1 00:00:00,080 --> 00:00:02,080 Speaker 1: We are so glad to have shopping expert in the 2 00:00:02,080 --> 00:00:05,240 Speaker 1: Atlanta Airport. Atlanta FED President Rafael Bostik, who is with 3 00:00:05,320 --> 00:00:07,680 Speaker 1: us here on site, really appreciate you being with us. 4 00:00:08,080 --> 00:00:10,200 Speaker 1: President bos Tak, I want to start with a change 5 00:00:10,200 --> 00:00:12,320 Speaker 1: in tone that we have heard from you over the 6 00:00:12,360 --> 00:00:13,520 Speaker 1: past couple of weeks. 7 00:00:13,760 --> 00:00:15,200 Speaker 2: It seems like three. 8 00:00:14,960 --> 00:00:18,160 Speaker 1: Months ago you were not that urgent, urgently feeling like 9 00:00:18,200 --> 00:00:21,440 Speaker 1: we needed to see lower rates. You've kind of changed 10 00:00:21,520 --> 00:00:24,000 Speaker 1: recently and really seen the need for it. 11 00:00:24,360 --> 00:00:25,160 Speaker 2: What's caused that. 12 00:00:25,120 --> 00:00:28,360 Speaker 3: Change, Well, I think two things have really happened to 13 00:00:28,440 --> 00:00:30,240 Speaker 3: lead for that change. First of all, good morning, It's 14 00:00:30,240 --> 00:00:30,960 Speaker 3: good to see y'alls. 15 00:00:31,040 --> 00:00:32,360 Speaker 2: Good to see, really good to be here. 16 00:00:33,240 --> 00:00:35,760 Speaker 3: The one change is that inflation has moved a lot 17 00:00:35,800 --> 00:00:39,319 Speaker 3: faster than I had anticipated. We've for the last two 18 00:00:39,400 --> 00:00:43,720 Speaker 3: years have really been in a mission of getting inflation 19 00:00:43,840 --> 00:00:46,199 Speaker 3: back to our two percent goal. We had seen a 20 00:00:46,200 --> 00:00:48,680 Speaker 3: lot of progress early this year, it seemed like it 21 00:00:48,720 --> 00:00:51,560 Speaker 3: may have been soling out. I'm really gratified to see 22 00:00:51,560 --> 00:00:54,320 Speaker 3: that it's continuing back on that pace and that's a 23 00:00:54,400 --> 00:00:56,640 Speaker 3: very good thing. And then the second part is the 24 00:00:56,680 --> 00:00:59,920 Speaker 3: employment side. So we know that unemployment rates have gone 25 00:01:00,120 --> 00:01:02,680 Speaker 3: from about three point four percent to four point three percent. 26 00:01:03,040 --> 00:01:07,200 Speaker 3: That's a big change. Now it's from super hot to 27 00:01:07,280 --> 00:01:08,920 Speaker 3: solid right. So I don't want to make it seem 28 00:01:09,000 --> 00:01:11,960 Speaker 3: like labor markets are a week, but it really starts 29 00:01:11,959 --> 00:01:14,039 Speaker 3: to tell me that things are much more imbalanced than 30 00:01:14,080 --> 00:01:17,639 Speaker 3: they have been for quite some time. And that's really 31 00:01:18,360 --> 00:01:21,280 Speaker 3: a sign that our policy has done his job and 32 00:01:21,319 --> 00:01:24,560 Speaker 3: now we need to start the path back to our 33 00:01:24,560 --> 00:01:26,319 Speaker 3: more neutral stance. 34 00:01:26,480 --> 00:01:28,280 Speaker 4: More than anyone at the FED, you've got a more 35 00:01:28,280 --> 00:01:30,959 Speaker 4: holistic view with John Show and at Stanford, with all 36 00:01:30,959 --> 00:01:34,800 Speaker 4: the academics you've done in southern California about racism, about 37 00:01:34,840 --> 00:01:38,160 Speaker 4: society and all. We're in the maelstream of a political election. 38 00:01:38,280 --> 00:01:40,480 Speaker 4: Greg Yepp, writing in the Wall Street Journal in the 39 00:01:40,560 --> 00:01:45,920 Speaker 4: last twenty four hours, says, the politicians are not practicing economics. 40 00:01:46,160 --> 00:01:49,360 Speaker 4: How does the FED get to the September meeting, get 41 00:01:49,400 --> 00:01:53,600 Speaker 4: to the November meeting and avoid the first Tuesday of November? 