Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Glad to have Senator
Speaker 1: Bill Haggerty with us right now. Senator, welcome back to
Speaker 1: Bloomberg TV and Radio. You've been calling, I believe, for
Speaker 1: rate cuts over the course of this regime. Are you
Speaker 1: now saying that it's the right move higher for longer
Speaker 1: when it comes to interest rates?
Speaker 2: Joe, actually haven't been calling for rate cuts at all.
Speaker 2: What I've been calling for is for the FED to
Speaker 2: remain data driven. I know Chairman pala is under a
Speaker 2: tremendous amount of political pressure to cut rates. My colleagues, Frankly,
Speaker 2: my colleagues from the other side of the aisle on
Speaker 2: the Democrat side, have put immense pressure on him to
Speaker 2: cut rates ahead of the November election. What I've been
Speaker 2: maintaining is that he needs to remain data driven because
Speaker 2: to the extent the FED gets involved or even gives
Speaker 2: the appearance of acting in a political fashion, it will
Speaker 2: destroy its credibility. Chairman Powell made it clear in his
Speaker 2: testimony with me that he understands that he's going to
Speaker 2: remain data driven. We see inflation moving, you know, direction downward,
Speaker 2: at least the rate of growth, but it's not where
Speaker 2: it's supposed to be, and I think he's going to
Speaker 2: make certain that this isn't a transitory bump before he
Speaker 2: takes any sort of action. I think that's the right
Speaker 2: thing for the FED to do. We need to make
Speaker 2: certain that we get inflation under control, and the most
Speaker 2: important thing right now is that they not allow themselves
Speaker 2: to be perceived as political actors.
Speaker 3: Well, Senator, if it really is about the data, and say,
Speaker 3: the data tomorrow and the data that we get in
Speaker 3: the intervening months do show that inflation is indeed cooling,
Speaker 3: that data could support the idea that the FED would
Speaker 3: cut rates. Are you essentially saying there is no way
Speaker 3: that they can do that before the election without it
Speaker 3: being seen as political, even if the indicators within the
Speaker 3: economy would support it.
Speaker 2: No, Kayley, I think you mentioned the indicators. They just
Speaker 2: have to support it, and I don't care when it
Speaker 2: happens as long as the data do support it. I'm
Speaker 2: just concerned that he's getting a lot of pressure. The
Speaker 2: FED chair is getting a lot of pressure right now
Speaker 2: that is political in nature, and I think he's got
Speaker 2: to stick to his guns. He gave you every indication
Speaker 2: in his testimony that that is precisely what he's going
Speaker 2: to do.
Speaker 1: It brings us to the issue of FED independence, Centator,
Speaker 1: something that you brought up in your remarks yesterday. Here's
Speaker 1: what you had to say during yesterday's testimony, and we'll
Speaker 1: follow up with a question now.
Speaker 2: As you know, the Federal Reserve was structured to shield
Speaker 2: monetary policy from political influence, and that independence has given
Speaker 2: the FED unique credibility in executing its mission. If the
Speaker 2: FOMC were influenced in any way by political calculation rather
Speaker 2: than economic data, it would severely damage the Fed's credibility
Speaker 2: as an independent institution. It would increase uncertainty in our markets,
Speaker 2: and it would jeopardize the dollar status as a global
Speaker 2: reserve currency.
Speaker 1: So FED independence is something we hear about every time
Speaker 1: we talked to White House official. Senator, and I'm glad
Speaker 1: that you went there. You're talking about this through the
Speaker 1: guise of Joe Biden's political interests here, but I wonder
Speaker 1: where you are on FED independence if there's another Trump administration,
Speaker 1: because we all remember the tweeting directly at the FED
Speaker 1: chair and now reading reports that the former president wants
Speaker 1: to be more directly in if he wins this election.
Speaker 1: And actually have a hand in setting interest rates. Does
Speaker 1: FED independence work for both sides of the.
Speaker 2: Aisle, Well, it definitely should, and I think the case
Speaker 2: is very clear that as long as the FED maintains
Speaker 2: data driven approach, that we will see certainty in the marketplace.
Speaker 2: The world looks to what the FED does and the
Speaker 2: approach that Chairman pal has taken, and I think that
Speaker 2: I'll maintain this over time. We need to make certain
Speaker 2: that the FED is perceived not as a political actor,
Speaker 2: but one that is driven by the data.
Speaker 3: Of course, it's not just the Fed's job to set
Speaker 3: monetary policy. They also act as a regulator of the
Speaker 3: banking system. And Chairman Powell did make a little news
Speaker 3: in your hearing yesterday in regard to Basel three and
Speaker 3: what the game will be. He suggested they're going to
Speaker 3: have to repropose it. What do you need to see
Speaker 3: in that reproposal?
