1 00:00:00,320 --> 00:00:03,279 Speaker 1: And I'm joined now by Lorettamester, who is the president 2 00:00:03,480 --> 00:00:06,240 Speaker 1: of the Federal Reserve Bank of Cleveland and at least 3 00:00:06,240 --> 00:00:09,400 Speaker 1: for half a year, a voter on the Open Market Committee. 4 00:00:09,440 --> 00:00:11,640 Speaker 1: We'll ask about that part a little bit later, but 5 00:00:11,720 --> 00:00:16,000 Speaker 1: thank you for joining us today. CPI day. We got 6 00:00:16,040 --> 00:00:19,520 Speaker 1: mixed news, a little bit of an increase in the headline, 7 00:00:19,680 --> 00:00:22,759 Speaker 1: a little bit of a decrease in the core. What 8 00:00:22,840 --> 00:00:23,840 Speaker 1: do you take away from it? 9 00:00:24,800 --> 00:00:28,400 Speaker 2: Well, Mike, first, thanks for having me. It doesn't really 10 00:00:28,480 --> 00:00:31,800 Speaker 2: change my view of where we are. I think, you know, 11 00:00:31,800 --> 00:00:34,080 Speaker 2: if you think about where we start the year, the 12 00:00:34,159 --> 00:00:38,360 Speaker 2: economy and monetary policy are both in a good place. 13 00:00:38,840 --> 00:00:42,040 Speaker 2: Inflation today is in a much better place than a 14 00:00:42,120 --> 00:00:46,560 Speaker 2: year ago, and we've really seen this discernible progress. 15 00:00:46,120 --> 00:00:46,879 Speaker 3: On the inflation. 16 00:00:46,960 --> 00:00:49,920 Speaker 2: But the December CPI report shows that the job isn't 17 00:00:49,960 --> 00:00:53,600 Speaker 2: done yet and that we're on the foc as you know, 18 00:00:53,680 --> 00:00:57,480 Speaker 2: are committed to finish the job of getting inflation back 19 00:00:57,480 --> 00:01:00,320 Speaker 2: to our two percent target. But the important thing to 20 00:01:00,360 --> 00:01:04,040 Speaker 2: realize is that that disinflation that's been happening has happened 21 00:01:04,080 --> 00:01:06,640 Speaker 2: while the labor market conditions remain healthy. 22 00:01:06,760 --> 00:01:11,160 Speaker 3: So that's given us an opportunity. I think to really. 23 00:01:11,360 --> 00:01:14,160 Speaker 2: You know, look at where the economy is going, how 24 00:01:14,200 --> 00:01:17,440 Speaker 2: it's going to evolve at the beginning of the year, 25 00:01:17,560 --> 00:01:21,959 Speaker 2: and really assess right whether the economy is evolving as 26 00:01:22,640 --> 00:01:25,400 Speaker 2: we expect it to. My own forecast is that we'll 27 00:01:25,440 --> 00:01:28,560 Speaker 2: continue to see inflation move down this year. 28 00:01:28,600 --> 00:01:30,800 Speaker 3: We won't get to our two percent goal this year. 29 00:01:30,640 --> 00:01:36,400 Speaker 2: But we'll see continued progress, and we'll see continued progress 30 00:01:36,560 --> 00:01:38,880 Speaker 2: in the product side of the market of getting things 31 00:01:38,880 --> 00:01:42,279 Speaker 2: into better balance, and on the labor market, getting supply 32 00:01:42,319 --> 00:01:43,959 Speaker 2: and demand into better balance there. 33 00:01:44,040 --> 00:01:45,319 Speaker 3: So I think we're in a. 34 00:01:45,280 --> 00:01:49,920 Speaker 2: Good spot to really assess conditions as they come in and. 35 00:01:50,320 --> 00:01:52,200 Speaker 3: To really evaluate. 36 00:01:53,040 --> 00:01:56,520 Speaker 2: The balance of risks around both of parts of our mandate. 