WEBVTT - Richard Clarida on the Fed Decision

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<v Speaker 1>This is a difficult decision for this FED today, the

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<v Speaker 1>hardest in the last twelve months by far. Joining us

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<v Speaker 1>now to discuss it is Richard Clarity, of the Global

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<v Speaker 1>Economic Advisor at PIMCO and former Vice chair of the

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<v Speaker 1>Federal Reserve. Rich let's start here, How on earth do

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<v Speaker 1>you expect them to approach this decision today? Well, I

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<v Speaker 1>think that they're juggling a lot of competing data and

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<v Speaker 1>competing motives, but ultimately inflations too high, and I think

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<v Speaker 1>they will come down. We'll know in a couple of

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<v Speaker 1>minutes that they'll come down on the side of doing

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<v Speaker 1>a twenty five basis point high. I think if they

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<v Speaker 1>do that, I think it'll be a dovish twenty five.

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<v Speaker 1>I think they're going to want to preserve optionality, and

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<v Speaker 1>almost certainly, either in the statement or the press conference discussion,

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<v Speaker 1>will acknowledge the uncertainty and probably the increased tightening of

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<v Speaker 1>financial condition. So I think that's where they'll land. Let's

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<v Speaker 1>talk through it piece by piece. You've got the decision,

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<v Speaker 1>but that's only a small part of it. As you've indicated,

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<v Speaker 1>You've got the statement, the forecast, a news conference. Rich

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<v Speaker 1>In the statement, there is this line here about ongoing increases.

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<v Speaker 1>Do you expect that to disappear in about twenty five minutes?

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<v Speaker 1>I think yeah, I lean in that direction. I think

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<v Speaker 1>it will. I think it will. Certainly, if they want

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<v Speaker 1>to go in the dovish twenty five direction, I think

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<v Speaker 1>it'll disappear or be modified in some way. Rich. Do

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<v Speaker 1>you think that that's the likely outcome? We were speaking

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<v Speaker 1>earlier today with Betsy Duke, a former Fed governor, who

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<v Speaker 1>said that she thinks the big surprise is going to

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<v Speaker 1>come with a statement of economic projections where they increase

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<v Speaker 1>them in tandem with what they said they were going

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<v Speaker 1>to do, what seems like an eternity ago. Yeah, you know,

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<v Speaker 1>so much has happened in three months. So much has

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<v Speaker 1>happened in three or four days. All eyes on the SEP.

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<v Speaker 1>That being said, Lisa, you know, sometimes Fed chairs, whether

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<v Speaker 1>or not they be Bernanke, Yellen or Pal, can distance

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<v Speaker 1>themselves from an SEP that they're not aligned with, depending

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<v Speaker 1>on where the SEP lands today and the message the

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<v Speaker 1>chair wants to send. We could see that as well.

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<v Speaker 1>It's very finally balanced. I think only two of the eighteen.

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<v Speaker 1>Remember lel Brand is now off the White House only

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<v Speaker 1>two of the eighteen dots would need to shift up

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<v Speaker 1>in order to get those the overall median dot to

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<v Speaker 1>shift up. So I think it is very finally balanced

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<v Speaker 1>on the projections. What would you do, Rich, if you

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<v Speaker 1>were on the FED, what would you vote for? I

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<v Speaker 1>would go for the twenty five. I think that inflation

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<v Speaker 1>is too high. I think that if I think that

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<v Speaker 1>it would be, it will be challenging to pull off

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<v Speaker 1>a pause right here in particular. You know, the whole

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<v Speaker 1>issue that can come up we confronted three years ago.

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<v Speaker 1>You know, what do they know that we don't know?

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<v Speaker 1>So I do think they'll go for the twenty five again.

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<v Speaker 1>I enjoy doing your show thirty minutes before because we'll

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<v Speaker 1>find out where we land. Maybe I'll do a postgame someday, Rich,

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<v Speaker 1>we should do a post game stick around. We can

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<v Speaker 1>do that today. I want to follow up just on

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<v Speaker 1>the psychology of this. We talked about this in the

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<v Speaker 1>last couple of weeks at the FED. Did they really

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<v Speaker 1>know things we don't know about the financial system? When

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<v Speaker 1>chem And pass sits there in that news conference, it's

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<v Speaker 1>just under an affrom Now, Rich, does he know things

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<v Speaker 1>that we don't know about what's happening in the banking

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<v Speaker 1>system right now? Well level, sure, the FED directly regulates

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<v Speaker 1>and supervises thousands of banks, that has supervisors and examiners,

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<v Speaker 1>you know, on the grounds as it were. Not all

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<v Speaker 1>of that goes up, you know, on a daily basis

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<v Speaker 1>to the chair, to the governors or the vice chair.

