1 00:00:02,720 --> 00:00:09,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. At the Federal Reserve's 2 00:00:09,840 --> 00:00:13,680 Speaker 1: Annual Economic Policy Conference in Jackson Hole, Wyoming, on Friday, 3 00:00:14,080 --> 00:00:17,040 Speaker 1: Federal Reserve Chair Jerome Powell left the door open for 4 00:00:17,079 --> 00:00:19,320 Speaker 1: a possible rate cut in September, and. 5 00:00:19,280 --> 00:00:22,200 Speaker 2: The stability of the unemployment rate and other labor market 6 00:00:22,280 --> 00:00:26,280 Speaker 2: measures allows us to proceed carefully as we consider changes 7 00:00:26,320 --> 00:00:31,520 Speaker 2: to our policy stance. Nonetheless, with policy and restrictive territory, 8 00:00:31,880 --> 00:00:35,440 Speaker 2: the baseline outlook and the shifting balance of risks may 9 00:00:35,479 --> 00:00:37,600 Speaker 2: warrant adjusting our policy stance. 10 00:00:38,040 --> 00:00:40,960 Speaker 1: His remarks sent a positive signal to Wall Street. The 11 00:00:41,120 --> 00:00:45,839 Speaker 1: response is rip roaring in markets, with equities surging, guilds plunging. 12 00:00:46,000 --> 00:00:49,360 Speaker 1: But we're not as warmly received by President Trump. He's 13 00:00:49,400 --> 00:00:51,960 Speaker 1: been putting pressure on the Fed to lower interest rates 14 00:00:51,960 --> 00:00:57,040 Speaker 1: for months. He spoke from the Oval Office on Friday afternoon. Well, 15 00:00:57,040 --> 00:00:58,520 Speaker 1: when we call him too late for a reason, you 16 00:00:58,520 --> 00:00:59,720 Speaker 1: should have got him a year ago. 17 00:01:00,200 --> 00:01:00,840 Speaker 3: He's too late. 18 00:01:01,200 --> 00:01:04,360 Speaker 1: Amara Amochway covers the Federal Reserve and the US economy 19 00:01:04,360 --> 00:01:05,280 Speaker 1: for Bloomberg News. 20 00:01:05,600 --> 00:01:08,840 Speaker 4: The big takeaway is that he opened the door for 21 00:01:08,880 --> 00:01:11,520 Speaker 4: the first time this year to a rate cut, and 22 00:01:11,560 --> 00:01:13,720 Speaker 4: this was the key phrase in this speech quote, the 23 00:01:13,760 --> 00:01:18,240 Speaker 4: shifting balance of risks may warrant adjusting our policy stance. 24 00:01:19,160 --> 00:01:22,039 Speaker 1: She's been tracking the unique moment the US Central Bank 25 00:01:22,080 --> 00:01:25,360 Speaker 1: finds itself in. It's under increasing criticism from the Trump 26 00:01:25,400 --> 00:01:28,840 Speaker 1: administration for Howard's handled rate decisions, a threat from the 27 00:01:28,880 --> 00:01:32,000 Speaker 1: President to fire a sitting FED governor if she doesn't resign, 28 00:01:32,720 --> 00:01:36,119 Speaker 1: the early departure of another governor on the board, and 29 00:01:36,280 --> 00:01:38,479 Speaker 1: the end of Powell's chair term in May. 30 00:01:39,319 --> 00:01:43,480 Speaker 3: And it's been an unpreceded pressure campaign from the Trump 31 00:01:43,520 --> 00:01:47,480 Speaker 3: administration and his allies on Chair pal and the FED 32 00:01:47,520 --> 00:01:51,080 Speaker 3: for lower interest rates. We've heard Chejury Secretary Scott Besen 33 00:01:51,240 --> 00:01:53,960 Speaker 3: also talking about the fact that the Fed is behind 34 00:01:53,960 --> 00:01:56,320 Speaker 3: the curve, and so it really has been an all 35 00:01:56,360 --> 00:02:00,240 Speaker 3: out assault. And we've seen the criticisms kind of then 36 00:02:00,280 --> 00:02:04,440 Speaker 3: beyond interest rate policy to then also scrutinizing this two 37 00:02:04,480 --> 00:02:07,160 Speaker 3: point five billion dollar renovation that the FED is doing 38 00:02:07,200 --> 00:02:10,400 Speaker 3: of its headquarters. Now we have Bill Poulte, who is 39 00:02:10,400 --> 00:02:13,280 Speaker 3: the head of the FHFA, accusing one of the FED 40 00:02:13,320 --> 00:02:15,960 Speaker 3: governors of mortgage fraud and calling on her to resign 41 00:02:16,000 --> 00:02:19,919 Speaker 3: because of it. So we're just seeing Trump and people 42 00:02:19,960 --> 00:02:22,600 Speaker 3: around him put pressure on the Fed from sort of 43 00:02:22,720 --> 00:02:24,760 Speaker 3: any angle that they can find. 44 00:02:28,520 --> 00:02:31,960 Speaker 1: I'm Saleamosen and this is the big take from Bloomberg News. 45 00:02:32,320 --> 00:02:32,600 Speaker 4: Today. 