WEBVTT - Federal Reserve Governor Stephen Miran Talks Interest Rates 0:00:02.520 --> 0:00:08.039 Bloomberg Audio Studios, Podcasts Radio. An important conversation we want 0:00:08.080 --> 0:00:11.280 to bring you now to in New York Bloomberg Salaams 0:00:11.320 --> 0:00:13.360 and sitting down with the newest member of the FED 0:00:13.480 --> 0:00:16.680 Governor Stephen Myron. This is at the Economic Club of 0:00:16.680 --> 0:00:19.720 New York, a fireside chat live on Bloomberg, and. 0:00:19.720 --> 0:00:23.360 That it wasn't bad. And so my initial thought was 0:00:23.440 --> 0:00:25.720 that I was going to be given I was going 0:00:25.760 --> 0:00:27.479 to be asked to run the buer of labor sistics 0:00:27.520 --> 0:00:31.680 as a second job. That's what I initially expected when 0:00:31.720 --> 0:00:34.640 I walked into the Oval office that day. But yeah, 0:00:34.680 --> 0:00:35.760 that's that's not how it turned out. 0:00:35.960 --> 0:00:38.960 Yeah, they couldn't find you personnel decision could be firing 0:00:39.240 --> 0:00:42.440 or would you like to be a FED governor? 0:00:42.800 --> 0:00:44.800 Yes, So that's that's what it turned out to be. Yeah. 0:00:44.880 --> 0:00:48.160 Yeah, So you're on leave from working for President Trump, 0:00:48.280 --> 0:00:51.040 where in your job you provided economic analysis for the 0:00:51.040 --> 0:00:55.040 White House. Trump says in the White House says that 0:00:55.080 --> 0:00:57.680 the US economy is doing great. They recently put a 0:00:57.720 --> 0:01:00.800 post up on the website that talks about how Americans 0:01:00.880 --> 0:01:04.280 adding like never before, they are earning more, and the 0:01:04.319 --> 0:01:06.160 industrial renaissance is here. 0:01:06.840 --> 0:01:08.440 Yet. As a FED governor. 0:01:08.600 --> 0:01:11.840 Last week you wrote down a forecast for a total 0:01:11.880 --> 0:01:14.880 of one hundred and fifty basis point cuts in three meetings, 0:01:15.440 --> 0:01:20.360 which is usually panic territory. How can both points be 0:01:20.480 --> 0:01:23.240 true at the same time that the economy is doing great, 0:01:23.880 --> 0:01:27.240 but a rapid interest rate reduction is necessary. 0:01:27.680 --> 0:01:30.080 Yeah. So, look, I mean, as I said a few 0:01:30.120 --> 0:01:32.600 moments ago, I expect the second half of the year 0:01:32.600 --> 0:01:34.800 and into next year to be better in terms of growth. 0:01:34.800 --> 0:01:37.360 In the first half of this year in large part 0:01:37.360 --> 0:01:39.679 because a lot of the effects of the tax bill 0:01:39.720 --> 0:01:42.680 are going to be kicking in and trade uncertainty is dissipating. 0:01:42.840 --> 0:01:45.240 But I view a lot of that as also expanding 0:01:45.240 --> 0:01:47.440 the supply side at the same time as the as 0:01:47.440 --> 0:01:49.760 the demand side, And so, as I said, if actual 0:01:49.800 --> 0:01:52.000 output and potential output are moving up at the same time, 0:01:52.120 --> 0:01:55.680 it doesn't imply a necessarily hawkish or much tigher policy 0:01:55.720 --> 0:01:58.880 because the apple cap isn't expanding if they're both moving 0:01:58.880 --> 0:02:02.520 at the same time. Instead, my view is that policy 0:02:02.640 --> 0:02:06.800 is roughly two points too restrictive, which is considerably restrictive. 0:02:07.320 --> 0:02:09.600 And even though I am expecting growth to be a 0:02:09.600 --> 0:02:11.760 little bit better in the future, that could get derailed 0:02:12.720 --> 0:02:15.320 unnecessarily so and create an apup of gap where one 0:02:15.360 --> 0:02:18.440 need not exist if we don't get policy closer to neutral. 0:02:18.800 --> 0:02:21.520 Now that said, because of the distance neutral, my view 0:02:21.600 --> 0:02:23.760 is it's better to move there more quickly than less quickly. 0:02:23.880 --> 0:02:25.560 It's not a panic, you know. I think a panicky 0:02:25.600 --> 0:02:27.679 move would be something like seventy five business points or 0:02:27.720 --> 0:02:31.960 even more. I'm not panicked. I just see that the 0:02:32.040 --> 0:02:35.280 risks grow the longer you remain significantly above neutral. 