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<v Speaker 1>But sure, part of what part of what the Jet

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<v Speaker 1>Fed does is that it supervises bank holding companies, So

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<v Speaker 1>it knows a lot about the banking system for sure,

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<v Speaker 1>an individual bank. You might need a PhD in psychology

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<v Speaker 1>to understand some of this rich but I do wonder

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<v Speaker 1>what the psychology if the decision is today. Do you

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<v Speaker 1>think they look at this and have an understanding that

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<v Speaker 1>for some people out there, the more duvish they are,

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<v Speaker 1>the more worried. Some other people might be, well, well,

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<v Speaker 1>that's right. And I do think Lisa and John that

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<v Speaker 1>the reality is is that, you know, initial conditions matter.

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<v Speaker 1>If we were several years ago and we not had

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<v Speaker 1>this overshoot in inflation, I think the power or the

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<v Speaker 1>the yelling or the Bernankee Fed could well could well

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<v Speaker 1>pause at a meeting like this. But the history is

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<v Speaker 1>what it is, which is inflation is too high. The

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<v Speaker 1>data since the beginning of the year has been too high.

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<v Speaker 1>And remember the Fed acted very boldly just days ago

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<v Speaker 1>to put in place a very appropriate, but bold liquidity program,

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<v Speaker 1>and I think they believe that that can address the

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<v Speaker 1>immediate issues in the banking system, the so called separation principle.

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<v Speaker 1>They'd like to use rates to address inflation and use

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<v Speaker 1>their other tools to address financial stability concerns. How do

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<v Speaker 1>they finesse the byproduct of this, which is a three

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<v Speaker 1>hundred billion dollar expansion of their balance sheet? Well, I

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<v Speaker 1>don't know if you can, Lisa finance a three hundred

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<v Speaker 1>billion The balance sheet is actually now moving in There

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<v Speaker 1>are different forces on the balance sheet. You have the

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<v Speaker 1>facilities which inject liquidity. The Treasury is running down its

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<v Speaker 1>TGA account that's adding liquidity. On the other hand, you

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<v Speaker 1>have this reverse repurchase facility that's draining liquility, and then

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<v Speaker 1>you have QT. So there are a lot of moving

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<v Speaker 1>parts here. I think today will be status quo. I

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<v Speaker 1>would be surprised if we see an adjustment in those parameters.

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<v Speaker 1>But over time, if this liquidity provision with these new programs,

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<v Speaker 1>then at some point they will probably have to address it.

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<v Speaker 1>Tiffany Wilding of PIMCO came out and said that regardless

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<v Speaker 1>of whether they go twenty five basis points or nothing,

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<v Speaker 1>this is probably going to be the end of the

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<v Speaker 1>rate hiking cycle. Do you agree with that? And what

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<v Speaker 1>is going to be the justification of that? If basically

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<v Speaker 1>we heard from if A chair J. Powell just weeks

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<v Speaker 1>ago that they're still pretty far away from their goal, well,

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<v Speaker 1>they are far away from their goals. I think it

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<v Speaker 1>will be data dependent. It sounds tripe, but I think

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<v Speaker 1>in this case it's true. One thing I would say

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<v Speaker 1>is that whatever you thought about the tightening of financial

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<v Speaker 1>conditions before SVB and Credit Swiss and the like, clearly

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<v Speaker 1>we're going to have tighter financial conditions going further and

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<v Speaker 1>historically when bank lending is impacted, as it will be,

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<v Speaker 1>I think going forward that's going to slow the economy,

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<v Speaker 1>and I think the Committee will take that into account.

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<v Speaker 1>The real question is when does that start to show

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<v Speaker 1>up in the data and on their radar screen. So

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<v Speaker 1>what do you think he'll say if he's asked today

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<v Speaker 1>whether the recent instability is disinflation rate? Do you think

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<v Speaker 1>he'll address that straight on head on Jay's J J.