37 00:01:56,720 --> 00:02:00,520 Speaker 2: And so I'm kind of you know, obviously we don't 38 00:02:00,520 --> 00:02:04,920 Speaker 2: want to see the progress in inflation saw out, but 39 00:02:05,040 --> 00:02:08,480 Speaker 2: I don't think this report suggests that's happening. It just 40 00:02:08,520 --> 00:02:11,919 Speaker 2: suggests we have more work to do and we're committed 41 00:02:11,919 --> 00:02:12,359 Speaker 2: to do it. 42 00:02:13,000 --> 00:02:16,280 Speaker 1: Housing is one of the more interest sensitive sectors, and 43 00:02:16,360 --> 00:02:20,560 Speaker 1: yet shelter prices have gone up. Do you have a 44 00:02:20,639 --> 00:02:25,320 Speaker 1: problem with housing and are the delayed lags maybe going 45 00:02:25,360 --> 00:02:27,440 Speaker 1: to hit it? What's happening there? 46 00:02:27,880 --> 00:02:30,560 Speaker 2: I mean housing is complicated because of two things that 47 00:02:30,560 --> 00:02:34,799 Speaker 2: have happened. Obviously, supply has been constrained. This was before 48 00:02:34,840 --> 00:02:37,640 Speaker 2: the pandemic. Even there was constrained supply of housing, and 49 00:02:37,680 --> 00:02:41,239 Speaker 2: now the pandemic exacerbated that. At the same time, demand 50 00:02:41,320 --> 00:02:44,799 Speaker 2: for housing change during the pandemic as well as people wanted. 51 00:02:44,480 --> 00:02:47,600 Speaker 3: To move or have a larger house. 52 00:02:47,639 --> 00:02:51,760 Speaker 2: So the typical play of higher interist rates in the 53 00:02:51,800 --> 00:02:56,120 Speaker 2: housing market has been affected by supply and demand conditions 54 00:02:56,120 --> 00:02:58,880 Speaker 2: that are not typical. I do think we're going to 55 00:02:58,960 --> 00:03:02,639 Speaker 2: need to see how inflation continue to move down. We're 56 00:03:02,639 --> 00:03:05,360 Speaker 2: going to need see goods inflation continue to move down. 57 00:03:05,400 --> 00:03:09,880 Speaker 2: We're going to need to see shelter core shelter x 58 00:03:09,960 --> 00:03:12,639 Speaker 2: housing continue to move down inflation, and that all three 59 00:03:12,639 --> 00:03:15,920 Speaker 2: of those components are going to need to see more progress. 60 00:03:16,080 --> 00:03:18,680 Speaker 2: And there's research here at the Cleveland FED that suggests 61 00:03:19,320 --> 00:03:21,120 Speaker 2: you can't take one of those out. We're going to 62 00:03:21,160 --> 00:03:23,560 Speaker 2: have to see that, and we'll likely need to see 63 00:03:23,600 --> 00:03:25,239 Speaker 2: some adjustment in wages. 64 00:03:25,840 --> 00:03:26,520 Speaker 3: Although we have. 65 00:03:26,560 --> 00:03:31,079 Speaker 2: Seen wage growth come down again to be much more 66 00:03:31,080 --> 00:03:33,560 Speaker 2: in line with a two percent inflation. 67 00:03:33,680 --> 00:03:36,440 Speaker 1: There are some people who look at the wage numbers 68 00:03:36,440 --> 00:03:40,119 Speaker 1: that we saw in the employment numbers last Friday and 69 00:03:40,320 --> 00:03:44,040 Speaker 1: the CPI today in terms of real earnings and the 70 00:03:44,080 --> 00:03:47,440 Speaker 1: Atlanta Fed wage tracker five point seven percent. One of 71 00:03:47,440 --> 00:03:50,920 Speaker 1: the chances that wages are going to push inflation back 72 00:03:51,000 --> 00:03:53,240 Speaker 1: up again, well, you. 73 00:03:53,200 --> 00:03:57,880 Speaker 2: Know, you talk to district contacts and wage setters and 74 00:03:57,920 --> 00:04:01,000 Speaker 2: what they do say is there's been this turnable. Like 75 00:04:01,680 --> 00:04:04,720 Speaker 2: the malabor market they would characterize is still tight, but 76 00:04:04,880 --> 00:04:08,000 Speaker 2: it's not nearly as tight as