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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Farrell and Lisa Brownowitz Jailey. We bring you

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Speaker 1: insight from the best and economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance, an Apple podcast, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course on the Bloomberg Terminal. What would like

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Speaker 1: to do is advance a conversation on the present economics

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Speaker 1: of the world. That has been her tour to force

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Speaker 1: at the International Monetary Fund for a number of years,

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Speaker 1: but it is new duties for Geta Gopinath. She is

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Speaker 1: first Deputy Managing Director at the International Monetary Fund. I

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Speaker 1: could stay Geta. There was a celebration across all of

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Speaker 1: economics with this announcement. What is different from your economic

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Speaker 1: duties versus being first deputy managing director well as chief economists.

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Speaker 1: I would see my role as an advisor, but I

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Speaker 1: suppose deputy managing director. I'm in management, so I'm taking

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Speaker 1: a lot more difficult decisions. I think that would be

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Speaker 1: an important difference. You've been spiriting the pandemic and I

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Speaker 1: must ask on an update on the way Asia and

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Speaker 1: the way China is prosecuting their pandemic. What does the

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Speaker 1: I m F need from China to help Asia do

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Speaker 1: better in the pandemic. The pandemic has evolved, as you know,

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Speaker 1: compared to the last two years, we have much more

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Speaker 1: burau in strains, which is making it harder to contain. So,

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Speaker 1: like every other country is recalibrating their strategy in terms

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Speaker 1: of how to deal with the virus. I mean, our

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Speaker 1: advice to China would also be that some recalibration would

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Speaker 1: be very helpful. Do they need American vaccines to fix

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Speaker 1: this is a heart of the matter. They need mrn

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Speaker 1: A Visor Moderna to get China vaccinated. So firstly, they

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Speaker 1: need to get more coverage of their seventy plus population.

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Speaker 1: While they have overall very high vaccine coverage, if you

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Speaker 1: look at the very tail end in terms of age distribution,

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Speaker 1: you certainly need a greater coverage. Secondly, they would need

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Speaker 1: booster shots for their older populations, and effective booster shots

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Speaker 1: would be very important. Do you have an amazing bird's

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Speaker 1: eye view right now of how well prepared we are

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Speaker 1: to combat an additional strain that possibly the vaccines don't cover,

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Speaker 1: or an additional pandemic with the additional rollouts of vaccines

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Speaker 1: similar to what we just saw. Are we much better

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Speaker 1: prepared to tackle it more quickly that we did this

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Speaker 1: last time around? We certainly have the signs. We certainly

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Speaker 1: have the knowledge from having dealt and lived with over

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Speaker 1: two years of the pandemic. What I am worried about

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Speaker 1: is that everybody is hoping for the best case scenario,

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Speaker 1: which is that this is a mild endemic virus. But

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Speaker 1: what the experts tell us is that we could have

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Speaker 1: much worse downside scenarios, and we need to prepare for that.

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Speaker 1: And that's the pot where I think more needs to

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Speaker 1: be done. We needed on the fifteen billion in grants

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Speaker 1: this year to get the right amount of preparation in place,

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Speaker 1: and then ten billion every year four pandemic preparedness. What

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Speaker 1: does preparation mean when we've seen that a lot of

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Speaker 1: the money and a lot of the tools that have

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Speaker 1: gone to certain countries haven't really gotten out to the public,

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Speaker 1: and you deal with people who are so hesitant to

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Speaker 1: actually get vaccinated in the first place. So the huge

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Speaker 1: discrepancy between the vaccination rates in high income countries, which

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Speaker 1: is around seventy versus low income countries, which is eleven.

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Speaker 1: That gap has to be closed. Now. It's true that

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Speaker 1: you are seeing vaccine hesitancy in different paths of the world,

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Speaker 1: and you are seeing UH absorption capacity constraints, but still

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Speaker 1: we need to get at least the most vulnerable population

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Speaker 1: in every part of the world vaccinated. You don't want

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Speaker 1: to turn to your tour to force here. We could

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Speaker 1: get out front and make some breaking news today and

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Speaker 1: the World Economical look, I think it comes out next week,

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Speaker 1: but if you want to slip any numbers out this morning,

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Speaker 1: that's fine. The w t O shocked the other day

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Speaker 1: with a number that truly shocked me, two point eight

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Speaker 1: percent global growth. I don't want to front run the

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Speaker 1: great I m F work that you do here, but

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Speaker 1: we're on I don't but we're under three pc. It

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Speaker 1: appears in global growth. Have we been here before? Is

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Speaker 1: the global slowdown now original and tangible? So Tom, you

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Speaker 1: will get the numbers next week and I won't be

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Speaker 1: leaking any numbers right now. You can do it on Twitter,

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Speaker 1: elon muscle, let you do it on Twitter. What is

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Speaker 1: true is that we will have a significant downgrade to

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Speaker 1: our growth projection. So the last number we had for

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Speaker 1: this year was four point four percent. We will have

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Speaker 1: a significant downgrade motive to that number. You know, what

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Speaker 1: is true is that we will remain in positive territory

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Speaker 1: for global growth. But that's said, we are very very

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Speaker 1: difficult times. The pandemic is not over. We have the

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Speaker 1: war framing. I'm going to interrupt there. That was stunning

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Speaker 1: what you just said. You're framing a probability distribution, a

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Speaker 1: fan distribution. We will see next week, and you've got

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Speaker 1: a lower bound of telling me it could it will

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Speaker 1: be positive. No, that's not what I said. I said

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Speaker 1: that the modal estimate, which is what we put out

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Speaker 1: in terms of our baseline, will be a positive number.

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Speaker 1: But if I look at the fan chart, of course

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Speaker 1: many other things are possible. So we are still living

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Speaker 1: in a time when they're very high railed. From that,

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Speaker 1: I heard what she said. It's Lisa, we're talking here

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Speaker 1: sub three percent global economic growth. I've never done that

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Speaker 1: well ever. And part of this is because where does

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Speaker 1: the growth come from? Right, We've always talked about China,

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Speaker 1: about India driving growth. That's no longer the case. Now

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Speaker 1: we're talking about the United States driving growth. How much

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Speaker 1: does the United States have to grow their GDP this

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Speaker 1: year in order to prevent the world's economy from flipping

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Speaker 1: into recession. Okay, so firstly, I would say that much

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Speaker 1: of the world economy towards the end of last year

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Speaker 1: had the momentum coming out off the pandemic reopening, so

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Speaker 1: there was growth coming back in and we're seeing labor

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Speaker 1: markets in many advanced economies being very tight, so there

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Speaker 1: is a momentum to sustain growth at this point. But

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Speaker 1: you've hit shock after shock, so you've had the pandemic

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Speaker 1: that's not over. You had the war. You're seeing inflation

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Speaker 1: and members we haven't seen before. Just as a simple comparison,

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Speaker 1: before the pandemic, global inflation was around two Today global

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Speaker 1: inflation is eight percent. So this is in numbers that

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Speaker 1: are a decade or highs, which makes it very challenging,

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Speaker 1: which which is why one should be careful about projecting forward.

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Speaker 1: I think there were very big risks, and I agree,

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Speaker 1: and this is the magnitude issue, and we can be

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Speaker 1: on the Y axis. I'm far more interested in your

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Speaker 1: work next week in a particular financial stability in world

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Speaker 1: economic outlook the X axis. Do you have a framework

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Speaker 1: of how long the duration of four and five and

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Speaker 1: six standard deviation inflation will be Do you have any

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Speaker 1: sense of the width of that given the cacophony of

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Speaker 1: issues you have. If you're thinking about a target of

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Speaker 1: two percent, and your question is how long will it

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Speaker 1: take to come down to it? The two percent target

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Speaker 1: number that would take, you know, we're looking at towards

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Speaker 1: the end of next year, so it's going to take

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Speaker 1: many months before we see inflation coming down. Now, if

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Speaker 1: your question is has it peaked and is it likely

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Speaker 1: to come down again unless we're hit by another escalation

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Speaker 1: of the war for the major events, the expectation is

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Speaker 1: that the second half of you we should start seeing inflation.

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Speaker 1: We need to adjust to Adam poses three DR pose

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Speaker 1: and will join us today and Blanchard into an extent

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Speaker 1: out of Posen are saying we got to forget about

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Speaker 1: two percent, which I understand is the company line, and

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Speaker 1: we have to bratchet that upward or band around three percent.

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Speaker 1: Do we need to start thinking about that? I think

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Speaker 1: what feed will realize that coming down bringing down inflation

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Speaker 1: to four percent is going to be somewhat easier than

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Speaker 1: coming down the rest of the way, which is from

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Speaker 1: four to two. So you know, while it is important,

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Speaker 1: of course, to communicate very clearly and having a framework

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Speaker 1: that people understand it follow is important. You know, these

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Speaker 1: are importan it's important to decide about where you're going

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Speaker 1: to land. The i m F has just tweeted me

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Speaker 1: and they've said on my d I they've said, that's

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Speaker 1: way too much economic talk with Dr Gopinath, thank you

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Speaker 1: so much for joining us as first Deputy Managing Director

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Speaker 1: g to Gopeneth. Of course, here at the International Monetary Fund,

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Speaker 1: we are advantaged by over the years wonderful guests who

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Speaker 1: have provided us with decades of perspective and they're changing

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Speaker 1: views on what matters to you on radio and on television.