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<v Speaker 1>Pale's a straight shooter. I think he will. I think

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<v Speaker 1>I think what he would likely say to a question

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<v Speaker 1>like that is the FED monitors broad range of indicators

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<v Speaker 1>on financial conditions, and I think he would put it

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<v Speaker 1>in the context or broader financial conditions, probably not wanting

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<v Speaker 1>to single this out in particular. Rich. One thing I've

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<v Speaker 1>said over the last couple of weeks, in fact, the

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<v Speaker 1>last week particularly, and I'll ask this question of you

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<v Speaker 1>as well, when they discussed the totality of the data,

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<v Speaker 1>does that include bank stocks? Now? Bank stocks? Do you

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<v Speaker 1>mean bank bankityan equities? Yeah, well, obviously I'm not in

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<v Speaker 1>the meeting. I don't know. I think financial conditions come

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<v Speaker 1>up quite regularly. Whether or not they would hone in

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<v Speaker 1>on bank stocks, I'm not sure. Let's get to our

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<v Speaker 1>next guest, Pre Miser, the head of Right Strategy over

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<v Speaker 1>at TD Securities. Pre I wonder for to catch up

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<v Speaker 1>you decision thirteen minutes away, twenty five or pause when

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<v Speaker 1>two weeks ago it was fifty or twenty five? What

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<v Speaker 1>a change it has? Indeed, and I think you've seen

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<v Speaker 1>the tightening in financial conditions and expected tightening in bank

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<v Speaker 1>lending standards, you know, but we think the market's eighty

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<v Speaker 1>percent price for twenty five, that the FED goes twenty five.

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<v Speaker 1>It's all about the communication beyond. But you know, beyond

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<v Speaker 1>just looking at a sort of the dot plot, we're

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<v Speaker 1>actually going to be looking at, how does see SEP

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<v Speaker 1>lineup with the dot plot? You know, the economic outlook

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<v Speaker 1>is extremely uncertain. If we get a sense of the

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<v Speaker 1>FED reaction function, you know, how would they respond if

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<v Speaker 1>inflation is a little high but the unemployment rate starts

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<v Speaker 1>to rise. I think that's what I'll be watching. I

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<v Speaker 1>think we have to be extremely number, but we do

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<v Speaker 1>think that they're going to hike. They're going to try

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<v Speaker 1>and separate liquidity facilities from essentially monetary policy. I do

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<v Speaker 1>hope chap Howe sells that BTFP program. It's a very

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<v Speaker 1>generous program, you know, I think talking about sort of

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<v Speaker 1>removing that stigma, if any stigma exists. I hope Chapow

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<v Speaker 1>is able to say banks access this, it's against treasuries,

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<v Speaker 1>it's against mortgages. And here, you know, let us focus

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<v Speaker 1>on inflation. Pray lace or I just then we're talking

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<v Speaker 1>about Christine the Card, the ECB president earlier on today.

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<v Speaker 1>No trade offs between price and financial stability, we will

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<v Speaker 1>not entertain trade offs. The ECP has plenty of toes

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<v Speaker 1>to address financial stability risks. Can you imagine chairman powers

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<v Speaker 1>and the same thing in around about forty two minutes. Yeah.

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<v Speaker 1>I struggle with that a little bit because how does

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<v Speaker 1>monetary policy flow through the economy. It does throw through

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<v Speaker 1>the banking system, and it does through essentially financial markets.

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<v Speaker 1>When the banking system is constrained, when financial markets are

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<v Speaker 1>sort of seizing, freezing you can use your favorite term,

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<v Speaker 1>you know. I think then it's very hard to sort

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<v Speaker 1>of disentangle the two. I mean, I think we have

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<v Speaker 1>a clear inflation problem. It's not clear how sustain the

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<v Speaker 1>banking crisis will be. So I think chappower to separate

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<v Speaker 1>the two entirely, I think would be very risk negative,

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<v Speaker 1>would make people get nervous that the effects going to

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<v Speaker 1>overdo it. I'm hoping he can use the data dependence,

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<v Speaker 1>the idea that we've got these tools but we remain watchful.