46 00:02:32,639 --> 00:02:35,639 Speaker 1: On the show, we head to the Jackson Hole Economic 47 00:02:35,720 --> 00:02:39,519 Speaker 1: Policy Symposium in Wyoming to learn what FED Chair j 48 00:02:39,720 --> 00:02:42,160 Speaker 1: Powell said about the possibility of a rate cut in 49 00:02:42,200 --> 00:02:45,720 Speaker 1: September and any hint about his future in the midst 50 00:02:45,720 --> 00:02:49,440 Speaker 1: of escalating tensions between the Trump administration and the Federal Reserve. 51 00:02:53,440 --> 00:02:57,040 Speaker 1: This year's Jackson Hole Economic Policy Symposium comes at a 52 00:02:57,080 --> 00:03:00,720 Speaker 1: significant time. For months, the Trump administs stration has been 53 00:03:00,720 --> 00:03:03,880 Speaker 1: putting pressure on Federal Reserve Chair Jerom Powell to cut 54 00:03:03,919 --> 00:03:06,960 Speaker 1: interest rates, and the next rate decision will come in 55 00:03:07,000 --> 00:03:11,680 Speaker 1: about a month in mid September. Here's my colleague amar Amokway, 56 00:03:11,800 --> 00:03:13,880 Speaker 1: who covers the Federal Reserve for Bloomberg. 57 00:03:14,440 --> 00:03:17,080 Speaker 3: The Fed has not cut interest rates this entire year, 58 00:03:17,240 --> 00:03:20,000 Speaker 3: after cutting interest rates three times at the end of 59 00:03:20,080 --> 00:03:22,760 Speaker 3: twenty twenty four. And the reason that Chair Powell and 60 00:03:22,800 --> 00:03:26,040 Speaker 3: other Fed officials up until now have been hesitant to 61 00:03:26,080 --> 00:03:29,840 Speaker 3: do rate cuts is because they are on guard for 62 00:03:29,880 --> 00:03:35,200 Speaker 3: the potential for President Donald Trump's tariffs to stoke inflation. So, 63 00:03:35,280 --> 00:03:38,080 Speaker 3: of course, the Fed has two responsibilities to foster maximum 64 00:03:38,160 --> 00:03:42,440 Speaker 3: employment and to keep inflation stable. And so right now 65 00:03:42,640 --> 00:03:45,880 Speaker 3: those two goals are a little bit intention because if 66 00:03:45,880 --> 00:03:48,760 Speaker 3: tariffs are going to drive inflation, that would suggest not 67 00:03:48,800 --> 00:03:51,280 Speaker 3: doing rate cuts, But if the labor market is weakening, 68 00:03:51,360 --> 00:03:53,560 Speaker 3: that would suggest that they should be cutting rates. 69 00:03:55,680 --> 00:03:58,040 Speaker 1: Now we know that Powell is leaving the door open 70 00:03:58,080 --> 00:04:00,800 Speaker 1: to a possible rate cut. He asked a Mare to 71 00:04:00,840 --> 00:04:03,200 Speaker 1: react to what she heard in Powell's speech. 72 00:04:03,520 --> 00:04:06,400 Speaker 4: He didn't say definitively that officials will cut at their 73 00:04:06,440 --> 00:04:10,560 Speaker 4: next meeting in September, but his remarks signaled that the 74 00:04:10,600 --> 00:04:13,800 Speaker 4: option is on the table. And there he was talking 75 00:04:13,840 --> 00:04:15,840 Speaker 4: about the fact that, in his view, and as he 76 00:04:15,880 --> 00:04:19,520 Speaker 4: also talked about in the speech, downside risks to employment 77 00:04:19,680 --> 00:04:22,479 Speaker 4: are rising. And this was a notable shift for Powle 78 00:04:22,560 --> 00:04:26,040 Speaker 4: because as recently as last month he had a more 79 