42 00:01:53,640 --> 00:01:58,080 Speaker 4: How do you maintain FED independence with this crazy economic 43 00:01:58,160 --> 00:01:58,960 Speaker 4: dialogue here? 44 00:02:00,160 --> 00:02:03,040 Speaker 3: You don't think it's that hard to remain independent. I 45 00:02:03,040 --> 00:02:05,800 Speaker 3: think for us, the job is to keep our heads down, 46 00:02:06,400 --> 00:02:10,120 Speaker 3: do our work, read the data, study it, get input 47 00:02:10,200 --> 00:02:13,639 Speaker 3: from businesses and people all over this country to get 48 00:02:13,680 --> 00:02:16,480 Speaker 3: a good handle about where the economy is, how it's moving, 49 00:02:16,840 --> 00:02:19,600 Speaker 3: and how people feel is going to move forward, and 50 00:02:19,639 --> 00:02:22,359 Speaker 3: then use that information to figure out what the most 51 00:02:22,400 --> 00:02:25,359 Speaker 3: appropriate policy is. The worst thing that we can do 52 00:02:25,760 --> 00:02:29,959 Speaker 3: is not do the right thing for reasons other than 53 00:02:30,680 --> 00:02:33,000 Speaker 3: this not being the right thing right And to me, 54 00:02:33,160 --> 00:02:37,080 Speaker 3: I think we must at all times be true to 55 00:02:37,919 --> 00:02:41,040 Speaker 3: Our job is to set up a long run environment 56 00:02:41,040 --> 00:02:43,720 Speaker 3: for this economy so that it's got a firm foundation, 57 00:02:44,240 --> 00:02:47,200 Speaker 3: and that means we can't be focused and pulled into 58 00:02:47,240 --> 00:02:48,400 Speaker 3: the shorter run issues. 59 00:02:48,560 --> 00:02:49,760 Speaker 2: So I'm just gonna keep my head down. 60 00:02:49,800 --> 00:02:52,919 Speaker 3: The FED has a long history of doing whatever it takes, 61 00:02:52,960 --> 00:02:56,079 Speaker 3: whenever it takes, and that's what I expect we'll do too. 62 00:02:56,560 --> 00:02:59,040 Speaker 5: You've been criticized. The Fed's been criticized by a lot 63 00:02:59,040 --> 00:03:01,440 Speaker 5: of people on Wall Street who say you're too data dependent, 64 00:03:01,520 --> 00:03:04,880 Speaker 5: you're looking backwards too much. I don't think they realize 65 00:03:04,919 --> 00:03:07,520 Speaker 5: that you're constantly talking to people in your district to 66 00:03:07,520 --> 00:03:08,840 Speaker 5: get the current lay of the land. 67 00:03:09,160 --> 00:03:10,440 Speaker 2: So what is that lay of the land. 68 00:03:10,440 --> 00:03:13,400 Speaker 5: What are CEOs telling you about their plans and their 69 00:03:13,520 --> 00:03:16,280 Speaker 5: view of demand and business going forward? 70 00:03:16,480 --> 00:03:19,320 Speaker 3: Well, you should tell people more often we spend a 71 00:03:19,400 --> 00:03:21,960 Speaker 3: lot of time looking forward. That's actually a really important thing. 72 00:03:22,240 --> 00:03:25,720 Speaker 3: We do surveys. Our bank has a lot of surveys 73 00:03:25,720 --> 00:03:27,880 Speaker 3: that we do, asking what's your outlook for the next 74 00:03:27,880 --> 00:03:29,680 Speaker 3: six months, for the next twelve months in the light 75 00:03:30,480 --> 00:03:31,600 Speaker 3: we hear a couple things. 76 00:03:31,840 --> 00:03:32,520 Speaker 2: So one we. 77 00:03:32,560 --> 00:03:36,280 Speaker 3: Hear that the demand for product is weakening, but it's 78 00:03:36,280 --> 00:03:40,760 Speaker 3: still quite solid. We hear that businesses are not expecting 79 00:03:40,840 --> 00:03:45,000 Speaker 3: to expand their workforces in a very significant way, but 80 00:03:45,040 --> 00:03:47,280 Speaker 3: they're also not expecting to light people off, that that 81 00:03:47,560 --> 00:03:50,120 Speaker 3: is not the mode. That they're really in a steady 82 00:03:50,120 --> 00:03:52,680 Speaker 3: state where they can handle where things are, and their 83 00:03:52,720 --> 00:03:55,320 Speaker 3: outlook for the next six to twelve months is by 84 00:03:55,360 --> 00:03:58,240 Speaker 3: and large positive. Maybe a little lower in terms of 85 00:03:58,320 --> 00:04:01,080 Speaker 3: revenues and profits from where we've been