Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The big question for everybody, especially for Wall Street, is
Speaker 2: what happens on September seventeenth.
Speaker 3: So this is, as you know, kind of an interesting
Speaker 3: month because we've got Jackson Hole and then we've got
Speaker 3: quite a few weeks of data to kind of pull in.
Speaker 3: So I'm really I think everybody's quite interested in some
Speaker 3: of the maybe the prints that happened in the last
Speaker 3: couple of months and kind of where they go from here.
Speaker 3: So I'm I'm like everybody. I think there was some
Speaker 3: fascinating conversations at the last FMC, As you know, there
Speaker 3: were a couple of cents. I think my interpretation of
Speaker 3: what's happening, especially in the labor market, is that the
Speaker 3: first couple quarters, a lot of business people were just
Speaker 3: saying there's uncertainty enough, and I think they kind of
Speaker 3: cooled a little bit on higher side. But the most
Speaker 3: recent couple of weeks that we've been talking to businesses
Speaker 3: in the district, there seems to be a burgeoning optimism
Speaker 3: again that they've kind of digested and they've been agile
Speaker 3: enough to try to work their way through some of
Speaker 3: the new policies from the administration and maybe going forward,
Speaker 3: maybe we'll see a little bit uptick. That said, I
Speaker 3: still believe there's that the inflation number is trending closer
Speaker 3: to three than two.
Speaker 2: Well, we saw that in the minutes that in general
Speaker 2: the Open Market Committee felt that inflation was a bigger
Speaker 2: danger at this point.
Speaker 1: Would you say that's your view now?
Speaker 4: It would be my view now.
Speaker 3: I think with an understanding that what may have happened
Speaker 3: in the first couple quarters on the labor side, which
Speaker 3: I think concerned several people on the committee, me included.
Speaker 3: But I think this PPI was interesting, that print was interesting.
Speaker 3: But I really believe that when we talked to a
Speaker 3: lot of a lot of folks in our district, is
Speaker 3: that if you had to kind of lean or have
Speaker 3: a bias toward, it would be on the inflation side.
Speaker 2: Well, it sounds like what you're saying is that companies
Speaker 2: may be feeling better about being able to keep employees
Speaker 2: on the payroll, but they're going to have to raise prices.
Speaker 4: I don't know. I think that.
Speaker 3: What's interesting to me, Mike is is I think the
Speaker 3: business has learned a lot in that twenty two to
Speaker 3: twenty three cycle with the supply chain disruptions, and I
Speaker 3: think a lot of them really made new decisions with
Speaker 3: plan b's and c's relative to where their goods come from.
Speaker 3: And I think they might not have prepared for terrorists,
Speaker 3: but they might have prepared themselves for other supply shocks.
Speaker 3: But it seems like they've adapted a lot of their
Speaker 3: businesses from that experience.
Speaker 4: So I actually think that the agility that they created.
Speaker 3: From that experience is going to get them through this
Speaker 3: next few quarters.
Speaker 2: Well, then it sounds again that may you've moved toward
Speaker 2: the middle in terms of whether you should hold rates
Speaker 2: or cut rates.
Speaker 3: You know, it's really fascinating you think about and you
Speaker 3: have great experience in this when you get to the
Speaker 3: policy table there when you're talking about it, everything's connected
Speaker 3: to the to the dual mandate, right, and when inflation
Speaker 3: is really ramping up, you have a blunt instrument and
Speaker 3: you act, which is what we did. Now, as you
Speaker 3: get closer to the optimum dual mandate numbers, it actually
Speaker 3: becomes more difficult to make decisions on the margin relative
Speaker 3: to where that policy rate should go. And so that
Speaker 3: I think that's where you're seeing a lot of the
Speaker 3: debate now is you know where's your lean is it?
Speaker 3: Where do you believe things are too restrictive on the
Speaker 3: policy rate side or not. I think they're modestly restrictive.
Speaker 3: I'm still trying to find ways of what's being inhibited
Speaker 3: in the economy from where are policy rate is today.
Speaker 3: But I think we're on a good path.
Speaker 2: So at this point, it probably would be a mistake
Speaker 2: for Fairm and Powell on Friday to say definitely we're
Speaker 2: going to cut as he did last year.