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Speaker 1: One of those is Adam Posen of the Peterson Institute,

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Speaker 1: one of the great German authorities of American academics, but

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Speaker 1: far more at the Peterson Institute, looking at the things

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Speaker 1: that matter, and particularly this original inflation that we have.

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Speaker 1: We spoke to his colleague Olivia Bonchard, of course, the

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Speaker 1: former chief economist of the i m F, the other

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Speaker 1: day and we advanced that conversation forward this morning. I

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Speaker 1: was talking I believe it was with ge to gop

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Speaker 1: and FF. I can't remember about once again the certitude

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Speaker 1: of elites saying we've got to get inflation back to

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Speaker 1: two percent. No one has led to charge in the

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Speaker 1: world for a readjustment of that decades old certitude than

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Speaker 1: you are we heading back to three inflation? I hope so, Tom.

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Speaker 1: I think the ECB, which you and at least thing

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Speaker 1: guy were just talking about, is important to set out

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Speaker 1: a different path than the FED, notwithstanding is saying another's

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Speaker 1: remarks because the inflation is different in Europe than in

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Speaker 1: the US. It's different in Europe, but nevertheless, you've made

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Speaker 1: worldwide impact, and Economics was saying we need to reset

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Speaker 1: and some way maybe it's two point eight percent. Who's

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Speaker 1: who splitting her tenth of a point as well? We

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Speaker 1: are since the last time I talked to you, we

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Speaker 1: are six standard deviations out on so many statistics. Now

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Speaker 1: there's a glide path back we get how do we

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Speaker 1: get back to two inflation for those days over? We

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Speaker 1: can get there, but it's probably not worth the cost.

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Speaker 1: In my view, I think you have to get it

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Speaker 1: wailed below four percent in the US, and the FED

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Speaker 1: is on track to do that. The choice point is

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Speaker 1: how far and how fast? Echoing something Lisa just said

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Speaker 1: it takes to get from four to two or four

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Speaker 1: to two and a half. So between now and say

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Speaker 1: first quarter of the FEDS tightening is baked in right

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Speaker 1: two or fifty plus basis points, and inflation is probably

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Speaker 1: peaking in the US or not elsewhere. So you're going

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Speaker 1: to get it down below five by the end of

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Speaker 1: the year. I'm reasonably confident. The question is how fast

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Speaker 1: and how far do you push it down from there?

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Speaker 1: And I'm hoping that they accept running something in the

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Speaker 1: high twos or even three and take it. How high

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Speaker 1: can inflation be without crippling consumer confidence, without crippling the

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Speaker 1: ability to go out and spend. It's a good question, Lisa,

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Speaker 1: But I think right now what we're seeing is, for

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Speaker 1: all the talk consumer confidences determined by other things, we

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Speaker 1: are seeing continued spending in the US. Right well, we're

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Speaker 1: going to get actually retail sales coming up, and we

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Speaker 1: have seen them decelerate dramatically, and on an inflation adjusted basis,

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Speaker 1: they have been increasingly negative over the past few readings.

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Speaker 1: So yes, people are still buying, but with an asterisk.

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Speaker 1: I mean, at what point do you start to worry

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Speaker 1: given the fact that this inflation rate is certainly affecting.

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Speaker 1: There's no question. I mean again, I'm totally on record,

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Speaker 1: and I was on record a year ago saying, I

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Speaker 1: mean literally April one last year saying inflation is going

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Speaker 1: to come in way beyond the Fed's forecast and they

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Speaker 1: have to start moving. So but that the two are

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Speaker 1: are not the same thing. The idea that they've took

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Speaker 1: a gamble, in my view, the gamble didn't work out,

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Speaker 1: and now they got to rectify it is one thing,

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Speaker 1: and that's separate from what would happen if they don't

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Speaker 1: grind the US economy down to get from three point

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Speaker 1: three to two point five. And that's the question for

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Speaker 1: Thomas sol the great conservative economist, wrote a book on

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Speaker 1: classical economics now, and I've seen so much static analysis

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Speaker 1: right now, I feel like I'm launching back pre Javonian,

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Speaker 1: back to David Ricardo and almost nineteenth century analysis. Of

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Speaker 1: all the noise going on. The optimists like Adam Posen

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Speaker 1: would say, we are a dynamic system, we will compensate

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Speaker 1: and we will get beyond. This is the great compensator

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Speaker 1: the currency market, and that we could see substantial depreciation

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Speaker 1: and devaluation in some countries in crisis who don't get

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Speaker 1: it right. I think you're going to see some of

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Speaker 1: that even if they do get it right. I mean

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Speaker 1: we're coming into the spring meetings of the Bank and

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Speaker 1: the Fund and as first step you Imagining Director Gopinat

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Speaker 1: said earlier this morning to you there's in the secretary

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Speaker 1: yell and said last night, there's real stuff going on

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Speaker 1: in that world. There are food shortages, there are energy shortages,

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Speaker 1: their price spikes, there are interest rates being past on

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Speaker 1: by the US necessary actions, and so you get to

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Speaker 1: a point where there are going to be dead problems

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Speaker 1: and there are going to be recessions and maybe unrest.

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Speaker 1: But it's not because they didn't get it right, because

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Speaker 1: it's just the world is hard, and we're not very

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Speaker 1: fair about sharing the ability to to to to keep

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Speaker 1: the floor under things. Adam, We've got to move on

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Speaker 1: in an incredibly hectic day. But can we see you

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Speaker 1: against soon. Thank you for having an imposing Thank you

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Speaker 1: so much right now it is an extremely timely moment.

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Speaker 1: Michael McKee speaks to this fedeficial, that fedeficial, and he

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Speaker 1: will look at the official they listen to with the

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Speaker 1: New York Fed. John Williams Michael, thank you very much,

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Speaker 1: and we'd like to welcome President Williams, the president of

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Speaker 1: the New York Fed, to Bloomberg Television and Radio worldwide.

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Speaker 1: We should also mention you are the vice chairman of

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Speaker 1: the Open Market Committee, so second in command of the

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Speaker 1: group that makes the interest rate decisions. You have to

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Speaker 1: decide what you're going to do and how fast you're

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Speaker 1: going to do it going forward from the data that

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Speaker 1: you have. We just got retail sales numbers, inflation boosted

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Speaker 1: sales up half a percent. What's your take on I

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Speaker 1: know you've looked a little bit at the numbers on this,

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Speaker 1: so we're seeing any decline in demand? Well, first of all,

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Speaker 1: it's great to be here in person, Mike. It's uh,

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Speaker 1: it's nice to be able to do this today. You know,

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Speaker 1: we are seeing I think some signs, early signs that

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Speaker 1: consumers are shifting their purchasing patterns coming out of the

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Speaker 1: pandemic away from all the purchases of goods of the

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Speaker 1: past few years and more to services. I won't respond

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Speaker 1: too much to one months of data, but one month

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Speaker 1: of data, but I do think that's how a pattern

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Speaker 1: I'm expecting to see continue during the year and I

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Speaker 1: think it's a very important part of this story is

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Speaker 1: to see consumers as we get past the pandemic, be

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Speaker 1: able to move back to more normal patterns of spendings.

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Speaker 1: We'll have to watch that data carefully, but that as

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Speaker 1: a trend I am looking to see this year. Well,

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Speaker 1: it's been interesting over the last week or so a

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Speaker 1: number of your colleagues have seemed more concerned about the

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Speaker 1: pace of inflation and have suggested they're changing their mind

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Speaker 1: about how quickly you should do that. Are you still

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Speaker 1: believing that the that you can do this at a

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Speaker 1: measured slow pace. Well, I don't think we're going to

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Speaker 1: do our policy adjustment and measured slow pace for sure.