last two or 86 00:04:01,080 --> 00:04:02,880 Speaker 3: three years, but last two or three years have been 87 00:04:03,200 --> 00:04:07,120 Speaker 3: record breaking pretty much in every sector, every industry. So 88 00:04:07,200 --> 00:04:10,200 Speaker 3: it's a solid picture, and it's one of the reasons 89 00:04:10,240 --> 00:04:13,080 Speaker 3: why I do think that we've had some space to 90 00:04:13,120 --> 00:04:16,719 Speaker 3: be patient with our policy moves and we'll just have 91 00:04:16,839 --> 00:04:18,800 Speaker 3: to see whether their outlook plays out. 92 00:04:18,960 --> 00:04:19,920 Speaker 2: I'm hopeful that it does. 93 00:04:20,400 --> 00:04:22,560 Speaker 5: Given the problems least we talked about earlier with the 94 00:04:22,640 --> 00:04:24,800 Speaker 5: data and coming out of the pandemic and everything. How 95 00:04:24,839 --> 00:04:28,320 Speaker 5: certain are you that your data is correct enough that 96 00:04:28,360 --> 00:04:29,480 Speaker 5: you're not behind the curve. 97 00:04:30,200 --> 00:04:34,520 Speaker 3: Well, I mean, we try really hard to get our 98 00:04:34,600 --> 00:04:38,520 Speaker 3: view based on the pulse that business leaders are showing 99 00:04:38,560 --> 00:04:41,760 Speaker 3: at every moment. We talked to folks day to day, 100 00:04:41,920 --> 00:04:45,080 Speaker 3: week to week, and we ask two questions all the time. One, 101 00:04:45,320 --> 00:04:47,599 Speaker 3: what's your outlook for the next six months, and how 102 00:04:47,640 --> 00:04:50,279 Speaker 3: has that changed relative to where you were two weeks 103 00:04:50,279 --> 00:04:52,880 Speaker 3: ago or three weeks ago. We are trying really hard 104 00:04:53,160 --> 00:04:56,239 Speaker 3: to notice those inflection points so that we can speak 105 00:04:56,240 --> 00:04:59,200 Speaker 3: to that, we can bring that to our policy table 106 00:04:59,240 --> 00:05:02,719 Speaker 3: and make sure that we're behind the curve. But this 107 00:05:02,839 --> 00:05:04,880 Speaker 3: these are turbulent times, as you know. I mean, you'll 108 00:05:05,040 --> 00:05:09,880 Speaker 3: recover the economy. Things are happening in unexpected ways in 109 00:05:10,040 --> 00:05:13,480 Speaker 3: many different venues and many different parts of the economy, 110 00:05:13,760 --> 00:05:16,800 Speaker 3: and so there is a natural trend. There's always some uncertainty, 111 00:05:17,000 --> 00:05:19,120 Speaker 3: and we've just got to sort of navigate our way 112 00:05:19,120 --> 00:05:21,200 Speaker 3: through and do the best that we can to get 113 00:05:21,200 --> 00:05:22,520 Speaker 3: as much information so we can. 114 00:05:22,440 --> 00:05:23,279 Speaker 2: Make good policy. 115 00:05:23,360 --> 00:05:24,280 Speaker 1: What does gradual mean? 116 00:05:25,720 --> 00:05:27,960 Speaker 2: Oh, well, that's a very good question. 117 00:05:28,040 --> 00:05:33,159 Speaker 3: So to me, I think it is taking one step 118 00:05:33,160 --> 00:05:36,680 Speaker 3: at a time and after each step, looking around to 119 00:05:36,720 --> 00:05:38,320 Speaker 3: see how the economy is evolved. 120 00:05:38,320 --> 00:05:40,960 Speaker 1: Okay, what everyone's asking is really is that step twenty 121 00:05:41,000 --> 00:05:43,479 Speaker 1: five basis points? Is it defty basis points? Does one 122 00:05:43,560 --> 00:05:44,760 Speaker 1: mean gradual? And whatnot? 