0:02:35.960 --> 0:02:38.320 You have company among your new colleagues at the FED 0:02:38.440 --> 0:02:41.079 in your neutral rate forecast that nobody wants to move 0:02:41.200 --> 0:02:42.760 quite as quickly as you do. 0:02:43.280 --> 0:02:45.600 What is it that concerns you about the labor market? 0:02:46.440 --> 0:02:48.560 Well, we learned that the first half of the year 0:02:48.639 --> 0:02:50.040 was not as strong as we would have liked it 0:02:50.080 --> 0:02:53.360 to have been. We learned that the labor marketing continued 0:02:53.400 --> 0:02:56.000 to lose momentum throughout last year and into the first 0:02:56.000 --> 0:02:58.640 half of this year. And that to me means that 0:02:58.880 --> 0:03:00.680 even though I think that growth is going to pick 0:03:00.760 --> 0:03:04.240 up for various reasons, there are concerns that, hey, things 0:03:04.240 --> 0:03:06.600 had been moving in the wrong direction, and if you 0:03:06.720 --> 0:03:10.239 keep policy this degree of restrictive for too long, you're 0:03:10.240 --> 0:03:12.239 not going to allow things to move in the other direction, 0:03:12.320 --> 0:03:15.480 and so you're going to create a situation which napokap expands. 0:03:15.720 --> 0:03:18.200 And so in my opinion, it's imperative that we get 0:03:18.400 --> 0:03:21.560 closer to neutral quickly. And so I thought three, you know, 0:03:21.560 --> 0:03:24.160 sort of a series of fifties to recalibrate interest rates 0:03:24.200 --> 0:03:25.280 was the appropriate policy. 0:03:25.400 --> 0:03:27.600 And you don't see that as panic, No. 0:03:27.480 --> 0:03:28.920 I don't see that as panic. I mean, if I 0:03:28.919 --> 0:03:30.639 were panicking, I would tell people I were panicking. 0:03:32.280 --> 0:03:36.760 All right, A lot of businesses say that you talk 0:03:36.800 --> 0:03:40.200 in your speech and just now about how rates are 0:03:40.240 --> 0:03:42.720 too restrictive, But a lot of businesses that I've been 0:03:43.120 --> 0:03:46.480 hearing from reading different reports and analyzes, show that some 0:03:46.520 --> 0:03:51.560 of the pullback and investments is not to the restrictive 0:03:51.800 --> 0:03:55.320 rate environment, but has to do with policy related uncertainty. 0:03:55.360 --> 0:03:57.560 How do you counter that, well. 0:03:57.320 --> 0:03:59.200 I mean I think that you know, there's a lot 0:03:59.200 --> 0:04:01.520 of different interest rates in the economy and a lot 0:04:01.520 --> 0:04:04.440 of different types of investment, and so for sure, there 0:04:04.440 --> 0:04:06.720 are parts of the economy that have been affected by that. 0:04:07.040 --> 0:04:09.200 And as I said before, I do think that that 0:04:09.200 --> 0:04:11.400 that type of uncertainty is not totally on, but I 0:04:11.400 --> 0:04:13.960 think it's certainly less than it was a few months ago. However, 0:04:14.040 --> 0:04:16.320 if you look at other sectors like housing, you know, 0:04:16.360 --> 0:04:18.840 I think it's very clear that rates are that rates 0:04:18.839 --> 0:04:21.280 are you know, that rates are the primary impetitive and 0:04:21.400 --> 0:04:26.240 to investing in housing and building more housing at the moment. 0:04:26.760 --> 0:04:28.200 You know, I don't think that that's a function of 0:04:28.240 --> 0:04:29.360 trade policy uncertainty. 0:04:30.080 --> 0:04:31.159 You threw a lot of numbers. 0:04:31.440 --> 0:04:32.960 I apologize everyone. 