00:04:26,080 --> 00:04:29,440 Speaker 4: optimistic tone about the labor market, but on Friday he 80 00:04:29,560 --> 00:04:32,560 Speaker 4: sounded more cautious. He referenced the week jobs report we 81 00:04:32,600 --> 00:04:35,320 Speaker 4: got earlier this month, and he cautioned that if risks 82 00:04:35,320 --> 00:04:38,320 Speaker 4: in the labor market materialized, it could lead to higher 83 00:04:38,400 --> 00:04:42,440 Speaker 4: layoffs and higher unemployment. At the same time, though Powell 84 00:04:42,480 --> 00:04:46,360 Speaker 4: continued to argue that policymakers must guard against the prospect 85 00:04:46,400 --> 00:04:50,280 Speaker 4: that President Donald Trump's tariffs will lead to persistent inflation. 86 00:04:50,480 --> 00:04:53,240 Speaker 4: He said the effects of tariffs on consumer prices are 87 00:04:53,279 --> 00:04:57,120 Speaker 4: now clearly visible, but it's reasonable to expect that the 88 00:04:57,160 --> 00:05:01,440 Speaker 4: effects will be relatively short lived. Said that it's possible 89 00:05:01,440 --> 00:05:04,279 Speaker 4: that tariffs could bring more lasting inflation than that policy 90 00:05:04,279 --> 00:05:08,200 Speaker 4: makers need to assess and manage that risk. Paul also 91 00:05:08,200 --> 00:05:11,200 Speaker 4: said that the combination of the possibility for inflation to 92 00:05:11,320 --> 00:05:14,000 Speaker 4: rise and for the labor market to weekend puts the 93 00:05:14,000 --> 00:05:18,320 Speaker 4: Fed's policy calculations and a challenging situation. So while he 94 00:05:18,360 --> 00:05:20,640 Speaker 4: did open the door to rate cuts, it was still 95 00:05:20,640 --> 00:05:23,400 Speaker 4: a message that was carefully hedged. 96 00:05:23,720 --> 00:05:25,800 Speaker 1: Before we dig into how the Fed will make its 97 00:05:25,800 --> 00:05:28,680 Speaker 1: decision in September. I wanted a merit a talk us 98 00:05:28,720 --> 00:05:31,400 Speaker 1: through how we got to this point where Powell is 99 00:05:31,480 --> 00:05:32,760 Speaker 1: under so much pressure. 100 00:05:33,040 --> 00:05:35,800 Speaker 3: The President has been pushing for lower interest rates for 101 00:05:35,839 --> 00:05:39,600 Speaker 3: a couple of reasons. One, he kind of pushes back 102 00:05:39,640 --> 00:05:44,720 Speaker 3: against this idea that his tariffs will cause inflation to rise. 103 00:05:45,080 --> 00:05:47,640 Speaker 3: So he's pushing against that idea because obviously tariffs are 104 00:05:47,680 --> 00:05:51,800 Speaker 3: a centerpiece of his economic agenda. Then he's also saying 105 00:05:51,839 --> 00:05:54,320 Speaker 3: that the FED holding interest rates at the level where 106 00:05:54,320 --> 00:05:57,120 Speaker 3: they are now is driving up borrowing costs for the 107 00:05:57,200 --> 00:06:00,880 Speaker 3: US government. And obviously, the President has has talked a 108 00:06:00,960 --> 00:06:05,320 Speaker 3: lot about closing the US deficit, bringing down US brawing costs, 109 00:06:05,400 --> 00:06:07,159 Speaker 3: and so in a way, he wants the FED to 110 00:06:07,240 --> 00:06:10,640 Speaker 3: assist him in reaching that goal. And so what we've 111 00:06:10,640 --> 00:06:14,560 Speaker 3: seen from President Trump is constant, constant, constant pressure on 112 00:06:14,600 --> 00:06:15,960 Speaker 3: Chair pal for a lower. 113 00:06:15,760 --> 00:06:19,839 Speaker 1: Rates, and that includes Trump at least talking about ruminating 114 00:06:19,880 --> 00:06:22,440 Speaker 1: about firing J. Powell. What's the likelihood of that at 115 00:06:22,440 --> 00:06:22,920 Speaker 1: this point. 