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Speaker 1: I do think we need with high, very high inflation,

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Speaker 1: we need to really focus on bringing inflation down to

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Speaker 1: our two percent longer run goal and to do that

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Speaker 1: over the next few years. So that is the number

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Speaker 1: one focus. And we I say that because the economy

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Speaker 1: is strong, the labor market is basically back to a

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Speaker 1: close to where it was before the pandemic, with the

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Speaker 1: unemployment rate round three and a half percent and other

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Speaker 1: indicators showing that we have very strong demand for for

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Speaker 1: for labor. So I do think from a Monterey policy

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Speaker 1: point of view, it does make sense for us to

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Speaker 1: move expeditiously towards more normal levels of the real funds

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Speaker 1: rate UH, and also to move forward on our balance

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Speaker 1: sheet reduction plans. If there was one phrase it sort

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Speaker 1: of sums up where your colleagues are, it's get to

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Speaker 1: neutral by the end of the year. Would you be

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Speaker 1: on board with that? I do think we need to

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Speaker 1: get back to a more neutral and normal level of

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Speaker 1: the federal funds. Right whether it's at the end of

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Speaker 1: the year or exactly when that happens will depend on

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Speaker 1: the data. We We will continue to be a data

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Speaker 1: dependent but given where the economy is, and especially given

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Speaker 1: where inflation is, we really do need to reverse the

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Speaker 1: policy actions that we put into place back in March,

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Speaker 1: move that forward UH, and move the federal funds target

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Speaker 1: to neutral. And again, whether it's by the end of

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Speaker 1: the year or exactly when it happens, I think that

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Speaker 1: that will depend on the path of the economy. But yes,

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Speaker 1: I agree with them. So fifty basis points on May fourth, Well,

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Speaker 1: that's not a decision we made yet, but I do

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Speaker 1: think that, well, you can make it right now, that's

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Speaker 1: not a decision we made yet, MIKEA. But but I

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Speaker 1: think that's a you know, a reasonable option. I think

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Speaker 1: that for us, because federal funds rate is very low,

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Speaker 1: we do need to move UH policy back to more

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Speaker 1: neutral levels uh later this you know, through this year.

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Speaker 1: And I think that's a very reasonable option. Speaking of neutral,

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Speaker 1: what do you think neutral is these days? You were

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Speaker 1: sort of the guy who invented, along with the late

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Speaker 1: Tim law back the our star concept measurement, and that's

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Speaker 1: the key indicator for what neutral might be. So it's

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Speaker 1: hard to know. I've always started any question on the

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Speaker 1: neutral interest rate with it's it's it's an uncertain thing.

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Speaker 1: It's something we don't measure directly. We have to infer

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Speaker 1: it from other indicators coming into the pandemic, and our estimates,

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Speaker 1: most estimates of neutral were quite low. And I think

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Speaker 1: that's consistent with the my colleagues, the f O m

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Speaker 1: c's view that the normal nominal federal funds rate is

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Speaker 1: probably around two and a half percent UM. So I

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Speaker 1: think that I think about, well, where is it today?

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Speaker 1: It's uh, it's the economy is being pushed around supplying

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Speaker 1: demand dramatically by UM pandemic. Obviously, H the invasion of

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Speaker 1: Ukraine and and and other factors are moving the economy around.

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Speaker 1: But then I go back to what are the longer

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Speaker 1: run drivers of a neutral rate? And economists I think

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Speaker 1: have studied this pretty carefully. They've identified demographics, productivity, growth,

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Speaker 1: global demand for the safe assets like the US dollar.

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Speaker 1: I don't think those have fundamentally changed since before the pandemic.

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Speaker 1: So I guess my my baseline assumption is a neutral

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Speaker 1: UH nominal federal funds rate in the long run is

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Speaker 1: probably still in the very low two percent to two

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Speaker 1: and a half percent range, So I don't think that's changed.

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Speaker 1: But again we have to have an open mind and

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Speaker 1: see how they can follow the data. How far above

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Speaker 1: that do you think you might have to go to

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Speaker 1: bring inflation down? That? You know, I think that's a

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Speaker 1: really important question as we as we get back to

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Speaker 1: you know, neutral uh nominal neutral levels UH, that we

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Speaker 1: have to I think to do two things. One is

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Speaker 1: we have to keep focus on real interest rate, so

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Speaker 1: it's not it's not just a nominal interest rate like

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Speaker 1: the federal funds rate. But whereas inflation so I do

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Speaker 1: think that we do we will need to real interest

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Speaker 1: rates mean nominal interest rates adjusted for inflation or expected

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Speaker 1: inflation back to more normal levels uh by by next year, um,

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Speaker 1: and we may need to go a little bit above

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Speaker 1: that depending on where inflation is. I think the economy

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Speaker 1: right now has a lot of good momentum. I think

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Speaker 1: the economy can withstand uh neutral or real interest rates

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Speaker 1: or you know, at neutral or a bit above. But

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Speaker 1: the decision, those decisions we made, you know, in the future,

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Speaker 1: depending on how the economy evolves. Well, where is inflation

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Speaker 1: these days? The general consensus of analysts coming out of

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Speaker 1: the CPI report this week was inflation has peaked. Well,

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Speaker 1: I'm not gonna make a prediction about whether inflation has

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Speaker 1: peaked because clearly energy food and energy prices have been

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Speaker 1: quite volatile and affected by by this situation Ukraine. So

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Speaker 1: and uh we you know, the oil prices could go

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Speaker 1: back up. They're volatile. So I don't know about peaking.

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Speaker 1: I do think that my view is with Monte policy

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Speaker 1: reducing uh, you know, the imbalance between supply and demand

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Speaker 1: and the economy. That's by bringing interest rates back to

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Speaker 1: more normal levels. That's going to bring demand and the

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Speaker 1: economy back to close to the supply. With some of

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Speaker 1: the supply chain issues gradually being resolved, and also this

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Speaker 1: rebalancing between goods and services. I do think that the

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Speaker 1: underlying trend inflation is probably going to peak soon hopefully

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Speaker 1: and start coming down later in this year. The black

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Speaker 1: Rock Analysts, world's largest asset manager, say that you can't

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Speaker 1: raise rates high enough to bring inflation down to two

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Speaker 1: percent in the short run without an unacceptable level of unemployment.

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Speaker 1: How high are you willing to go on unemployment? Uh?

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Speaker 1: They also suggest you may just learn to live with

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Speaker 1: three percent inflation instead of two. Well, I'll start with

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Speaker 1: the last part where I don't agree with that. We

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Speaker 1: have a two percent longer run goal. We we've discussed

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Speaker 1: that thoroughly. That is our long run goal, and that's

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Speaker 1: what we're gonna stay with. So we're going to get

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Speaker 1: inflation back to two percent. In terms of the unemployment

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Speaker 1: and the risks there, clearly this is a period of

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Speaker 1: great uncertainty. Um. This is a challenging circumstances to conduct

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Speaker 1: Monterey policy bringing inflation down while trying to keep the

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Speaker 1: economy the labor markets strong. I think we have a

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Speaker 1: couple of advantages over previous episodes. So one is where

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Speaker 1: is the economy the strongest. Where are we seeing the

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Speaker 1: kind of demand um, you know, exceeding supply. It's really

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Speaker 1: in the interest sensitive sectors. It's in durable goods, in autos,

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Speaker 1: in housing, and so as we brought up expectations of

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Speaker 1: interest rates, as as yields have moved up, mortgage rates

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Speaker 1: have come up, that's that's going to help bring down

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Speaker 1: that excess demand for that sector relative to supply. So

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Speaker 1: I think that our monte policy tool this time of

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Speaker 1: interest rates is actually really well suited for the imbalance

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Speaker 1: we have in the economy. So I think that's an

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Speaker 1: important point to remember. The second is we have a

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Speaker 1: very unique situation with the demand for labor obviously much

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Speaker 1: stronger than the supply UM. So the goal here would

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Speaker 1: be to reduce that excess demand. We see it in

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Speaker 1: the record number of job openings. For example, Let's get

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Speaker 1: the number of job openings down to a level that's

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Speaker 1: consistent with maximum employment. So I don't think we have

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Speaker 1: to decrease employment or raise unemployment. So much is just

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Speaker 1: take the froth, if you will, out of the economy

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Speaker 1: and get in a more sustainable basis. So you disagree

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Speaker 1: with your predecessor at the New York Fed Bill Dudley,

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Speaker 1: who said, uh, you can't achieve a soft landing. I

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Speaker 1: think we can achieve a soft landing. I think this

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Speaker 1: is a unique set of circumstances, as we've talked about

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Speaker 1: with the pandemic and uh with the Russian invasion Ukraine

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Speaker 1: creates a unique set of circumstances as well. It's not

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Speaker 1: gonna be easy. I'm not gonna pretend this is a

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Speaker 1: uh you Monty policy and this type of situation everything

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Speaker 1: goes exactly according to plan. But I think we are

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Speaker 1: in a good place with with Monterey policial policy. We've

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Speaker 1: seen a dramatic, significant movement in yields and financial conditions

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Speaker 1: over the past several months, and that's um you know,

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Speaker 1: already positioning I think policy well to get supplying demand

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Speaker 1: in kind of back into balance and to set us

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Speaker 1: up for bringing inflation down over the next couple of years.