0:04:33.120 --> 0:04:34.840 Yes, I'm sure everyone's going to go back and look 0:04:34.839 --> 0:04:37.720 at this speech and the table. Can you break down 0:04:37.880 --> 0:04:41.080 just a little bit what your economic growth forecast is 0:04:41.080 --> 0:04:42.000 for twenty twenty six. 0:04:42.000 --> 0:04:43.479 Where do you see the economy ending the. 0:04:43.520 --> 0:04:49.279 Year so conditional upon economy, sorry, conditional upon on getting 0:04:49.640 --> 0:04:52.480 rates closer to neutral as I had in the SEP, 0:04:52.760 --> 0:04:54.440 I think growth is going to be in the you know, 0:04:54.480 --> 0:04:56.560 sort of in the mid two area. 0:04:56.760 --> 0:04:59.400 And where do you see the federal funds rate. 0:05:01.040 --> 0:05:03.680 Again in the mid in the in the mid two area. 0:05:04.360 --> 0:05:07.480 So if your forecasts are right, it might be time 0:05:07.680 --> 0:05:11.480 for rates to go up at that time. 0:05:12.720 --> 0:05:15.120 Uh no, because some of the so so there's a 0:05:15.160 --> 0:05:17.279 difference between So in the speech I said two to 0:05:17.320 --> 0:05:19.440 two and a half percent was the correct rate, but 0:05:19.520 --> 0:05:22.200 my dots actually have a slight divergence from that because 0:05:22.200 --> 0:05:24.800 some of the effects kick in differentially over time. And 0:05:24.839 --> 0:05:26.960 so there are some effects that you know, I think 0:05:27.080 --> 0:05:28.839 we'll be kicking in immediately, but then sort of the 0:05:28.839 --> 0:05:31.680 rent disinflation accelerates over time, and the apple gaps kind 0:05:31.680 --> 0:05:35.000 of ameliorate over time as potential, sorry, as actual catches 0:05:35.080 --> 0:05:37.560 up to potential, and so there's a so so it's 0:05:37.600 --> 0:05:39.520 not the case that you would sort of just collapse 0:05:39.560 --> 0:05:41.520 down immediately to two to two and a half percent 0:05:41.560 --> 0:05:45.160 and then gradually raise back up over time. Because of that, 0:05:45.200 --> 0:05:48.640 there's actually there's you know, my view is get relatively 0:05:48.680 --> 0:05:51.880 close neutral quickly, and then there's a little bit more 0:05:51.880 --> 0:05:54.000 cutting next year, and then a little bit more cutting 0:05:54.000 --> 0:05:55.760 the year after that, and then sort of back up 0:05:55.760 --> 0:05:56.800 to neutral thereafter. 0:05:57.360 --> 0:05:59.599 So I want to talk to you about a paper 0:05:59.600 --> 0:06:02.159 that you wrote for the Manhattan Institute last year. It 0:06:02.160 --> 0:06:05.000 came out in March of twenty twenty four. You name 0:06:05.320 --> 0:06:09.919 Lalel Brainard, specifically criticizing her for being among the Central 0:06:09.920 --> 0:06:12.800 Bank officials who have rotated between the White House and 0:06:12.839 --> 0:06:16.520 the Federal Reserve. Of course, that officials are most of 0:06:16.520 --> 0:06:18.719 them are nominated by the president, and so there's a 0:06:18.800 --> 0:06:23.560 natural link there. You named that Brainard specifically took one 0:06:23.720 --> 0:06:26.320 single weekend between a political role at the White House 0:06:26.600 --> 0:06:30.279 and a role as an independent member of the Federal Reserve. 0:06:30.920 --> 0:06:33.440 A quote that jumps out from the paper is to 0:06:33.520 --> 0:06:36.920 pretend that no one to pretend that one can easily 0:06:36.960 --> 0:06:41.400 shift between highly political and allegedly non political roles without 0:06:41.480 --> 0:06:45.560 letting political bias informed policy is at best naive and 0:06:45.640 --> 0:06:49.960 at worst, sinister Governor Myron, how is your being on 0:06:50.120 --> 0:06:52.960 leave from working directly from President Trump different? 0:06:53.480 --> 0:06:55.600 Yeah, so first, let me let me address me let 0:06:55.600 --> 0:06:58.240 me go backwards with that. Right, So, first, the on 0:06:58.440 --> 0:07:01.680 leave is just because it's a four month job. And 0:07:01.720 --> 0:07:03.240 if it were a longer than four month job, I 0:07:03.279 --> 0:07:05.600 would of course resign, you know, immediately. If there were 0:07:05.640 --> 0:07:07.040 some reason that I would think that I would be 0:07:07.120 --> 0:07:11.000 in the seat past January, i'd resign. Now at the moment, 0:07:11.040 --> 0:07:18.240 I don't have such a reason, you know. And I 0:07:18.280 --> 0:07:21.400 think that there's no question that the FED had previously 0:07:23.520 --> 0:07:26.240 gotten over its skis in terms of politics, and I 0:07:26.280 --> 