123 00:05:45,279 --> 00:05:49,520 Speaker 3: So I would say this the first step. It will 124 00:05:49,520 --> 00:05:51,680 Speaker 3: depend on what the next couple data points come in. 125 00:05:52,480 --> 00:05:55,560 Speaker 3: A couple of data points come in, and inflation is 126 00:05:55,600 --> 00:05:59,360 Speaker 3: moving and unemployment is staying pretty stable. I think a 127 00:05:59,400 --> 00:06:03,680 Speaker 3: move would be on the lower side. But there's a 128 00:06:03,760 --> 00:06:06,799 Speaker 3: narrative that says inflation comes in super hot and maybe 129 00:06:06,839 --> 00:06:10,400 Speaker 3: we don't move at all, or that unemployment spikes in 130 00:06:10,400 --> 00:06:13,240 Speaker 3: an unexpected way and we have to move bigger. I 131 00:06:13,240 --> 00:06:17,440 Speaker 3: don't want to really be sitting on any one action 132 00:06:17,760 --> 00:06:21,640 Speaker 3: as my modal expectation today. I'm really gonna let things 133 00:06:21,680 --> 00:06:23,720 Speaker 3: play out. And you know, one of the things I've 134 00:06:23,800 --> 00:06:27,640 Speaker 3: learned very much in the last four years is that 135 00:06:27,920 --> 00:06:31,480 Speaker 3: getting too far out ahead of what actually happens just 136 00:06:31,600 --> 00:06:33,680 Speaker 3: causes me. There's been a lot of extra energy that 137 00:06:33,760 --> 00:06:36,600 Speaker 3: I wind up having to sort of undo and then 138 00:06:36,680 --> 00:06:38,640 Speaker 3: get to where the reality is. So I really am 139 00:06:38,680 --> 00:06:41,200 Speaker 3: trying as much as possible to be in the moment 140 00:06:41,600 --> 00:06:42,320 Speaker 3: and of the moment. 141 00:06:42,839 --> 00:06:45,120 Speaker 5: Well, markets are forward looking, they're not in the moment. 142 00:06:45,200 --> 00:06:47,599 Speaker 5: So everybody wants to know where do you end up? 143 00:06:47,600 --> 00:06:50,320 Speaker 5: Where do you think neutral is going to end up 144 00:06:50,400 --> 00:06:52,200 Speaker 5: when you finish your cutting cycle. 145 00:06:52,320 --> 00:06:55,320 Speaker 3: So I'll say two things on this one in the 146 00:06:55,440 --> 00:06:57,560 Speaker 3: SEPs and the dot plus, we have to put a 147 00:06:57,560 --> 00:06:59,680 Speaker 3: long run number for me. Right now, that long run 148 00:06:59,760 --> 00:07:02,520 Speaker 3: number is three percent. I think it's a little higher 149 00:07:02,520 --> 00:07:06,400 Speaker 3: than where it was the depths of the pandemic, but 150 00:07:07,279 --> 00:07:09,960 Speaker 3: where that is precisely is unclear. The second thing I 151 00:07:09,960 --> 00:07:13,000 Speaker 3: would say, though, is I've really been focused much more 152 00:07:13,080 --> 00:07:15,360 Speaker 3: on making sure that inflation gets to two percent than 153 00:07:15,400 --> 00:07:18,560 Speaker 3: what a long run number is, and now that we're 154 00:07:18,920 --> 00:07:22,960 Speaker 3: close to moving on that way, that's a question that 155 00:07:23,000 --> 00:07:25,280 Speaker 3: I will spend a lot more time with my team 156 00:07:25,320 --> 00:07:29,120 Speaker 3: trying to figure out. In my building, we started to 157 00:07:29,120 --> 00:07:33,080 Speaker 3: have discussion slash arguments about this, and in my blood, 158 00:07:33,120 --> 00:07:35,800 Speaker 3: I get views ranging from two and a half to 159 00:07:35,880 --> 00:07:36,640 Speaker 3: four and a quarter. 160 00:07:37,040 --> 00:07:39,040 Speaker 2: Right, that's a large range, and. 161 00:07:39,000 --> 00:07:41,720 Speaker 3: We're going to have to narrow that down, and so 162 00:07:41,760 --> 00:07:44,480 Speaker 3: I'm really looking forward to a robust discussion that will 163 00:07:44,520 --> 00:07:47,240 Speaker 3: help me get a sense of where I think it. 164 00:07:47,160 --> 00:07:50,200 Speaker 1: Is two years ago, J. Powell's speech was eight minutes long. 165 00:07:50,280 --> 00:07:51,640 Speaker 1: How long do you think this speech is going to be? 166 00:07:52,160 --> 00:07:54,400 Speaker 3: So you know, I don't get any insights on that. 167 00:07:55,000 --> 00:07:59,840 Speaker 3: Eight is historically the record breaking short. I'm not expecting 168 00:07:59,880 --> 00:08:02,600 Speaker 3: a break records today, but we'll have to see what happens. 169 00:08:02,760 --> 00:08:05,560 Speaker 1: Raphael Vostik, President of the Atlanta Fed, Thank you so 170 00:08:05,640 --> 00:08:06,520 Speaker 1: much for being with us.