1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:07,880 --> 00:00:10,160 Speaker 2: Right now, we're going to go to CenTra in Portugal, 3 00:00:10,240 --> 00:00:13,680 Speaker 2: where the world's top central bankers are gathering together for 4 00:00:13,760 --> 00:00:16,120 Speaker 2: a discussion with Bloomberg's Francine Lacua. 5 00:00:16,480 --> 00:00:18,000 Speaker 3: We had let's listening. 6 00:00:17,880 --> 00:00:21,120 Speaker 4: Today this morning. Consumer prices rising some two percent from 7 00:00:21,120 --> 00:00:23,680 Speaker 4: a year ago, up from AYE one point nine percent, 8 00:00:24,360 --> 00:00:26,840 Speaker 4: but then the tariffs still loom large. So how do 9 00:00:26,880 --> 00:00:27,880 Speaker 4: you see that developing? 10 00:00:28,960 --> 00:00:30,640 Speaker 5: Well, first of all, I would note that we are 11 00:00:30,680 --> 00:00:33,879 Speaker 5: at two percent and this is the latest reading. This 12 00:00:34,000 --> 00:00:37,519 Speaker 5: is also the target that we have had, and this 13 00:00:37,600 --> 00:00:41,879 Speaker 5: is the projection that our staff is indicating for the 14 00:00:42,040 --> 00:00:45,120 Speaker 5: medium term, which is exactly what we had anticipated. So 15 00:00:45,159 --> 00:00:49,440 Speaker 5: I'm not saying mission accomplished, but I say target reached. Okay, 16 00:00:49,720 --> 00:00:53,680 Speaker 5: And I think we should start by recognizing that we 17 00:00:53,800 --> 00:00:58,760 Speaker 5: faced massive amount of shocks, compounded shocks occasionally, and we 18 00:00:58,840 --> 00:01:02,640 Speaker 5: are through this inflationary process that we have conducted over 19 00:01:02,640 --> 00:01:07,680 Speaker 5: the last two years. And yes, we are facing a 20 00:01:07,680 --> 00:01:10,720 Speaker 5: lot of uncertainty. Yes we are facing the risk of 21 00:01:10,800 --> 00:01:16,440 Speaker 5: fragmentation increasing, and yes we are facing political developments that 22 00:01:16,680 --> 00:01:22,600 Speaker 5: are worrying generally, but that also are causing two side 23 00:01:23,080 --> 00:01:27,319 Speaker 5: risk to inflation, So we have to continue to be 24 00:01:27,360 --> 00:01:30,600 Speaker 5: extremely vigilant. We have to continue to be committed to 25 00:01:30,720 --> 00:01:33,319 Speaker 5: delivering on our target, and I think we are at 26 00:01:33,319 --> 00:01:36,200 Speaker 5: this point in time in a very good position to 27 00:01:36,280 --> 00:01:39,600 Speaker 5: do that. So we are well equipped to navigate the 28 00:01:39,800 --> 00:01:42,000 Speaker 5: tormented waters that we should anticipate. 29 00:01:42,800 --> 00:01:45,320 Speaker 4: Chair Powel. Tariffs are not yet showing up in inflation. 30 00:01:45,880 --> 00:01:48,640 Speaker 4: Is this forcing you or your staff to actually rethink 31 00:01:48,640 --> 00:01:51,360 Speaker 4: what the models say about how much the tariffs will 32 00:01:51,440 --> 00:01:54,520 Speaker 4: ultimately through some of the final prices. 33 00:01:55,360 --> 00:01:57,720 Speaker 2: So thank you Frantz and Christine. Thank you to you 34 00:01:57,760 --> 00:02:00,240 Speaker 2: and your colleagues for putting on another great conference here today. 35 00:02:00,560 --> 00:02:02,800 Speaker 3: It's been a pleasure. I guess I. 36 00:02:02,760 --> 00:02:04,720 Speaker 2: Would start, if I may, by saying that the US 37 00:02:04,760 --> 00:02:07,880 Speaker 2: economy is in a pretty good position. Inflation has come 38 00:02:07,960 --> 00:02:11,320 Speaker 2: down close to two percent, we're two point three headline, 39 00:02:11,320 --> 00:02:14,040 Speaker 2: two point seven core. The unemployment rate is at four 40 00:02:14,040 --> 00:02:19,240 Speaker 2: point two percent, so we're healthy overall. The if you 41 00:02:19,280 --> 00:02:23,040 Speaker 2: look ignore the tariffs for a second, inflation is behaving 42 00:02:23,080 --> 00:02:25,679 Speaker 2: pretty much exactly as we as we have expected and 43 00:02:26,040 --> 00:02:29,680 Speaker 2: hoped that it would. We haven't seen effects much yet 44 00:02:30,000 --> 00:02:32,880 Speaker 2: from tariffs, and we didn't expect too by now we've 45 00:02:32,880 --> 00:02:36,400 Speaker 2: always said that the timing, amount and persistence of the 46 00:02:36,680 --> 00:02:39,800 Speaker 2: inflation would be highly uncertain, and it's certainly improved that. 47 00:02:39,960 --> 00:02:42,079 Speaker 3: So we're watching. We expect to. 48 00:02:42,040 --> 00:02:45,760 Speaker 2: See over the summer some readings higher readings, but we're 49 00:02:45,800 --> 00:02:49,840 Speaker 2: prepared to learn that it can be higher or lower, 50 00:02:50,440 --> 00:02:53,520 Speaker 2: or later or sooner than we'd expect it. 51 00:02:53,080 --> 00:02:55,119 Speaker 4: But a chair with the fen have cut more by 52 00:02:55,160 --> 00:02:56,840 Speaker 4: now if it weren't for the tariffs. 53 00:02:58,560 --> 00:03:00,360 Speaker 3: So I do think that I think that's right. 54 00:03:00,400 --> 00:03:03,120 Speaker 2: Where in effect we went on hold when we saw 55 00:03:03,280 --> 00:03:06,440 Speaker 2: the size of the tariffs and where and essentially all 56 00:03:06,800 --> 00:03:10,280 Speaker 2: inflation forecasts for the United States went up materially as 57 00:03:10,280 --> 00:03:14,480 Speaker 2: a consequence of the tariffs. So we didn't overreact. In fact, 58 00:03:14,520 --> 00:03:17,280 Speaker 2: we didn't react at all. We're simply taking some time. 59 00:03:17,320 --> 00:03:20,320 Speaker 2: As long as the US economy is in solid shape, 60 00:03:20,600 --> 00:03:23,280 Speaker 2: we think the prudent thing to do is to wait 61 00:03:23,360 --> 00:03:26,280 Speaker 2: and learn more and see what those effects might be. 62 00:03:26,320 --> 00:03:29,640 Speaker 2: And again they haven't really shown up, and you know, 63 00:03:29,720 --> 00:03:31,160 Speaker 2: so we're for now, we're. 64 00:03:31,000 --> 00:03:34,680 Speaker 4: Waiting, Governor, I mean South Korea's economies of course, Highland 65 00:03:34,840 --> 00:03:38,240 Speaker 4: reliant on trade, putting aside the deals that each government 66 00:03:38,480 --> 00:03:41,600 Speaker 4: could do can strike with the Trump administration, what can 67 00:03:41,680 --> 00:03:45,080 Speaker 4: central banks in your position do to shield economies from 68 00:03:45,120 --> 00:03:46,480 Speaker 4: the impact of trade tariffs? 69 00:03:47,440 --> 00:03:52,920 Speaker 6: Actually about the tariff's impact on infreation. How current infreation 70 00:03:53,080 --> 00:03:56,760 Speaker 6: is well stabilized around two percent, and we believe tariff 71 00:03:56,800 --> 00:04:01,080 Speaker 6: tends to be defractionally rather than infretionary full reasons One, 72 00:04:01,160 --> 00:04:06,480 Speaker 6: it is created not likely to use retalitary tariff. Second, we 73 00:04:07,200 --> 00:04:10,560 Speaker 6: import twenty two percent of our import from China and 74 00:04:10,680 --> 00:04:16,440 Speaker 6: recently export price of China has been falling at five 75 00:04:16,440 --> 00:04:19,360 Speaker 6: percent a year for several years, and we believe that 76 00:04:19,400 --> 00:04:22,080 Speaker 6: it will continue to do so. And at this moment, our 77 00:04:22,160 --> 00:04:24,679 Speaker 6: growth rate is zero point eight percent, which is well 78 00:04:24,680 --> 00:04:28,919 Speaker 6: below our potential growth rate, so aggregate demand pressure is 79 00:04:29,040 --> 00:04:32,640 Speaker 6: much lower. So our problem is not the infration itself, 80 00:04:32,640 --> 00:04:34,279 Speaker 6: but the gross impact of tariff. 81 00:04:34,880 --> 00:04:36,640 Speaker 4: So what does that mean you'll do going forward? 82 00:04:37,680 --> 00:04:40,159 Speaker 6: Actually we are we have been an easying cycle and 83 00:04:40,320 --> 00:04:43,520 Speaker 6: we cut our interest rate one hundred pp from last October, 84 00:04:43,839 --> 00:04:46,000 Speaker 6: and we will continue to be in an easying cycle 85 00:04:46,120 --> 00:04:50,480 Speaker 6: given our growth rate. But recently financial stability risk has 86 00:04:50,560 --> 00:04:54,800 Speaker 6: been rising, especially housing price in the metropolitan area is 87 00:04:54,920 --> 00:04:57,839 Speaker 6: increasing very fast. So we are keeping eye on this 88 00:04:58,200 --> 00:05:02,240 Speaker 6: financial stability risk. Deciding the pace in the timing of 89 00:05:02,279 --> 00:05:03,120 Speaker 6: the photocots. 90 00:05:03,760 --> 00:05:06,200 Speaker 4: Governor Billy, you've taken the view that the latest rises 91 00:05:06,240 --> 00:05:09,919 Speaker 4: inflation in the UK will be transitory. Why are you 92 00:05:09,960 --> 00:05:12,159 Speaker 4: so confident that that inflation will fall back? 93 00:05:12,480 --> 00:05:16,000 Speaker 7: Actually you've detected. I've tried to avoid using the translatory 94 00:05:16,040 --> 00:05:21,200 Speaker 7: work because oddly enough it has a bit of a history. 