0:07:30.000 think my analysis is borne out by the history. The 0:07:30.000 --> 0:07:32.520 FED decided that it was going to be the organization 0:07:32.800 --> 0:07:36.280 to take on climate change and to join various international 0:07:36.320 --> 0:07:39.600 networks for bringing the financial system. The FED decided that 0:07:39.640 --> 0:07:41.960 it was going to get involved in credit allocation, deciding 0:07:42.000 --> 0:07:43.880 that this sector of the economy is worthy of credit 0:07:44.120 --> 0:07:46.360 and this sector that we don't politically favor is not 0:07:46.440 --> 0:07:48.880 worthy of credit. The FED decided that it was going 0:07:48.920 --> 0:07:56.160 to intervene in heavily political issues of racism and police, 0:07:56.880 --> 0:08:00.800 and FED officials started giving speeches about police brutality and 0:08:01.000 --> 0:08:05.640 arguing that we were overincarcerated the you know. The FED 0:08:05.720 --> 0:08:08.320 decided that it was going to become more and more 0:08:08.360 --> 0:08:10.120 political along these lines, and I viewed that as a 0:08:10.160 --> 0:08:13.040 significant problem. That's the context in which I in which 0:08:13.040 --> 0:08:16.360 I in which I wrote that the proposals that in 0:08:16.400 --> 0:08:18.880 that paper are a package deal, a system of checks 0:08:18.920 --> 0:08:22.160 and balances, and everything that I wrote in there requires 0:08:22.200 --> 0:08:24.320 the entire system of checks and balances to be effective. 0:08:24.360 --> 0:08:26.680 If you just took one check and you ignored all 0:08:26.680 --> 0:08:28.520 the others, all you do is empower the one that 0:08:28.560 --> 0:08:32.000 you're protecting. So it's a it's a it all has 0:08:32.040 --> 0:08:33.760 to be viewed in the context of a total system, 0:08:33.760 --> 0:08:36.959 as opposed to sort of in isolation. Now, I was 0:08:37.000 --> 0:08:39.839 asked to take this role by the President of the 0:08:39.880 --> 0:08:43.520 United States. I took the role. I will do the 0:08:43.559 --> 0:08:46.040 best at it that I possibly can. That means for 0:08:46.559 --> 0:08:48.760 forming my own views independently based on what I think 0:08:48.800 --> 0:08:51.400 is appropriate economics, based on what I think is appropriate analysis, 0:08:51.679 --> 0:08:54.280 and because of exactly the things that you're discussing are 0:08:54.400 --> 0:08:57.600 why I want to be so transparent and as transparent 0:08:57.640 --> 0:08:59.680 as I possibly can be. I didn't just make the 0:08:59.720 --> 0:09:02.880 number up for the SAP, right, I just read everyone 0:09:02.960 --> 0:09:04.840 the analysis. And I know I probably bored people to 0:09:04.880 --> 0:09:07.160 death with this many numbers. But the reason why I 0:09:07.200 --> 0:09:09.400 did so is that people know these numbers aren't just 0:09:09.440 --> 0:09:11.679 made up. There's a reason every single line there has 0:09:11.720 --> 0:09:14.800 a number on it, and every single line has an elasticity, 0:09:14.920 --> 0:09:17.720 a size of the change, and then these policy outcome, 0:09:17.720 --> 0:09:19.559 which is basically the two multiplied to each other. And 0:09:19.600 --> 0:09:21.560 if you're going to disagree with me, I invite you 0:09:21.600 --> 0:09:23.160 to disagree with me. Tell me, do you think the 0:09:23.200 --> 0:09:25.120 elcicsity is wrong or do you think that the size 0:09:25.120 --> 0:09:29.280 of the size of the changing the changing parameter is wrong? 0:09:29.320 --> 0:09:31.960 The changing variable is wrong? Right? Because you may think 0:09:32.000 --> 0:09:34.840 that you know that there's other estimates of the effects 0:09:34.880 --> 0:09:39.240 of immigrants on rental prices on rents right that you 0:09:39.280 --> 0:09:40.679 know are higher or lower, and I should be using 0:09:40.679 --> 0:09:43.960 a higher and lower elisticity, right like, please have the conversation, right. 