116 00:06:23,200 --> 00:06:25,640 Speaker 3: Well, you know, this is something, as you've reported on, 117 00:06:25,680 --> 00:06:27,520 Speaker 3: that goes back to his first term, where he has 118 00:06:27,880 --> 00:06:31,400 Speaker 3: constantly flirted with the idea of firing Powell. He seems 119 00:06:31,440 --> 00:06:34,839 Speaker 3: to have backed off that idea and is instead focusing 120 00:06:34,960 --> 00:06:37,520 Speaker 3: sort of on this pressure campaign. And I think that's 121 00:06:37,520 --> 00:06:40,160 Speaker 3: in part because from a legal perspective, it would be 122 00:06:40,279 --> 00:06:43,560 Speaker 3: very difficult to remove him. The law that governs the 123 00:06:43,560 --> 00:06:46,400 Speaker 3: Federal Reserve says that if FED governor can only be 124 00:06:46,440 --> 00:06:49,320 Speaker 3: removed for cause, which is a very high legal standard. 125 00:06:49,440 --> 00:06:52,120 Speaker 3: The law is a little bit more ambiguous on whether 126 00:06:52,160 --> 00:06:54,080 Speaker 3: the chair can or cannot be removed for cause, but 127 00:06:54,800 --> 00:06:57,479 Speaker 3: the Supreme Court has also come out this year and 128 00:06:57,600 --> 00:07:01,120 Speaker 3: kind of did an initial ruling that signaled that they 129 00:07:01,160 --> 00:07:03,960 Speaker 3: would sort of insulate the FED chair and FED governor's 130 00:07:04,040 --> 00:07:08,440 Speaker 3: really from removal from their positions by the president. So 131 00:07:08,880 --> 00:07:11,120 Speaker 3: from a legal standpoint, it seems like it would be 132 00:07:11,200 --> 00:07:13,960 Speaker 3: very difficult for President Trump to remove chair pal and 133 00:07:14,000 --> 00:07:15,880 Speaker 3: we've seen him sort of back off from the idea 134 00:07:15,880 --> 00:07:17,360 Speaker 3: as well. 135 00:07:17,600 --> 00:07:20,480 Speaker 1: As Trump is backed off that idea, he's called for 136 00:07:20,520 --> 00:07:23,160 Speaker 1: the resignation of one member of the Board of Governors, 137 00:07:23,480 --> 00:07:27,000 Speaker 1: Lisa Cook, threatening on Friday to fire her if she 138 00:07:27,080 --> 00:07:31,960 Speaker 1: doesn't resign. Trump shared that with reporters as Powell was speaking. 139 00:07:34,720 --> 00:07:39,480 Speaker 2: Her if she doesn't resign case what she did was abandoned. 140 00:07:39,760 --> 00:07:43,679 Speaker 4: Of course, either a firing or a resignation from Cook 141 00:07:43,720 --> 00:07:46,600 Speaker 4: would give the President an opportunity to name someone of 142 00:07:46,640 --> 00:07:49,720 Speaker 4: his choosing to fill her slot on the Fed's board 143 00:07:50,160 --> 00:07:54,239 Speaker 4: and likely push for the lower rates that President Trump wants. 144 00:07:54,640 --> 00:07:56,920 Speaker 4: But earlier this week Cook said in a statement that 145 00:07:56,960 --> 00:07:59,520 Speaker 4: she would not be bullied into stepping down. And there 146 00:07:59,560 --> 00:08:01,760 Speaker 4: are also lots of legal questions and doubts that a 147 00:08:01,800 --> 00:08:04,760 Speaker 4: president can easily fire a FED governor because of the 148 00:08:04,840 --> 00:08:05,960 Speaker 4: law that governs the FED. 149 00:08:07,160 --> 00:08:10,560 Speaker 1: I asked Amara about how this evolving situation around FED 150 00:08:10,560 --> 00:08:14,400 Speaker 1: Governor Lisa Cook changed the conversations heading into Jackson Hole 151 00:08:14,720 --> 00:08:16,960 Speaker 1: and might have informed what we heard from Powell. 