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Speaker 1: I have to ask you about the balance sheet. Obviously

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Speaker 1: you're gonna make that decision. Lile Brainerd suggested you announce

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Speaker 1: it in May and it starts in June. Is that

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Speaker 1: your anticipation. Well, again, a NodD decision we made, but

432
00:23:15,440 --> 00:23:17,320
Speaker 1: that is what I would expect I think we should

433
00:23:17,359 --> 00:23:20,920
Speaker 1: get the balance sheet reduction process underway. We've set out

434
00:23:20,960 --> 00:23:24,040
Speaker 1: the principles around that. Those are I think really important,

435
00:23:24,359 --> 00:23:26,720
Speaker 1: and we worked hard and coming up with a good

436
00:23:26,720 --> 00:23:29,280
Speaker 1: plan for that. UM So, yes, if we do make

437
00:23:29,280 --> 00:23:33,520
Speaker 1: the decision in the main meeting, technically that process of

438
00:23:33,560 --> 00:23:36,320
Speaker 1: reduction would start at the beginning of June, but it

439
00:23:36,359 --> 00:23:39,720
Speaker 1: would obviously continue for quite some time if we get

440
00:23:39,720 --> 00:23:42,200
Speaker 1: the balance sheet down to Two quick follows on that one,

441
00:23:42,680 --> 00:23:45,880
Speaker 1: what is your estimate of the impact on rates from

442
00:23:45,920 --> 00:23:49,960
Speaker 1: reducing the balance sheet and to what would trigger sales

443
00:23:50,000 --> 00:23:54,000
Speaker 1: of mortgage backed securities? You said you might do that. Yeah,

444
00:23:54,080 --> 00:23:57,320
Speaker 1: So this question about what's how do you convert the

445
00:23:57,400 --> 00:24:00,680
Speaker 1: balance sheet reduction into a like, how big of change

446
00:24:00,680 --> 00:24:02,520
Speaker 1: in the federal funds target is that equal to? I

447
00:24:02,560 --> 00:24:04,680
Speaker 1: think it's really hard. I think the way I think

448
00:24:04,760 --> 00:24:07,480
Speaker 1: to calculate that kind of number, given all the uncertainty,

449
00:24:07,680 --> 00:24:11,440
Speaker 1: and given that the balance sheet policies affect the economy

450
00:24:11,440 --> 00:24:13,800
Speaker 1: in different ways than the normal uh same moving the

451
00:24:13,800 --> 00:24:16,320
Speaker 1: federal funds target. The way I think about it is

452
00:24:16,359 --> 00:24:19,000
Speaker 1: that as we reduce the balance sheing is we've announced

453
00:24:19,080 --> 00:24:23,560
Speaker 1: doing that, you're seeing basically upward pressure on longer term

454
00:24:23,560 --> 00:24:26,040
Speaker 1: interest rates in the term premium, and we're seeing that

455
00:24:26,080 --> 00:24:27,960
Speaker 1: in the data. If you look at five year, five

456
00:24:28,000 --> 00:24:31,680
Speaker 1: year four rates in the treasury yield curve, UH, look

457
00:24:31,680 --> 00:24:34,399
Speaker 1: at tenure rates. Clearly we've seen over the past several

458
00:24:34,400 --> 00:24:37,440
Speaker 1: months movements for movements up in those rates, which I

459
00:24:37,440 --> 00:24:41,159
Speaker 1: think reflect the markets expectation that we're gonna conduct the

460
00:24:41,240 --> 00:24:43,639
Speaker 1: balance sheet reduction. So I see, I see that is

461
00:24:43,640 --> 00:24:46,679
Speaker 1: primarily the channel by which it affects things that raises

462
00:24:46,720 --> 00:24:50,080
Speaker 1: mortgage rates, of effects longer term meelds, which affects borrowing costs.

463
00:24:50,240 --> 00:24:51,960
Speaker 1: So we're seeing that happen. I think a lot of

464
00:24:52,000 --> 00:24:54,720
Speaker 1: it has happened because it's through the expectation of our

465
00:24:54,720 --> 00:24:58,400
Speaker 1: future action. That's in parallel obviously with our short rate

466
00:24:58,920 --> 00:25:01,920
Speaker 1: the path of federal runs rate, which is also removing

467
00:25:02,000 --> 00:25:04,920
Speaker 1: monetary accommodation. So important point here, I think is both

468
00:25:04,920 --> 00:25:07,119
Speaker 1: of these are happy at the same time. Financial conditions

469
00:25:07,200 --> 00:25:10,520
Speaker 1: are being adjusted pre significantly with both of these tools.

470
00:25:10,760 --> 00:25:14,760
Speaker 1: In terms of nbs UM sales right now, uh, you know,

471
00:25:14,800 --> 00:25:17,879
Speaker 1: the first part of the plan is really UH doesn't

472
00:25:17,880 --> 00:25:23,080
Speaker 1: incorporate sales. It's really about um letting the balance sheet. UH.

473
00:25:23,560 --> 00:25:27,480
Speaker 1: Fall kind of organically or be reduced through an organic process,

474
00:25:27,960 --> 00:25:29,560
Speaker 1: and I think that's where we need to be focused.

475
00:25:29,600 --> 00:25:33,239
Speaker 1: So to me, the first stage is really getting the uh,

476
00:25:33,640 --> 00:25:35,800
Speaker 1: the size of the balance sheet down. There is this

477
00:25:35,880 --> 00:25:37,960
Speaker 1: longer term issue. We got to also want to get

478
00:25:38,000 --> 00:25:40,960
Speaker 1: the composition of the balance sheet to be primarily treasuries.

479
00:25:41,240 --> 00:25:44,280
Speaker 1: So I see further down the road, once we've got

480
00:25:44,280 --> 00:25:46,879
Speaker 1: the balance sheet reduction well underway, is the time. But

481
00:25:47,000 --> 00:25:49,040
Speaker 1: we can contemplate, well, do we want to add to

482
00:25:49,080 --> 00:25:52,760
Speaker 1: the mix some sales to really get the long run

483
00:25:52,840 --> 00:25:55,960
Speaker 1: composition right. But that's not a decision for now. John Williams,

484
00:25:56,080 --> 00:25:58,560
Speaker 1: President of the New York Federal Reserve, thank you very

485
00:25:58,640 --> 00:26:07,000
Speaker 1: much for coming in this morning. Let's not delay because

486
00:26:07,080 --> 00:26:10,640
Speaker 1: right now our next guests are the pre eminent thinkers

487
00:26:10,760 --> 00:26:15,080
Speaker 1: in both Russia and energy is important. We've been doing

488
00:26:15,119 --> 00:26:17,600
Speaker 1: this for years and I think of one moment at

489
00:26:17,680 --> 00:26:21,600
Speaker 1: Davos ken Rogoff and Joe Stiglets Ken Rogoff and Joe

490
00:26:21,600 --> 00:26:24,360
Speaker 1: Stiglets and Davos a couple of years ago, but they

491
00:26:24,400 --> 00:26:28,679
Speaker 1: weren't married. This is wonderful in international relationship to have

492
00:26:28,840 --> 00:26:32,080
Speaker 1: with us. Angela Stan and she's brought along Daniel Jurgen

493
00:26:32,119 --> 00:26:36,240
Speaker 1: this morning with true expertise on Russia and are shattered

494
00:26:36,320 --> 00:26:39,440
Speaker 1: commanding heights. Wonderful that both of you here. I want

495
00:26:39,440 --> 00:26:42,760
Speaker 1: to begin simply with I did a survey last night.

496
00:26:43,560 --> 00:26:46,280
Speaker 1: I called up the New York Times and I said, okay,

497
00:26:46,440 --> 00:26:49,520
Speaker 1: I tried to read every wedding announcement. The record for

498
00:26:49,640 --> 00:26:53,199
Speaker 1: number of academic citations and a wedding announcement was a

499
00:26:53,240 --> 00:26:56,520
Speaker 1: few years ago when YouTube you were at the Times

500
00:26:56,520 --> 00:26:59,679
Speaker 1: of London right now, I was actually a car. I

501
00:26:59,680 --> 00:27:01,639
Speaker 1: mean while I was changing by PhD. I was a

502
00:27:01,640 --> 00:27:05,240
Speaker 1: correspondent for the Time's Higher Education And were you abouming

503
00:27:05,280 --> 00:27:08,240
Speaker 1: the subways of London or something? I was floating around

504
00:27:08,280 --> 00:27:11,520
Speaker 1: as a graduate. How did you to me? I mean,

505
00:27:11,720 --> 00:27:15,040
Speaker 1: I'm wrating the class on French history at Cambridge University.

506
00:27:15,160 --> 00:27:18,120
Speaker 1: She she allegedly ran out of ink and I gallantly

507
00:27:18,160 --> 00:27:25,720
Speaker 1: produced a patent. Serious and he has written every book

508
00:27:25,760 --> 00:27:28,160
Speaker 1: on it. Let's get to this, and Angel, I want

509
00:27:28,160 --> 00:27:30,280
Speaker 1: to start with you. And I've got a quote that's ugly.

