Speaker 1: We are so glad to have shopping expert in the
Speaker 1: Atlanta Airport. Atlanta FED President Rafael Bostik, who is with
Speaker 1: us here on site, really appreciate you being with us.
Speaker 1: President bos Tak, I want to start with a change
Speaker 1: in tone that we have heard from you over the
Speaker 1: past couple of weeks.
Speaker 2: It seems like three.
Speaker 1: Months ago you were not that urgent, urgently feeling like
Speaker 1: we needed to see lower rates. You've kind of changed
Speaker 1: recently and really seen the need for it.
Speaker 2: What's caused that.
Speaker 3: Change, Well, I think two things have really happened to
Speaker 3: lead for that change. First of all, good morning, It's
Speaker 3: good to see y'alls.
Speaker 2: Good to see, really good to be here.
Speaker 3: The one change is that inflation has moved a lot
Speaker 3: faster than I had anticipated. We've for the last two
Speaker 3: years have really been in a mission of getting inflation
Speaker 3: back to our two percent goal. We had seen a
Speaker 3: lot of progress early this year, it seemed like it
Speaker 3: may have been soling out. I'm really gratified to see
Speaker 3: that it's continuing back on that pace and that's a
Speaker 3: very good thing. And then the second part is the
Speaker 3: employment side. So we know that unemployment rates have gone
Speaker 3: from about three point four percent to four point three percent.
Speaker 3: That's a big change. Now it's from super hot to
Speaker 3: solid right. So I don't want to make it seem
Speaker 3: like labor markets are a week, but it really starts
Speaker 3: to tell me that things are much more imbalanced than
Speaker 3: they have been for quite some time. And that's really
Speaker 3: a sign that our policy has done his job and
Speaker 3: now we need to start the path back to our
Speaker 3: more neutral stance.
Speaker 4: More than anyone at the FED, you've got a more
Speaker 4: holistic view with John Show and at Stanford, with all
Speaker 4: the academics you've done in southern California about racism, about
Speaker 4: society and all. We're in the maelstream of a political election.
Speaker 4: Greg Yepp, writing in the Wall Street Journal in the
Speaker 4: last twenty four hours, says, the politicians are not practicing economics.
Speaker 4: How does the FED get to the September meeting, get
Speaker 4: to the November meeting and avoid the first Tuesday of November?
Speaker 4: How do you maintain FED independence with this crazy economic
Speaker 4: dialogue here?
Speaker 3: You don't think it's that hard to remain independent. I
Speaker 3: think for us, the job is to keep our heads down,
Speaker 3: do our work, read the data, study it, get input
Speaker 3: from businesses and people all over this country to get
Speaker 3: a good handle about where the economy is, how it's moving,
Speaker 3: and how people feel is going to move forward, and
Speaker 3: then use that information to figure out what the most
Speaker 3: appropriate policy is. The worst thing that we can do
Speaker 3: is not do the right thing for reasons other than
Speaker 3: this not being the right thing right And to me,
Speaker 3: I think we must at all times be true to
Speaker 3: Our job is to set up a long run environment
Speaker 3: for this economy so that it's got a firm foundation,
Speaker 3: and that means we can't be focused and pulled into
Speaker 3: the shorter run issues.
Speaker 2: So I'm just gonna keep my head down.
Speaker 3: The FED has a long history of doing whatever it takes,
Speaker 3: whenever it takes, and that's what I expect we'll do too.
Speaker 5: You've been criticized. The Fed's been criticized by a lot
Speaker 5: of people on Wall Street who say you're too data dependent,
Speaker 5: you're looking backwards too much. I don't think they realize
Speaker 5: that you're constantly talking to people in your district to
Speaker 5: get the current lay of the land.
Speaker 2: So what is that lay of the land.
Speaker 5: What are CEOs telling you about their plans and their
Speaker 5: view of demand and business going forward?
Speaker 3: Well, you should tell people more often we spend a
Speaker 3: lot of time looking forward. That's actually a really important thing.
Speaker 3: We do surveys. Our bank has a lot of surveys
Speaker 3: that we do, asking what's your outlook for the next
Speaker 3: six months, for the next twelve months in the light
Speaker 3: we hear a couple things.
Speaker 2: So one we.
Speaker 3: Hear that the demand for product is weakening, but it's
Speaker 3: still quite solid. We hear that businesses are not expecting
Speaker 3: to expand their workforces in a very significant way, but
Speaker 3: they're also not expecting to light people off, that that
Speaker 3: is not the mode. That they're really in a steady
Speaker 3: state where they can handle where things are, and their
Speaker 3: outlook for the next six to twelve months is by
Speaker 3: and large positive. Maybe a little lower in terms of
Speaker 3: revenues and profits from where we've been last two or
Speaker 3: three years, but last two or three years have been
Speaker 3: record breaking pretty much in every sector, every industry. So
Speaker 3: it's a solid picture, and it's one of the reasons
Speaker 3: why I do think that we've had some space to
Speaker 3: be patient with our policy moves and we'll just have
Speaker 3: to see whether their outlook plays out.