95 00:05:21,640 --> 00:05:26,440 Speaker 7: But to be serious, obviously, any increase in inflation is 96 00:05:26,440 --> 00:05:29,360 Speaker 7: an increase in inflation. Sorry to state the obvious. The 97 00:05:29,640 --> 00:05:32,080 Speaker 7: reasons it's gone up is really entirely due to so 98 00:05:32,160 --> 00:05:36,040 Speaker 7: called administered prices. Now that's say, that's an increasing prices, 99 00:05:36,040 --> 00:05:38,400 Speaker 7: don't get me wrong, But it's not telling us much 100 00:05:38,560 --> 00:05:41,680 Speaker 7: or anything about the context of the economy. In other words, 101 00:05:41,680 --> 00:05:43,880 Speaker 7: it's not telling us anything really much about the balance 102 00:05:43,920 --> 00:05:47,000 Speaker 7: of supply and demand in the economy. So I think 103 00:05:46,839 --> 00:05:48,800 Speaker 7: the key judgment for us is are we going to 104 00:05:48,800 --> 00:05:51,840 Speaker 7: get second round effects from this this pickup? And of 105 00:05:51,839 --> 00:05:53,800 Speaker 7: course it's nothing like the pickup with a few years ago, 106 00:05:54,120 --> 00:05:57,360 Speaker 7: just just to be clear, and my judgment is at 107 00:05:57,360 --> 00:05:59,719 Speaker 7: the moment is that the context is different. That we 108 00:05:59,800 --> 00:06:02,320 Speaker 7: do see evidence and I see some signs of softening 109 00:06:02,320 --> 00:06:04,839 Speaker 7: and the economy see signs of softening and the labor market. 110 00:06:06,120 --> 00:06:08,120 Speaker 7: We are going to have to see those come through, though, 111 00:06:08,279 --> 00:06:12,039 Speaker 7: I mean come through into into prices. I think we've 112 00:06:12,040 --> 00:06:14,920 Speaker 7: still got to see the evidence and prices. But that 113 00:06:15,000 --> 00:06:18,200 Speaker 7: background context allows certainly me to say, look, I think 114 00:06:18,240 --> 00:06:22,279 Speaker 7: the direction continues of interest rates continues to be downwards. 115 00:06:23,360 --> 00:06:26,240 Speaker 4: When you look at all of the uncertainty. Again, is 116 00:06:26,279 --> 00:06:29,039 Speaker 4: it it's a bold call given what happened to oil 117 00:06:29,080 --> 00:06:31,520 Speaker 4: prices and trade negotiations. 118 00:06:31,880 --> 00:06:34,000 Speaker 7: It is. I mean I would say two things on that. 119 00:06:34,400 --> 00:06:34,640 Speaker 5: One. 120 00:06:35,760 --> 00:06:38,680 Speaker 7: I think, as others have said, it's probably Jay was saying, 121 00:06:38,720 --> 00:06:40,960 Speaker 7: I think it's a bit too soon, I think really 122 00:06:41,040 --> 00:06:43,760 Speaker 7: to see the price effects coming through from from from 123 00:06:43,800 --> 00:06:47,000 Speaker 7: the trade and tariff's action. We've made a point of 124 00:06:47,040 --> 00:06:49,279 Speaker 7: saying also that I think, as Christine was saying, that 125 00:06:49,320 --> 00:06:52,440 Speaker 7: these are two sided. They could go either way. Could 126 00:06:52,480 --> 00:06:55,120 Speaker 7: be weaker demand, we could see some supply chain disruption. 127 00:06:55,200 --> 00:06:57,279 Speaker 7: And the second thing, of course, is that you know 128 00:06:57,320 --> 00:06:59,120 Speaker 7: some of these effects if you take the oil price 129 00:06:59,200 --> 00:07:01,039 Speaker 7: story for I mean, you know it's gone up, it's 130 00:07:01,040 --> 00:07:04,520 Speaker 7: come down all since our last meeting, effectively, so you know, 131 00:07:04,560 --> 00:07:07,440 Speaker 7: we always reach for the lexicon at this point. I mean, 132 00:07:07,480 --> 00:07:11,200 Speaker 7: we've added unpredictability to uncertainty. I was slightly amused at 133 00:07:11,240 --> 00:07:14,600 Speaker 7: the introductory film this morning with Christine saying all these words, 134 00:07:14,640 --> 00:07:18,440 Speaker 7: because it's true, because not only are we getting uncertainty 135 00:07:18,440 --> 00:07:20,400 Speaker 7: in the sense, you know, the range of outcomes, but 136 00:07:20,480 --> 00:07:22,560 Speaker 7: unpredictable in the sense that if you get things like 137 00:07:22,880 --> 00:07:26,840 Speaker 7: the tarifaction. History really isn't a particularly good guide to that. Actually, 138 00:07:26,840 --> 00:07:29,480 Speaker 7: you can't really draw much from the past on that. 139 00:07:30,160 --> 00:07:34,040 Speaker 4: Now, Governor Uta, you're in a slightly different situation right Japan. 140 00:07:34,120 --> 00:07:37,840 Speaker 4: CPI has stayed above two percent for three years. Now, 141 00:07:38,240 --> 00:07:40,760 Speaker 4: what do you see as a fundamental changes in your 142 00:07:40,800 --> 00:07:42,880 Speaker 4: economy that make inslation more persistent? 143 00:07:44,440 --> 00:07:48,560 Speaker 8: So let me say to put it simply, as you say, 144 00:07:48,840 --> 00:07:52,360 Speaker 8: headlining in version has been above two percent for almost 145 00:07:52,440 --> 00:07:56,640 Speaker 8: three years, while what we call underlying inversion, who is 146 00:07:56,680 --> 00:07:59,920 Speaker 8: still somewhat be a little two percent. That's the situation 147 00:08:00,120 --> 00:08:00,600 Speaker 8: we are in. 148 00:08:01,280 --> 00:08:02,280 Speaker 7: But if I could. 149 00:08:02,240 --> 00:08:08,920 Speaker 8: Decomposite father, there's probably about three components to it. First, 150 00:08:09,080 --> 00:08:16,360 Speaker 8: there's underlying inflation dictated by wage price dynamics, whereby increases 151 00:08:16,360 --> 00:08:22,960 Speaker 8: in prices affect wages, which further affect prices. Helped by 152 00:08:23,200 --> 00:08:28,200 Speaker 8: a resilient domestic demand this component is has been going 153 00:08:28,280 --> 00:08:32,240 Speaker 8: up slowly, but as I said, it's you're somewhat be 154 00:08:32,280 --> 00:08:35,920 Speaker 8: able to present. Then there's going to be perhaps a 155 00:08:35,960 --> 00:08:42,080 Speaker 8: second component, which will be the expected negative effects of 156 00:08:42,480 --> 00:08:47,839 Speaker 8: possible types on uh the economy and prices. We are 157 00:08:47,880 --> 00:08:50,680 Speaker 8: expecting this to take place, but we haven't seen that yet. 158 00:08:51,559 --> 00:08:57,400 Speaker 8: There's a third component, which is domestics of partial generated 159 00:08:57,440 --> 00:09:03,760 Speaker 8: by increases in food prices. This component accounts for about 160 00:09:03,800 --> 00:09:07,120 Speaker 8: fifty percent of the headline inflation we've got at the moment. 161 00:09:07,679 --> 00:09:12,839 Speaker 8: So letting these three, we think the first component and 162 00:09:12,960 --> 00:09:17,400 Speaker 8: the second component will produce a slow increase in underlying 163 00:09:17,440 --> 00:09:21,640 Speaker 8: inflation towards two percent by and twenty six or twenty seven. 164 00:09:22,679 --> 00:09:27,640 Speaker 8: The third component food inflation is going to subside toward 165 00:09:27,720 --> 00:09:32,480 Speaker 8: the year end. So but we will be closely monitoring 166 00:09:32,960 --> 00:09:35,000 Speaker 8: interplace between these three forces. 167 00:09:35,280 --> 00:09:38,720 Speaker 4: But Governor, how do you trade concerns the day after 168 00:09:38,800 --> 00:09:41,480 Speaker 4: President Trump threatened Japan with more terrorifts. 169 00:09:42,120 --> 00:09:49,000 Speaker 8: Well, it's it's being negotiated by our minister in charge. 170 00:09:49,080 --> 00:09:53,120 Speaker 8: So I'm trying to avoid making any specific. 171 00:09:52,800 --> 00:09:53,320 Speaker 7: Comments on this. 172 00:09:54,920 --> 00:09:57,280 Speaker 4: So let me just ask you what will be the 173 00:09:57,360 --> 00:10:01,280 Speaker 4: key trigger for Japan for deciding for the rate hikes. 174 00:10:02,080 --> 00:10:06,080 Speaker 8: Okay, as I said, it will depend on the route 175 00:10:06,120 --> 00:10:11,400 Speaker 8: if strength of the three eye infashion dynamics I was describing, 176 00:10:11,960 --> 00:10:15,640 Speaker 8: and we need some more information to determine determined. 177 00:10:15,200 --> 00:10:20,160 Speaker 4: Land, President Gard, When you look at rate cuts, I mean, 178 00:10:20,480 --> 00:10:23,320 Speaker 4: are we gonna where do you see actually the ECV going? 179 00:10:23,480 --> 00:10:25,679 Speaker 4: You're in a pretty comfortable position right now out of 180 00:10:25,720 --> 00:10:27,040 Speaker 4: all the Central Banks. 181 00:10:27,320 --> 00:10:32,360 Speaker 9: Data, I will tell, so I think we are we are. 182 00:10:32,760 --> 00:10:35,680 Speaker 5: We are determined to continue to be data dependent, to 183 00:10:35,760 --> 00:10:38,640 Speaker 5: decide meeting by meeting, and to not commit to any 184 00:10:38,679 --> 00:10:42,640 Speaker 5: particular rate path. That's the that the docs are. And 185 00:10:43,000 --> 00:10:46,439 Speaker 5: we're very lucky because we have just completed our strategy assessment, 186 00:10:47,080 --> 00:10:50,679 Speaker 5: which really gives us a good framework and good good 187 00:10:51,360 --> 00:10:55,400 Speaker 5: strategy lines within which to operate. But that those three 188 00:10:55,440 --> 00:10:58,960 Speaker 5: aspects that I have mentioned, data dependent, meeting by meeting, 189 00:10:59,360 --> 00:11:03,400 Speaker 5: no commitment to any particular rate path are constant in 190 00:11:03,440 --> 00:11:07,880 Speaker 5: that ongoing strategy based on what we have concluded actually 191 00:11:08,080 --> 00:11:10,000 Speaker 5: yesterday Chapel. 