,559 --> 00:09:03,240
Speaker 2: an ubsurge in inflation and what was driving it, and

191
00:09:03,240 --> 00:09:05,320
Speaker 2: and then sort of think about whether that shock is

192
00:09:05,440 --> 00:09:07,600
Speaker 2: likely to be persistent or whether the shock is likely

193
00:09:07,640 --> 00:09:10,760
Speaker 2: to be transitory. And it's the nature. It's the nature

194
00:09:10,760 --> 00:09:12,920
Speaker 2: of the shock. It's not just as inflation higher for

195
00:09:12,920 --> 00:09:14,840
Speaker 2: a certain number of months, it's why is it higher

196
00:09:15,440 --> 00:09:17,640
Speaker 2: or why is it lower? And how long are those

197
00:09:17,720 --> 00:09:20,280
Speaker 2: and how long are those shocks likely to persist? And

198
00:09:20,480 --> 00:09:22,520
Speaker 2: if you have a situation in which inflation is much

199
00:09:22,600 --> 00:09:25,319
Speaker 2: higher because there's you know, sort of let's say a

200
00:09:25,440 --> 00:09:28,920
Speaker 2: very significant expansion in national borrowing that drives up demand,

201
00:09:29,200 --> 00:09:30,800
Speaker 2: could be driven by fiscal it could be driven by

202
00:09:30,840 --> 00:09:32,520
Speaker 2: something else. That might be the type of thing that

203
00:09:32,559 --> 00:09:34,640
Speaker 2: you would expect to be to be more persistent. In

204
00:09:34,679 --> 00:09:37,360
Speaker 2: my mind, if you have the type of shock that's

205
00:09:37,440 --> 00:09:40,720
Speaker 2: driven by a you know, basically one off change to

206
00:09:40,960 --> 00:09:44,199
Speaker 2: tax rates, right, whether that's a vat tax or tariffs

207
00:09:44,280 --> 00:09:47,240
Speaker 2: or anything else, you know, that, in my mind is

208
00:09:47,280 --> 00:09:48,920
Speaker 2: not the type of shock that would lead you to

209
00:09:48,960 --> 00:09:51,199
Speaker 2: think that inflation is is going to be sticky for

210
00:09:51,240 --> 00:09:53,280
Speaker 2: a long period of time. And in fact, there's you know,

211
00:09:53,400 --> 00:09:55,439
Speaker 2: most central banks around the world, I think actually all

212
00:09:55,480 --> 00:09:57,840
Speaker 2: of them would sort of you know, encounter this in

213
00:09:57,880 --> 00:10:00,600
Speaker 2: a much more direct manner through changes in value at taxes,

214
00:10:01,040 --> 00:10:03,480
Speaker 2: and they always look through them, you know, they always say, Okay,

215
00:10:03,520 --> 00:10:05,240
Speaker 2: look the VAT went up or the VAT went down,

216
00:10:05,559 --> 00:10:07,599
Speaker 2: and that's going to affect the inflations stistics for a

217
00:10:07,600 --> 00:10:09,120
Speaker 2: period of time. But then we all know that this

218
00:10:09,280 --> 00:10:12,320
Speaker 2: was basically a fiscally mandated price change, and monetary policies

219
00:10:12,320 --> 00:10:15,920
Speaker 2: shouldn't respond necessarily to fiscally mandated price changes because that's

220
00:10:15,960 --> 00:10:19,079
Speaker 2: not indicative of changes to the underlying supply demand balance

221
00:10:19,080 --> 00:10:22,160
Speaker 2: in the economy, which ultimately drives the type of persons

222
00:10:22,240 --> 00:10:24,040
Speaker 2: in inflation that the Central Bank cares about.

223
00:10:24,160 --> 00:10:26,000
Speaker 4: Governor Martin, I'd love to get your thoughts a little

224
00:10:26,040 --> 00:10:28,280
Speaker 4: bit more deeper on housing this thing. Matt Misk and

225
00:10:28,360 --> 00:10:30,560
Speaker 4: Neil Dudda have talked a lot on this program about

226
00:10:31,240 --> 00:10:33,920
Speaker 4: going into next year. Do you think the housing market

227
00:10:34,000 --> 00:10:37,560
Speaker 4: will weigh on a deceleration of inflation? Is that part

228
00:10:37,559 --> 00:10:39,320
Speaker 4: of your thesis on inflation coming down?