152 00:08:17,440 --> 00:08:20,600 Speaker 3: Well, if we were going to be talking about central 153 00:08:20,600 --> 00:08:24,720 Speaker 3: bank independence, the FEDS and dependents on monetary policy and 154 00:08:25,360 --> 00:08:28,560 Speaker 3: the pressure campaign that the Trump administration has applied on 155 00:08:28,680 --> 00:08:32,480 Speaker 3: Powell and the FED this year before these latest allegations 156 00:08:32,480 --> 00:08:35,000 Speaker 3: on Lisa Cook came out, now we're definitely going to 157 00:08:35,040 --> 00:08:37,880 Speaker 3: be talking about that here right Like this has just 158 00:08:38,520 --> 00:08:43,480 Speaker 3: made it so crystal clear that this is what the 159 00:08:43,520 --> 00:08:46,560 Speaker 3: FED is facing. This is the greatest challenge that the 160 00:08:46,559 --> 00:08:50,160 Speaker 3: FED is facing, along with this interest rate decision that 161 00:08:50,200 --> 00:08:52,679 Speaker 3: it has to make. But you know, this is just 162 00:08:52,720 --> 00:08:55,840 Speaker 3: such a huge, huge moment for the FED at a 163 00:08:55,880 --> 00:08:59,760 Speaker 3: time of transition for the FED. Right we had another 164 00:08:59,840 --> 00:09:04,360 Speaker 3: governor resigned earlier than expected, and President Trump is expected 165 00:09:04,360 --> 00:09:08,040 Speaker 3: to put one of his allies into that seat. Chairpal's 166 00:09:08,120 --> 00:09:13,559 Speaker 3: term is expiring next May, so this board could begin 167 00:09:13,640 --> 00:09:17,360 Speaker 3: to look very different, and the next chair could be 168 00:09:17,400 --> 00:09:21,680 Speaker 3: someone who is very different. And so for the current 169 00:09:21,720 --> 00:09:26,520 Speaker 3: people on the FED, protecting the Fed's independents, pushing back 170 00:09:26,600 --> 00:09:30,800 Speaker 3: against this pressure campaign from the President and his allies 171 00:09:30,800 --> 00:09:33,559 Speaker 3: and saying, look, we're not going to lower rates because 172 00:09:33,559 --> 00:09:37,480 Speaker 3: the President tells us so, or because he's scrutinizing our 173 00:09:37,480 --> 00:09:41,240 Speaker 3: construction project or scrutinizing our mortgages. We're going to make 174 00:09:41,280 --> 00:09:43,880 Speaker 3: interest rate decisions based on what we see in the 175 00:09:43,920 --> 00:09:47,280 Speaker 3: economy and what we see in the data. Because if 176 00:09:47,280 --> 00:09:53,040 Speaker 3: they shown any sign of making their decisions for any 177 00:09:53,080 --> 00:09:56,520 Speaker 3: other reason, that then opens up a potential can of 178 00:09:56,559 --> 00:10:02,200 Speaker 3: worms where markets, investors, the public can no longer potentially 179 00:10:02,320 --> 00:10:05,800 Speaker 3: trust that the FED will get inflation under control when 180 00:10:05,800 --> 00:10:08,720 Speaker 3: we have an inflation problem, that the FED is making 181 00:10:08,720 --> 00:10:11,600 Speaker 3: its decisions based on their best judgments and not because 182 00:10:11,640 --> 00:10:12,640 Speaker 3: of political pressure. 183 00:10:14,280 --> 00:10:17,520 Speaker 1: So that's the pressure facing the Federal Reserve. We dig 184 00:10:17,559 --> 00:10:28,240 Speaker 1: into how they do make decisions after the break. Speaking 185 00:10:28,320 --> 00:10:31,280 Speaker 1: from the Grand Teton National Park in Wyoming on Friday, 186 00:10:31,720 --> 00:10:35,520 Speaker 1: Powell very clearly telegraphed the importance of FED independence and 187 00:10:35,559 --> 00:10:38,079 Speaker 1: the Central banks reliance on trusted data. 188 00:10:38,679 --> 00:10:42,640 Speaker 2: FOMC members will make these decisions based solely on their 189 00:10:42,679 --> 00:10:45,760 Speaker 2: assessment of the data and its implications for the economic 190 00:10:45,760 --> 00:10:50,000 Speaker 2: outlook and the balance of risks. We will never deviate 191 00:10:50,080 --> 00:10:50,880 Speaker 2: from that approach. 192 00:10:52,080 --> 00:10:53,880 Speaker 1: And Meryl. Let's dig a little bit deeper into the 193 00:10:53,960 --> 00:10:57,440 Speaker 1: question of the data that's driving decisions at the Federal Reserve. 