192 00:11:10,760 --> 00:11:14,360 Speaker 2: So from our standpoint, as you will have seen, a 193 00:11:14,400 --> 00:11:17,640 Speaker 2: solid majority of f HOMC participants do expect that it 194 00:11:17,679 --> 00:11:22,560 Speaker 2: will become appropriate later this year to begin to reduce 195 00:11:22,640 --> 00:11:23,160 Speaker 2: rates again. 196 00:11:23,440 --> 00:11:24,000 Speaker 3: And so. 197 00:11:25,480 --> 00:11:29,160 Speaker 2: And that will depend though, as Christine just mentioned, on 198 00:11:29,200 --> 00:11:32,480 Speaker 2: the incoming data, will be monitoring particularly what does show 199 00:11:32,600 --> 00:11:35,559 Speaker 2: up in terms of inflation or what does not show up, 200 00:11:35,880 --> 00:11:39,000 Speaker 2: and also carefully watching the labor market. You know, we 201 00:11:39,080 --> 00:11:43,960 Speaker 2: watch very carefully for signs of unexpected weakness. We see 202 00:11:43,960 --> 00:11:46,120 Speaker 2: a gradual calling, but we don't really see that yet. 203 00:11:46,120 --> 00:11:47,960 Speaker 2: So those are the things will be watching. But as 204 00:11:48,160 --> 00:11:50,079 Speaker 2: I have mentioned, a majority of us do feel it 205 00:11:50,160 --> 00:11:52,640 Speaker 2: will be appropriate in the remaining four meetings of the 206 00:11:52,720 --> 00:11:54,679 Speaker 2: year to begin to reduce rates again. 207 00:11:55,280 --> 00:11:58,080 Speaker 4: Madame Laguarde, the euro has also served about twelve percent 208 00:11:58,120 --> 00:12:00,520 Speaker 4: against the dollar so far this year. Are concerned that 209 00:12:00,600 --> 00:12:03,600 Speaker 4: its strength runs counter to your efforts to also loose 210 00:12:03,640 --> 00:12:04,800 Speaker 4: in financial conditions. 211 00:12:06,000 --> 00:12:08,040 Speaker 5: You know, I'm not going to comment on the exchange rate. 212 00:12:10,640 --> 00:12:13,400 Speaker 5: We take it into account for purposes of our projections. 213 00:12:13,520 --> 00:12:16,719 Speaker 5: Obviously it as an impact, but it's a reflection of 214 00:12:17,240 --> 00:12:19,480 Speaker 5: the market conditions and assessment. 215 00:12:19,600 --> 00:12:22,559 Speaker 9: It's also a reflection of the strength of our economy. 216 00:12:22,840 --> 00:12:26,840 Speaker 5: But there has been a clear appreciation relative to the dollar. 217 00:12:26,920 --> 00:12:28,439 Speaker 5: Depending on how you look at it, it's eye the 218 00:12:28,559 --> 00:12:31,320 Speaker 5: depreciation of the dollar and appreciation of the euros, and 219 00:12:31,360 --> 00:12:33,440 Speaker 5: there might be a bit of both in that particular case. 220 00:12:33,600 --> 00:12:37,479 Speaker 5: We're also looking at the movement the flow of capitals 221 00:12:37,520 --> 00:12:40,920 Speaker 5: and the attractiveness of Euro denominated assets, which is also 222 00:12:40,920 --> 00:12:43,080 Speaker 5: an interesting phenomena that we've observed lately. 223 00:12:44,600 --> 00:12:46,400 Speaker 4: Trip, I mean, is it fair to say, I know, 224 00:12:46,600 --> 00:12:48,800 Speaker 4: you know, nothing is guaranteed. Number one, we all know 225 00:12:48,880 --> 00:12:52,079 Speaker 4: this barring a real surprise. Is July just too soon, 226 00:12:52,160 --> 00:12:53,640 Speaker 4: too seriously even considerably? 227 00:12:54,520 --> 00:12:55,520 Speaker 3: Yeah, I really can't say. 228 00:12:55,520 --> 00:12:58,400 Speaker 2: It's going to depend on the data, and we are 229 00:12:58,440 --> 00:13:03,079 Speaker 2: going meeting by meeting. I mentioned you know how I'm 230 00:13:03,120 --> 00:13:05,760 Speaker 2: thinking about that, but I wouldn't take any meeting off 231 00:13:05,760 --> 00:13:07,679 Speaker 2: the table or put it directly on the table. It's 232 00:13:07,679 --> 00:13:09,760 Speaker 2: going to depend on how the data evolved. 233 00:13:10,920 --> 00:13:13,800 Speaker 4: Governory, what's the biggest risk stemming from protectionist trade policy? 234 00:13:13,800 --> 00:13:17,480 Speaker 4: Actually for the global economy and for South Koreas, can 235 00:13:17,559 --> 00:13:22,880 Speaker 4: you see the biggest risk stemming from trades and protectionist measures? 236 00:13:23,280 --> 00:13:26,560 Speaker 6: You know, the career has quite an export driven economy, 237 00:13:27,040 --> 00:13:30,400 Speaker 6: so whatever, the global fragmentation is a serious impact, not 238 00:13:30,520 --> 00:13:33,280 Speaker 6: only direct impacts through the US tariff, but also in 239 00:13:33,320 --> 00:13:37,640 Speaker 6: direct impacts through China, Mexico and Canada, and we usually 240 00:13:38,320 --> 00:13:40,640 Speaker 6: can it really depends on what's going to happen to 241 00:13:40,679 --> 00:13:44,360 Speaker 6: July nine. We are actually waiting for the research, but 242 00:13:44,520 --> 00:13:47,440 Speaker 6: we don't know what was going to happen. But for example, 243 00:13:47,520 --> 00:13:51,760 Speaker 6: like if the tariff goes back to twenty six percent 244 00:13:51,880 --> 00:13:55,679 Speaker 6: Italier tariff that was announced in April second and then 245 00:13:55,720 --> 00:13:59,319 Speaker 6: also with a lot of sexual tarifficial effect our economy, 246 00:13:59,360 --> 00:14:04,000 Speaker 6: aluminium steal and cars, you can easily say that it 247 00:14:04,040 --> 00:14:08,800 Speaker 6: has impacted larger than cost one percent. You our GDP 248 00:14:08,880 --> 00:14:12,040 Speaker 6: glow straight and depending on how long it last, I 249 00:14:12,040 --> 00:14:14,160 Speaker 6: think we have to adjust to the new supply chain, 250 00:14:14,520 --> 00:14:18,480 Speaker 6: so the impact will be larger. But I hope that 251 00:14:18,679 --> 00:14:19,560 Speaker 6: scenario one come. 252 00:14:20,560 --> 00:14:22,960 Speaker 4: What is the most concern for the Bank of Korea. 253 00:14:23,120 --> 00:14:26,480 Speaker 4: Is it installing South Korea exports slow down and global 254 00:14:26,520 --> 00:14:28,920 Speaker 4: trade or a downturn in the US economy. 255 00:14:29,760 --> 00:14:32,200 Speaker 6: It's all linked, right, It's all linked right, So it's 256 00:14:32,200 --> 00:14:35,200 Speaker 6: a global it can slow down. And one thing I 257 00:14:35,480 --> 00:14:39,640 Speaker 6: mentioned some negative sizes only but one pative side I 258 00:14:39,640 --> 00:14:42,200 Speaker 6: don't know is a path or not. But Korean companies 259 00:14:42,320 --> 00:14:46,280 Speaker 6: has been preparing for the supply diverscation a long time 260 00:14:46,320 --> 00:14:50,680 Speaker 6: ago before the tariff US tariffs start to because you 261 00:14:50,760 --> 00:14:54,440 Speaker 6: have some issues with China, and then also Chinese industry 262 00:14:54,440 --> 00:14:58,760 Speaker 6: has become very competitive, so we had to relocate our 263 00:15:00,040 --> 00:15:03,280 Speaker 6: looks insight from China to elsewhere. So relatively speaking, you 264 00:15:03,320 --> 00:15:07,280 Speaker 6: are well prepared. And second, still good thing is that 265 00:15:07,400 --> 00:15:10,680 Speaker 6: we have some strong industries such as a semiconductor, which 266 00:15:10,720 --> 00:15:15,360 Speaker 6: benefit from the AI technology development. So I hope that 267 00:15:15,440 --> 00:15:17,880 Speaker 6: we can manage it. But on the other end, given 268 00:15:17,920 --> 00:15:21,120 Speaker 6: the just we'll get the sheer size of the export dependence, 269 00:15:21,560 --> 00:15:23,120 Speaker 6: we will be significantly. 270 00:15:22,560 --> 00:15:25,680 Speaker 4: Affecting govern Really, do do you think interest rates will 271 00:15:25,680 --> 00:15:27,840 Speaker 4: be closer to three or four percent at the end 272 00:15:27,840 --> 00:15:29,920 Speaker 4: of the easing cycle given all of the inflation and 273 00:15:29,960 --> 00:15:31,080 Speaker 4: trade dynamics. 274 00:15:31,760 --> 00:15:34,240 Speaker 7: That's a subtle way into the ass star question. Actually, 275 00:15:35,600 --> 00:15:41,440 Speaker 7: I would detect. So I'm fairly cautious about the whole 276 00:15:41,480 --> 00:15:45,200 Speaker 7: discussion of the level of our star and therefore sort 277 00:15:45,240 --> 00:15:47,880 Speaker 7: of where rates are going to reach in the cycle. 278 00:15:49,120 --> 00:15:52,120 Speaker 7: There is huge uncertainty around it. What I think is 279 00:15:52,160 --> 00:15:55,000 Speaker 7: important and what we spend our time looking at is 280 00:15:55,040 --> 00:16:00,200 Speaker 7: how restrictive is policy both now and going forwards, And 281 00:16:00,200 --> 00:16:02,080 Speaker 7: our staff do a huge amount of work on that 282 00:16:02,120 --> 00:16:05,880 Speaker 7: front to judge the restrictiveness of policy in the current context, 283 00:16:06,800 --> 00:16:10,000 Speaker 7: and it's how restrictive it's going to be. Looking forwards. 