Speaker 3: Yeah, yeah, I always can't wait for that speech. I
Speaker 3: think he keeps it close fast. I wouldn't front round
Speaker 3: him even if I knew. But I think that we've
Speaker 3: been doing so much work this year around the framework,
Speaker 3: around really getting into where how we get this soft
Speaker 3: landing to two percent without breaking anything.
Speaker 4: So I think he has a lot.
Speaker 3: Of different directions to go, and I think it'll be
Speaker 3: a very anticipated discussion.
Speaker 2: Well speaking of the framework or about at that point
Speaker 2: where he is expected to announce what you're going to do.
Speaker 2: Is it basically going back to the old framework of
Speaker 2: we will do whatever is best for the economy at
Speaker 2: the time, as opposed to leaning towards one side or
Speaker 2: the other.
Speaker 4: Of the mandate.
Speaker 3: Yeah, I think I'd say maybe two things on that.
Speaker 3: I think we learned a ton. I mean, think about
Speaker 3: the disruptions that we're created in that twenty twenty pandemic cycle,
Speaker 3: and I think it was very instructive what we did
Speaker 3: and how we did it through twenty twenty. That said,
Speaker 3: you know, I think those learnings are going to come
Speaker 3: out in the framework discussion. And I think the thing
Speaker 3: I'm very interested in the framework is this whole concept
Speaker 3: of transmission. I think we can all learn and try
Speaker 3: to do better relative to how we transmit what we're
Speaker 3: doing at the table, so one people understand what we're
Speaker 3: doing and how we're doing it. And so I'm kind
Speaker 3: of interested in even how we communicate and transmit the
Speaker 3: activities and actions of the FLMC.
Speaker 2: Well, you're on the inside and you're dealing with this
Speaker 2: all the time, and I'm reporting on it.
Speaker 1: So we care about the framework.
Speaker 2: But I'm wondering how important the framework actually is in
Speaker 2: the sense that they adopted a framework in twenty twenty,
Speaker 2: it didn't work when we get the post pandemic inflation,
Speaker 2: and the Chairman has already said, well, right after that,
Speaker 2: we abandoned the framework and we went back to doing
Speaker 2: what we needed to do at the time.
Speaker 1: Does it really matter? We talk about it a lot,
Speaker 1: Does it really matter?
Speaker 3: I think you have to have something that kind of
Speaker 3: frames around what you're trying to accomplish. I mean, you
Speaker 3: have nineteen people at the table, you're trying to collaborate
Speaker 3: and trying to have a consensus of some kind. I
Speaker 3: think there's an expectation of those nineteen that we have
Speaker 3: at least some sense of how we're going to take
Speaker 3: and do our work best, and then how are we
Speaker 3: going to transmit and communicate it after we make the decision.
Speaker 3: So I think it matters because I think there's a
Speaker 3: consistency it creates, even though you've got to have agility
Speaker 3: as you're doing the work, and how you're going to
Speaker 3: communicate it after you decide.
Speaker 4: So I really do.
Speaker 3: I've been there two years and I've been fascinated by
Speaker 3: it all, and I think we're going to emerge with
Speaker 3: something that I think is better than what we had.
Speaker 2: Well, how do you think you should communicate going forward?
Speaker 2: Because there are some people who are candidates for to
Speaker 2: be the next chair who say the FED talks too much.
Speaker 3: Yeah, wow, well you hear both sides of that coin
Speaker 3: all the time. Right, One, do we keep too much
Speaker 3: to our best?
Speaker 4: Two?
Speaker 3: Why aren't we doing more kind of transmitting future crystal
Speaker 3: ball or or or how are we how are we
Speaker 3: interpreting the numbers to a future event? Uh, you know,
Speaker 3: the se P and the dot plot is maybe some
Speaker 3: of that. But I don't hear a lot that we
Speaker 3: that we don't talk enough or express ourselves enough. I
Speaker 3: think it's more important where the American public is concerned.
Speaker 3: As they understand, we do a better job on helping
Speaker 3: them understand what.
Speaker 4: We're doing and why we're doing it. Uh.
Speaker 3: And and the dual mandate and the and the crispness
Speaker 3: of those two mandates help us help us a.
Speaker 4: Lot in the role we have.
Speaker 2: I have to ask you about the latest presidential twe
Speaker 2: and the attack on Lisa Cook, Governor Cook. I know
Speaker 2: that FED officials will always say, we don't let politics come.