Speaker 2: I'm hopeful that it does.
Speaker 5: Given the problems least we talked about earlier with the
Speaker 5: data and coming out of the pandemic and everything. How
Speaker 5: certain are you that your data is correct enough that
Speaker 5: you're not behind the curve.
Speaker 3: Well, I mean, we try really hard to get our
Speaker 3: view based on the pulse that business leaders are showing
Speaker 3: at every moment. We talked to folks day to day,
Speaker 3: week to week, and we ask two questions all the time. One,
Speaker 3: what's your outlook for the next six months, and how
Speaker 3: has that changed relative to where you were two weeks
Speaker 3: ago or three weeks ago. We are trying really hard
Speaker 3: to notice those inflection points so that we can speak
Speaker 3: to that, we can bring that to our policy table
Speaker 3: and make sure that we're behind the curve. But this
Speaker 3: these are turbulent times, as you know. I mean, you'll
Speaker 3: recover the economy. Things are happening in unexpected ways in
Speaker 3: many different venues and many different parts of the economy,
Speaker 3: and so there is a natural trend. There's always some uncertainty,
Speaker 3: and we've just got to sort of navigate our way
Speaker 3: through and do the best that we can to get
Speaker 3: as much information so we can.
Speaker 2: Make good policy.
Speaker 1: What does gradual mean?
Speaker 2: Oh, well, that's a very good question.
Speaker 3: So to me, I think it is taking one step
Speaker 3: at a time and after each step, looking around to
Speaker 3: see how the economy is evolved.
Speaker 1: Okay, what everyone's asking is really is that step twenty
Speaker 1: five basis points? Is it defty basis points? Does one
Speaker 1: mean gradual? And whatnot?
Speaker 3: So I would say this the first step. It will
Speaker 3: depend on what the next couple data points come in.
Speaker 3: A couple of data points come in, and inflation is
Speaker 3: moving and unemployment is staying pretty stable. I think a
Speaker 3: move would be on the lower side. But there's a
Speaker 3: narrative that says inflation comes in super hot and maybe
Speaker 3: we don't move at all, or that unemployment spikes in
Speaker 3: an unexpected way and we have to move bigger. I
Speaker 3: don't want to really be sitting on any one action
Speaker 3: as my modal expectation today. I'm really gonna let things
Speaker 3: play out. And you know, one of the things I've
Speaker 3: learned very much in the last four years is that
Speaker 3: getting too far out ahead of what actually happens just
Speaker 3: causes me. There's been a lot of extra energy that
Speaker 3: I wind up having to sort of undo and then
Speaker 3: get to where the reality is. So I really am
Speaker 3: trying as much as possible to be in the moment
Speaker 3: and of the moment.
Speaker 5: Well, markets are forward looking, they're not in the moment.
Speaker 5: So everybody wants to know where do you end up?
Speaker 5: Where do you think neutral is going to end up
Speaker 5: when you finish your cutting cycle.
Speaker 3: So I'll say two things on this one in the
Speaker 3: SEPs and the dot plus, we have to put a
Speaker 3: long run number for me. Right now, that long run
Speaker 3: number is three percent. I think it's a little higher
Speaker 3: than where it was the depths of the pandemic, but
Speaker 3: where that is precisely is unclear. The second thing I
Speaker 3: would say, though, is I've really been focused much more
Speaker 3: on making sure that inflation gets to two percent than
Speaker 3: what a long run number is, and now that we're
Speaker 3: close to moving on that way, that's a question that
Speaker 3: I will spend a lot more time with my team
Speaker 3: trying to figure out. In my building, we started to
Speaker 3: have discussion slash arguments about this, and in my blood,
Speaker 3: I get views ranging from two and a half to
Speaker 3: four and a quarter.
Speaker 2: Right, that's a large range, and.
Speaker 3: We're going to have to narrow that down, and so
Speaker 3: I'm really looking forward to a robust discussion that will
Speaker 3: help me get a sense of where I think it.
Speaker 1: Is two years ago, J. Powell's speech was eight minutes long.
Speaker 1: How long do you think this speech is going to be?
Speaker 3: So you know, I don't get any insights on that.
Speaker 3: Eight is historically the record breaking short. I'm not expecting
Speaker 3: a break records today, but we'll have to see what happens.
Speaker 1: Raphael Vostik, President of the Atlanta Fed, Thank you so
Speaker 1: much for being with us.