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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: That wraps up the news conference with Chairman Power down

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Speaker 2: in Washington, d C. Here in New York City, we're

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Speaker 2: reacting to a twenty five basis point rake cup from

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Speaker 2: the Federal Reserve, a descent pushing for fifty basis points,

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Speaker 2: and a huge, huge debate about the future, and a

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Speaker 2: wong of Bloomberg economics with this to say, I have

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Speaker 2: not seen a meeting with so many contradictions. This is

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Speaker 2: a low conviction federal reserve with limited, limited visibility and

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Speaker 2: a very wide range of views on the future. And

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Speaker 2: this is why this market is so confused. Captured by

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Speaker 2: this move in the equy market on the S and

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Speaker 2: P five hundred, move lower, move higher, all over the place,

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Speaker 2: this market is somewhat shaken. This feeder reserve has no

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Speaker 2: idea what twenty twenty six is going to bring. And

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Speaker 2: this chairman did his mess to articulate that.

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Speaker 3: And I don't know that he sent a clear message,

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Speaker 3: because it's not possible to send a clear message that

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Speaker 3: sounds you. That's the idea of forward guidance dying, because ultimately,

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Speaker 3: how can a federal reserve with this level of dispersion

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Speaker 3: in views really give any sense of their reaction function.

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Speaker 3: And to me, the idea that he said there wasn't

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Speaker 3: widespread support at all for a fifty basis point rate cut,

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Speaker 3: and talking about this is a risk management rate cut

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Speaker 3: flew in the face of the hopes and dreams of

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Speaker 3: markets that we're hoping brilliant.

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Speaker 4: About forward guidance just evaporating. And Johnny goes back to

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Speaker 4: when you looked into the other room here at the

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Speaker 4: south wing of our studios, and you looked at the

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Speaker 4: dot plot, and the dispersion looked like a B fifty

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Speaker 4: two Bombers.

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Speaker 2: Wingspan, massive spread, massively least talk about it right now.

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Speaker 5: TK.

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Speaker 2: At the very bottom of that spread is a dot

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Speaker 2: that's basically projecting a massive amount of rate cuts. The

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Speaker 2: political dot a sub three percent dot. Tom look above it.

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Speaker 2: You've also got a dot there that's looking for a

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Speaker 2: federal reserve that could be hiking interest rates of the

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Speaker 2: next several meetings. These dots are all over the place.

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Speaker 2: And Bramo, you now did a risk management rate cut,

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Speaker 2: two sided risk, no risk free path in a meeting

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Speaker 2: by meeting situation. I think the chairman did his best

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Speaker 2: here to form a consensus that probably didn't exist on

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Speaker 2: the committee when they got together for the first day

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Speaker 2: just yesterday.

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Speaker 3: Yeah, I think that that's well said. He even talked

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Speaker 3: about the labor market that clearly you can no longer

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Speaker 3: say it's very solid. But then he went on to

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Speaker 3: say that any kind of headline disappointment was due to

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Speaker 3: the immigration picture, probably in a significant part. This is

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Speaker 3: the reason why it is it is a federaliser of

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Speaker 3: it is unable to really present forward guidance because ultimately

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Speaker 3: we don't even know who will be doing the guiding

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Speaker 3: and who will be doing the decision making contracts here,

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Speaker 3: and that is the reason why there's so many questions

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Speaker 3: about that outlier. Tom called it a political dot. That

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Speaker 3: political dot potentially has quite a bit of weight.

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Speaker 2: Might be a flavor of things to come in twenty

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Speaker 2: six and beyond. Joining us now to discuss the former

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Speaker 2: New York Fed President Bill Dudley. Bill, welcome to the program, sir.

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Speaker 2: A lots of process here, many contradictions. Is that a

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Speaker 2: fair way of describing this meeting.