0:09:44.160 --> 0:09:46.360 But I am being as transparent as I possibly can, 0:09:47.040 --> 0:09:49.640 precisely because of the concerns that you just listed, and 0:09:49.720 --> 0:09:51.360 I invite everyone to do so. Well. 0:09:51.360 --> 0:09:53.280 There's nothing boring about what's coming out of the Federal 0:09:53.280 --> 0:09:56.959 Reserve these days, I assure you, the President, Let's talk 0:09:56.960 --> 0:09:59.920 about the context you shared, the context against which you 0:10:00.040 --> 0:10:02.920 wrote the March twenty twenty four paper for the Manhattan Institute. 0:10:03.080 --> 0:10:05.800 The context right now is that the President has said 0:10:06.040 --> 0:10:10.480 many times that he will have a majority soon at 0:10:10.520 --> 0:10:15.000 the FED, more of his appointees than anyone else. A 0:10:15.040 --> 0:10:17.800 lot of academic studies show that a loss of central 0:10:17.800 --> 0:10:22.080 bank independence is often associated with higher borrowing costs. Do 0:10:22.120 --> 0:10:24.320 you think that there is a risk to the President 0:10:24.400 --> 0:10:28.800 being so directly involved in selecting governors who have a 0:10:28.840 --> 0:10:32.320 certain view on rates. Let's set aside DEI and climate risks, 0:10:32.360 --> 0:10:34.920 but we're talking monetary policy where the rate path should be. 0:10:35.920 --> 0:10:38.520 You know, again, the president is entitled to his views 0:10:38.520 --> 0:10:40.920 on monetary policy. I think everyone's entailed to their views 0:10:40.920 --> 0:10:43.040 on monitary policy, and I'm delighted to hear views from 0:10:43.080 --> 0:10:45.840 all I think it's very important to avoid groupthink. That 0:10:45.880 --> 0:10:48.120 means hearing all views from all perspectives, and I'm very 0:10:48.120 --> 0:10:50.120 happy to hear the President's views. But at the end 0:10:50.120 --> 0:10:52.120 of the day, I make my analysis based on my 0:10:52.160 --> 0:10:54.560 own understanding of economics and how the economy works, and 0:10:54.600 --> 0:10:57.400 I just read it all out loud to everybody, and 0:10:57.840 --> 0:11:00.120 I would hope that everyone else who is appointed the 0:11:00.160 --> 0:11:04.760 Federal Reserve does the same. You know, presidents have always 0:11:04.920 --> 0:11:09.200 appointed people to the Federal Reserve who thought about policy 0:11:09.800 --> 0:11:12.000 in a way that they wanted to appoint people to 0:11:12.120 --> 0:11:12.839 the FED. 0:11:14.320 --> 0:11:17.320 You did stay on Friday on Live TV that you 0:11:17.360 --> 0:11:19.440 had spoken to the President the day that you were confirmed. 0:11:19.480 --> 0:11:21.160 That was just a congratulatory call. 0:11:21.400 --> 0:11:24.000 You said, Yes, he called me to congratulate me after 0:11:24.000 --> 0:11:24.760 I'd been sworn in. 0:11:25.960 --> 0:11:28.040 If I'm curious what you would do if, in a 0:11:28.040 --> 0:11:31.960 phone call the President directly asked you to vie for 0:11:32.000 --> 0:11:34.160 a specific decision at the FED. 0:11:34.240 --> 0:11:37.880 I would respectfully listen to his view and his analysis 0:11:37.920 --> 0:11:40.120 of why interest rates should be wherever they think that 0:11:40.360 --> 0:11:42.280 they should be. And he has been very forthright in 0:11:42.320 --> 0:11:44.760 his view, right, which is not exactly the same as 0:11:44.760 --> 0:11:46.920 the numbers that I put out there. There is a difference, right. 0:11:47.480 --> 0:11:49.800 I would respectfully listen to his view. I would consider 0:11:49.800 --> 0:11:51.800 his arguments, consider whether they had any merit, and then 0:11:51.800 --> 0:11:53.440 I would make up my own mind based on my 0:11:53.520 --> 0:11:55.880 own analysis. And I would do that whether it's the 0:11:55.920 --> 0:11:59.839 President or anyone or any other you know, political actor. 