510
00:27:30,600 --> 00:27:32,680
Speaker 1: So we're in our studios in New York and Bloomberg

511
00:27:32,720 --> 00:27:35,639
Speaker 1: surveillance is always trying to be smart in the immediate

512
00:27:36,080 --> 00:27:39,000
Speaker 1: and I looked down at my screen of ten fifteen monitors,

513
00:27:39,040 --> 00:27:42,439
Speaker 1: whatever it is, and there is Vladimir Putin in the

514
00:27:42,480 --> 00:27:45,920
Speaker 1: far east of Russia doing a junket. First time really

515
00:27:46,080 --> 00:27:49,480
Speaker 1: after the beginning of this war. Associated Press did a

516
00:27:49,560 --> 00:27:55,080
Speaker 1: translation of his comments. Clearly for the Russian consumption. Putin

517
00:27:55,640 --> 00:27:58,800
Speaker 1: two days ago. The only question was one of timing

518
00:27:59,160 --> 00:28:02,359
Speaker 1: the thing we do. On the one hand, we help people,

519
00:28:02,480 --> 00:28:05,960
Speaker 1: saving them from Nazism. On the other hand, we take

520
00:28:06,040 --> 00:28:11,520
Speaker 1: measures to ensure Russia's own security. He reaffirms this concept

521
00:28:11,960 --> 00:28:17,520
Speaker 1: of Nazism in Christina Gryava's Eastern Europe. Where did that

522
00:28:17,680 --> 00:28:20,919
Speaker 1: come from? Well, this is a way of dehumanizing, you know,

523
00:28:21,119 --> 00:28:23,919
Speaker 1: the Ukrainians. Right. The great moment in Russian history that

524
00:28:23,960 --> 00:28:26,600
Speaker 1: Putin keeps talking about is the victory in World War

525
00:28:26,640 --> 00:28:29,719
Speaker 1: two where the Soviet Union defeated the Nazis. So if

526
00:28:29,800 --> 00:28:33,040
Speaker 1: you say that the Ukrainians are Nazis uh there and

527
00:28:33,080 --> 00:28:36,399
Speaker 1: they're committing genocide against Russians, which is what he's also said,

528
00:28:36,600 --> 00:28:39,040
Speaker 1: then in a sense you tell these young recruits on

529
00:28:39,120 --> 00:28:41,800
Speaker 1: the field to go out and kill these Nazis uh

530
00:28:41,840 --> 00:28:44,720
Speaker 1: and and even those Russian soldiers are confused. But it

531
00:28:44,840 --> 00:28:49,400
Speaker 1: is it's the dehumanization and the demonization of the Ukrainians. Angela,

532
00:28:49,480 --> 00:28:53,240
Speaker 1: do you think that within Russia there is a realization

533
00:28:53,600 --> 00:28:56,440
Speaker 1: of what has been given up for the stability that

534
00:28:56,560 --> 00:29:00,600
Speaker 1: Vladimir Putin has represented over the past number of decades.

535
00:29:00,920 --> 00:29:03,560
Speaker 1: I don't think the Russian population fully understand that yet.

536
00:29:03,640 --> 00:29:06,680
Speaker 1: I mean they can see things that disappearing from their shelves.

537
00:29:07,120 --> 00:29:10,240
Speaker 1: It's hard to access a t m S. They're getting poorer,

538
00:29:10,280 --> 00:29:12,800
Speaker 1: but they're being said all these lives, they're being told

539
00:29:12,800 --> 00:29:15,560
Speaker 1: that they're defeating Nazism, and then if they don't do that,

540
00:29:15,640 --> 00:29:18,479
Speaker 1: Rustaurant self will be invaded. So I think we have

541
00:29:18,520 --> 00:29:20,600
Speaker 1: a reckoning to come, but I don't think we're there yet.

542
00:29:20,800 --> 00:29:24,000
Speaker 1: And Dan, you're again with your expertise on the energy markets.

543
00:29:24,080 --> 00:29:26,960
Speaker 1: They are being kept afloat from some of these oil

544
00:29:27,000 --> 00:29:30,480
Speaker 1: and gas receipts, and we have seen that. Vladimir Putin

545
00:29:30,520 --> 00:29:33,000
Speaker 1: today came out and said it is going to be

546
00:29:33,120 --> 00:29:36,080
Speaker 1: very difficult for the world to move away in Europe,

547
00:29:36,120 --> 00:29:39,200
Speaker 1: to move away from their gas. Do you see a

548
00:29:39,240 --> 00:29:42,080
Speaker 1: different story, well, to some degree. I mean they're right now.

549
00:29:42,280 --> 00:29:43,960
Speaker 1: If this year, at this price, they're going to earn

550
00:29:44,000 --> 00:29:47,440
Speaker 1: about two hundred and fifty billion dollars from European purchases

551
00:29:47,440 --> 00:29:49,400
Speaker 1: of oil and gas. I think we're going to start

552
00:29:49,400 --> 00:29:51,600
Speaker 1: to see sanctions, I guess. I think the last two

553
00:29:51,600 --> 00:29:53,920
Speaker 1: weeks have really changed in terms of what people have

554
00:29:54,040 --> 00:29:56,680
Speaker 1: seen as the Russian troops have withdrawn as the war

555
00:29:57,640 --> 00:30:01,400
Speaker 1: grows closer than the dawn boss intensity. And so I

556
00:30:01,440 --> 00:30:04,520
Speaker 1: think we'll start we're seeing the self sanctioning, and I

557
00:30:04,520 --> 00:30:07,440
Speaker 1: think it'll be progressive sanctioning that will cut back on energy.

558
00:30:07,720 --> 00:30:10,120
Speaker 1: Oil will be easier, particularly crude oil, will be easier

559
00:30:10,120 --> 00:30:12,920
Speaker 1: to cut back on than gas. That that is his

560
00:30:13,000 --> 00:30:15,160
Speaker 1: strongest point right now. But I think you're going to

561
00:30:15,200 --> 00:30:17,240
Speaker 1: start to see that to the pressure just will mount.

562
00:30:17,280 --> 00:30:21,320
Speaker 1: Are the commanding heights shattered? Well, well, I think in

563
00:30:21,360 --> 00:30:24,160
Speaker 1: the sense what we've seen as a return to government control.

564
00:30:24,240 --> 00:30:26,920
Speaker 1: But I think the sense of a global economy and

565
00:30:27,000 --> 00:30:30,440
Speaker 1: integrated global economy that Russia was part of, that's finished.

566
00:30:30,480 --> 00:30:32,360
Speaker 1: I mean, Russia is going to end up in dependency

567
00:30:32,360 --> 00:30:34,760
Speaker 1: of China. That's what it will be in greater global

568
00:30:34,800 --> 00:30:39,840
Speaker 1: economy is shattered or ending or nuanced into something new.

569
00:30:40,520 --> 00:30:43,240
Speaker 1: The great fear, and I would suggest the great fear

570
00:30:43,280 --> 00:30:45,840
Speaker 1: in this building is what I would call block is

571
00:30:45,960 --> 00:30:48,760
Speaker 1: m B L O C. Block is um of a

572
00:30:48,840 --> 00:30:53,360
Speaker 1: regionalization of our trade. Is that where we're here? Yeah,

573
00:30:53,400 --> 00:30:57,040
Speaker 1: I think I've used a phrase a fragmented globalization, but

574
00:30:57,120 --> 00:31:00,680
Speaker 1: I think block ism is a fair way to describe it.

575
00:31:00,760 --> 00:31:04,719
Speaker 1: To that this this thirty year period that we've been

576
00:31:04,760 --> 00:31:08,920
Speaker 1: in the world, economy connected and people generally benefiting from

577
00:31:09,000 --> 00:31:12,400
Speaker 1: an economic growth is really under great pressure right now. Angela,

578
00:31:12,680 --> 00:31:15,040
Speaker 1: there's an issue of what this will do to bring

579
00:31:15,040 --> 00:31:18,720
Speaker 1: the war to an end, right of basically pressuring Russia

580
00:31:18,800 --> 00:31:23,360
Speaker 1: and Russia's isolation, and whether that actually will allow Ukraine

581
00:31:23,480 --> 00:31:27,400
Speaker 1: to survive to some degree. What's your view on that. Well,

582
00:31:27,440 --> 00:31:29,360
Speaker 1: Putin is in no mood at the moment to bring

583
00:31:29,360 --> 00:31:32,280
Speaker 1: the war to an end. Now the Russians are regrouping,

584
00:31:32,280 --> 00:31:35,000
Speaker 1: they wonder at least take the don bus since they failed,

585
00:31:35,160 --> 00:31:38,080
Speaker 1: of course to take Kiev. So right now the sanctions

586
00:31:38,120 --> 00:31:40,640
Speaker 1: don't seem to be driving Putin to do that. I

587
00:31:40,680 --> 00:31:42,880
Speaker 1: really think the only solution is that the US and

588
00:31:42,880 --> 00:31:46,080
Speaker 1: its allies to keep armoring the Ukrainians and to enable

589
00:31:46,120 --> 00:31:49,120
Speaker 1: the Ukrainians to push back against the Russians so that

590
00:31:49,160 --> 00:31:52,880
Speaker 1: the Russians really can't declare victory, but Putent's not going

591
00:31:52,920 --> 00:31:55,160
Speaker 1: to accept that yet. How long do you think it

592
00:31:55,200 --> 00:31:58,040
Speaker 1: will take for people to really move away Europe, in

593
00:31:58,080 --> 00:32:02,600
Speaker 1: particular from importing gas from Russia to truly isolate Russia

594
00:32:02,640 --> 00:32:05,520
Speaker 1: to the degree that many people are expecting. Yeah, I

595
00:32:05,520 --> 00:32:08,960
Speaker 1: think I think I'll take a long time. I think

596
00:32:09,040 --> 00:32:13,280
Speaker 1: I think we'll see crude oil for first. I think

597
00:32:13,280 --> 00:32:17,440
Speaker 1: that the pressures definitely will grow and the restrictions. I

598
00:32:17,480 --> 00:32:20,160
Speaker 1: think I think you can start chipping away at the

599
00:32:20,200 --> 00:32:22,520
Speaker 1: gas and I think people are saying, well, maybe it

600
00:32:22,520 --> 00:32:25,680
Speaker 1: will start with not taking Russian Ellengy for instance, into Europe,

601
00:32:25,920 --> 00:32:28,320
Speaker 1: and I think to three years. I mean, what the

602
00:32:28,440 --> 00:32:31,520
Speaker 1: Germans have to do is build those receiving stations for

603
00:32:31,720 --> 00:32:34,360
Speaker 1: l en g and over the next two or three years.