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Speaker 1: I think there is a lot of tension between the

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Speaker 1: inflation outlook and the labor market. But I think Paul

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Speaker 1: said it pretty well. I mean, he said, basically, what

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Speaker 1: we think that's the risks on the unemployment side have

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Speaker 1: risen more than the risk on the inflation side, and

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Speaker 1: so given that we should be less restrictive, and so

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Speaker 1: we're taking out essentially a risk management cut to reflect

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Speaker 1: the fact that the risk on the leader markets seemed

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Speaker 1: to be a little bit higher. You know. After that,

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Speaker 1: you know, there's a lot of uncertainty about you know,

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Speaker 1: how that's going to evolve in twenty twenty six and

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Speaker 1: twenty twenty seven, and the committee, you know, is split

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Speaker 1: about what to do going forward. I think it's interesting

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Speaker 1: the market reaction initially was like, oh, gee, two more

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Speaker 1: rate cuts this year, and then I think people past

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Speaker 1: the summary of economic projections a little bit more and

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Speaker 1: realized that it was actually nine to nine plus mirn.

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Speaker 1: So people wanted no more cuts or one more cut,

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Speaker 1: and nine wanted two more cuts. And then there was

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Speaker 1: a steam Marin who I'm absolutely confident that that's his dot.

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Speaker 3: Well, Bill, I think a lot of people would agree

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Speaker 3: with you. I just wonder going forward how much you

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Speaker 3: are satisfied by fed Shair Powell's response to why they're

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Speaker 3: upgrading their expectation for inflation, Why they always put the

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Speaker 3: idea of two percent two years out and why they

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Speaker 3: are still cutting even though they have not achieved that

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Speaker 3: in more than five years.

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Speaker 1: Well, if he didn't think policy was restrictive today, then

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Speaker 1: he certainly they certainly wouldn't have cut. But he's starting

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Speaker 1: with the premise that policy is restrictive. It's exerting downward

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Speaker 1: restraint on the economy and we and basically, given that

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Speaker 1: the balance of the risk have shifted towards greater risks

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Speaker 1: of the downside on the labor market side, he wants

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Speaker 1: policy to be somewhat less restrictive. So this is a

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Speaker 1: very modest adjustment, and I don't think there's a lot

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Speaker 1: of you know, I don't think there's four guides at

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Speaker 1: this point really that that's meaningful, because it really is

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Speaker 1: going to depend on how the market, you know, the

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Speaker 1: economic economy evolves. I mean, look at the data just

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Speaker 1: the last for a couple of months. You know, we

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Speaker 1: have weakness in the labor market and then we seem

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Speaker 1: to have strength in terms of GDP and spending. So

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Speaker 1: you know, the l I FED GDP now forecast for

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Speaker 1: now cast for the third quarter, is it three point

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Speaker 1: four percent. So there's a lot of uncertainty on the outlook.

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Speaker 1: But you know, this is a this is an insurance

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Speaker 1: rate cut, that's all it is, and it doesn't really

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Speaker 1: foreshadow what's going to happen going forward.

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Speaker 4: Bill Dudley, you're one of our best at dovetailing the

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Speaker 4: dynamics of market economics into our academics. I think a

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Speaker 4: Robert Hall who was at Berkeley, and he went over

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Speaker 4: to a school across the Bay. I can't remember the

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Speaker 4: name of it right now, Bill, I.

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Speaker 6: Look at the inflation.

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Speaker 4: Let's take East Tampton, Massachusetts, where when you were a kid,

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Speaker 4: you were in school there. Sewage rates are up thirty

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Speaker 4: three percent in the last twenty four months. Is this

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Speaker 4: a FED looking at a purchasing power crisis for too

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Speaker 4: many Americans out to the December tenth meeting and into

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Speaker 4: next year.

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Speaker 1: Well, there's definitely a squeeze on low income houses. Households.

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Speaker 1: They don't benefit by the rise in the stock market.

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Speaker 1: They don't benefit by the fact that they're lucked. You know,

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Speaker 1: they held you know, three percent mortgage mortgages. They're hurt

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Speaker 1: by the higher tariffs, they're hurt by the weaker labor market.

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Speaker 1: And so it's really a tale of two economies in

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Speaker 1: terms of the outlook. Matria policy is a very blonde instrument,

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Speaker 1: and unfortunately the FED can't calibrate Maitre policy to sort

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Speaker 1: of equally help everybody in the current environment.