284 00:16:10,000 --> 00:16:12,560 Speaker 7: If you project forward with the market curve and the 285 00:16:12,600 --> 00:16:14,960 Speaker 7: assessment we've got the reader is the policy is, policy 286 00:16:15,000 --> 00:16:17,960 Speaker 7: remains restrictive. It will continue to be restrictive, although the 287 00:16:18,040 --> 00:16:21,440 Speaker 7: level of restrictiveness will come down over time, which is 288 00:16:21,480 --> 00:16:25,400 Speaker 7: what I would expect, and I would expect that level 289 00:16:25,400 --> 00:16:27,480 Speaker 7: of restrictiveness to come down to a point where it 290 00:16:27,960 --> 00:16:30,360 Speaker 7: goes more neutral. But it's saying I think you have 291 00:16:30,400 --> 00:16:33,520 Speaker 7: to judge that in context, you know, just to give 292 00:16:33,560 --> 00:16:37,360 Speaker 7: you an example of that, in the UK economy, the 293 00:16:37,440 --> 00:16:40,400 Speaker 7: level of household and corporate debt in the UK economy 294 00:16:40,440 --> 00:16:43,000 Speaker 7: is actually lower than we would have expected it to be, 295 00:16:44,160 --> 00:16:47,360 Speaker 7: but based on past experience. So again that feeds through 296 00:16:47,360 --> 00:16:49,600 Speaker 7: it too, just how restrictive policy is at a given 297 00:16:49,640 --> 00:16:53,200 Speaker 7: interest rate. It's somewhat less restrictive probably than it would 298 00:16:53,200 --> 00:16:54,080 Speaker 7: have been historically. 299 00:16:54,880 --> 00:16:56,440 Speaker 4: Could I ask all of you actually thoughts on the 300 00:16:56,440 --> 00:16:58,720 Speaker 4: neutral rates your power. 301 00:16:59,000 --> 00:17:01,480 Speaker 2: That that's a the literal rate, So I think you know, 302 00:17:01,520 --> 00:17:05,360 Speaker 2: there are countless empirical and theoretical ways to derive it. 303 00:17:05,760 --> 00:17:08,760 Speaker 2: At the end of the day, I think I like 304 00:17:08,840 --> 00:17:12,480 Speaker 2: to look at the economy and ask whether our policy 305 00:17:12,520 --> 00:17:16,160 Speaker 2: stances having the effects we expect and want on the economy, 306 00:17:16,160 --> 00:17:20,520 Speaker 2: and to me, I would say we're somewhere probably modestly 307 00:17:20,600 --> 00:17:23,880 Speaker 2: restrictive at this level, and by some formulations we're more 308 00:17:23,880 --> 00:17:25,760 Speaker 2: restrictive in that. But if you look at the economy, 309 00:17:26,119 --> 00:17:30,359 Speaker 2: growth has been solid, the labor market is solid and 310 00:17:30,640 --> 00:17:34,439 Speaker 2: still at historically lower levels of unemployment. It's not an 311 00:17:34,440 --> 00:17:38,359 Speaker 2: economy that feels like it's suffering from very tight monetary policy. 312 00:17:38,359 --> 00:17:41,200 Speaker 2: But I would say that policy is still restrictive. 313 00:17:42,320 --> 00:17:43,240 Speaker 4: President laguard. 314 00:17:45,160 --> 00:17:48,600 Speaker 5: I would say that it's a nice concept, it's interesting, 315 00:17:48,760 --> 00:17:51,840 Speaker 5: and many of the terribly talented and brilliant economists in 316 00:17:51,880 --> 00:17:56,880 Speaker 5: this room actually are delighted with discussion about the neutral rate. 317 00:17:57,400 --> 00:18:00,960 Speaker 5: But honestly, as we're getting, you know, closed to target 318 00:18:01,000 --> 00:18:03,960 Speaker 5: and to where we should be or are where we 319 00:18:04,000 --> 00:18:06,159 Speaker 5: should be, and I don't want to past judgment on that, 320 00:18:06,240 --> 00:18:09,440 Speaker 5: I think that discussion becomes less relevant. I think what 321 00:18:09,920 --> 00:18:15,080 Speaker 5: our staff at the CB measures leads us to believe 322 00:18:15,119 --> 00:18:17,639 Speaker 5: that it is higher than where it was before the 323 00:18:17,680 --> 00:18:23,880 Speaker 5: Great Financial Crisis, but it's relative relatively low as well, compared, 324 00:18:24,000 --> 00:18:27,600 Speaker 5: for instance, with what the US neutral rate is at 325 00:18:27,600 --> 00:18:30,760 Speaker 5: the moment. But it's in a way, it's a bit 326 00:18:30,800 --> 00:18:32,800 Speaker 5: of an illusion to discuss that at the moment, because 327 00:18:32,800 --> 00:18:35,520 Speaker 5: the neutral rate is normally defined in a world where 328 00:18:35,520 --> 00:18:38,440 Speaker 5: there is no shock, where you have perfect equilibrium. 329 00:18:38,640 --> 00:18:40,560 Speaker 9: Now are we in a world with no shocks at 330 00:18:40,560 --> 00:18:42,280 Speaker 9: the moment? I don't think so. 331 00:18:42,280 --> 00:18:44,640 Speaker 5: So it's nice, nice to have as a concept, nice 332 00:18:44,680 --> 00:18:47,439 Speaker 5: to elaborate on it, nice to do research on it. 333 00:18:47,480 --> 00:18:49,760 Speaker 5: But to use it at the moment where we are 334 00:18:49,840 --> 00:18:51,960 Speaker 5: as a guiding principle to where we should be, I 335 00:18:51,960 --> 00:18:54,760 Speaker 5: don't think is particularly appropriate. 336 00:18:55,400 --> 00:18:59,040 Speaker 7: And you bery well, that sort of continues what I 337 00:18:59,040 --> 00:19:01,200 Speaker 7: was saying earlier. Again, I don't use it as a 338 00:19:01,240 --> 00:19:04,520 Speaker 7: sort of a guide to where policy should be. But 339 00:19:04,560 --> 00:19:08,280 Speaker 7: I think this whole concept of restrictiveness is of course 340 00:19:08,320 --> 00:19:11,439 Speaker 7: critical to our judgment, because that's critical to the transmission 341 00:19:11,480 --> 00:19:13,680 Speaker 7: mechanism of policy, which we have to judge every time 342 00:19:13,720 --> 00:19:16,000 Speaker 7: we meet. So that's a judgment that, in a sense, 343 00:19:16,040 --> 00:19:19,440 Speaker 7: we renew every time every meeting we have. I think 344 00:19:19,760 --> 00:19:21,600 Speaker 7: I'd rather agree with what Jay was just saying. I 345 00:19:21,640 --> 00:19:24,760 Speaker 7: think in our case, policy is restrictive at the moment, 346 00:19:24,800 --> 00:19:28,800 Speaker 7: it's going to become less restrictive based on the curve 347 00:19:28,840 --> 00:19:30,520 Speaker 7: that we've got in the market. That's what I would 348 00:19:30,560 --> 00:19:32,920 Speaker 7: expect we will judge it each time. 349 00:19:34,320 --> 00:19:38,240 Speaker 4: Governory similar, I have nothing to it. How would you 350 00:19:38,280 --> 00:19:38,960 Speaker 4: see it? Governor? 351 00:19:39,040 --> 00:19:40,880 Speaker 3: You aida, yes. 352 00:19:41,000 --> 00:19:45,119 Speaker 8: So we also estimated something like the neutral rate the 353 00:19:45,200 --> 00:19:49,040 Speaker 8: number of times, but the range of estimate is very wide. 354 00:19:49,320 --> 00:19:53,920 Speaker 8: So but at least we think we can say, well, 355 00:19:54,080 --> 00:19:55,440 Speaker 8: the current rate. 356 00:19:55,440 --> 00:19:56,320 Speaker 9: Is below neutral. 357 00:19:57,440 --> 00:20:01,960 Speaker 8: But other than that, I would refer to what Jay 358 00:20:02,040 --> 00:20:05,800 Speaker 8: said you're a two a girl in a Jackson Hall conference, 359 00:20:06,200 --> 00:20:10,280 Speaker 8: which was like, we are guided by our staff, but 360 00:20:10,440 --> 00:20:11,440 Speaker 8: under cloudy. 361 00:20:11,119 --> 00:20:17,000 Speaker 4: Sky, President, can you talk to us about scenario and 362 00:20:17,040 --> 00:20:19,240 Speaker 4: why this is, you know, because of the sharks and 363 00:20:19,280 --> 00:20:22,200 Speaker 4: actually the changes that are going very fast, why scenarios 364 00:20:22,600 --> 00:20:24,720 Speaker 4: make more sense as a template of the economy. 365 00:20:25,119 --> 00:20:28,000 Speaker 5: Okay, So this is a topic that we have largely 366 00:20:28,000 --> 00:20:31,600 Speaker 5: debated as part of the strategy assessment that we conducted 367 00:20:31,600 --> 00:20:35,199 Speaker 5: in in the last year. And I think, you know, 368 00:20:35,560 --> 00:20:39,960 Speaker 5: in fairness, the baseline, which is, you know, the essential 369 00:20:40,640 --> 00:20:44,320 Speaker 5: projection on which we work and we determine our monetary 370 00:20:44,359 --> 00:20:50,240 Speaker 5: policy stance, holds and is decisive in our consideration. But 371 00:20:50,320 --> 00:20:54,040 Speaker 5: at the same time, our staff has I wouldn't say forever, 372 00:20:54,080 --> 00:20:57,640 Speaker 5: but as long as I know myself, has always conducted 373 00:20:57,720 --> 00:21:02,520 Speaker 5: scenario analysis, sensitivity analysis in order to arrive at the 374 00:21:02,520 --> 00:21:08,199 Speaker 5: most solid baseline. It is probably the case that we 375 00:21:08,240 --> 00:21:11,320 Speaker 5: will do more of it more systematically, that we might 376 00:21:11,359 --> 00:21:14,080 Speaker 5: publish more often than we have. We have published, I 377 00:21:14,080 --> 00:21:18,640 Speaker 5: think in the last few years, for in four circumstances 378 00:21:18,640 --> 00:21:22,440 Speaker 5: we have published scenario analysis. The invasion of Ukraine was one, 379 00:21:22,640 --> 00:21:25,359 Speaker 5: COVID was one, the oil crisis as well, and the 380 00:21:25,400 --> 00:21:29,160 Speaker 5: tariff threats, so all those were exogenous factors that we're 381 00:21:29,200 --> 00:21:32,720 Speaker 5: sort of hitting our screens. I think we might do 382 00:21:32,840 --> 00:21:36,959 Speaker 5: more scenario analysis that will be looking at the longer 383 00:21:37,040 --> 00:21:39,840 Speaker 5: term trends that will affect our economy and that will 384 00:21:39,880 --> 00:21:45,600 Speaker 5: inform and strengthen our baseline, enhance it probably in its reliability. 