604
00:32:34,560 --> 00:32:37,520
Speaker 1: But I think I think it could actually come sooner,

605
00:32:37,600 --> 00:32:40,400
Speaker 1: depending what horrors come out of Ukraine and the pressures

606
00:32:40,440 --> 00:32:43,360
Speaker 1: will be so great. Angel sent one final question to you.

607
00:32:43,800 --> 00:32:47,480
Speaker 1: There is a primal scream for the cliche of a

608
00:32:47,560 --> 00:32:51,800
Speaker 1: martial plan. How do you envision a martial plan of

609
00:32:51,840 --> 00:32:56,160
Speaker 1: the Allies to Ukraine. Well, it's going to be incredibly costly,

610
00:32:56,240 --> 00:32:58,240
Speaker 1: but obviously they are going to have to pay and

611
00:32:58,320 --> 00:33:00,840
Speaker 1: mentioned yesterday. She says mag to Tun is the issue.

612
00:33:00,880 --> 00:33:04,920
Speaker 1: We're thinking in billions instead of trillions. Do we bankrupt ourselves?

613
00:33:05,240 --> 00:33:09,880
Speaker 1: You'll be quiet? Do we besel we have? We have

614
00:33:10,000 --> 00:33:13,360
Speaker 1: all of these Russian assets that we've impounded. We used

615
00:33:13,400 --> 00:33:17,400
Speaker 1: those also partly to pay for it. We forced the rusting. Yeah,

616
00:33:17,440 --> 00:33:19,200
Speaker 1: that's what I think. We'll use the Russian assets and

617
00:33:19,520 --> 00:33:21,960
Speaker 1: use those Russian yachts as long as you can find

618
00:33:22,000 --> 00:33:24,560
Speaker 1: buyers for those shots. Well, that's a key question. I mean,

619
00:33:24,600 --> 00:33:27,560
Speaker 1: can you if you're talking about what brokers were there?

620
00:33:27,960 --> 00:33:30,920
Speaker 1: Seven million dollars a lot of puts we got you

621
00:33:31,000 --> 00:33:34,240
Speaker 1: ought to buy something for you. This has been wonderful.

622
00:33:34,320 --> 00:33:39,280
Speaker 1: We hope we can do it. Took most of negotiations

623
00:33:40,080 --> 00:33:44,720
Speaker 1: between us. Whoever is the next book coming up? At

624
00:33:44,720 --> 00:33:49,000
Speaker 1: the moment, we're still both so engaging. We're living our

625
00:33:49,040 --> 00:33:52,760
Speaker 1: current books every day every days, and Daniel can thank

626
00:33:52,800 --> 00:34:03,360
Speaker 1: you so much. Not a usual interview at the International

627
00:34:03,520 --> 00:34:07,120
Speaker 1: Monetary Fund in these unusual times with the spring meetings

628
00:34:07,480 --> 00:34:10,120
Speaker 1: in one week, we are out front with the first

629
00:34:10,160 --> 00:34:15,120
Speaker 1: interview with Kristilina Gorgeva, the International Monetary Fund Managing Director.

630
00:34:15,480 --> 00:34:17,640
Speaker 1: An extensive interview and I'd made clear to her. If

631
00:34:17,680 --> 00:34:20,280
Speaker 1: she wants to go longer, we'll let her go longer.

632
00:34:20,360 --> 00:34:22,960
Speaker 1: On the morning, so much to talk about. Thank you

633
00:34:23,000 --> 00:34:24,920
Speaker 1: so much for having us here. It's been a wonderful

634
00:34:25,239 --> 00:34:29,160
Speaker 1: conversation through the morning. I want to talk and go

635
00:34:29,320 --> 00:34:32,280
Speaker 1: to a quote which I just spoke to Angeluston about

636
00:34:32,280 --> 00:34:35,600
Speaker 1: the great author of Putin. This is Vladimir Putin in

637
00:34:35,680 --> 00:34:40,200
Speaker 1: Russia two days ago uh an Associated Press translation, obviously

638
00:34:40,280 --> 00:34:44,359
Speaker 1: for the Russian audience. The thing we do, on one

639
00:34:44,400 --> 00:34:48,399
Speaker 1: hand we help people, saving them from Nazism. On the

640
00:34:48,400 --> 00:34:52,879
Speaker 1: other hand, we take measures to ensure Russia's own security.

641
00:34:53,360 --> 00:34:57,279
Speaker 1: You are more qualified than anyone. Your heritage of Bulgaria.

642
00:34:57,400 --> 00:35:02,000
Speaker 1: Your grandfather was a patriot of Aulgaria. You have lived

643
00:35:02,080 --> 00:35:06,000
Speaker 1: under this car Marks University and such. You personally must

644
00:35:06,040 --> 00:35:10,800
Speaker 1: be thunderstruck and with members of the Greater Gorgava clan

645
00:35:11,080 --> 00:35:14,080
Speaker 1: in Ukraine. Now, just for a moment, what is the

646
00:35:14,160 --> 00:35:17,520
Speaker 1: last fifty days been like for you and your family?

647
00:35:18,440 --> 00:35:23,879
Speaker 1: It has been horrific. A war is a terrible thing

648
00:35:25,480 --> 00:35:31,280
Speaker 1: for my family. What it means is threat to their safety,

649
00:35:32,680 --> 00:35:36,560
Speaker 1: more difficult to find foot and more expensive to bite,

650
00:35:37,320 --> 00:35:43,200
Speaker 1: no medicines, and above all that sense that the war

651
00:35:43,840 --> 00:35:50,560
Speaker 1: would not soon end. Getting out there in Harkif in

652
00:35:50,680 --> 00:35:55,680
Speaker 1: distant part of Ukraine is close to impossible. Why they

653
00:35:55,719 --> 00:35:58,879
Speaker 1: are very close to the Russian border and very far

654
00:35:59,200 --> 00:36:04,759
Speaker 1: from the Polish and other borders of Ukraine. But in

655
00:36:05,000 --> 00:36:10,560
Speaker 1: this horror of war, what impressed me the most is

656
00:36:10,640 --> 00:36:19,440
Speaker 1: the strength that they demonstrate for the future of Ukraine.

657
00:36:20,719 --> 00:36:25,920
Speaker 1: My sister in law's messages, we will win this war.

658
00:36:26,440 --> 00:36:29,120
Speaker 1: Can they do it alone? In the distinction of my

659
00:36:29,320 --> 00:36:33,240
Speaker 1: interviews with the right and the left, the politically savvy

660
00:36:33,320 --> 00:36:37,600
Speaker 1: and not is this timidity about starting a World War three?

661
00:36:37,600 --> 00:36:40,239
Speaker 1: Now that's not your mandate, it I m F. But

662
00:36:40,360 --> 00:36:43,320
Speaker 1: I would like you to comment on how you perceive

663
00:36:43,840 --> 00:36:48,040
Speaker 1: the shock of the Western world and their tentativeness in

664
00:36:48,160 --> 00:36:52,000
Speaker 1: assisting not only Ukraine for all of Eastern Europe, frankly

665
00:36:52,080 --> 00:36:58,040
Speaker 1: the Finland. But the reality of this war is it

666
00:36:58,280 --> 00:37:04,040
Speaker 1: is about Ukraine, and it is beyond Ukraine. It is

667
00:37:04,080 --> 00:37:11,360
Speaker 1: about Ukraine because its existence is being threatened, but also

668
00:37:12,080 --> 00:37:18,239
Speaker 1: the post world order is being threatened, and it this

669
00:37:18,360 --> 00:37:23,959
Speaker 1: sends The war affects all of us. If we are

670
00:37:25,000 --> 00:37:38,160
Speaker 1: to allow a twenty first century military takeover of a

671
00:37:38,280 --> 00:37:44,960
Speaker 1: country in Europe that is detrimental to Europe, it is

672
00:37:45,239 --> 00:37:49,800
Speaker 1: detrimental to the world. And what we have to recognize

673
00:37:49,840 --> 00:37:57,640
Speaker 1: that the war is having consequences, reaching far and fast.