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Speaker 4: So who do they do it for, John Global wall Street?

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Speaker 4: Is that the mandate? You know?

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Speaker 2: I was thinking back to tk my day's back at school,

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Speaker 2: when I was a kid. If I kept telling my mom,

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Speaker 2: in two years, i'll do better, in two years, I'll

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Speaker 2: do better, I'm sure my mum at some point would

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Speaker 2: lose patience. Bill should we lose patience with this fatal reserve?

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Speaker 2: What is this in two years time, we'll hit our

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Speaker 2: inflation target. In two years time, we'll hit our inflation target.

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Speaker 2: Might McKee address this in the news conference? And I

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Speaker 2: actually think it's a really important moment. How credible is

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Speaker 2: this pursuit of two percent?

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Speaker 1: Well, I think it's a fair point that you know,

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Speaker 1: every it's always two years later we're going to finally

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Speaker 1: achieve our inflation objective, you know, basically trying to as

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Speaker 1: sure Paul made it very clear he's they're trying to

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Speaker 1: balance the fact that the two goals are intentioned, and

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Speaker 1: so if they just focused on driving immediately to the

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Speaker 1: two percent inflation goal, that would lead to much higher unemployment.

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Speaker 1: And so they want to balance those two risks. But

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Speaker 1: you know, the resk to the FED is that every

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Speaker 1: year you continue to go with inflation above two percent,

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Speaker 1: the risk is that inflation expectations finally become unanchored. And

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Speaker 1: the attacks on the Fed's independence obviously increase that risk.

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Speaker 2: Well, Dudley with the lights to thank you, sir, appreciate

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Speaker 2: your reaction, Thanks for standing by the former New York

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Speaker 2: FED president. Mi McKey was in that news conference. It

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Speaker 2: was an important moment, I think, and Mima Keay joins

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Speaker 2: us now for more. My first of all, we assessment

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Speaker 2: of the last sixty minutes or so, and what did

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Speaker 2: you make of that exchange you had with the FED chat?

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Speaker 5: Well, the last sixteen minutes or so.

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Speaker 7: I think Jay Poul was trying to walk off very

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Speaker 7: fine line because he's got a very divided committee. Nobody

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Speaker 7: is sure what's going to happen going forward, except for

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Speaker 7: Steven Meier and who thinks that things are going to

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Speaker 7: be be absolutely rosy and we need to cut rates

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Speaker 7: a lot. Everyone else is uncertain and the dot plot

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Speaker 7: median shows two rate cuts this year. But when you

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Speaker 7: look at the dot plot itself, it's so narrowly divided

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Speaker 7: that you really can't take any signal from it. As

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Speaker 7: Bill Dudley was saying, so Paul is trying to tell

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Speaker 7: people that we really don't know without saying we really

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Speaker 7: don't know. And as Bill said, trying to make this

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Speaker 7: an insurance cut the two percent thing, I think is

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Speaker 7: a real question for them, And he didn't really give

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Speaker 7: a good answer to my question.

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Speaker 5: It's not just that.

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Speaker 7: Inflation expectations become unanchored, but that higher expectations can become embedded,

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Speaker 7: and people don't think you're going to get it down farther,

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Speaker 7: And so then how do you fight that going forward

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Speaker 7: if you can't make any progress or can't be seen

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Speaker 7: to be making any progress towards your target.

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Speaker 3: Mike, while you're down there, since you are in the room,

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Speaker 3: it sounded like press conference language. We did get a statement,

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Speaker 3: we did get a rape decision, But can you tell

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Speaker 3: us and just describe to us how different this FED

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Speaker 3: meeting felt, what it looked like, what kind of changes

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Speaker 3: were made.

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Speaker 7: Well, I'll tell you a lot more press here than usual.

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Speaker 7: That's one thing that it looked like the changes are

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Speaker 7: the kind of things that you would see in the

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Speaker 7: statement when they're changing policy, which they did. The dot

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Speaker 7: plot maybe a little bit more confusing, less guidance in

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Speaker 7: it than we had seen before, and there was obviously

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Speaker 7: some tension between what the rate cut medians were with

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Speaker 7: what the economic projection medians were, But overall it went

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Speaker 7: off pretty much as they usually do.