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<v Speaker 1>I'm hoping he can sort of not sound too blase

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<v Speaker 1>about about financial stability here. How do you translate financial

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<v Speaker 1>instability with some sort of equivalency in rate hike. It's

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<v Speaker 1>very hard, It's the same thing I struggled with with

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<v Speaker 1>QT as well. These are nonlinear effects, you know, small

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<v Speaker 1>tightening and financial conditions, I would argue, is what the

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<v Speaker 1>FED wants through heights when it's disorderly, when it is

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<v Speaker 1>too much, I think that's when it starts to impact

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<v Speaker 1>the economy in fairly nonlinear fashion. QT is similar. So

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<v Speaker 1>I actually don't like the comparison because you know it

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<v Speaker 1>would be it's assuming some sort of linear relationship between

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<v Speaker 1>tighter financial conditions and rate hikes. It's really when it

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<v Speaker 1>becomes too much, so very hard to model. I think

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<v Speaker 1>it's something we're just going to have to track. We're

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<v Speaker 1>going to have to track things like deposit flows, lending,

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<v Speaker 1>you know, bank lending, things like that to get a

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<v Speaker 1>sense of how is this financial crisis sort of feeding

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<v Speaker 1>through into the real economy. If FED share j Howard

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<v Speaker 1>comes out indicates twenty five basis point, they're going to

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<v Speaker 1>hike by that and there could still be additional right

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<v Speaker 1>hikes down the pike, how much is that reprice the market?

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<v Speaker 1>That is pretty much counting on rate cuts before the

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<v Speaker 1>end of the year. So I think the one year,

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<v Speaker 1>two year part can absolutely reprice because I think we

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<v Speaker 1>have to understand there's a different threshold for the FED

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<v Speaker 1>to stop hiking as if there is to start to ease.

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<v Speaker 1>So I think that zero, you know, the very front

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<v Speaker 1>end can move in my mind, the five year, the

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<v Speaker 1>ten year, that's much more a view of where's the economy.

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<v Speaker 1>I mean, we were in the hard landing camp even

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<v Speaker 1>before this. Now I guess we're in a harder landing

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<v Speaker 1>camp because now you've had that tightening in bank lending

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<v Speaker 1>standards or you will have that. So I think the

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<v Speaker 1>actually the long end might rally, meaning you know, long

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<v Speaker 1>end rates might actually fall because if the FED is

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<v Speaker 1>not going to have the flexibility to be responsive to

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<v Speaker 1>the tightening and financial conditions, that's actually going to make

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<v Speaker 1>things worse for the economy. So I think only the

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<v Speaker 1>very front end is going to be extremely responsive responsive

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<v Speaker 1>to a hawk ish FED. The long end is going

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<v Speaker 1>to I think it a harder line. Then if you

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<v Speaker 1>watch this tune again in Life on TV and radio,

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<v Speaker 1>we kind of get down to a FED decision about

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<v Speaker 1>nine minutes away. Alongside us, Premisra of TD also waits

0:11:08.920 --> 0:11:10.680
<v Speaker 1>in patient lead the form of FED vice chat Richard

0:11:11.080 --> 0:11:12.800
<v Speaker 1>rich Just to bring you back into the conversation, we'll

0:11:12.800 --> 0:11:15.120
<v Speaker 1>be talking about how high the hurdle rate might be,

0:11:15.200 --> 0:11:17.560
<v Speaker 1>the bar to kind of interest rates Rich How high

0:11:17.559 --> 0:11:19.360
<v Speaker 1>do you think the bar is to cut rates at

0:11:19.400 --> 0:11:22.640
<v Speaker 1>of FED. Well, I think it's higher than it has

0:11:22.679 --> 0:11:25.599
<v Speaker 1>been in the last thirty years, when the FED was

0:11:25.679 --> 0:11:29.439
<v Speaker 1>quite responsive when there was any rise in unemployment, and

0:11:30.040 --> 0:11:32.959
<v Speaker 1>so I do think obviously I agree with Prea. I

0:11:33.040 --> 0:11:35.079
<v Speaker 1>think it's not only something they will do, it's something

0:11:35.120 --> 0:11:37.439
<v Speaker 1>they should do. Is to acknowledge that there will be

0:11:37.480 --> 0:11:42.040
<v Speaker 1>additional tiny and financial conditions as banks add liquidity. And