194 00:10:57,960 --> 00:11:02,320 Speaker 1: Powell's critics, including Trump who Powell too late Jay, say 195 00:11:02,360 --> 00:11:05,560 Speaker 1: that he's been behind the curve of inflation, waiting on 196 00:11:05,720 --> 00:11:08,839 Speaker 1: data that turned out to need huge revisions Later on, 197 00:11:09,480 --> 00:11:12,240 Speaker 1: we saw over the summer that Trump fired the head 198 00:11:12,240 --> 00:11:14,520 Speaker 1: of the Bureau of Labor Statistics and the wave of 199 00:11:14,520 --> 00:11:18,960 Speaker 1: those revisions. How much validity is there? The criticism of 200 00:11:19,000 --> 00:11:22,800 Speaker 1: how the Fed relies on data and which data it uses. 201 00:11:23,320 --> 00:11:26,280 Speaker 3: BLS data is constantly rovitsed, right, So the fact that 202 00:11:26,360 --> 00:11:30,160 Speaker 3: we had revisions is not abnormal. The magnitude of the 203 00:11:30,200 --> 00:11:34,800 Speaker 3: revisions this time was abnormal. So I think it is 204 00:11:34,960 --> 00:11:37,480 Speaker 3: fair for people to say, Okay, what is going on 205 00:11:37,559 --> 00:11:42,160 Speaker 3: with the data? Why are the revisions so notable? But 206 00:11:42,280 --> 00:11:44,640 Speaker 3: as we've been talking about, this is a labor market 207 00:11:44,679 --> 00:11:46,920 Speaker 3: that's in transition. There are a lot of changes happening, 208 00:11:47,640 --> 00:11:50,679 Speaker 3: and some of those because of President Trump's policies, like 209 00:11:50,720 --> 00:11:54,360 Speaker 3: his immigration crackdown, like his efforts to reduce the size 210 00:11:54,360 --> 00:11:58,240 Speaker 3: of the federal government, and also the BLS itself has 211 00:11:58,280 --> 00:12:02,400 Speaker 3: talked about having fewer resources and therefore maybe some of 212 00:12:02,400 --> 00:12:05,440 Speaker 3: the methods that they use not being as robust as 213 00:12:05,640 --> 00:12:08,280 Speaker 3: they were in the past. So you know, all of 214 00:12:08,280 --> 00:12:11,600 Speaker 3: those things are happening, and so that's the backdrop. I 215 00:12:11,640 --> 00:12:15,559 Speaker 3: think that the FED has been pretty consistent though in 216 00:12:15,679 --> 00:12:18,880 Speaker 3: explaining how it thinks about data and how it uses 217 00:12:18,920 --> 00:12:22,280 Speaker 3: that data, right, and so Chair Power and the others 218 00:12:22,320 --> 00:12:26,720 Speaker 3: have always talked about looking at the official government numbers 219 00:12:26,720 --> 00:12:30,080 Speaker 3: that come out on inflation and the labor market, but 220 00:12:30,280 --> 00:12:34,360 Speaker 3: also relying on what they're hearing from businesses and people 221 00:12:34,400 --> 00:12:37,920 Speaker 3: when they're out in the economy. The reason why the 222 00:12:38,000 --> 00:12:40,920 Speaker 3: FED is in such a difficult position right now is 223 00:12:40,960 --> 00:12:45,480 Speaker 3: because the data is changing, but they're not all changing 224 00:12:45,559 --> 00:12:48,400 Speaker 3: in the same direction, right, So the labor market is 225 00:12:48,440 --> 00:12:51,240 Speaker 3: pointing in one direction and the inflation data is pointing 226 00:12:51,240 --> 00:12:53,760 Speaker 3: in a different direction, and so then that makes it 227 00:12:53,800 --> 00:12:56,160 Speaker 3: hard for them to judge what the right move is 228 00:12:56,600 --> 00:12:57,520 Speaker 3: based on the data. 229 00:12:58,200 --> 00:13:02,120 Speaker 1: And where does this lead us in terms of credibility 230 00:13:02,160 --> 00:13:05,600 Speaker 1: for the FED and credibility of the data that's used 231 00:13:05,720 --> 00:13:07,960 Speaker 1: to make these data dependent decisions. 