674
00:37:58,560 --> 00:38:07,719
Speaker 1: It affects hundreds of millions of people through three main channels. One.

675
00:38:08,080 --> 00:38:15,800
Speaker 1: Commodity prices especially food, energy, but also metals and foot

676
00:38:16,040 --> 00:38:20,719
Speaker 1: prices are up at the time they were pushed already

677
00:38:21,000 --> 00:38:25,120
Speaker 1: up by I want to talk about the food in

678
00:38:25,120 --> 00:38:26,759
Speaker 1: a minute. That's going to be the main part of

679
00:38:26,800 --> 00:38:29,960
Speaker 1: our conversation with what we see the challenges of the

680
00:38:30,000 --> 00:38:32,400
Speaker 1: I m F and helping Sri Lanka, prow and others.

681
00:38:32,880 --> 00:38:36,560
Speaker 1: But I want you to comment on the scope and

682
00:38:36,640 --> 00:38:39,840
Speaker 1: scale we see. This is something you're expert in academically.

683
00:38:40,280 --> 00:38:43,319
Speaker 1: And another expert, Janet Yellen, who has a little bit

684
00:38:43,320 --> 00:38:46,960
Speaker 1: of experience with the trillions word, says we're getting the

685
00:38:47,000 --> 00:38:51,080
Speaker 1: magnitude right. Yellen says, we need to think in trillions,

686
00:38:51,239 --> 00:38:54,160
Speaker 1: not billions. Because you go to your Spring meetings and

687
00:38:54,280 --> 00:38:58,080
Speaker 1: frankly to your October meetings, do we have the magnitude

688
00:38:58,080 --> 00:39:02,799
Speaker 1: wrong of what is needed? Well, Janet Plan is right.

689
00:39:03,080 --> 00:39:05,520
Speaker 1: We need trillions and we have been talking about these

690
00:39:05,520 --> 00:39:14,640
Speaker 1: trillions for years. How can we transform billions into trillions. Well, First,

691
00:39:14,680 --> 00:39:19,760
Speaker 1: by all of us working together, we cannot have fragmented

692
00:39:19,920 --> 00:39:29,480
Speaker 1: deployment of scarce development international finance resources. Two, by embracing

693
00:39:29,680 --> 00:39:34,799
Speaker 1: a very simple principle public money should be used for

694
00:39:34,960 --> 00:39:39,600
Speaker 1: only one of two things. To finance what private money

695
00:39:39,640 --> 00:39:45,480
Speaker 1: would never finance, and to remove barrious for private finance

696
00:39:45,640 --> 00:39:49,360
Speaker 1: in emerging markets and developing economies. And we are still

697
00:39:49,520 --> 00:39:56,080
Speaker 1: short of embracing entirely this principle at d Imath. Our

698
00:39:56,200 --> 00:40:00,719
Speaker 1: concentration is when we have a program in the country,

699
00:40:00,760 --> 00:40:05,880
Speaker 1: is this program going to open up space for private

700
00:40:06,040 --> 00:40:12,120
Speaker 1: sector let growth, for jobs that come because vibrant investments

701
00:40:12,120 --> 00:40:15,040
Speaker 1: are being made. And when we when we look at

702
00:40:15,320 --> 00:40:21,080
Speaker 1: the countries that are now in difficulty, we are determined

703
00:40:21,400 --> 00:40:25,160
Speaker 1: to have helped them have fundamentals that would make that

704
00:40:25,680 --> 00:40:28,919
Speaker 1: private sector let growth possible. I want to talk about

705
00:40:28,960 --> 00:40:31,120
Speaker 1: the mechanisms here and then get to the food crisis

706
00:40:31,160 --> 00:40:33,239
Speaker 1: or Eric Martin is front and center on this and

707
00:40:33,400 --> 00:40:37,480
Speaker 1: looking nation to nation where the greatest challenges are. The

708
00:40:38,920 --> 00:40:42,840
Speaker 1: nuance here is the solution domestically for these troubled nations

709
00:40:42,840 --> 00:40:45,520
Speaker 1: and food is price control. To keep the price of

710
00:40:45,560 --> 00:40:47,279
Speaker 1: bread down and keep the price of week down. The

711
00:40:47,320 --> 00:40:50,200
Speaker 1: price of rice down, etcetera. The I. M. F Comes

712
00:40:50,200 --> 00:40:53,319
Speaker 1: in and says, okay, you're broke, fine, let us help

713
00:40:53,360 --> 00:40:55,759
Speaker 1: you fix it. But there needs to be a new

714
00:40:56,520 --> 00:41:01,360
Speaker 1: mechanism given the magnitude and the shock of this inflation.

715
00:41:01,920 --> 00:41:06,200
Speaker 1: Explain the new mechanism or process you will use to

716
00:41:06,320 --> 00:41:11,720
Speaker 1: move from domestic controls over the something that's more modern

717
00:41:11,960 --> 00:41:14,920
Speaker 1: Western capitalists, how do you how do you get from

718
00:41:15,000 --> 00:41:17,360
Speaker 1: A to B? We have been on this now for

719
00:41:17,520 --> 00:41:20,280
Speaker 1: quite some time, and you're right. We have to get

720
00:41:20,680 --> 00:41:24,360
Speaker 1: even faster on that path. And what we are working

721
00:41:24,360 --> 00:41:29,000
Speaker 1: with countries to do is to have targeted assistance, so

722
00:41:29,200 --> 00:41:33,920
Speaker 1: there is social protection that identifies who are the vulnerable

723
00:41:34,040 --> 00:41:36,319
Speaker 1: that need to be helped. What is the problem with

724
00:41:36,360 --> 00:41:41,200
Speaker 1: price controls? Everybody benefits from it, the rich benefit and

725
00:41:41,280 --> 00:41:44,680
Speaker 1: the poor. But if the country doesn't have a social

726
00:41:44,719 --> 00:41:48,160
Speaker 1: safety net, if they don't know who their vulnerable families are,

727
00:41:48,960 --> 00:41:53,000
Speaker 1: they are bound to go for price controls because that's

728
00:41:53,040 --> 00:41:55,120
Speaker 1: the only thing they can do. And by the way,

729
00:41:55,160 --> 00:42:00,479
Speaker 1: at this moment of time, in some circumstances, we would

730
00:42:00,480 --> 00:42:04,160
Speaker 1: say this is not your first best, it's not only

731
00:42:04,160 --> 00:42:10,640
Speaker 1: your second best. But given the speed with which prices

732
00:42:10,680 --> 00:42:15,080
Speaker 1: are jumping. There is some some logic in making sure

733
00:42:15,200 --> 00:42:19,160
Speaker 1: people don't go hungry. How do we think about this

734
00:42:19,239 --> 00:42:24,560
Speaker 1: in the future. We have to two complementary strategies. One

735
00:42:24,680 --> 00:42:28,400
Speaker 1: is what I just described, target or your public spending.

736
00:42:28,680 --> 00:42:32,680
Speaker 1: For God's sake, don't throw good money in the direction

737
00:42:32,719 --> 00:42:39,040
Speaker 1: of rich people. Second, think about food in a more

738
00:42:39,560 --> 00:42:47,319
Speaker 1: sustainable manner. Remember this year, food crisis has already been

739
00:42:47,719 --> 00:42:52,520
Speaker 1: knocking on the door before the war, because of climate change,

740
00:42:52,600 --> 00:42:57,239
Speaker 1: because of climate shocks, because agriculture in Africa rain fed.

741
00:42:57,400 --> 00:43:00,480
Speaker 1: You have no rain, you have no food. We have

742
00:43:00,680 --> 00:43:06,160
Speaker 1: to think about sustainability and resilience in a more shocked

743
00:43:06,160 --> 00:43:09,600
Speaker 1: prone world differently. Okay, well, let's I want a digress

744
00:43:09,600 --> 00:43:11,080
Speaker 1: here and I do want to come back to food

745
00:43:11,080 --> 00:43:12,920
Speaker 1: and folks. So if you're just joining because on Bloomberg

746
00:43:12,960 --> 00:43:16,360
Speaker 1: Radio Bloomberg Television, Crystallyna Gore gave of the i m

747
00:43:16,440 --> 00:43:19,279
Speaker 1: F Managing director here in a conversation, I can say,

748
00:43:19,280 --> 00:43:21,840
Speaker 1: in all my years of doing this, a critical point

749
00:43:21,920 --> 00:43:25,200
Speaker 1: into the spring meetings of the i m F next week,

750
00:43:25,520 --> 00:43:28,000
Speaker 1: I want to digress here on climate change. I was

751
00:43:28,120 --> 00:43:32,040
Speaker 1: at the Paris Accords and the advancements that have been made.