it was before. There's 77 00:04:08,080 --> 00:04:12,080 Speaker 2: still you know, jobs that demand higher wages, but the 78 00:04:12,200 --> 00:04:15,800 Speaker 2: rate of increase of wages has come down, so again 79 00:04:16,240 --> 00:04:18,560 Speaker 2: we see the adjustment coming. You know, if you look 80 00:04:18,560 --> 00:04:20,880 Speaker 2: at a lot at different indicators in the labor market, 81 00:04:21,240 --> 00:04:23,280 Speaker 2: what you see is that supply and a man are 82 00:04:23,320 --> 00:04:25,799 Speaker 2: coming into better balance. Part of that supply, the labor 83 00:04:25,839 --> 00:04:28,320 Speaker 2: force participation rate has gone up. People are coming back 84 00:04:28,360 --> 00:04:31,120 Speaker 2: into the labor market, which is great. I think that's 85 00:04:31,160 --> 00:04:35,600 Speaker 2: a really good development and that's helped us in a 86 00:04:35,680 --> 00:04:38,359 Speaker 2: number of ways because it basically we've been able to 87 00:04:38,400 --> 00:04:42,400 Speaker 2: do the disinflation at the same time labor market conditions 88 00:04:42,400 --> 00:04:44,520 Speaker 2: remain healthy, and that's made us not. 89 00:04:44,520 --> 00:04:47,440 Speaker 3: Have to face a hard trade off there. We knew 90 00:04:47,480 --> 00:04:49,719 Speaker 3: what the job was. The job one. 91 00:04:49,760 --> 00:04:53,760 Speaker 2: Was to get that inflation that was exorbitant under control. 92 00:04:54,040 --> 00:04:56,320 Speaker 3: We have had good progress there, but we just have 93 00:04:56,440 --> 00:04:57,440 Speaker 3: more work to do there. 94 00:04:57,560 --> 00:05:00,279 Speaker 2: But this year is going to be one about really 95 00:05:00,800 --> 00:05:04,440 Speaker 2: looking at the balance now between both parts of our mandate, 96 00:05:04,600 --> 00:05:06,480 Speaker 2: and so we're going to be focused on and I 97 00:05:06,560 --> 00:05:09,760 Speaker 2: certainly be focused on making sure that we continue to 98 00:05:09,760 --> 00:05:12,640 Speaker 2: get inflation on a sustainable and time we've had back 99 00:05:12,680 --> 00:05:17,120 Speaker 2: to two percent while we can maintain healthy labor market conditions. 100 00:05:17,400 --> 00:05:20,039 Speaker 1: You mentioned district contacts. I'm wondering what they're telling you 101 00:05:20,080 --> 00:05:23,120 Speaker 1: about their pricing power now, whether they intend to keep 102 00:05:23,160 --> 00:05:27,800 Speaker 1: trying to get some additional price margin as we go along, 103 00:05:27,880 --> 00:05:31,160 Speaker 1: or whether they have tapped out on price increases because 104 00:05:31,200 --> 00:05:33,400 Speaker 1: customers are pushing back, so. 105 00:05:33,360 --> 00:05:36,839 Speaker 2: We hear mix as you would expect, right, So we 106 00:05:37,000 --> 00:05:43,680 Speaker 2: definitely have had our contexts tell us that pricing pressures 107 00:05:44,200 --> 00:05:46,800 Speaker 2: have eased, and from their sign in terms of their 108 00:05:46,800 --> 00:05:50,880 Speaker 2: input prices that come down, but also their ability to 109 00:05:50,880 --> 00:05:56,880 Speaker 2: pass on past increases has been it's harder now, right, 110 00:05:56,880 --> 00:06:01,800 Speaker 2: customers are pushing back, not uniform, so some firms have 111 00:06:01,880 --> 00:06:05,960 Speaker 2: been able to maintain pricing power, but there's fewer firms 112 00:06:05,960 --> 00:06:09,159 Speaker 2: that say, you know, we're not going to push back. 113 00:06:09,279 --> 00:06:12,080 Speaker 2: They have to sort of work to get those price 114 00:06:12,160 --> 00:06:14,600 Speaker 2: increases in. But at the same time, they've been able 115 00:06:14,640 --> 00:06:17,080 Speaker 2: to maintain their margins because you've seen goods prices and 116 00:06:17,120 --> 00:06:21,240 Speaker 2: input prices come down, and so you know, wages haven't 117 00:06:21,240 --> 00:06:24,200 Speaker 2: come down that much, but in terms of other input costs, 118 00:06:24,240 --> 00:06:26,479 Speaker 2: they have come down, so firms have been able to 119 00:06:26,520 --> 00:06:27,599 Speaker 2: maintain their margins. 120 00:06:27,920 --> 00:06:30,919 Speaker 1: We're going to mix pictures as well from indicators like 121 00:06:31,240 --> 00:06:34,240 Speaker 1: initial jobless claims, which have been flat on a seasonally 122 00:06:34,240 --> 00:06:37,159 Speaker 1: adjusted basis, but on a non seasonally adjusted basis have 123 00:06:37,279 --> 00:06:39,960 Speaker 1: spiked in the last few weeks. I'm wondering what your 124 00:06:40,000 --> 00:06:42,760 Speaker 1: business contacts in the district are telling you about their 125 00:06:42,800 --> 00:06:46,120 Speaker 1: plans for their labor force. Are they hiring, are they 126 00:06:46,680 --> 00:06:49,400 Speaker 1: status quo, or are they beginning to think they might 127 00:06:49,440 --> 00:06:50,359 Speaker 1: have to let some people go. 128 00:06:51,360 --> 00:06:54,640 Speaker 2: So we're not hearing much at all about letting people go. 129 00:06:54,760 --> 00:06:56,800 Speaker 2: I mean, you do hear from bankers that you know, 130 00:06:56,880 --> 00:06:59,040 Speaker 2: in areas where they're not making a lot of loans 131 00:06:59,040 --> 00:07:02,520 Speaker 2: like mortgages, they've already reduced staff there, But there isn't 132 00:07:02,520 --> 00:07:05,760 Speaker 2: the kind of staff productions that one would expect to 133 00:07:05,880 --> 00:07:08,320 Speaker 2: see if the economy was slowing materially. 134 00:07:08,480 --> 00:07:10,520 Speaker 3: A lot of our firms are. 135 00:07:10,440 --> 00:07:13,560 Speaker 2: Still looking for workers. They're still looking for workers, especially 136 00:07:13,600 --> 00:07:14,440 Speaker 2: with hard. 137 00:07:14,320 --> 00:07:15,480 Speaker 3: To define skills. 138 00:07:15,920 --> 00:07:20,280 Speaker 2: But they do say there's more applications and that fewer 139 00:07:20,600 --> 00:07:23,800 Speaker 2: of their staff are quitting to go look for another job, 140 00:07:23,880 --> 00:07:26,000 Speaker 2: so the conditions are still healthy. 141 00:07:26,840 --> 00:07:29,760 Speaker 3: They still have plans to hire in areas where they 142 00:07:29,800 --> 00:07:31,280 Speaker 3: need workers. 143 00:07:31,640 --> 00:07:34,480 Speaker 2: And they don't really have plans to lay lay off 144 00:07:34,560 --> 00:07:36,280 Speaker 2: any workers at this point there. 145 00:07:36,320 --> 00:07:38,720 Speaker 3: You know, their order books still look pretty decent. 146 00:07:39,440 --> 00:07:41,680 Speaker 2: You know, one thing that did happen is because it 147 00:07:41,720 --> 00:07:45,600 Speaker 2: was so hard to find workers and all the effort 148 00:07:45,600 --> 00:07:48,200 Speaker 2: that went into We do still continue to hear from 149 00:07:48,240 --> 00:07:50,800 Speaker 2: firms that say, we're going to do what we have 150 00:07:50,920 --> 00:07:54,640 Speaker 2: to do to keep keep our workers on staff because 151 00:07:54,680 --> 00:07:57,800 Speaker 2: it's just so costly to the firm if we lose 152 00:07:57,840 --> 00:07:59,720 Speaker 2: workers and then we need to go back into the market. 