385 00:21:46,080 --> 00:21:49,840 Speaker 5: So that's what we are debating at the moment. How 386 00:21:49,880 --> 00:21:54,480 Speaker 5: this is built, what assumptions we make, what choices are 387 00:21:54,720 --> 00:21:58,159 Speaker 5: decided in terms of publishing, will be determined by the 388 00:21:58,200 --> 00:21:58,959 Speaker 5: Governing Council. 389 00:21:59,160 --> 00:22:02,439 Speaker 9: In good intelligence, we stuff j POW on scenarios. 390 00:22:03,119 --> 00:22:07,920 Speaker 2: So for many years we have used scenario analysis internally 391 00:22:08,280 --> 00:22:11,200 Speaker 2: and I personally find it very useful. I think many 392 00:22:11,240 --> 00:22:15,080 Speaker 2: of my colleagues do too. You have just many different 393 00:22:15,119 --> 00:22:17,920 Speaker 2: kinds of scenario with six or seven at every FMC meeting. 394 00:22:18,080 --> 00:22:21,040 Speaker 2: They're often the topic of discussion among governors, and at 395 00:22:21,040 --> 00:22:24,119 Speaker 2: the meeting we have not taken a step of a 396 00:22:24,359 --> 00:22:28,440 Speaker 2: step of using them as a public communications device, and 397 00:22:28,560 --> 00:22:31,960 Speaker 2: that's a big difference. So that's one of the things 398 00:22:32,000 --> 00:22:34,600 Speaker 2: we're going to be talking about this fall. We will 399 00:22:34,640 --> 00:22:36,840 Speaker 2: wrap up the first part of our framework review, which 400 00:22:36,880 --> 00:22:40,199 Speaker 2: is the big consensus statement our monetary policy framework we 401 00:22:40,240 --> 00:22:42,280 Speaker 2: expect to by the end of the summer, and then 402 00:22:42,280 --> 00:22:44,440 Speaker 2: we're going to use the fall meetings to look at 403 00:22:44,480 --> 00:22:46,680 Speaker 2: communications ideas, and that's one of the ones. 404 00:22:46,520 --> 00:22:47,119 Speaker 3: We'll look at. 405 00:22:47,320 --> 00:22:49,800 Speaker 2: I will say it has a lot of appeal and 406 00:22:49,840 --> 00:22:53,360 Speaker 2: a lot of questions, and so my expectation is we 407 00:22:54,280 --> 00:22:56,280 Speaker 2: know if we're going to do something in that area, 408 00:22:56,359 --> 00:22:59,080 Speaker 2: it's going to be putting a toe in the water 409 00:22:59,160 --> 00:23:02,200 Speaker 2: and not just throwing ourselves in, you know, over Niagara 410 00:23:02,280 --> 00:23:05,240 Speaker 2: falls on it. So I can imagine a situation where 411 00:23:05,240 --> 00:23:09,399 Speaker 2: we would try that in a particular circumstance. But for us, 412 00:23:09,440 --> 00:23:11,680 Speaker 2: we're just going to do the work and understand it 413 00:23:11,720 --> 00:23:13,480 Speaker 2: as many other central banks are doing now. 414 00:23:15,000 --> 00:23:18,760 Speaker 6: UH in case, we use the scenario analysis in our 415 00:23:19,200 --> 00:23:22,520 Speaker 6: risk management section as a as a kind of representing 416 00:23:22,560 --> 00:23:25,560 Speaker 6: the table risk. But I have to read the EACV report. 417 00:23:25,640 --> 00:23:28,720 Speaker 6: But if we have to move that section into the 418 00:23:28,720 --> 00:23:33,960 Speaker 6: more focusing section for public communication, I wonder whether it's 419 00:23:34,000 --> 00:23:36,439 Speaker 6: going to be easy to get some consensus. It's a 420 00:23:36,480 --> 00:23:41,360 Speaker 6: scenario we have to do it among our probably members 421 00:23:41,400 --> 00:23:45,159 Speaker 6: in the monetic policy meeting. So because that scenario and 422 00:23:45,160 --> 00:23:49,639 Speaker 6: the underine assumption maybe much harder to to communicate to 423 00:23:49,720 --> 00:23:53,119 Speaker 6: agree among the members. And also it's a specific to us. 424 00:23:53,160 --> 00:23:56,280 Speaker 6: But how I can differentiate the previous approach of risk 425 00:23:56,359 --> 00:23:59,120 Speaker 6: management section to the focusing that I have to think 426 00:23:59,200 --> 00:24:00,439 Speaker 6: about what we have to do. 427 00:24:01,840 --> 00:24:04,159 Speaker 7: So I had two things I would add, and it's 428 00:24:04,240 --> 00:24:10,000 Speaker 7: very much in the same spirit as colleagues. One, we 429 00:24:10,040 --> 00:24:15,200 Speaker 7: introduced two scenarios, and the May Round and the May Report. 430 00:24:16,160 --> 00:24:18,520 Speaker 7: For me, they were very useful and they were either 431 00:24:18,640 --> 00:24:20,520 Speaker 7: on either side. They weren't symmetric, by the way, but 432 00:24:20,520 --> 00:24:23,119 Speaker 7: they were oither side. For me, they were very useful 433 00:24:23,240 --> 00:24:25,879 Speaker 7: in terms of my decision making because they helped me 434 00:24:25,960 --> 00:24:29,359 Speaker 7: to answer the question, given the uncertainty if we're wrong, 435 00:24:29,440 --> 00:24:32,040 Speaker 7: if I'm wrong in my judgment, how wrong am I 436 00:24:32,119 --> 00:24:34,359 Speaker 7: going to be? You know, do I think I'm going 437 00:24:34,400 --> 00:24:36,720 Speaker 7: to be? And what would be the consequences of that, 438 00:24:36,800 --> 00:24:38,959 Speaker 7: and you know, what would we then have to do 439 00:24:39,000 --> 00:24:41,639 Speaker 7: to deal with the moon? Is it manageable? And that 440 00:24:41,720 --> 00:24:44,240 Speaker 7: was helpful, and then I think the question is coming 441 00:24:44,240 --> 00:24:46,080 Speaker 7: back to know what Day was saying in terms of 442 00:24:46,080 --> 00:24:48,840 Speaker 7: public communication. I mean, this is the big step, I think, 443 00:24:48,960 --> 00:24:53,640 Speaker 7: and it is challenging. I tell you why, because I say, 444 00:24:53,680 --> 00:24:56,800 Speaker 7: it's quite a lot. We make a lot of conditional statements. 445 00:24:57,040 --> 00:24:59,000 Speaker 7: You might have detected this in all the interview, the 446 00:24:59,040 --> 00:25:01,760 Speaker 7: many interviews you do, and don't I'm not I'm not 447 00:25:01,800 --> 00:25:04,200 Speaker 7: making a personal comment now, Francine, but yeah, a lot 448 00:25:04,200 --> 00:25:08,760 Speaker 7: of those conditional comments get immediately translated as unconditional comments. 449 00:25:09,119 --> 00:25:10,160 Speaker 7: It's sort of life. 450 00:25:10,680 --> 00:25:11,600 Speaker 4: We're quite careful. 451 00:25:11,640 --> 00:25:13,359 Speaker 7: But yeah, no, no, it's not personal. You know, this 452 00:25:13,440 --> 00:25:16,520 Speaker 7: is the general point. And so so the reason I 453 00:25:16,560 --> 00:25:19,399 Speaker 7: say this is that if we yeah, and that's about 454 00:25:19,520 --> 00:25:21,239 Speaker 7: that's about the central case. By the way, so if 455 00:25:21,240 --> 00:25:24,080 Speaker 7: we introduce scenarios, you know, that's a message to us 456 00:25:24,080 --> 00:25:25,639 Speaker 7: that you're going to have to do this very carefully 457 00:25:26,280 --> 00:25:29,679 Speaker 7: in that world because to get the point across about 458 00:25:29,720 --> 00:25:31,960 Speaker 7: you know, there is always a there is always uncertainty, 459 00:25:32,000 --> 00:25:34,280 Speaker 7: there is always risk. How you calibrate those and how 460 00:25:34,359 --> 00:25:37,600 Speaker 7: you as Jay was saying, how you communicate those publicly. 461 00:25:38,280 --> 00:25:40,960 Speaker 7: It's critical but quite pretty challenging, frankly in that in 462 00:25:41,240 --> 00:25:42,480 Speaker 7: that environment. 463 00:25:42,800 --> 00:25:49,760 Speaker 8: Governor you Ina, Yes, we also carry out many simulation 464 00:25:50,280 --> 00:25:55,920 Speaker 8: exercises about scenarios, but we have not, as far as 465 00:25:55,920 --> 00:25:59,720 Speaker 8: they know, published them. We do discuss in our quality 466 00:26:00,080 --> 00:26:05,959 Speaker 8: wards qualitatively what risks we are we have in mind. 467 00:26:06,920 --> 00:26:11,480 Speaker 8: On top of what I would say in a very 468 00:26:12,160 --> 00:26:16,080 Speaker 8: rough way, we are carrying out something like a risk 469 00:26:16,200 --> 00:26:21,080 Speaker 8: management approach to management policy making, which is probably a 470 00:26:21,080 --> 00:26:28,199 Speaker 8: bit similar to what Christine was talking about yesterday. I 471 00:26:28,240 --> 00:26:32,440 Speaker 8: can't come up with a good example, but so risk scenarios, 472 00:26:32,800 --> 00:26:37,639 Speaker 8: thinkings about tail risks sometimes do affect our monitor policy prinking. 