232 00:13:08,120 --> 00:13:10,000 Speaker 3: I think that is a challenge for the FED right 233 00:13:10,080 --> 00:13:13,920 Speaker 3: because you have these questions about the data coming alongside 234 00:13:15,080 --> 00:13:18,559 Speaker 3: questions about the Fed's credibility that are being constantly raised 235 00:13:19,200 --> 00:13:23,640 Speaker 3: by the President and his allies, right, So I think 236 00:13:23,679 --> 00:13:27,720 Speaker 3: that's why you are seeing FED officials be so sort 237 00:13:27,760 --> 00:13:30,200 Speaker 3: of dug into their position that they're going to ignore 238 00:13:30,240 --> 00:13:34,400 Speaker 3: the political noise, right because I think one thing economists 239 00:13:34,400 --> 00:13:37,280 Speaker 3: always tell me is that the way you preserve your 240 00:13:37,320 --> 00:13:40,600 Speaker 3: credibility is being able to make a coherent argument. And 241 00:13:40,679 --> 00:13:43,840 Speaker 3: so I think that is what FED officials are going 242 00:13:43,840 --> 00:13:46,240 Speaker 3: to try to do. Even if there are questions about 243 00:13:46,240 --> 00:13:48,560 Speaker 3: the data, They're going to say, look, this is the 244 00:13:48,559 --> 00:13:51,360 Speaker 3: best data that we have. We're combining that data with 245 00:13:51,440 --> 00:13:55,000 Speaker 3: other sources of information, whether that be anecdotal data, data 246 00:13:55,000 --> 00:13:57,840 Speaker 3: from private sources, and we're making the best decisions that 247 00:13:57,880 --> 00:14:00,439 Speaker 3: we can based on what we see in front of. 248 00:14:00,440 --> 00:14:03,480 Speaker 1: Us amor the world is watching as the sanctity of 249 00:14:03,480 --> 00:14:06,080 Speaker 1: the FED and I'm talking about that, it's independence from 250 00:14:06,160 --> 00:14:10,719 Speaker 1: political meddling is being tested. Are you hearing about officials 251 00:14:10,720 --> 00:14:14,920 Speaker 1: from other central banks like Eureuprasia talking about what diminished 252 00:14:14,960 --> 00:14:16,720 Speaker 1: FED independence might mean for them? 253 00:14:17,120 --> 00:14:19,720 Speaker 3: Yes, we are, And I think, like when cher Powell 254 00:14:19,760 --> 00:14:26,160 Speaker 3: has been in forums and settings with other international central bankers, 255 00:14:26,600 --> 00:14:30,040 Speaker 3: you really do hear them kind of coming to his 256 00:14:30,120 --> 00:14:34,920 Speaker 3: defense and also applauding him for trying to stay. 257 00:14:34,680 --> 00:14:35,800 Speaker 1: Above the political fray. 258 00:14:35,840 --> 00:14:37,440 Speaker 3: I mean he hasn't, I mean he hasn't been able 259 00:14:37,440 --> 00:14:39,480 Speaker 3: to stay out of it, but kind of when he's 260 00:14:39,520 --> 00:14:42,800 Speaker 3: asked about Trump and all the insults that Trump labs 261 00:14:42,840 --> 00:14:45,120 Speaker 3: his way, you know, just saying we're sticking to our nitting, 262 00:14:45,280 --> 00:14:48,720 Speaker 3: you know. So, I think central bankers from around the 263 00:14:48,760 --> 00:14:52,560 Speaker 3: world really respect j. Powell and really respect how how 264 00:14:52,560 --> 00:14:56,920 Speaker 3: he has managed a very tricky situation. And I think 265 00:14:57,320 --> 00:15:01,200 Speaker 3: central bankers understand that because the US economy is really 266 00:15:01,480 --> 00:15:04,840 Speaker 3: the bell Weather economy for the entire globe, and everything 267 00:15:04,880 --> 00:15:08,560 Speaker 3: that happens with our assets, the dollar treasuries matter for 268 00:15:08,680 --> 00:15:13,840 Speaker 3: global markets. I think that they encourage Powell because they 269 00:15:13,920 --> 00:15:18,080 Speaker 3: know that his ability to be steadfast matters for their 270 00:15:18,120 --> 00:15:20,840 Speaker 3: ability to do their jobs and their economies back in 271 00:15:20,880 --> 00:15:23,280 Speaker 3: their home nations. And so I think that's why you 272 00:15:23,400 --> 00:15:26,400 Speaker 3: do see a lot of support for Chair Powell on 273 00:15:26,440 --> 00:15:27,800 Speaker 3: the international stage. 