752
00:43:32,560 --> 00:43:35,680
Speaker 1: Tell me of the derailment of the need to burn call.

753
00:43:36,360 --> 00:43:40,320
Speaker 1: How temporary is that? Or has there been a seismic

754
00:43:40,400 --> 00:43:44,600
Speaker 1: shift for climate change? It is temporary. I don't see

755
00:43:44,680 --> 00:43:49,080
Speaker 1: call persisting for much longer. Why because one of the benefits,

756
00:43:50,080 --> 00:43:53,280
Speaker 1: the silver lining, if you wish, of high energy prices

757
00:43:53,480 --> 00:43:59,440
Speaker 1: is they make renewables more viable and they inevitably believe

758
00:43:59,440 --> 00:44:03,839
Speaker 1: we see so the yes, how long would it take?

759
00:44:04,200 --> 00:44:07,400
Speaker 1: I'm not antige expert. I would not guess, but the

760
00:44:07,400 --> 00:44:11,680
Speaker 1: direction to travel is uh cleaning, Okay, fine, just because

761
00:44:11,680 --> 00:44:14,000
Speaker 1: of time. I really want to get all these issues in.

762
00:44:14,360 --> 00:44:17,760
Speaker 1: We see Peru, we see Sri Lanka, we see Egypt,

763
00:44:17,840 --> 00:44:20,280
Speaker 1: which is a much larger, bigger problem. That's a focus

764
00:44:20,320 --> 00:44:23,319
Speaker 1: of our Eric Martin, If I see these different companies

765
00:44:23,360 --> 00:44:27,680
Speaker 1: in maximum distress, it alludes to the Arab spring, to

766
00:44:27,760 --> 00:44:31,799
Speaker 1: the Tunisia and almost the domino effect of an unraveling.

767
00:44:32,080 --> 00:44:36,080
Speaker 1: Are we near not an Arab spring but a war

768
00:44:36,320 --> 00:44:40,040
Speaker 1: crisis where we get a domino effect of food crisis.

769
00:44:40,440 --> 00:44:42,520
Speaker 1: We have to get on top of the food crisis.

770
00:44:42,560 --> 00:44:46,439
Speaker 1: We need to front it right now, and we can.

771
00:44:46,719 --> 00:44:48,799
Speaker 1: We have learned lessons about it, we know how to

772
00:44:48,840 --> 00:44:54,040
Speaker 1: do it. But even if we front it, more countries

773
00:44:54,080 --> 00:44:58,880
Speaker 1: would be in trouble. Why because in everybody had to

774
00:44:58,920 --> 00:45:04,960
Speaker 1: borrow more to sustain an economy. Instance, still the largest

775
00:45:05,000 --> 00:45:08,560
Speaker 1: increase in that because of the pandemic in twenty one.

776
00:45:09,040 --> 00:45:12,239
Speaker 1: Servicing this that was easy. It was actually cheaper in

777
00:45:12,280 --> 00:45:15,400
Speaker 1: some places because interest rates were so low or negative

778
00:45:16,000 --> 00:45:22,160
Speaker 1: two No more with technic of financial conditions, servicing that

779
00:45:22,680 --> 00:45:27,160
Speaker 1: is getting more expensive. Now good news, not so good news.

780
00:45:28,080 --> 00:45:31,000
Speaker 1: Good news is that we see that we follow it

781
00:45:31,160 --> 00:45:34,120
Speaker 1: and we are already zero inking on on the countries

782
00:45:34,440 --> 00:45:36,759
Speaker 1: that are in need of that restructuring. We have to

783
00:45:36,840 --> 00:45:40,600
Speaker 1: press for that. Right they're coming in the doors, they're

784
00:45:40,600 --> 00:45:45,960
Speaker 1: gonna and we will. We would sit with Egypt, we

785
00:45:46,000 --> 00:45:48,920
Speaker 1: would sit with Tunisia, and we would discuss with them

786
00:45:49,040 --> 00:45:52,719
Speaker 1: realistically what needs to be done. One one thing that

787
00:45:52,760 --> 00:45:56,760
Speaker 1: I saw Sri Lanka has appointed very prominent Tri Lankan

788
00:45:56,880 --> 00:46:01,080
Speaker 1: economies to be advisors. That gives me hope that they're saying, okay,

789
00:46:01,080 --> 00:46:03,040
Speaker 1: we got because the time I've got to move on.

790
00:46:03,239 --> 00:46:05,680
Speaker 1: Everybody in G seven is focused on the six. Mr

791
00:46:05,760 --> 00:46:07,920
Speaker 1: mccrawn he's got to get reelected, so we'll give him

792
00:46:07,960 --> 00:46:11,399
Speaker 1: a pass. Right now, what do you need from G

793
00:46:11,560 --> 00:46:17,480
Speaker 1: seven to affect maximum I m F tactics and issues

794
00:46:17,640 --> 00:46:21,520
Speaker 1: in this crisis. We need from the seven support for

795
00:46:21,640 --> 00:46:25,080
Speaker 1: deploying the full set of instruments of the I m

796
00:46:25,160 --> 00:46:31,000
Speaker 1: F FAST and we need space to build it for

797
00:46:31,239 --> 00:46:35,800
Speaker 1: the future. Yesterday our board approved a new instrument, first

798
00:46:35,840 --> 00:46:38,080
Speaker 1: time in the history of the IMF. We have a

799
00:46:38,080 --> 00:46:42,960
Speaker 1: long term financing instrument specifically for pandemic preparedness and for

800
00:46:43,040 --> 00:46:49,320
Speaker 1: climate action. What we want is to think of building

801
00:46:49,400 --> 00:46:53,760
Speaker 1: that resilience I talked about in a more comprehensive way before.

802
00:46:53,840 --> 00:46:56,920
Speaker 1: When I m F says resilience, we mean banking sector

803
00:46:57,040 --> 00:47:00,520
Speaker 1: financial stability. Now it is broader. You have to have

804
00:47:00,840 --> 00:47:04,759
Speaker 1: people that are healthy and educated. We have to have

805
00:47:05,000 --> 00:47:08,839
Speaker 1: economy more vibrant. We have to have digital money integrated

806
00:47:09,160 --> 00:47:12,399
Speaker 1: today in the way we would function tomorrow. You are

807
00:47:12,440 --> 00:47:14,600
Speaker 1: a tough not the way you came up with some

808
00:47:14,680 --> 00:47:18,000
Speaker 1: real struggle in Bulgaria. Your academics and the work, and

809
00:47:18,040 --> 00:47:20,480
Speaker 1: you've just got that certain manner of you do this

810
00:47:20,600 --> 00:47:23,440
Speaker 1: thing and you're like, let's go, let's go, let's go.

811
00:47:23,760 --> 00:47:26,520
Speaker 1: What do you say to the I m F nations

812
00:47:26,560 --> 00:47:30,920
Speaker 1: supporting mr Prutin, whether it's direct maybe it's someone indirect

813
00:47:31,000 --> 00:47:33,799
Speaker 1: I think India, China, et cetera. How does the I

814
00:47:34,000 --> 00:47:38,880
Speaker 1: m F address those nations that aren't on board helping

815
00:47:39,120 --> 00:47:44,960
Speaker 1: Ukraine think of the interests of your people. Over the

816
00:47:45,040 --> 00:47:51,480
Speaker 1: last decades of integrated global economy, we have tripled the

817
00:47:51,640 --> 00:47:57,200
Speaker 1: size of global GDP triple who benefited the most emerging

818
00:47:57,280 --> 00:48:02,759
Speaker 1: markets developing economies their size increased four and a half times.

819
00:48:03,440 --> 00:48:07,680
Speaker 1: Their poor poor people are fewer, their their middle class

820
00:48:07,719 --> 00:48:12,960
Speaker 1: has expanded. An integrated economy in which we can work

821
00:48:13,040 --> 00:48:18,319
Speaker 1: together benefits you. Crystal nnagor Gaba, Thank you so much

822
00:48:18,360 --> 00:48:21,360
Speaker 1: for joining us more a wonderful start to the spring meeting.

823
00:48:21,480 --> 00:48:24,960
Speaker 1: She is the I m F Managing Director. Joining Bloomberg

824
00:48:25,000 --> 00:48:29,440
Speaker 1: on radio and television, this is the Bloomberg Surveillance Podcast.

825
00:48:29,719 --> 00:48:33,080
Speaker 1: Thanks for listening. Join us live weekdays from seven to

826
00:48:33,160 --> 00:48:37,239
Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television

827
00:48:37,600 --> 00:48:41,600
Speaker 1: each day from six to nine am for insight from

828
00:48:41,600 --> 00:48:46,160
Speaker 1: the best in economics, finance, investment, and international relations. And

829
00:48:46,280 --> 00:48:51,400
Speaker 1: subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg

830
00:48:51,480 --> 00:48:54,799
Speaker 1: dot com, and of course on the terminal. I'm Tom

831
00:48:54,880 --> 00:48:57,200
Speaker 1: Keene and this is Bloomberg,