229
00:10:40,559 --> 00:10:42,840
Speaker 2: Yeah? I mean it explicitly is I mean? Look, you know,

230
00:10:43,040 --> 00:10:46,560
Speaker 2: supply and demand dominates all things economically, right, and if

231
00:10:46,600 --> 00:10:50,520
Speaker 2: you're increasing the demand for housing by dramatically increasing population

232
00:10:50,640 --> 00:10:53,720
Speaker 2: growth without a material increase in the supply of housing

233
00:10:53,760 --> 00:10:56,200
Speaker 2: at the same time, of course, you are going to

234
00:10:56,240 --> 00:10:59,880
Speaker 2: get upward pressure on shelter inflation, and then vice versa.

235
00:11:00,040 --> 00:11:03,160
Speaker 2: If you start decreasing population growth because of a change

236
00:11:03,160 --> 00:11:07,320
Speaker 2: in border policies without destroying shelter supply, or if shelter

237
00:11:07,360 --> 00:11:09,280
Speaker 2: supply keeps an expanding at a rate that it has

238
00:11:09,320 --> 00:11:12,920
Speaker 2: been in previous years, then you get a relative change

239
00:11:13,000 --> 00:11:17,120
Speaker 2: in shelter inflation once again. So it's just it's simple,

240
00:11:17,240 --> 00:11:19,160
Speaker 2: you know, it's simple supply and demand. If we have

241
00:11:19,760 --> 00:11:24,040
Speaker 2: a material downward population shock because we have negative net migration,

242
00:11:24,840 --> 00:11:27,400
Speaker 2: that's an increase in the supply of shelter. And I

243
00:11:27,440 --> 00:11:29,440
Speaker 2: think that the study that I cited in the speech

244
00:11:29,440 --> 00:11:33,280
Speaker 2: on Monday work where Albert says found that in Needless

245
00:11:33,280 --> 00:11:35,800
Speaker 2: city of one basically that a one percent increase in

246
00:11:35,920 --> 00:11:39,400
Speaker 2: the in the in the number of immigrant renters leads

247
00:11:39,400 --> 00:11:41,600
Speaker 2: to a one percentage point change in the rents.

248
00:11:41,679 --> 00:11:44,000
Speaker 4: Right, But immigration is short term, right, this is a

249
00:11:44,000 --> 00:11:46,400
Speaker 4: short term story. Would you be willing to revise up

250
00:11:46,480 --> 00:11:49,080
Speaker 4: neutral if immigration is not much of a drag?

251
00:11:51,040 --> 00:11:54,240
Speaker 2: Well, I mean, you know, I have good reason for

252
00:11:54,280 --> 00:11:56,400
Speaker 2: expecting that the immigration story is going to persist at

253
00:11:56,480 --> 00:12:00,080
Speaker 2: least for another three and a half years, and I

254
00:12:00,280 --> 00:12:03,360
Speaker 2: quite likely potentially after that also, So I'm not convinced

255
00:12:03,360 --> 00:12:04,959
Speaker 2: that immigration is really a short term story.

256
00:12:05,120 --> 00:12:06,960
Speaker 1: He Governor, just before you go, because I know you've

257
00:12:07,000 --> 00:12:08,600
Speaker 1: got to run. Have you got a taste for this?

258
00:12:09,120 --> 00:12:11,640
Speaker 1: Is this a position you'd like to keep beyond the

259
00:12:11,720 --> 00:12:12,280
Speaker 1: end of this year?

260
00:12:13,400 --> 00:12:15,720
Speaker 2: Look, you know, I love this country and I'm happy

261
00:12:15,800 --> 00:12:17,280
Speaker 2: to serve this country in any way that I'm asked

262
00:12:17,320 --> 00:12:19,920
Speaker 2: to do so. But personal decisions are not decisions that

263
00:12:19,960 --> 00:12:20,240
Speaker 2: I make.

264
00:12:20,360 --> 00:12:23,320
Speaker 1: Governor Maron, appreciate your time. Diplomatic end, Thank you, sir,

265
00:12:23,440 --> 00:12:25,960
Speaker 1: Thank you very much, Governor Maron from the Federal Reserve.

266
00:12:26,120 --> 00:12:28,199
Speaker 1: Are the next views from the FED and his argument

267
00:12:28,520 --> 00:12:29,920
Speaker 1: very much lower neutral rate