153 00:07:59,760 --> 00:08:01,280 Speaker 3: Told so that's a good thing in. 154 00:08:01,200 --> 00:08:04,160 Speaker 2: The labor market in terms of keeping people attached to 155 00:08:04,160 --> 00:08:06,760 Speaker 2: the labor market. And that's why I have, you know, 156 00:08:06,840 --> 00:08:09,760 Speaker 2: I in my own you know baseline forecast. 157 00:08:09,800 --> 00:08:12,280 Speaker 3: I have the unemployment rate which is extremely low. 158 00:08:12,240 --> 00:08:15,360 Speaker 2: Right now, kicking off a little bit but not really 159 00:08:15,840 --> 00:08:17,440 Speaker 2: moving of that appreciably. 160 00:08:17,480 --> 00:08:20,280 Speaker 3: And that's what I mean by we can get inflation down. 161 00:08:22,080 --> 00:08:26,640 Speaker 2: By continuing to keep some restrictiveness in our monetary policy, 162 00:08:26,720 --> 00:08:30,160 Speaker 2: but we can also have the labor market remain healthy 163 00:08:30,200 --> 00:08:30,800 Speaker 2: as we do that. 164 00:08:31,840 --> 00:08:34,120 Speaker 1: Janet Yellen, you know her, and she knows a little 165 00:08:34,160 --> 00:08:37,840 Speaker 1: something about monetary policy. I said last week that the 166 00:08:38,000 --> 00:08:42,000 Speaker 1: economy has achieved essentially a soft landing. Would you agree 167 00:08:42,080 --> 00:08:43,000 Speaker 1: or would you push back. 168 00:08:44,280 --> 00:08:47,600 Speaker 2: I think we're aiming to achieve a soft landing, and 169 00:08:47,640 --> 00:08:50,240 Speaker 2: I think the incoming information that we've seen and how 170 00:08:50,280 --> 00:08:53,960 Speaker 2: the economy has evolved has been consistent with that. But 171 00:08:54,120 --> 00:08:56,840 Speaker 2: you know, when you look out, there are some risks 172 00:08:56,880 --> 00:09:00,920 Speaker 2: around the forecast. And of course my f is basically 173 00:09:00,960 --> 00:09:03,920 Speaker 2: a soft landing, and so you wouldn't want to say, Okay, 174 00:09:04,160 --> 00:09:07,959 Speaker 2: job done, We're on a good path to a soft landing. 175 00:09:07,960 --> 00:09:12,480 Speaker 3: It's it's basically made it. We just have to keep 176 00:09:12,520 --> 00:09:13,280 Speaker 3: attuned to the. 177 00:09:13,240 --> 00:09:16,400 Speaker 2: Fact that, you know, we need to calibrate our monetary 178 00:09:16,480 --> 00:09:20,320 Speaker 2: policy so that we are achieving the soft landing and 179 00:09:20,360 --> 00:09:22,880 Speaker 2: we have to be attuned to risks around that and 180 00:09:23,000 --> 00:09:25,400 Speaker 2: risk of both sides and remanding. I mean, in some 181 00:09:25,440 --> 00:09:28,600 Speaker 2: sense last year it was the inflation part of the. 182 00:09:28,600 --> 00:09:30,440 Speaker 3: Mandate had to have our focus. 183 00:09:30,800 --> 00:09:34,520 Speaker 2: Now as the economy has come into better balance, right, 184 00:09:34,600 --> 00:09:38,280 Speaker 2: the risks have become more in balance as well, in. 185 00:09:38,320 --> 00:09:40,480 Speaker 3: Terms of both sides of remanding. And I think that's 186 00:09:40,520 --> 00:09:43,360 Speaker 3: the job this year, is to make sure that we're 187 00:09:43,400 --> 00:09:44,280 Speaker 3: calibrating our. 188 00:09:44,240 --> 00:09:48,800 Speaker 2: Policy to maintain healthy labor markets even as we continue 189 00:09:49,360 --> 00:09:52,600 Speaker 2: the process to get inflation back to two percent. 