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Speaker 5: The FED statement wasn't that unusual.

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Speaker 7: There obviously was the big elephant in the room of

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Speaker 7: Stephen Myron that the chairman declined to comment on.

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Speaker 5: He also declined to comment on Lisa Cook.

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Speaker 7: He tried to keep it just to the FED, So

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Speaker 7: it's it really wasn't a hugely different dynamic, except that

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Speaker 7: there were a lot more moving parts than we often see,

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Speaker 7: or at least than we've seen in a number of years.

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Speaker 2: Just before you go, there was a moment there where

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Speaker 2: I do think he addressed the Governor Maron question the

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Speaker 2: importance of one individual on the committee and how much

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Speaker 2: sway they have on the f WEMC, how they've got

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Speaker 2: to persuade the other individuals in the room, and Mike,

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Speaker 2: I think it begs the question if that's Stephen Myron

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Speaker 2: doll that Governor Myron dot sub three percent is a

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Speaker 2: flavor of things to come, Mike, to what extent this

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Speaker 2: committee will push back?

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Speaker 7: Well, clearly the committee pushed back today and we didn't

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Speaker 7: see a dissent from Mickey Bowman or Chris Waller. So

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Speaker 7: they seem to be satisfied with where they are at

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Speaker 7: the moment. And that suggests that Stephen Myron is not

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Speaker 7: going to have a lot of influence.

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Speaker 5: Nobody really expected him to.

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Speaker 7: It does raise the question, though, John, as you sort

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Speaker 7: of imply there that if the president gets more people

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Speaker 7: on the board, where do we go from here? And

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Speaker 7: Themyron dot is a sign that the president's people would

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Speaker 7: definitely try to push rates lower, whether or not the

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Speaker 7: economy justifies it.

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Speaker 2: Might mc kay with Altis Mike clinic Hanci always you're

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Speaker 2: one of the very best. Appreciate your time. I think

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Speaker 2: it would be a massive mistake just to say that's

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Speaker 2: all political. We have this conversation with Greg Peters a

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Speaker 2: PGM right before the news conference. He said, what's political

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Speaker 2: and what's real. Whatever you think is political right now

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Speaker 2: might be real next year. That might be a flavor

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Speaker 2: of what's still to come from the incoming chairman for

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Speaker 2: twenty twenty six. And it's not just about being able

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Speaker 2: to persuade the rest of the committee. It's a question

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Speaker 2: about how credible it will be with fixed income and

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Speaker 2: broader markets.

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Speaker 3: And right now it seems like it was credible to

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Speaker 3: the extent that it's not causing some sort of massive

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Speaker 3: sell off in long term yields. I do think it's

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Speaker 3: notable that there was only one percent about a fifty

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Speaker 3: basis point rate cut, and I think we have to

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Speaker 3: keep going back to that. But Stephen Myron was alone.

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Speaker 3: He didn't get a sort of concurrent opinion from Mickey

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Speaker 3: Bowman or Chris Waller.

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Speaker 4: We're going to get to Jeff Rosenberg, but Jen I

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Speaker 4: was going to go to Mike on and so let

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Speaker 4: me just bring it up April twenty nine, next year,

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Speaker 4: June seventeenth, next year, July twenty nine. I think there's

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Speaker 4: an election just after the October twenty eighth meeting. When

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Speaker 4: does House politics or even Senate politics come into this

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Speaker 4: discussion with a vengeance, I don't know when it is.

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Speaker 2: I think we're right there right now. Yeah, you know,

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Speaker 2: before this decision, Tom, we sat around the table and

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Speaker 2: I said, this is the last set of forecast you'll

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Speaker 2: get from cham and Powell without knowing who the incoming

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Speaker 2: feed share is going to be. And I think we

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Speaker 2: can say that by the time we get to December,

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Speaker 2: we'll know who the FED share is. We expect to

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Speaker 2: know who the FED share is, and you're also going

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Speaker 2: to know what they think about where policy should be

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Speaker 2: in twenty twenty six. And that's going to bring a

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Speaker 2: very different flavor to the meeting at the end of

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Speaker 2: this year. Chairman Power did the best job he could

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Speaker 2: possibly do in that news conference given all the contradictions

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Speaker 2: of this moment, not just about the contradictions within the committee,

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Speaker 2: the contradictions almost all over the place. The fact we've

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Speaker 2: had to step down and pay ross growth we've had

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Speaker 2: and unemployment has been super super stable over that period.