473 00:26:38,440 --> 00:26:41,000 Speaker 4: Can I ask you all about the dollar? Everyone's favorite subjects, 474 00:26:41,040 --> 00:26:44,520 Speaker 4: So when you tune out noise right of the past 475 00:26:44,600 --> 00:26:47,080 Speaker 4: few months, one has really changed about the dollar, Governor, 476 00:26:47,160 --> 00:26:50,159 Speaker 4: We are we really seeing some sort of paradigm shift 477 00:26:50,600 --> 00:26:53,280 Speaker 4: in the status as a reserve currency. That means historians 478 00:26:53,320 --> 00:26:56,000 Speaker 4: will look back on twenty twenty five as some sort 479 00:26:56,040 --> 00:26:56,800 Speaker 4: of pivotal year. 480 00:26:57,520 --> 00:27:01,360 Speaker 6: I don't think so, especially in keys of Korea. Our 481 00:27:01,520 --> 00:27:05,640 Speaker 6: Korean one has appreciated significantly in the last two months, 482 00:27:05,960 --> 00:27:08,280 Speaker 6: but I think it's mostly due to the very unique 483 00:27:08,280 --> 00:27:11,520 Speaker 6: situation that we had, and we had a very unexpected 484 00:27:11,720 --> 00:27:16,159 Speaker 6: unnecessary martial law declaration in last December, and after that, 485 00:27:16,440 --> 00:27:19,680 Speaker 6: is this political risk, together with the slow down our economy, 486 00:27:20,119 --> 00:27:24,879 Speaker 6: really make Korean one depreciate much more than our fundamentals explains. 487 00:27:24,920 --> 00:27:28,360 Speaker 6: So in some sense the appreciation that we have observed 488 00:27:28,359 --> 00:27:32,200 Speaker 6: in the last two months in some sense normalization of our. 489 00:27:33,600 --> 00:27:34,399 Speaker 7: Our currencies. 490 00:27:34,640 --> 00:27:36,960 Speaker 6: And as for the kind of long term shift of 491 00:27:37,000 --> 00:27:41,000 Speaker 6: the Dalla sentiment, we have discussions, but it looks like 492 00:27:41,160 --> 00:27:43,479 Speaker 6: people are talking about it, but at this moment they 493 00:27:43,640 --> 00:27:47,600 Speaker 6: keep the Dallas sets while they're increasing the Hatch ratios. 494 00:27:47,840 --> 00:27:50,200 Speaker 6: So at this moment, I think the lion's share of 495 00:27:50,240 --> 00:27:53,280 Speaker 6: the impact VI support showed this one is impact is 496 00:27:53,560 --> 00:27:57,320 Speaker 6: mostly moving from the unhatchy to the hetchy positions. So 497 00:27:57,359 --> 00:27:59,639 Speaker 6: we have to see what will happen. 498 00:27:59,359 --> 00:28:02,600 Speaker 7: In the future. Governor baby Well, I'd say two things. 499 00:28:02,920 --> 00:28:06,960 Speaker 7: First of all, I think that it's important to bear 500 00:28:06,960 --> 00:28:09,080 Speaker 7: in mind what the sort of the definition of a 501 00:28:09,119 --> 00:28:13,959 Speaker 7: reserve currency is and how it's evolved over many years. 502 00:28:14,320 --> 00:28:18,280 Speaker 7: So I, like Jenerally, I don't see the being a 503 00:28:18,320 --> 00:28:21,320 Speaker 7: sort of a major shift at the moment, not least 504 00:28:21,359 --> 00:28:23,159 Speaker 7: because in this day and age, the definition of a 505 00:28:23,200 --> 00:28:25,359 Speaker 7: reserve currency has as much to do with the supply 506 00:28:25,480 --> 00:28:28,000 Speaker 7: of safe assets into the market that can be used 507 00:28:28,359 --> 00:28:31,040 Speaker 7: for all the purposes of collateral and security, that they 508 00:28:31,080 --> 00:28:34,200 Speaker 7: are as much about as much as it is about 509 00:28:34,200 --> 00:28:35,960 Speaker 7: a sort of pure exchange rait. So I think we're 510 00:28:36,000 --> 00:28:38,360 Speaker 7: a long way off that sort of that change happening. 511 00:28:39,160 --> 00:28:41,120 Speaker 7: The second thing is going back to Someny Christine was 512 00:28:41,160 --> 00:28:43,400 Speaker 7: saying earlier. I mean, when we look at financial conditions, 513 00:28:44,000 --> 00:28:46,360 Speaker 7: I wish we do, of course, but I do think 514 00:28:46,400 --> 00:28:48,480 Speaker 7: particularly I mean I always believe this, but I think 515 00:28:48,480 --> 00:28:50,760 Speaker 7: it's even more relevant to the moment to unpack a 516 00:28:50,840 --> 00:28:53,280 Speaker 7: financial conditions index. And the reason I say that is 517 00:28:53,280 --> 00:28:56,160 Speaker 7: because we've seen a breakdown in the correlations of the 518 00:28:56,200 --> 00:28:59,400 Speaker 7: components of a financial conditions index. So you look at 519 00:28:59,400 --> 00:29:01,120 Speaker 7: sort of bond you're you look at exchange rates, you 520 00:29:01,120 --> 00:29:05,400 Speaker 7: look at equity risk premium for instance. Those correlations are 521 00:29:05,440 --> 00:29:09,240 Speaker 7: not the ones that we've tended to see established over time, 522 00:29:09,320 --> 00:29:11,240 Speaker 7: so you have to look at it much more carefully. 523 00:29:12,440 --> 00:29:15,360 Speaker 7: There are stories, to my mind about each of the 524 00:29:15,440 --> 00:29:18,240 Speaker 7: components of that. So when I look at the exchange 525 00:29:18,280 --> 00:29:19,959 Speaker 7: rates you know, I look at it very much on 526 00:29:20,000 --> 00:29:23,000 Speaker 7: that basis. I don't think it's sensible to sort of 527 00:29:23,000 --> 00:29:25,200 Speaker 7: pack it all up as we normally wouldn't say it's 528 00:29:25,240 --> 00:29:27,640 Speaker 7: all behaving normally because the correlations are. 529 00:29:27,560 --> 00:29:32,080 Speaker 4: Not actually governor ueida. I mean, there's also many colleagues 530 00:29:32,120 --> 00:29:34,440 Speaker 4: at central banks I guess around the world are building 531 00:29:34,480 --> 00:29:37,320 Speaker 4: up gold reserves. Is that the only real alternative to 532 00:29:37,400 --> 00:29:37,800 Speaker 4: the dollar? 533 00:29:40,400 --> 00:29:46,760 Speaker 8: I think it's up to a certain extent, what areas 534 00:29:46,960 --> 00:29:51,800 Speaker 8: like you're on or China would do in terms of 535 00:29:52,320 --> 00:29:57,720 Speaker 8: improving the efficiency or convenience of their currencies, Like the 536 00:29:57,800 --> 00:30:01,720 Speaker 8: kinds of things we were discussing this morning, capital markets, integration, 537 00:30:02,480 --> 00:30:07,400 Speaker 8: and these things will change the degree to which the 538 00:30:07,520 --> 00:30:09,680 Speaker 8: role of the data may decline are. 539 00:30:10,280 --> 00:30:13,160 Speaker 4: In the future, I mean the dard. 540 00:30:14,840 --> 00:30:17,600 Speaker 5: You know, I think I don't know if twenty twenty 541 00:30:17,600 --> 00:30:20,840 Speaker 5: five will be a pivotal year. I would tend to 542 00:30:20,880 --> 00:30:26,719 Speaker 5: think that yes, it might very well be, but for 543 00:30:26,800 --> 00:30:29,200 Speaker 5: a major change to occur will take a lot of 544 00:30:29,240 --> 00:30:35,680 Speaker 5: time and will require a lot of effort. And I 545 00:30:35,720 --> 00:30:38,080 Speaker 5: completely agree with the points made by Andrew about the 546 00:30:39,160 --> 00:30:42,160 Speaker 5: dichotomy that we're seeing at the moment, and that might 547 00:30:42,160 --> 00:30:45,480 Speaker 5: be an indication of the fact that investors are looking 548 00:30:45,520 --> 00:30:49,760 Speaker 5: at options. This is what investors are saying, They ask questions, 549 00:30:50,120 --> 00:30:55,400 Speaker 5: they seek alternatives, and whether that translates into a general 550 00:30:55,520 --> 00:30:59,120 Speaker 5: lack of confidence that will be further fueled by more uncertainty, 551 00:30:59,200 --> 00:30:59,960 Speaker 5: more and predictable. 552 00:31:00,040 --> 00:31:01,280 Speaker 9: Did you a bit of a jump. 553 00:31:01,040 --> 00:31:04,840 Speaker 5: In the unknown on several fronts, not just monetary policy, 554 00:31:05,280 --> 00:31:07,880 Speaker 5: not just even the economics, but beyond that in terms 555 00:31:07,920 --> 00:31:11,560 Speaker 5: of security at large, for instance, I think remains to 556 00:31:11,600 --> 00:31:14,120 Speaker 5: be seen. It's not going to happen just like that overnight. 557 00:31:14,200 --> 00:31:16,960 Speaker 5: It never did historically. There's no reason you should know, 558 00:31:17,040 --> 00:31:20,080 Speaker 5: but there is there is clearly something that has that 559 00:31:20,120 --> 00:31:23,240 Speaker 5: has been broken, and whether it is fixable or whether 560 00:31:23,280 --> 00:31:25,680 Speaker 5: it is going to continue to be broken, I think 561 00:31:25,680 --> 00:31:27,600 Speaker 5: the jury is out on that front. 562 00:31:27,960 --> 00:31:29,640 Speaker 4: A trepal. How do you think we'll look back on 563 00:31:29,920 --> 00:31:30,720 Speaker 4: twenty twenty five? 564 00:31:30,800 --> 00:31:32,600 Speaker 3: No one, here's me. 565 00:31:34,360 --> 00:31:36,280 Speaker 2: How we're going to look back on twenty twenty five? 566 00:31:36,440 --> 00:31:36,680 Speaker 9: Yeah? 567 00:31:37,040 --> 00:31:39,560 Speaker 4: How will historians look back on this year? Is it pivotal? 