Speaker 1: Into the boardroom.
Speaker 2: We do just what we think we should do on
Speaker 2: the account, we don't even talk about it.
Speaker 1: But you've got to be getting sick of this.
Speaker 3: Well, Look, I'm a little philosophical about the whole conversation
Speaker 3: of FED independence and where our role is in the
Speaker 3: American economy. We're almost two hundred and fifty years old
Speaker 3: as a nation. I think there's something to be said.
Speaker 3: We were built on words, and we continue to debate
Speaker 3: those words legislatively and judicially, whatever whatever friction we might
Speaker 3: have with other branches of the government. I think great
Speaker 3: steels tested by fire. So what we can always eat better,
Speaker 3: We can always do this better. But I think the
Speaker 3: nature of independence and I think, don't believe me, believe
Speaker 3: other nations that have central banks and don't it seems
Speaker 3: to work. But I'm always open for the conversation of
Speaker 3: how do we make it better?
Speaker 1: Well?
Speaker 2: Do you think the FED has suffered a hit to
Speaker 2: credibility by the constant attacks from Washington?
Speaker 3: So I think the credibility issue is more in are
Speaker 3: we fulfilling our responsibility and role around the actions of
Speaker 3: monetary policy and monetary operations? And I think the work
Speaker 3: we do on behalf of the American people is very
Speaker 3: important to their lifestyle and their living, and I want
Speaker 3: to make sure that our reputations stay strong around the
Speaker 3: things that we're mandated to do by Congress. Other than that,
Speaker 3: there's a lot of noise outside of that dual mandate
Speaker 3: and look, you take this chair, you do this job,
Speaker 3: and people are going to have opinions, and I'm fine
Speaker 3: with that.
Speaker 2: Well, what kind of reaction do you get from people
Speaker 2: around the district these days? Do people bring it up
Speaker 2: and say, are you guys really on the level?
Speaker 3: Yeah? We have those conversations several times a week. They're
Speaker 3: really the most important conversations. What it helps us do
Speaker 3: is it creates a real time experience and expression that
Speaker 3: I can take to Washington at the FOMC table. But
Speaker 3: I don't think we can communicate enough about the value
Speaker 3: proposition of the feeder reserve. And I think a lot
Speaker 3: of the things that we do, clearly, the monetary policy
Speaker 3: thing gets a lot of press and it gets a
Speaker 3: lot of notoriety. It's the monetary operations that we spend
Speaker 3: most of our time doing, you know, safe and sound banks,
Speaker 3: making sure payments get made every day around the globe,
Speaker 3: and making sure that the research that we're doing is
Speaker 3: a value added to the people we serve in the
Speaker 3: tenth district.
Speaker 2: Well, when you talk to people, do they understand why
Speaker 2: you're not lowering interest rates?
Speaker 4: Actually, it's interesting.
Speaker 3: So we're going to have two sets of folks that
Speaker 3: we would talk to, one are going to be business
Speaker 3: people and finance people that really they understand because they
Speaker 3: have to. I mean, I'm a former banker. You have
Speaker 3: to risk manage the cycles of rates to run your
Speaker 3: bank well and profitably. The general public that we continue
Speaker 3: to try to reach to give them some sense of
Speaker 3: what this dual mandate means to them, and I think
Speaker 3: there's a little bit of perfection in the healthy friction
Speaker 3: between full employment and stable prices. And I actually like
Speaker 3: that friction, and it allows us to kind of balance
Speaker 3: and rebalance what we're doing on their behalf. And it's
Speaker 3: one hundred percent on their behalf. If you reach full
Speaker 3: employment and if you keep prices stable, people can work
Speaker 3: and thrive. And I think that's an important piece of
Speaker 3: what the FED does.
Speaker 2: Our last question has to follow up on something we
Speaker 2: always asked esther before you took over.
Speaker 1: Predictions for the Chiefs this year.
Speaker 3: Oh man, they look pretty good. I love the management,
Speaker 3: I love their focus. I think their coaching is amazing.
Speaker 3: I also follow the Nebraska Cornhuskers. You know, hope spring's
Speaker 3: eternal when it comes to football season. Mike, So, where
Speaker 3: the Chiefs and the huskers are concerned. I'm very hopeful