0:12:00.400 --> 0:12:03.480 Would you share publicly if that conversation were to take. 0:12:03.360 --> 0:12:07.320 Place, Well, you know, as you can imagine, I've had 0:12:07.360 --> 0:12:11.079 a number of conversations with the President about the economy, 0:12:11.120 --> 0:12:14.480 about economic policy over the last you know, nine months, 0:12:14.480 --> 0:12:17.440 about the economy, economic policy. A number of those conversations 0:12:17.480 --> 0:12:19.640 that touched in the FED. Also, he's never asked me 0:12:19.880 --> 0:12:22.760 to set policy in a specific way. So Amy never 0:12:22.760 --> 0:12:24.000 asked me. It's never happened. 0:12:24.679 --> 0:12:28.080 From my understanding. On the day that you were nominated, 0:12:28.200 --> 0:12:31.840 you were interviewed, I believe by Scott Bessen, the treasure Secretary, 0:12:32.320 --> 0:12:34.600 Susie Wiles, the White House Chief of Staff, and the President. 0:12:34.720 --> 0:12:37.800 Did the rate path come up in those conversations. 0:12:37.320 --> 0:12:39.599 No, he never asked me. He never asked me to 0:12:39.640 --> 0:12:42.440 set policy in a specific way. He shared his view 0:12:42.440 --> 0:12:45.559 about Monterey policy, the same view he says on TV 0:12:46.080 --> 0:12:48.199 several times a week. You know, there's nothing about his 0:12:48.280 --> 0:12:50.320 view about Monterey policy that I know that you don't know. 0:12:51.600 --> 0:12:53.640 But he never asked me to set policy in a 0:12:53.640 --> 0:12:56.160 specific way in nine months. 0:12:56.400 --> 0:12:59.640 In nine months. So last Monday night you're confirmed by this. 0:12:59.679 --> 0:13:01.920 Then Tuesday morning you have a phone call from the 0:13:01.920 --> 0:13:05.040 president and then you walk into your very first FOMC meeting. 0:13:05.160 --> 0:13:07.400 Can you share just a little bit about what it 0:13:07.480 --> 0:13:10.200 is like to walk in? It was a historic meeting 0:13:10.280 --> 0:13:12.320 on Monday. We didn't know who was going to be 0:13:12.320 --> 0:13:14.480 in the room. Would you be confirmed? Would Lisa Cook 0:13:14.559 --> 0:13:16.480 still be able to participate? 0:13:16.600 --> 0:13:17.280 What was that like? 0:13:18.040 --> 0:13:21.920 It was? It was cordial, it was collegial, It was friendly, 0:13:21.960 --> 0:13:24.080 it was respectful, and I was very appreciative of that. 0:13:24.120 --> 0:13:26.720 Everybody was very welcoming, you know, and it was a 0:13:26.720 --> 0:13:29.120 good discussion. And you know, the way that it works 0:13:29.240 --> 0:13:33.079 is the staff make their presentation, Participants are allowed to 0:13:33.120 --> 0:13:36.160 ask the staff questions. Participants read their views of the 0:13:36.160 --> 0:13:39.040 economy and about appropriate monetary policy, and there was a 0:13:39.080 --> 0:13:43.080 forthright exchange of views, and you know, lots of diversity 0:13:43.080 --> 0:13:45.480 of views. And I appreciated that conversation and everybody was 0:13:45.559 --> 0:13:48.199 just very kind, and you know that meant a lot 0:13:48.240 --> 0:13:51.240 to me. And you know, in the press conference, Chairman 0:13:51.240 --> 0:13:54.960 Powell said something which I think really resonated, which is 0:13:55.000 --> 0:13:57.880 that the way the FMC works is by persuasion. Right. 0:13:58.320 --> 0:14:01.120 People go there, they have their view, and they try 0:14:01.160 --> 0:14:03.360 and convince other people of their view. Now, I don't 0:14:03.360 --> 0:14:06.800 think that persuasion actually tends to happen at the meeting because, 0:14:07.160 --> 0:14:09.439 let's face it, with nineteen people in just a few hours, 0:14:09.440 --> 0:14:11.640 you're never going to really reach a consensus on a 0:14:11.640 --> 0:14:14.199 lot of issues in that short amount of time. Conversation. 0:14:14.840 --> 0:14:17.600 It happens in between, right, And that's what I'm trying 0:14:17.600 --> 0:14:19.600 to do today, right, is I'm trying to tell people 0:14:19.640 --> 0:14:22.200 there's a reason why policy rates are too high. It's 0:14:22.200 --> 0:14:25.840 because there's been substantial changes in immigration, there's been substantial 0:14:25.880 --> 0:14:28.560 changes in tariff revenue. And these need to be incorporated 0:14:28.600 --> 0:14:31.320 into our economic models because they're relevant for how monetary 0:14:31.360 --> 0:14:35.000 policy is set. And that's how I'm going to approach 0:14:35.120 --> 0:14:37.640 my time at the Federal Reserve is to lay up 0:14:37.680 --> 0:14:40.240 my economic arguments as clearly and transparently as I can, 0:14:40.400 --> 0:14:43.160 and hope to persuade people by the force of the economics. 