274 00:15:28,040 --> 00:15:31,880 Speaker 1: So in his first term, Trump nominated Powell as chair, 275 00:15:32,320 --> 00:15:36,200 Speaker 1: and then Powell was again nominated to the chairmanship by Biden. 276 00:15:37,280 --> 00:15:41,120 Speaker 1: That term ends in May. How do you think folks 277 00:15:41,200 --> 00:15:45,400 Speaker 1: are reflecting on Powell's time as Chair as he gives 278 00:15:45,440 --> 00:15:48,400 Speaker 1: his speech, what are some of the defining aspects of 279 00:15:48,440 --> 00:15:49,080 Speaker 1: his legacy? 280 00:15:50,480 --> 00:15:53,160 Speaker 3: So two big things, and the first one is kind 281 00:15:53,160 --> 00:15:56,600 Speaker 3: of different sides of the same point. Right, Chair Pal 282 00:15:56,800 --> 00:16:00,400 Speaker 3: has faced a lot in his term as Chair. Right, 283 00:16:00,960 --> 00:16:04,960 Speaker 3: he had the worst inflation surge in decades as we 284 00:16:05,120 --> 00:16:09,040 Speaker 3: came out of the pandemic. And one defining sort of 285 00:16:09,120 --> 00:16:12,080 Speaker 3: moment of his tenure Edge Chair is that the FED 286 00:16:12,720 --> 00:16:17,200 Speaker 3: got that inflation wrong. The FED and others many others 287 00:16:17,200 --> 00:16:20,640 Speaker 3: thought that the inflation would be transitory, and so they 288 00:16:20,720 --> 00:16:23,520 Speaker 3: didn't begin to hike rates until we had an inflation 289 00:16:23,640 --> 00:16:29,240 Speaker 3: problem on our hands. And I think people will remember 290 00:16:30,040 --> 00:16:31,480 Speaker 3: that transitory was wrong. 291 00:16:31,680 --> 00:16:31,920 Speaker 4: Right. 292 00:16:32,440 --> 00:16:34,880 Speaker 3: But then at the same time, Chairpal has been given 293 00:16:34,920 --> 00:16:37,920 Speaker 3: a lot of credit for recognizing that we had an 294 00:16:37,960 --> 00:16:41,320 Speaker 3: inflation problem and then leading the FED to aggressively raise 295 00:16:41,360 --> 00:16:45,080 Speaker 3: interest rates to counter it. And at the time when 296 00:16:45,080 --> 00:16:48,240 Speaker 3: they began hiking rates, the fear was that those rate 297 00:16:48,280 --> 00:16:50,920 Speaker 3: hikes would really constrict the economy and cause a recession. 298 00:16:51,520 --> 00:16:54,720 Speaker 3: And so far, you know, we have not gotten that. 299 00:16:55,120 --> 00:16:59,600 Speaker 3: We have seen inflation come down, notably it is approaching 300 00:16:59,600 --> 00:17:02,640 Speaker 3: the Fed's two target, and we have seen the labor 301 00:17:02,680 --> 00:17:05,880 Speaker 3: market over these years, for the most part, hold up 302 00:17:06,000 --> 00:17:10,359 Speaker 3: pretty well. We didn't have a painful recession, and so 303 00:17:10,400 --> 00:17:16,200 Speaker 3: I think Chair Powell will also be remembered for acknowledging 304 00:17:16,240 --> 00:17:22,160 Speaker 3: the initial mistake, but then really crafting a response that 305 00:17:23,040 --> 00:17:26,840 Speaker 3: brought inflation down without inflicting widespread economic pain. 306 00:17:31,320 --> 00:17:34,200 Speaker 1: This is the Big Take from Bloomberg News. I'm Salamosen. 307 00:17:34,720 --> 00:17:37,000 Speaker 1: If you're enjoying our coverage of the Federal Reserve in 308 00:17:37,080 --> 00:17:40,399 Speaker 1: Jackson Hole, you should check out our sister show, Odd Lots, 309 00:17:40,440 --> 00:17:43,600 Speaker 1: who are in Wyoming to cover the symposium. The Big 310 00:17:43,640 --> 00:17:46,600 Speaker 1: Take is hosted by Me, David Gora, Aan Ha and 311 00:17:46,640 --> 00:17:50,600 Speaker 1: Sarah Holder. 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