0:11:42.080 --> 0:11:44.280
<v Speaker 1>I think banks, either of their own choice or with

0:11:44.720 --> 0:11:47.880
<v Speaker 1>the encouragement of supervisors, will be adding more liquidity, which

0:11:47.920 --> 0:11:51.439
<v Speaker 1>means slower loan growth. But I also think that the

0:11:51.600 --> 0:11:54.120
<v Speaker 1>FED message from ten days ago still relevant. I think

0:11:54.160 --> 0:11:56.839
<v Speaker 1>they will I think they will be patient. That said,

0:11:57.520 --> 0:12:00.240
<v Speaker 1>once we do start to see the labor markets often

0:12:00.360 --> 0:12:04.520
<v Speaker 1>unemployment to go up as the FED projects, then we

0:12:04.640 --> 0:12:07.400
<v Speaker 1>could see a pretty rapid decline and underlying inflation, and

0:12:07.480 --> 0:12:09.920
<v Speaker 1>I think they would be data dependent and respond to

0:12:10.000 --> 0:12:12.200
<v Speaker 1>that too. But I do think the bar has higher,

0:12:12.280 --> 0:12:14.880
<v Speaker 1>Jonathan than it has been in the past thirty years.

0:12:15.040 --> 0:12:16.920
<v Speaker 1>How much damage do you think has been done in

0:12:16.960 --> 0:12:18.679
<v Speaker 1>the last couple of weeks, and Rich the reason I

0:12:18.720 --> 0:12:21.199
<v Speaker 1>asked that, I'm very aware of how quickly things have

0:12:21.320 --> 0:12:24.680
<v Speaker 1>moved in just two weeks. Two weeks ago, Chairman Poals

0:12:24.720 --> 0:12:27.160
<v Speaker 1>comes off his second day of testimony on Capitol Hill,

0:12:27.520 --> 0:12:30.559
<v Speaker 1>opening the door to fifty basis points and bank here

0:12:30.600 --> 0:12:33.040
<v Speaker 1>we are talking about rate cuts and whether they hike

0:12:33.200 --> 0:12:35.719
<v Speaker 1>or not at all today, and Rich, I'm trying to

0:12:35.720 --> 0:12:39.600
<v Speaker 1>stay open minded about the prospect that maybe regulators authorities

0:12:39.640 --> 0:12:41.880
<v Speaker 1>come out with a solution for the banking system and

0:12:41.960 --> 0:12:43.480
<v Speaker 1>then all of a sudden we're talking about the things

0:12:43.520 --> 0:12:46.160
<v Speaker 1>we've been talking about two weeks ago. Is that on

0:12:46.200 --> 0:12:49.000
<v Speaker 1>the mind of these policymakers, and if it is, what's

0:12:49.040 --> 0:12:52.439
<v Speaker 1>the prudent course of action for them today? Well? I

0:12:52.600 --> 0:12:54.439
<v Speaker 1>do think it's on their mind. I think it should

0:12:54.480 --> 0:12:56.839
<v Speaker 1>be on their mind. I think the way they'd like

0:12:56.920 --> 0:13:00.280
<v Speaker 1>to see this go is by providing very out as said,

0:13:00.400 --> 0:13:04.040
<v Speaker 1>very ample and generous liquidity. They think that banks can

0:13:04.120 --> 0:13:07.160
<v Speaker 1>and should take advantage of that. But I think at

0:13:07.200 --> 0:13:10.679
<v Speaker 1>the margin, many of the banks that we're talking about

0:13:10.760 --> 0:13:13.240
<v Speaker 1>are probably going to have to slow their loan growth

0:13:13.320 --> 0:13:15.920
<v Speaker 1>in order to have a more liquid balance sheet, and

0:13:16.080 --> 0:13:19.480
<v Speaker 1>that will have to factor into the projections. Perhaps not

0:13:19.600 --> 0:13:22.760
<v Speaker 1>at this meeting, but certainly as we go through the year.