0:14:43.400 --> 0:14:46.720 I don't think, I really don't think the idea that 0:14:47.000 --> 0:14:50.480 population growth affects neutral interest rates as a controversial view. 0:14:50.760 --> 0:14:55.560 This was a universally held accepted fact. Probably nearly there's 0:14:55.560 --> 0:14:58.840 always an exception. Probably a nearly universally held accepted fact. 0:14:59.040 --> 0:15:01.520 Five or six years ago, everyone would have almost everybody 0:15:01.520 --> 0:15:04.960 would have agreed sure population growth effects neutral interest rates. 0:15:05.120 --> 0:15:08.200 Countries with high population growth have high neutral interest rates. 0:15:08.200 --> 0:15:11.400 Countries low population growth have loan neutral interest rates. Well, 0:15:11.440 --> 0:15:14.800 we just had a major swing in population growth because 0:15:14.840 --> 0:15:17.280 of the changes in border policy, and in my mind, 0:15:17.400 --> 0:15:20.320 it's incumbent upon us as policy makers to think about 0:15:20.360 --> 0:15:22.680 that when we think about where appropriate mantar policy should be. 0:15:24.120 --> 0:15:27.640 Governor Martin, you're talking about your approach while you're at 0:15:27.640 --> 0:15:31.640 the FED. You have a few short months, and it 0:15:31.720 --> 0:15:33.720 seems like a little bit of a caretaker role that 0:15:33.760 --> 0:15:37.400 should be taken seriously. You've also come out of the 0:15:37.400 --> 0:15:40.880 gate quite strong. You had your descent last week. We 0:15:40.920 --> 0:15:43.400 saw you on the airwaves on Friday, and now you've 0:15:43.480 --> 0:15:46.240 laid out in detail your views to be transparent. As 0:15:46.280 --> 0:15:48.920 you said, what should we make of your approach are 0:15:48.920 --> 0:15:52.720 you hoping to spend these few short months persuading on 0:15:52.760 --> 0:15:56.680 a board that is run by a chair whose ultimate 0:15:56.720 --> 0:15:58.920 job is to forge consensus. 0:15:59.680 --> 0:16:02.560 Yeah, I mean, look, you know, I'm I think at 0:16:02.560 --> 0:16:05.280 the end of the day, you know, I just try 0:16:05.320 --> 0:16:09.160 and think things through myself and ask questions to try 0:16:09.200 --> 0:16:12.840 and figure out where consensus might be complacent and wrong. 0:16:13.480 --> 0:16:15.400 And I've always done that and I think you sort 0:16:15.400 --> 0:16:17.240 of see that on you know, some of my previous 0:16:17.240 --> 0:16:20.600 writing on tariffs, for instance, right, you know, the idea 0:16:20.640 --> 0:16:22.640 that you would be able to implement these things without 0:16:22.640 --> 0:16:26.400 significant retaliation was once very out of consensus, and now 0:16:26.440 --> 0:16:28.760 I think a lot of folks are coming along to 0:16:28.800 --> 0:16:32.240 that direct, you know, sort of to that view. The 0:16:32.320 --> 0:16:35.000 same is true of this. I will be as independent 0:16:35.200 --> 0:16:37.840 as I can in thinking through monetary policy, and that 0:16:37.920 --> 0:16:40.040 means not only in a political sense, but in an 0:16:40.040 --> 0:16:43.360 intellectual sense as well. On the FMC, and I view 0:16:43.440 --> 0:16:48.480 my job as trying to provoke an interesting discussion that 0:16:48.520 --> 0:16:53.080 will help that will help the FOMC arrive at arrive 0:16:53.120 --> 0:16:56.560 at arrive at clear clearer understandings of the way the 0:16:56.560 --> 0:16:59.360 economy works and where Monterey policy should be set. It's 0:16:59.400 --> 0:17:02.240 a few short mind. But you know, I've got I 0:17:02.280 --> 0:17:04.160 think a lot of a lot of content to work through. 