Speaker 2: Well, frankly, I don't think we even require a submission.
Speaker 2: We've been through a massive stress test if you think
Speaker 2: about what happened through the pandemic, and for three consecutive
Speaker 2: years we were told that the system was adequately capitalized.
Speaker 2: We get a new Vice chair who comes in and
Speaker 2: makes a dramatic proposal that everyone in the industry told
Speaker 2: me would have been devastating in terms of our competitiveness
Speaker 2: as a nation. Our banking system is one of our
Speaker 2: true sources of competitive advantage here in America, and this
Speaker 2: would have placed us at a huge disadvantage relative to
Speaker 2: Europe and relative to other banking systems across the world.
Speaker 2: I'm delighted to see that the FED Board has realized
Speaker 2: that they've withdrawn it, or he's talking about withdrawing it
Speaker 2: and reproposing. At least he's indicated that the Chair has
Speaker 2: indicated that they're going to follow the Administrative Procedures Act,
Speaker 2: and that means they will have a reasonable amount of
Speaker 2: input from the industry, and I hope that they they'll
Speaker 2: take that fully into account.
Speaker 1: Donald Trump has said Senator that he wants to be
Speaker 1: the most crypto friendly president in American history. I guess
Speaker 1: that history doesn't go back too far if we want
Speaker 1: to draw a comparison. But what would that look like.
Speaker 2: Well, I've spent a good deal of time with the
Speaker 2: President talking about this industry and what we see, and
Speaker 2: I think a shared vision came through in our Republican
Speaker 2: platform just this week. We see crypto as a defining
Speaker 2: issue in the election this November, and I think as
Speaker 2: voters go to the polls, they're going to realize that
Speaker 2: as they cast their vote will determine the outcome of
Speaker 2: the crypto industry here in America, because on the Democrat
Speaker 2: side you have a group that are I think, very
Speaker 2: radically trying to centralize everything. They want central control. They
Speaker 2: don't like the decentralized nature of cryptocurrency. They don't like
Speaker 2: the decentralized nature of cryptotechnology. The innovation is going to happen.
Speaker 2: Cryptotechnology possesses tremendous potential for America. We have innovative DNA
Speaker 2: here that goes beyond any of the nation. We should
Speaker 2: capitalize on that. We'll create the ecosystem that would allow
Speaker 2: for that. And our platform basically says we're going to
Speaker 2: end the crackdown on the crypto industry. We're going to
Speaker 2: allow mining, we're going to create an ecosystem for innovation,
Speaker 2: we're going to allow decentralized control of these assets, and
Speaker 2: we're not going to allow the type of surveillance that
Speaker 2: the Democrat solution would support.
Speaker 3: Well, it's interesting, Senator to hear a little bit about
Speaker 3: the conversations you've had with the former president on that subject,
Speaker 3: and knowing that you've served as his ambassador to Japan,
Speaker 3: I wonder what conversations you've had with him about the
Speaker 3: US's relationship with allies As we have the NATO summit
Speaker 3: underway here in Washington, do you expect that the nature
Speaker 3: of US participation in that alliance will be changed in
Speaker 3: any way if he does indeed win in November. Our
Speaker 3: allies right to be concerned about that as they meet
Speaker 3: this week.
Speaker 2: Kaylee, I've met with a number of our allies during
Speaker 2: the course of this week because they realize I'm the
Speaker 2: only former member of the Trump administration that serves in
Speaker 2: the United States Senate, and I've been very clear with them,
Speaker 2: America First does not mean America alone. But what we
Speaker 2: want to see is our allies standing strong with us.
Speaker 2: And what we've seen in NATO is that they've responded
Speaker 2: to President Trump's pressure. They've stepped up their investment. They
Speaker 2: need to do more. I think President Trump is going
Speaker 2: to be very clear about that. We don't hesitate to
Speaker 2: criticize our allies when it's time for them to step up.
Speaker 2: We stand shoulder to shoulder with them at the same
Speaker 2: time when the need arises. That's what I've conveyed. That's
Speaker 2: what I think we'll see is the Natos Nateto group
Speaker 2: continues to visit me here this week. That's a message
Speaker 2: I'm going to be very consistent in delivering, all right.
Speaker 3: Republican Senator Bill Haggerty of Tennessee, member of the Senate
Speaker 3: Form Relations Committee and the Banking Committee as well, thank
Speaker 3: you so much for joining us.