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Speaker 2: The fact we're looking for a better growth profile for

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Speaker 2: twenty six yet at the same time we're talking about

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Speaker 2: more rate cuts, not less. It's a very unusual environment,

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Speaker 2: and I think the chairman did the best they could

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Speaker 2: do given the circumstances to communicate that.

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Speaker 3: Yeah, and I think that if you did sound a

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Speaker 3: little bit like word Salid occasionally it probably was to

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Speaker 3: be forgiven, just based on the fact that there aren't

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Speaker 3: good answers to any of these things, especially given the

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Speaker 3: dissent that you're getting on the committee.

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Speaker 2: Jeff Rosenberg of black Rock Joints just now for more. Jeff,

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Speaker 2: welcome to the program. We often say, you and I

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Speaker 2: the first move isn't always the right move, and we'll

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Speaker 2: see if it sticks in financial markets. But what do

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Speaker 2: you make of this move in response to some of

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Speaker 2: the contradictions we've heard over the last ninety minutes.

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Speaker 8: Yeah, you guys have covered a lot of it. I'd say,

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Speaker 8: you know, the three big takeaways for me. You know,

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Speaker 8: Number one, it's the validation of the Waller Bowman critique

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Speaker 8: from the summer. It's not unexpected, but it's important to recognize.

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Speaker 8: You know, that was the first thing that the markets

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Speaker 8: reacted to, the language and the statement, and it clearly

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Speaker 8: was echoed by Powell in the press conference that.

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Speaker 6: The impact of the revisions on the data.

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Speaker 8: He kind of like focused on it and then said, well,

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Speaker 8: it's not just that, but then he went back to

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Speaker 8: it again and again, and so that was the first takeaway.

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Speaker 8: Is this labor market slowed in has clearly resonated. It's

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Speaker 8: shifted the balance of risks, and that was the initial

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Speaker 8: market reaction. Rates went lower and they were a bit

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Speaker 8: positive on that, but when we got into the press conference,

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Speaker 8: it became a little bit less focus on that and

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Speaker 8: more about the forward twenty twenty six twenty twenty seven outlook.

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Speaker 8: And that's where my second point is kind of a

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Speaker 8: big takeaway here, is that the bond market and the

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Speaker 8: twenty year end twenty five outlook are basically aligned. It's

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Speaker 8: when you look further out into those projections relative to

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Speaker 8: where the bond market is pricing where there's a lot

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Speaker 8: of disagreement.

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Speaker 6: And it gets to this.

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Speaker 8: Notion of the spread that you were talking about before

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Speaker 8: in the dots, as you look at the dispersion there

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Speaker 8: and finally here I think you mentioned it before, you know,

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Speaker 8: going into the meeting, there was a lot of you know,

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Speaker 8: uncertainty about whether you'd get more than one descent, whether

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Speaker 8: Waller and Bowman would advocate for a faster move.

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Speaker 6: They didn't.

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Speaker 8: They were kind of on board with this adoption of

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Speaker 8: the balance of risks shifting, and I think that's important

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Speaker 8: in terms of validating that earlier point. It just made

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Speaker 8: that you know, bond markets for the end of this

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Speaker 8: year are kind of right online with where the FED is.

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Speaker 6: I think the.

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Speaker 8: Disconnect into next year is interesting and that's going to

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Speaker 8: have to be resolved.

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Speaker 3: I guess, Jeff, how much does this increase the weight

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Speaker 3: of just how many seats the president has to fill?

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Speaker 3: Given the fact that, as John and Tom were talking about,

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Speaker 3: we did see pushback from the other members from going

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Speaker 3: fifty basis points. We didn't see that coalescing around that view.