568 00:31:41,960 --> 00:31:45,160 Speaker 3: It's clearly an important It's an important year. 569 00:31:45,200 --> 00:31:47,200 Speaker 2: There's a there's a lot going on, you know that 570 00:31:47,320 --> 00:31:51,440 Speaker 2: with trade, and I think my hopeful that will look 571 00:31:51,480 --> 00:31:54,360 Speaker 2: back on it as a year that were we significant 572 00:31:54,520 --> 00:31:59,239 Speaker 2: successfully challenged some significant economic changes, and you know our 573 00:31:59,320 --> 00:32:00,480 Speaker 2: job is to make sure that that. 574 00:32:00,560 --> 00:32:01,040 Speaker 3: Is the case. 575 00:32:02,200 --> 00:32:05,120 Speaker 4: You get attacked by the president a lot on a 576 00:32:05,160 --> 00:32:07,360 Speaker 4: personal basis, does it make your job harder? 577 00:32:08,320 --> 00:32:10,240 Speaker 3: I'm very focused on just doing my job. 578 00:32:10,520 --> 00:32:12,840 Speaker 2: I mean, there are things that the things that matter 579 00:32:12,960 --> 00:32:16,320 Speaker 2: are using our tools to achieve the goals that commerce 580 00:32:16,320 --> 00:32:20,320 Speaker 2: has given us maximum employments, price stability, financial stability, and 581 00:32:20,440 --> 00:32:21,760 Speaker 2: that's what we focus on. 582 00:32:21,720 --> 00:32:36,120 Speaker 4: One I'm a dumb laguarde. If you were in the 583 00:32:36,120 --> 00:32:38,600 Speaker 4: same position as Chair Powell, would you do anything differently? 584 00:32:41,680 --> 00:32:43,560 Speaker 5: I think I speak for myself, but I speak for 585 00:32:43,600 --> 00:32:46,000 Speaker 5: all colleagues on the panel. I think we would do 586 00:32:46,120 --> 00:32:48,640 Speaker 5: exactly the same thing as our colleague J. 587 00:32:48,760 --> 00:32:50,080 Speaker 9: Powell does the same thing. 588 00:32:50,800 --> 00:33:07,280 Speaker 1: Yeah right, yes, Governor. 589 00:33:07,760 --> 00:33:09,920 Speaker 4: Is the rest of the world decoupling from America but 590 00:33:10,000 --> 00:33:13,200 Speaker 4: pulling tighter elsewhere. How do you see fragmentation happening? 591 00:33:15,320 --> 00:33:19,800 Speaker 7: Well, fragmentation were it to happen, and my view is 592 00:33:20,360 --> 00:33:24,000 Speaker 7: bad for activity in the world economy, no question about that. 593 00:33:24,040 --> 00:33:27,720 Speaker 7: I mean, if we reduce the openness of the world economy, 594 00:33:27,760 --> 00:33:29,800 Speaker 7: that will be bad for activity in the world economy. Now, 595 00:33:30,880 --> 00:33:33,160 Speaker 7: I temper that in one respect because obviously we have 596 00:33:33,240 --> 00:33:35,360 Speaker 7: learned a lot about the robust list of supply chains 597 00:33:35,400 --> 00:33:38,480 Speaker 7: over the last you know, five years, and it is 598 00:33:38,520 --> 00:33:40,800 Speaker 7: a course appropriate that there will be adjustments to that. 599 00:33:40,880 --> 00:33:43,760 Speaker 7: But if we see a breakdown of the openness of 600 00:33:43,800 --> 00:33:47,640 Speaker 7: the world economy sort of beyond that, beyond that sort 601 00:33:47,680 --> 00:33:49,840 Speaker 7: of resilience that we do see as needed, then that's 602 00:33:49,960 --> 00:33:52,160 Speaker 7: that's bad for activity, it's bad for the world economy, 603 00:33:52,160 --> 00:33:55,120 Speaker 7: and that I'm afraid it's something that I think we need. 604 00:33:55,240 --> 00:33:57,120 Speaker 7: You know, we need to be very clear. I've said 605 00:33:57,120 --> 00:33:59,400 Speaker 7: a number of times that there are reasons why this 606 00:33:59,440 --> 00:34:02,800 Speaker 7: has happened. It's not right to just go around saying 607 00:34:03,360 --> 00:34:04,960 Speaker 7: just you know, this is all the wrong, wrong, wrong, 608 00:34:05,040 --> 00:34:06,960 Speaker 7: you know, there are no reasons why this is happening. 609 00:34:07,520 --> 00:34:09,759 Speaker 7: What I think is very important is that we get 610 00:34:09,800 --> 00:34:12,719 Speaker 7: back to a governance of the world economy where we 611 00:34:12,760 --> 00:34:18,960 Speaker 7: can address these issues in the appropriate multilateral fora and 612 00:34:19,040 --> 00:34:21,720 Speaker 7: get to the question of what lies behind these issues, 613 00:34:21,719 --> 00:34:23,960 Speaker 7: what's at the root of these issues, what exactly are 614 00:34:24,000 --> 00:34:27,400 Speaker 7: the issues, and what do we do about them? And 615 00:34:28,200 --> 00:34:31,239 Speaker 7: I can't emphasize this enough that I think it's an 616 00:34:31,280 --> 00:34:33,640 Speaker 7: obligation for all of us who are obviously very heavily 617 00:34:33,680 --> 00:34:36,160 Speaker 7: involved in the governance of the world economy. We've all 618 00:34:36,160 --> 00:34:39,880 Speaker 7: got very big responsibilities to say that is our duty 619 00:34:41,000 --> 00:34:44,600 Speaker 7: to get back and to the process of saying what's 620 00:34:44,719 --> 00:34:46,680 Speaker 7: caused this, and what do we do about it? And 621 00:34:46,680 --> 00:34:49,080 Speaker 7: what do we deduce are the underlying issues and how 622 00:34:49,080 --> 00:34:52,600 Speaker 7: do we address them, because otherwise, say, fragmenting the bod 623 00:34:52,640 --> 00:34:54,040 Speaker 7: economy is a bad outcome. 624 00:34:54,200 --> 00:34:56,680 Speaker 4: But what kind of fragmentation would it be? Is it again? 625 00:34:57,080 --> 00:34:59,879 Speaker 4: You know, are you fearful that the world is splintering 626 00:35:00,680 --> 00:35:03,880 Speaker 4: irrevocably or is there a pool that's. 627 00:35:03,719 --> 00:35:07,160 Speaker 7: Just moving well? I think if it was a breakdown 628 00:35:07,160 --> 00:35:09,960 Speaker 7: of trade in the world economy, obviously exactly how that 629 00:35:10,000 --> 00:35:13,640 Speaker 7: would manifest itself would remain to be seen, but it 630 00:35:13,680 --> 00:35:17,879 Speaker 7: would be running against a long period now where we've 631 00:35:18,400 --> 00:35:21,000 Speaker 7: been building the resilience of trade in the world economy, 632 00:35:21,040 --> 00:35:23,399 Speaker 7: we've been building openness. But as I said, I want 633 00:35:23,400 --> 00:35:26,240 Speaker 7: to I want to sort of temper that by saying, look, 634 00:35:26,560 --> 00:35:28,799 Speaker 7: there are issues. I don't think we should say there 635 00:35:28,800 --> 00:35:30,799 Speaker 7: are no issues. You know, this is all made up. 636 00:35:30,880 --> 00:35:32,640 Speaker 7: There are issues and we need to we need to 637 00:35:32,680 --> 00:35:35,719 Speaker 7: address what they are and work them out. But we 638 00:35:35,800 --> 00:35:37,880 Speaker 7: need to do that in the context of a commitment 639 00:35:37,920 --> 00:35:39,600 Speaker 7: to a robust, open world economy. 640 00:35:40,160 --> 00:35:43,160 Speaker 4: Governor, as the only governor here representing a non reserve 641 00:35:43,800 --> 00:35:46,759 Speaker 4: currency country, how concerned are you about fragmentation of the 642 00:35:46,760 --> 00:35:49,880 Speaker 4: global financial system and the risk at the end of 643 00:35:49,920 --> 00:35:52,560 Speaker 4: the day that the US may be willing less willing 644 00:35:52,600 --> 00:35:55,440 Speaker 4: to provide dollar liquidity in a future financial shock. 645 00:35:57,600 --> 00:36:00,759 Speaker 6: I think I mentioned that we are quite vulnerable to fragmentation, 646 00:36:01,400 --> 00:36:05,080 Speaker 6: but in reality, as a small country, it's a pity 647 00:36:05,160 --> 00:36:07,839 Speaker 6: that we can raise our voice, but in reality we 648 00:36:08,280 --> 00:36:12,520 Speaker 6: cannot change the course. So we have to probably take 649 00:36:12,560 --> 00:36:16,240 Speaker 6: it as an environment and to adapt it. What matters 650 00:36:16,320 --> 00:36:19,799 Speaker 6: is we talk about economic fragmentation, but for country like us, 651 00:36:20,200 --> 00:36:24,160 Speaker 6: the most serious issues combined with security, and for that issue, 652 00:36:24,239 --> 00:36:25,919 Speaker 6: let me stop here because I don't want to go further. 653 00:36:26,360 --> 00:36:31,400 Speaker 6: But as for the dollar equity support, as demonstrated during 654 00:36:31,440 --> 00:36:37,640 Speaker 6: the global financial crisis and pandemic period, the standing dollar 655 00:36:37,719 --> 00:36:42,279 Speaker 6: facility sub lines with five international financial centers and the 656 00:36:42,400 --> 00:36:47,240 Speaker 6: nine a temporary shub lines for the nine non reserve 657 00:36:47,320 --> 00:36:50,920 Speaker 6: currencies that was crucial in restoring the stability in the 658 00:36:51,680 --> 00:36:56,400 Speaker 6: global world. And if another global dollar strategy hits, I 659 00:36:56,440 --> 00:37:00,720 Speaker 6: believe that the US, FAD will extend the lines again, 660 00:37:01,040 --> 00:37:04,600 Speaker 6: which is very important. And but one other problem for 661 00:37:04,719 --> 00:37:08,160 Speaker 6: country like US is we know that the US provide 662 00:37:08,800 --> 00:37:13,320 Speaker 6: air lines as wrong as there is a global but issues, 663 00:37:13,400 --> 00:37:16,879 Speaker 6: what happened if there is our own problem and then 664 00:37:17,239 --> 00:37:21,960 Speaker 6: there's no global Our understanding is that FAD cannot extend 665 00:37:21,960 --> 00:37:24,560 Speaker 6: those subt lines in that case and we have to 666 00:37:24,600 --> 00:37:27,760 Speaker 6: self defense ourselves. That is why I think they're having 667 00:37:27,800 --> 00:37:32,400 Speaker 6: a sufficient level of reserves is very important. And listen 668 00:37:32,440 --> 00:37:34,880 Speaker 6: to you. Thanks to the introduction of the FEMA be 669 00:37:35,000 --> 00:37:38,319 Speaker 6: for postility by the FAD, actually the reserves become much 670 00:37:38,400 --> 00:37:40,600 Speaker 6: more effective tool to defend ourselves. 