190 00:09:52,920 --> 00:09:56,000 Speaker 1: Okay, if you're calibrating your policy, how do you calibrate it? 191 00:09:56,480 --> 00:09:59,360 Speaker 1: Market thinks that May is the most likely month, but 192 00:09:59,400 --> 00:10:01,560 Speaker 1: there's still a bit a good chance that you might 193 00:10:01,640 --> 00:10:03,120 Speaker 1: cut rates in March. 194 00:10:03,920 --> 00:10:07,280 Speaker 2: Where are you well, I mean, it's hard to predict 195 00:10:07,280 --> 00:10:10,400 Speaker 2: the future, as you know, and it's really. 196 00:10:10,160 --> 00:10:12,520 Speaker 3: Going to be dependent on how the economy evolves. 197 00:10:12,600 --> 00:10:16,880 Speaker 2: I think March is probably too early in my estimation 198 00:10:18,280 --> 00:10:22,000 Speaker 2: for a rate decline because I think we need to 199 00:10:22,040 --> 00:10:26,040 Speaker 2: see some more evidence. I think the December CPI report 200 00:10:26,200 --> 00:10:28,920 Speaker 2: just shows there's more work to do, and that work 201 00:10:29,000 --> 00:10:32,199 Speaker 2: is going to take restrictive monetary policy. But I do 202 00:10:32,280 --> 00:10:37,440 Speaker 2: think that as we see continuing disinflation, and we could 203 00:10:37,440 --> 00:10:41,320 Speaker 2: get more evidence that is convincing that inflation is on 204 00:10:41,920 --> 00:10:45,560 Speaker 2: a sustainable, dour path to two percent, then I think 205 00:10:45,600 --> 00:10:48,560 Speaker 2: you know, we'll have that conversation about, Okay, is it 206 00:10:48,640 --> 00:10:52,000 Speaker 2: time now when we look at inflation but also importantly 207 00:10:52,000 --> 00:10:57,600 Speaker 2: inflation expectations, Right, is it time now to move the 208 00:10:57,679 --> 00:11:03,520 Speaker 2: inflation move our fitfunds rate when monetary policies start that process. 209 00:11:03,520 --> 00:11:05,120 Speaker 3: Of moving it back to a neutral rate. 210 00:11:05,160 --> 00:11:08,200 Speaker 2: And what I would say is I do sort of 211 00:11:08,240 --> 00:11:12,680 Speaker 2: the soft landing scenario right as being the most likely, 212 00:11:12,760 --> 00:11:14,440 Speaker 2: but I do think there's risks around it, and we 213 00:11:14,480 --> 00:11:15,319 Speaker 2: have to be attuned to. 214 00:11:15,280 --> 00:11:16,480 Speaker 3: Both sides of the mandate. 215 00:11:16,640 --> 00:11:21,440 Speaker 2: So a reduction in the funds rate that is because 216 00:11:21,520 --> 00:11:25,680 Speaker 2: we try to keep monetary policy well calibrated to what's 217 00:11:25,720 --> 00:11:27,880 Speaker 2: happening on the inflation side of the mandate. 218 00:11:27,600 --> 00:11:29,160 Speaker 3: And epployment side. 219 00:11:29,360 --> 00:11:31,880 Speaker 2: That's different than having to cut the rate because we're 220 00:11:31,880 --> 00:11:36,439 Speaker 2: heading into a recession, so you know, rate it decreases 221 00:11:36,520 --> 00:11:40,880 Speaker 2: that keep the real rate, you know, not from rising. 222 00:11:41,000 --> 00:11:45,120 Speaker 2: So when inflation and inflation expectations begin to come down, right, 223 00:11:45,160 --> 00:11:48,240 Speaker 2: if you didn't do anything to your funds rate, you'd 224 00:11:48,240 --> 00:11:52,480 Speaker 2: actually be sort of, you know, passively saying a tighter policy. 