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Speaker 8: Yeah, that's going to be a big issue, and I

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Speaker 8: think that's part of what you're seeing in terms of

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Speaker 8: the disconnect between the dots today and the bond market

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Speaker 8: expectations for the past of policy rates in twenty twenty six,

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Speaker 8: because the path of actual policy rates is what the

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Speaker 8: bond market is pricing, and the path that's written down

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Speaker 8: today is based on the current makeup, right, And so

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Speaker 8: that's where you see like effectively a disconnect in the

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Speaker 8: bond market, incorporating the possibility of a different makeup of

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Speaker 8: the FMC underlying the expectations of the distribution of outcomes

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Speaker 8: for where policy rates evolve beyond the near term, where

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Speaker 8: you see really clear alignment at Jeff Rozenberg.

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Speaker 4: I assume you survived probability and statistics at temper at

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Speaker 4: Carnegie Mellon. What's the standard eraror these fancy guys at

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Speaker 4: the FED are working with. How certain can we be

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Speaker 4: of the path forward? Are they really making it up

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Speaker 4: meeting to meeting as they go.

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Speaker 8: Yeah, it gets to this dispersion within the dots, and

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Speaker 8: it gets to something Powell talked you mentioned a couple

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Speaker 8: of times, which I think is a really important way

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Speaker 8: of thinking about and framing this moment in time for

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Speaker 8: the bond market and for how the bond market follows

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Speaker 8: what the FED does.

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Speaker 6: And he said there is no risk free path, and

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Speaker 6: that's a really important concept.

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Speaker 8: And what he means by no risk free path is

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Speaker 8: that there's risks to airing on the dual mandate. A

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Speaker 8: little question about their or third mandate in there later,

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Speaker 8: but there's a risk to the dual mandate if you

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Speaker 8: pursue the maximum employment and you put the inflation at risk,

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Speaker 8: and vice versa. If you focus on inflation, you put

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Speaker 8: the employment at risk.

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Speaker 6: And that's a very uncomfortable and unfamiliar spot.

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Speaker 8: We called it before we got into the post COVID.

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Speaker 6: Environment of too much inflation.

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Speaker 8: We called it divine coincidence of monetary policy. The policy

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Speaker 8: mandates were aligned, they never faced that conflict, and so

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Speaker 8: bond markets never faced the uncertainty that the dispersion in

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Speaker 8: the dots is reflecting. And there's really no resolution of that.

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Speaker 8: It's going to be the data and what is the

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Speaker 8: marginal change in data that the market's focused on, the

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Speaker 8: Fed's focused on, and the marginal changes that employment has

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Speaker 8: been the big downward revision. Inflation has kind of been

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Speaker 8: persistently above target, as we talked about going on five

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Speaker 8: years in the projections, but it's not accelerating.

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Speaker 6: And that's the key.

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Speaker 8: It's what's the rate of change between the dual mandate.

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Speaker 8: Right now, it's all on the labor markets, and that's

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Speaker 8: going to keep its focus.

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Speaker 6: That may change and as that changes.

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Speaker 4: Absolutely brilliant, John. What this amounts to is is it

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Speaker 4: a new data dependency.

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Speaker 2: They've made a choice, and I think we should respect

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Speaker 2: that fact. Jeff, you can always fall into the trap

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Speaker 2: of suggesting what the FED should do, what it shouldn't do,

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Speaker 2: Jeff the chairman saying there's no risk free path. But

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Speaker 2: the committee's made a choice to cut interest rates to

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Speaker 2: signal more to come if there is a consensus is

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Speaker 2: to cut again, cut again, and cut again. Now, Jeff,

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Speaker 2: as a market participant, you've got to respect that the

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Speaker 2: Federal Reserve has made a choice to take that risk.

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Speaker 2: And I want to understand from your perspective how credible

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Speaker 2: you think the pursuit of two percent actually is, and

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Speaker 2: as a bond investor, how your approach to a market

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Speaker 2: should change given the information that you've had this afternoon.