0:17:04.160 --> 0:17:07.600 In those months, you shared that you're using CEA data 0:17:07.680 --> 0:17:10.440 right now, but you're looking forward to working with FED 0:17:10.480 --> 0:17:13.960 staff as well as you move forward. You talked about 0:17:14.000 --> 0:17:16.560 population growth and other data points that you're looking at. 0:17:16.640 --> 0:17:18.720 Can you share with us a little bit about your 0:17:18.800 --> 0:17:23.240 views on the power of a descent. We saw governors 0:17:23.400 --> 0:17:27.800 Mickey Bowman and Chris Waller over the summer descent against 0:17:27.800 --> 0:17:33.000 Powell or the board. A few months prior, Governor Waller 0:17:33.080 --> 0:17:36.160 was on Bloomberg TV actually talking about how he views 0:17:36.200 --> 0:17:39.880 dissent as you do it once and then you've made 0:17:39.880 --> 0:17:43.080 your point, and maybe you back off and see how 0:17:43.119 --> 0:17:46.920 the economy develops and how the discussion goes. First, I'm 0:17:46.920 --> 0:17:48.760 curious your views on that, and then I'm curious about 0:17:48.760 --> 0:17:50.160 how you're going to be the October meeting. 0:17:50.960 --> 0:17:53.720 Yeah, I mean, look, you know, I arrive at a view. 0:17:54.520 --> 0:17:56.439 I do a lot of careful thinking. I arrive at 0:17:56.440 --> 0:17:59.000 a view, and then I will sort of continue, you know, 0:17:59.160 --> 0:18:01.880 until my view change. I will continue arguing for that view. 0:18:02.119 --> 0:18:04.199 And if that means continuing to descent, that means continuing 0:18:04.240 --> 0:18:06.840 to dissent. I don't view you know, look, I will 0:18:06.840 --> 0:18:10.800 always be polite and collegial, but I don't view voting 0:18:10.840 --> 0:18:13.720 with the consensus for the sake of establishing an appearance 0:18:13.760 --> 0:18:17.399 of a consensus, even if I disagree with it, to 0:18:17.480 --> 0:18:19.840 be more important than trying to argue for what I 0:18:19.920 --> 0:18:23.240 consider to be the correct policy. And if that means 0:18:23.280 --> 0:18:27.160 that I keep on being I think, you know, sort 0:18:27.200 --> 0:18:29.920 of sticking out from the crowd and sort of being 0:18:29.960 --> 0:18:32.119 more individual in my views and more adiosyncratic in my 0:18:32.160 --> 0:18:34.119 views I think than maybe the rest of the pumcy, 0:18:34.320 --> 0:18:35.919 then that's the way it's going to be. I'm not 0:18:36.000 --> 0:18:37.840 going to I'm not going to vote for something I 0:18:37.840 --> 0:18:40.080 don't believe in just for the sake of creating an 0:18:40.080 --> 0:18:42.959 illusion of consensus where where there is none. 0:18:43.359 --> 0:18:46.040 So, depending on how the economy unfolds and what data 0:18:46.080 --> 0:18:48.480 we see between now and the end of October, you 0:18:48.920 --> 0:18:51.679 are willing to be the loan descent again in October 0:18:51.720 --> 0:18:54.800 with fifty basis point dot on the plot? 0:18:54.880 --> 0:18:56.639 Or are you hoping that more people join you? 0:18:56.880 --> 0:19:00.000 Yeah, unless something unless something changes that would lead me 0:19:00.040 --> 0:19:02.440 to change my economic view, right, I mean something could 0:19:02.480 --> 0:19:04.880 change that would that would make change my economic view. 0:19:04.920 --> 0:19:06.320 You know, there's any number of things that could that 0:19:06.320 --> 0:19:08.320 could leave that, But as long as my current view 0:19:08.359 --> 0:19:10.800 remains my operative view, I don't see why I would 0:19:10.960 --> 0:19:12.160 vote for anything that's not my view. 0:19:14.240 --> 0:19:15.760 You have a way of getting the attention of the 0:19:15.760 --> 0:19:18.480 world of finance and economics with the words and phrases 0:19:18.520 --> 0:19:20.480 that you use. A few months ago, it was the 0:19:20.520 --> 0:19:23.080 notion of a mar A Lago accord that had a 0:19:23.080 --> 0:19:25.679 lot of people buzzing, especially in the Bloomberg that I 0:19:25.720 --> 0:19:29.000 live in. And now it's this concept of a third mandate, 0:19:29.240 --> 0:19:32.359