225 00:11:52,679 --> 00:11:54,480 Speaker 2: That's the part of the evaluation that we're going to 226 00:11:54,520 --> 00:11:57,400 Speaker 2: have coming up. But right now, the evaluation I think 227 00:11:57,559 --> 00:12:01,640 Speaker 2: is the policy evaluation is how long are we needing 228 00:12:01,679 --> 00:12:06,280 Speaker 2: to keep industrates and ontarry policy restrictive stance. The next 229 00:12:06,320 --> 00:12:09,960 Speaker 2: phase will be about you know, okay, is it now 230 00:12:10,160 --> 00:12:13,600 Speaker 2: we've seen the conditions we need to start reducing the 231 00:12:13,640 --> 00:12:16,360 Speaker 2: funds rate and reducing our funds rate back to a 232 00:12:16,440 --> 00:12:17,400 Speaker 2: more neutral stance. 233 00:12:17,480 --> 00:12:19,840 Speaker 3: I don't think we're there yet. I would like to see. 234 00:12:19,640 --> 00:12:23,760 Speaker 2: More evidence that the economy is progressing as we expected to, 235 00:12:24,400 --> 00:12:26,800 Speaker 2: as I expected to, before we can do that. 236 00:12:27,720 --> 00:12:30,600 Speaker 1: Well, let me ask you this in terms of timing. 237 00:12:30,720 --> 00:12:33,640 Speaker 1: Lori Logan says the FED should begin to talk about 238 00:12:33,720 --> 00:12:37,800 Speaker 1: tapering QT. John Williams says, no, which side would you 239 00:12:37,840 --> 00:12:38,080 Speaker 1: be on? 240 00:12:39,280 --> 00:12:41,360 Speaker 2: Well, you know, I can never say we shouldn't be 241 00:12:41,440 --> 00:12:44,040 Speaker 2: talking about some issue right because I think this is 242 00:12:44,080 --> 00:12:48,240 Speaker 2: something that's going to be coming up. You know, John, 243 00:12:48,400 --> 00:12:52,880 Speaker 2: I think rightly pointed out when he gave his remarks 244 00:12:52,960 --> 00:12:58,360 Speaker 2: earlier this week that the you know, the balance sheet 245 00:12:58,360 --> 00:13:01,800 Speaker 2: reduction is going as it's been, and we did announce 246 00:13:01,840 --> 00:13:04,560 Speaker 2: when we announced that start of that in May and 247 00:13:04,600 --> 00:13:05,679 Speaker 2: the plan in May. 248 00:13:05,480 --> 00:13:08,120 Speaker 3: Twenty twenty two, that at some point. 249 00:13:08,000 --> 00:13:11,920 Speaker 2: As the balance sheet and reserves come down, we're going 250 00:13:12,000 --> 00:13:14,679 Speaker 2: to want to sort of reduce the pace of the 251 00:13:14,720 --> 00:13:16,559 Speaker 2: reduction and normalize. 252 00:13:16,600 --> 00:13:17,719 Speaker 3: But we're still we. 253 00:13:17,679 --> 00:13:20,480 Speaker 2: Still have a lot of reserves in the system, so 254 00:13:20,520 --> 00:13:21,120 Speaker 2: we don't. 255 00:13:20,920 --> 00:13:23,320 Speaker 3: Have to do that eminently at all. 256 00:13:23,480 --> 00:13:26,760 Speaker 2: I think there's time and we'll be I'm sure this 257 00:13:26,840 --> 00:13:27,760 Speaker 2: year will be. 258 00:13:27,640 --> 00:13:29,360 Speaker 3: When we start having the conversations. 259 00:13:29,360 --> 00:13:31,880 Speaker 2: So what that plan would look like, and as we 260 00:13:31,960 --> 00:13:36,280 Speaker 2: also committed to is we'll make sure that market participants 261 00:13:36,320 --> 00:13:39,240 Speaker 2: in the public know what the plan is well before 262 00:13:39,520 --> 00:13:40,320 Speaker 2: we implement it. 263 00:13:40,640 --> 00:13:43,520 Speaker 1: Well we can certainly help you with that. We want 264 00:13:43,559 --> 00:13:45,960 Speaker 1: to welcome you back quite often between now and the 265 00:13:46,040 --> 00:13:48,600 Speaker 1: end of June when you leave the FED. Thank you 266 00:13:48,720 --> 00:13:52,120 Speaker 1: very much to Larettevester, the president of the Federal Reserve 267 00:13:52,200 --> 00:13:53,599 Speaker 1: Bank of Cleveland.