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Speaker 8: Well, and it was in your conversation with Mike McGee

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Speaker 8: and his question. You know, the risk is they lose

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Speaker 8: credibility on the two percent number. Now, you can get

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Speaker 8: stable prices at three percent as long as it's not accelerating,

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Speaker 8: but you're not reaching your target, so it's shifting the

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Speaker 8: target and you lose the credibility and the anchoring to

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Speaker 8: a two percent level.

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Speaker 6: What does that mean?

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Speaker 8: It means a higher level of long term interest rates,

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Speaker 8: It means a higher level of term premium, and to

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Speaker 8: the extent that you get more variability as a result

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Speaker 8: of not only hitting two percent but being persistently above it,

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Speaker 8: you get a higher inflation risk premium, and all those

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Speaker 8: things factor into how we price in term premium, the

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Speaker 8: value of the long end of the curve, the value

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Speaker 8: of inflation and inflation protection, and the longer you go

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Speaker 8: on above that two percent target, the more and more

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Speaker 8: we start to price those things. In my earlier comments

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Speaker 8: is right now everybody's focused on the labor markets. And

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Speaker 8: the key here, the key presumption that we're going to

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Speaker 8: test is is that inflation that's still coming down the

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Speaker 8: pipe in terms of the tear off pass through is

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Speaker 8: that one off. Everyone's pricing it in too be one off.

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Speaker 8: Hopefully that's correct, But the data and the evolution of

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Speaker 8: the data and the relative change between the inflation and

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Speaker 8: the labor market data is going to shift that focus.

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Speaker 8: Right now, the back end's pretty contained because the inflation

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Speaker 8: data isn't accelerating at the same time as the labor

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Speaker 8: market is decelerated.

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Speaker 3: Yeah, but je have to build on what John's talking about.

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Speaker 3: If this is essentially a central bank that has chosen,

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Speaker 3: and they chose the labor market over inflation, then you

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Speaker 3: would expect there to be a much bigger risk premium

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Speaker 3: on some of the long term bond yields. It's come off.

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Speaker 3: And I just wonder if let's say President Trump selects

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Speaker 3: Chris Waller to be the next FED chair. How much

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Speaker 3: does that risk premium come back because it takes off

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Speaker 3: the prospect of more aggressive yield curve control. In other words,

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Speaker 3: how how much is this sort of subdued reaction in

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Speaker 3: long term bonds sort of predicated on this idea that

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Speaker 3: this will be a very creative federal reserve and a

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Speaker 3: very creative treasure department.

440
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Speaker 8: I mean, I think on the prospects of innovation and

441
00:21:15,040 --> 00:21:18,240
Speaker 8: change in policy, I think a lot of it will

442
00:21:18,280 --> 00:21:22,520
Speaker 8: have to be the actual actions as opposed to the

443
00:21:22,560 --> 00:21:25,320
Speaker 8: potential for those actions. Very hard for the bond market

444
00:21:25,320 --> 00:21:28,720
Speaker 8: to price in those changes in policy until the likelihood

445
00:21:28,760 --> 00:21:34,040
Speaker 8: of those other scenarios in terms of policy innovation are

446
00:21:34,119 --> 00:21:38,400
Speaker 8: more clearly identifiable in terms of the probabilities right now

447
00:21:38,680 --> 00:21:41,680
Speaker 8: meet they remain kind of in the realm of possibility.

448
00:21:42,119 --> 00:21:44,320
Speaker 8: But as long as they're in the realm and not

449
00:21:44,440 --> 00:21:46,679
Speaker 8: in the likelihood, it's hard to price those things in.

450
00:21:46,720 --> 00:21:49,360
Speaker 8: I think the second piece around it is really going

451
00:21:49,359 --> 00:21:52,120
Speaker 8: to be how the data evolves to inform both those

452
00:21:52,119 --> 00:21:56,040
Speaker 8: policy choices and the relative trade off between this lack

453
00:21:56,080 --> 00:22:00,159
Speaker 8: of risk free path. If inflation is accelerating and the

454
00:22:00,240 --> 00:22:03,199
Speaker 8: labor markets are not decellerating, then the shift in the

455
00:22:03,240 --> 00:22:05,040
Speaker 8: focus can flip to inflation.