671 00:37:41,320 --> 00:37:44,719 Speaker 4: Repower on fragmentation, Well, I. 672 00:37:44,680 --> 00:37:48,359 Speaker 2: Guess I'll just agree with what Changan said, which is 673 00:37:48,760 --> 00:37:51,719 Speaker 2: our point out that our nothing has changed relative to 674 00:37:51,760 --> 00:37:53,759 Speaker 2: our swap lines. We still have the same authorities and 675 00:37:53,800 --> 00:37:56,879 Speaker 2: we're still prepared to use them in situations where it's 676 00:37:56,920 --> 00:37:59,600 Speaker 2: within our legal authorities and where we think it makes sense. 677 00:37:59,680 --> 00:38:02,080 Speaker 2: So that is and we know, we're aware that that's 678 00:38:02,080 --> 00:38:04,319 Speaker 2: a a big contribution that we can and and do 679 00:38:04,400 --> 00:38:07,200 Speaker 2: and will continue to make to the global financial stability. 680 00:38:07,719 --> 00:38:10,520 Speaker 4: Goodnu Wada h how much do you think about fragmentation 681 00:38:10,600 --> 00:38:12,120 Speaker 4: and the impact that's could have on Japan. 682 00:38:13,440 --> 00:38:13,800 Speaker 7: See. 683 00:38:13,840 --> 00:38:19,360 Speaker 8: On the trade side, I think a lot about what 684 00:38:19,480 --> 00:38:25,600 Speaker 8: will happen to Asia, even Asia excluding China so UH. 685 00:38:25,960 --> 00:38:31,160 Speaker 8: This will depend on the relative tari frates imposed on 686 00:38:31,239 --> 00:38:36,840 Speaker 8: the region relative to to China or relative to other countries. 687 00:38:37,560 --> 00:38:40,200 Speaker 9: But there's UH. 688 00:38:41,640 --> 00:38:47,480 Speaker 8: Fairly a strong intra regional trade UH taking place UH 689 00:38:47,600 --> 00:38:50,759 Speaker 8: during the last decade or two. Also there's UH uh 690 00:38:51,480 --> 00:38:55,760 Speaker 8: new UH countries like India growing at very high speed. 691 00:38:56,160 --> 00:39:00,600 Speaker 8: So I I hope there's a residly and sufficient resilient 692 00:39:00,600 --> 00:39:08,320 Speaker 8: domestic demand in the region to keep the. 693 00:39:06,960 --> 00:39:09,640 Speaker 3: Energy of the region alive. 694 00:39:10,560 --> 00:39:15,920 Speaker 8: On the financial side, I don't have much to add 695 00:39:15,960 --> 00:39:18,200 Speaker 8: to a lot of other people have said, but it 696 00:39:18,239 --> 00:39:22,800 Speaker 8: would be important to keep trying a multi layer or 697 00:39:22,840 --> 00:39:27,160 Speaker 8: the approach to things like swap lines we have chen 698 00:39:27,280 --> 00:39:31,400 Speaker 8: my initiatives in Asia. Doing something similar or continue to 699 00:39:31,400 --> 00:39:35,279 Speaker 8: do something similar will be important. 700 00:39:35,440 --> 00:39:38,399 Speaker 4: You've often spoken about the role that Europe could take 701 00:39:38,440 --> 00:39:40,680 Speaker 4: in a fragmented world. How do you see that developing 702 00:39:40,719 --> 00:39:42,120 Speaker 4: in what kind of timeframe? 703 00:39:44,239 --> 00:39:47,160 Speaker 5: Well, I think you know Europe has witnessed in the 704 00:39:47,239 --> 00:39:51,240 Speaker 5: last four years in particular, well since nineteen twenty sorry, 705 00:39:51,400 --> 00:39:55,160 Speaker 5: twenty twenty two, in particular, the last three years major 706 00:39:55,280 --> 00:39:59,640 Speaker 5: challenges to its way of doing business, to the assumptions 707 00:39:59,680 --> 00:40:05,360 Speaker 5: that it has made about security, about supply, about destination. 708 00:40:05,920 --> 00:40:09,000 Speaker 5: Whether you look at what the horrible Russian invasion of 709 00:40:09,080 --> 00:40:13,680 Speaker 5: Ukraine has precipitated and how that has impaired the sentiment 710 00:40:13,719 --> 00:40:16,680 Speaker 5: of security that we in Europe had and the sentiment 711 00:40:16,719 --> 00:40:21,040 Speaker 5: that we could forever rely on the protection of others, 712 00:40:21,200 --> 00:40:24,080 Speaker 5: that has been impaired significantly. When you look at the 713 00:40:24,400 --> 00:40:27,600 Speaker 5: energy supply on which some of the European countries in particular, 714 00:40:27,680 --> 00:40:31,080 Speaker 5: but most of us have relied upon, namely access to 715 00:40:31,560 --> 00:40:34,560 Speaker 5: reasonably cheap oil and gas supply from Russia, that has 716 00:40:34,600 --> 00:40:37,920 Speaker 5: been impaired significantly, and we had to find the resources 717 00:40:37,960 --> 00:40:40,360 Speaker 5: to respond to that. And whether you look at the 718 00:40:40,360 --> 00:40:43,760 Speaker 5: business model of some countries where destination was inevitably China 719 00:40:43,840 --> 00:40:47,200 Speaker 5: in the main, that has already been challenged as a 720 00:40:47,239 --> 00:40:49,759 Speaker 5: result of the fragmentation that is not just a risk, 721 00:40:49,800 --> 00:40:52,319 Speaker 5: but which has happened. If you combine that with the 722 00:40:52,360 --> 00:40:57,440 Speaker 5: technology risk that we could all be under, either because 723 00:40:57,480 --> 00:41:01,640 Speaker 5: of political determination or because of of supply, whether it's 724 00:41:01,680 --> 00:41:04,359 Speaker 5: on the front of microships or rare earth. I think 725 00:41:04,400 --> 00:41:07,319 Speaker 5: we are in a situation where many of the assumptions 726 00:41:07,320 --> 00:41:11,279 Speaker 5: have been shaken up and where we collectively are on 727 00:41:11,360 --> 00:41:15,640 Speaker 5: the cusp of I hope, this is my hope of 728 00:41:16,040 --> 00:41:19,880 Speaker 5: you know, better taking hold and control of our destiny 729 00:41:20,239 --> 00:41:26,719 Speaker 5: by making significant structural efforts to you know, be more independent, 730 00:41:27,480 --> 00:41:33,440 Speaker 5: be more proactive, be more autonomous in all these different dimensions. 731 00:41:33,520 --> 00:41:34,760 Speaker 9: Is it going to happen overnight? 732 00:41:34,840 --> 00:41:38,120 Speaker 5: Yet again, no, because on some of those fronts, it 733 00:41:38,200 --> 00:41:42,200 Speaker 5: takes time, It takes investment, it takes political determination, it 734 00:41:42,320 --> 00:41:46,160 Speaker 5: takes momentum. And you know, from a pure sort of 735 00:41:47,160 --> 00:41:49,200 Speaker 5: as President of the ECB, what we can do on 736 00:41:49,239 --> 00:41:51,960 Speaker 5: the monetary front is to deliver on our mandate of 737 00:41:52,040 --> 00:41:55,480 Speaker 5: providing price stability so that the fluidity of factors that 738 00:41:55,600 --> 00:41:58,160 Speaker 5: is needed both in terms of capital in terms of labor, 739 00:41:58,560 --> 00:42:02,920 Speaker 5: can rest assured that price stability will be within our 740 00:42:02,920 --> 00:42:07,840 Speaker 5: limit under strict commitment to deliver on our target of 741 00:42:07,880 --> 00:42:11,960 Speaker 5: two percent medium term. But yes, I think it's a Historically, 742 00:42:12,800 --> 00:42:15,359 Speaker 5: I believe that in a few years time we will 743 00:42:15,400 --> 00:42:19,520 Speaker 5: look at twenty five of those those latest three years 744 00:42:19,560 --> 00:42:23,720 Speaker 5: as significant change in the way in which we conduct 745 00:42:23,760 --> 00:42:25,600 Speaker 5: our life, our business and develop Europe. 746 00:42:25,600 --> 00:42:26,520 Speaker 9: And I hope for the better. 747 00:42:27,680 --> 00:42:30,319 Speaker 4: Ja Powell. Last year in Cintron you said that the 748 00:42:30,480 --> 00:42:33,719 Speaker 4: US cannot run these kind of deficits in good economic 749 00:42:33,760 --> 00:42:36,960 Speaker 4: times for very long, and then you also said, we'll 750 00:42:36,960 --> 00:42:39,640 Speaker 4: have to do better sooner, something sooner or later, and 751 00:42:39,680 --> 00:42:42,680 Speaker 4: sooner will be better than later. How's it going? 752 00:42:46,080 --> 00:42:50,120 Speaker 2: So, of course I probably preface that by saying that 753 00:42:50,160 --> 00:42:51,720 Speaker 2: we don't comment on fiscal policy. 754 00:42:53,160 --> 00:42:55,760 Speaker 3: That is the one thing that I have said. 755 00:42:55,520 --> 00:42:57,680 Speaker 2: In My predecessors have also said in that is, the 756 00:42:58,120 --> 00:43:02,239 Speaker 2: US federal fiscal path is not a sustainable one. The 757 00:43:02,320 --> 00:43:04,480 Speaker 2: level of the debt is sustainable, but the path is not, 758 00:43:05,200 --> 00:43:07,960 Speaker 2: and we need to We need to address that sooner 759 00:43:08,040 --> 00:43:09,800 Speaker 2: or later. Sooner is better than later. That's what I 760 00:43:09,840 --> 00:43:11,839 Speaker 2: said last year. There's not a lot more I can say.