456
00:22:05,440 --> 00:22:07,560
Speaker 6: How do policymakers.

457
00:22:06,760 --> 00:22:10,200
Speaker 8: React to that and is that reaction consistent with how

458
00:22:10,200 --> 00:22:12,520
Speaker 8: the bond market is praising. I think that's how we'll

459
00:22:12,840 --> 00:22:15,400
Speaker 8: evolve as we see these changes.

460
00:22:15,040 --> 00:22:19,200
Speaker 6: In policy alongside the changes in data.

461
00:22:19,400 --> 00:22:22,639
Speaker 2: If we get chair Rick reader, I'm loading up on bonds. Okay, Jeff,

462
00:22:23,760 --> 00:22:25,320
Speaker 2: I'm going to let you go. You don't have to

463
00:22:25,320 --> 00:22:27,920
Speaker 2: respond to that. Don't get in trouble. Thank you very much,

464
00:22:28,000 --> 00:22:32,560
Speaker 2: you run, Jeff Rosenberger, Blackrow, Thank you, sir, Governor Myron.

465
00:22:33,160 --> 00:22:36,040
Speaker 2: What are the yards he becomes Chairman Myron? What are

466
00:22:36,080 --> 00:22:39,640
Speaker 2: the odds that someone like him joins the committee? And

467
00:22:39,680 --> 00:22:41,960
Speaker 2: what would that do to the perception of this Federal

468
00:22:42,000 --> 00:22:45,520
Speaker 2: Reserve and how would it change financial markets? That dot

469
00:22:45,560 --> 00:22:49,960
Speaker 2: there is really really important for twenty twenty six and

470
00:22:50,000 --> 00:22:52,679
Speaker 2: how we should be thinking about this institution and what

471
00:22:52,720 --> 00:22:55,280
Speaker 2: their approach will be, how will change how persuasive, how

472
00:22:55,280 --> 00:22:56,960
Speaker 2: credible it might be. We've got to ask some big,

473
00:22:56,960 --> 00:23:01,000
Speaker 2: big questions about next year for monetary policy and financial markets.

474
00:23:01,119 --> 00:23:03,960
Speaker 3: Yeah, and the difficulty in understanding whether the market is

475
00:23:04,040 --> 00:23:06,760
Speaker 3: actually responding to that dot right, Are we getting a

476
00:23:06,840 --> 00:23:09,360
Speaker 3: sense of what the market's reaction would be to that

477
00:23:09,520 --> 00:23:13,439
Speaker 3: type of approach to monetary policy, or are people dismissing it.

478
00:23:13,720 --> 00:23:15,960
Speaker 3: This is not somebody who is able to get some

479
00:23:16,080 --> 00:23:18,040
Speaker 3: of the other members to come on board with him,

480
00:23:18,080 --> 00:23:20,919
Speaker 3: and so it is just one person on a committee.

481
00:23:20,960 --> 00:23:24,560
Speaker 6: More than the ages years I'm looking meeting to meeting

482
00:23:24,680 --> 00:23:25,160
Speaker 6: to meeting.

483
00:23:25,359 --> 00:23:27,560
Speaker 4: It's a fad that's going to be overcome by events.

484
00:23:27,560 --> 00:23:29,080
Speaker 2: When you wake up a little bit earlier and join

485
00:23:29,200 --> 00:23:33,720
Speaker 2: us tomorrow, you fancy that to stand? What do we

486
00:23:33,760 --> 00:23:35,159
Speaker 2: have to pay t K to make you wake up

487
00:23:35,200 --> 00:23:35,879
Speaker 2: earlier in the morning?

488
00:23:36,119 --> 00:23:39,840
Speaker 4: I got it's getting the car down fifth Avenue.

489
00:23:39,440 --> 00:23:42,199
Speaker 2: Is It's difficult, but if you want, you know, they

490
00:23:42,280 --> 00:23:44,919
Speaker 2: talk about the halves and the halves now talk to

491
00:23:44,960 --> 00:23:45,480
Speaker 2: my people.

492
00:23:45,720 --> 00:23:46,360
Speaker 5: This right here