0:13:23.600 --> 0:13:25.679
<v Speaker 1>We were talking about how potentially we could see a

0:13:25.800 --> 0:13:28.520
<v Speaker 1>much higher inflationary regime for a bit longer and the

0:13:28.600 --> 0:13:30.240
<v Speaker 1>FED would have to go further in terms of a

0:13:30.320 --> 0:13:33.360
<v Speaker 1>terminal rate. Perhaps the further in terms of eternal rate

0:13:33.520 --> 0:13:35.839
<v Speaker 1>isn't as much on the table now as it was

0:13:35.920 --> 0:13:39.000
<v Speaker 1>two weeks ago. But do you think that overall growth

0:13:39.080 --> 0:13:42.280
<v Speaker 1>expectations need to come down because of some greater degree

0:13:42.320 --> 0:13:46.640
<v Speaker 1>of structural tightening by some of these regional banks. Absolutely,

0:13:47.120 --> 0:13:49.720
<v Speaker 1>you know. I think if you look at market pricing,

0:13:50.080 --> 0:13:52.480
<v Speaker 1>we're not pricing in a hard landing by the end

0:13:52.520 --> 0:13:55.000
<v Speaker 1>of next year, after all the cuts of the markets

0:13:55.040 --> 0:13:57.360
<v Speaker 1>pricing and we're pricing and fit funds at three percent.

0:13:57.920 --> 0:14:00.719
<v Speaker 1>So I would argue that the markets pricing in, you know,

0:14:00.960 --> 0:14:03.640
<v Speaker 1>an early start to rate cuts, but then some soft

0:14:03.720 --> 0:14:06.079
<v Speaker 1>landing by the end of next year. If you have

0:14:06.160 --> 0:14:09.880
<v Speaker 1>to incorporate the lagged effects of monetary tightening, the fact

0:14:09.920 --> 0:14:12.199
<v Speaker 1>that now we're going to have bank lending tightening, I

0:14:12.280 --> 0:14:14.520
<v Speaker 1>think you're supposed to price in a decent chance of

0:14:14.559 --> 0:14:16.880
<v Speaker 1>a recession, which means that the fat funds rate may

0:14:16.920 --> 0:14:19.080
<v Speaker 1>have to go well below three percent. You know, I

0:14:19.120 --> 0:14:21.200
<v Speaker 1>don't know about zero, but perhaps the fat is to

0:14:21.280 --> 0:14:23.680
<v Speaker 1>go one percent two percent, and that's not priced in,

0:14:23.960 --> 0:14:25.600
<v Speaker 1>Which is why I still like the long end of

0:14:25.640 --> 0:14:28.520
<v Speaker 1>the treasury curve, because I think, as you know, the

0:14:28.600 --> 0:14:31.200
<v Speaker 1>savings buffer of the household sector starts to come down

0:14:31.560 --> 0:14:34.240
<v Speaker 1>the household sector, the business sector is going to need loans,

0:14:34.680 --> 0:14:36.680
<v Speaker 1>and if the banking sector is pushing back, that's not

0:14:36.760 --> 0:14:38.280
<v Speaker 1>going to happen. Rich I'd love you to weigh in

0:14:38.320 --> 0:14:40.040
<v Speaker 1>on that. Do you agree with prayer there that you

0:14:40.080 --> 0:14:41.760
<v Speaker 1>could see a fat funds rate that goes back to

0:14:41.880 --> 0:14:44.480
<v Speaker 1>one or even maybe two percent, but even one percent

0:14:45.000 --> 0:14:49.880
<v Speaker 1>after all of the discussion around a higher inflationary time, Well, well,

0:14:49.920 --> 0:14:51.600
<v Speaker 1>of course you could. I think you know there are

0:14:51.600 --> 0:14:56.360
<v Speaker 1>always there are probabilities involved, and and certainly you know

0:14:56.440 --> 0:14:58.440
<v Speaker 1>there are scenarios where you end up. I guess I'd

0:14:58.480 --> 0:15:01.440
<v Speaker 1>like to put on the table a scenario which probably

0:15:01.480 --> 0:15:04.520
<v Speaker 1>would be a recession scenario according to the NBER. But

0:15:04.960 --> 0:15:06.800
<v Speaker 1>we could have a rise in the unemployment rate of

0:15:06.840 --> 0:15:09.360
<v Speaker 1>a point and a point in a quarter, a slowdown

0:15:09.400 --> 0:15:12.640
<v Speaker 1>on GDP growth, with unemployment ending up in the floors.

0:15:13.480 --> 0:15:15.840
<v Speaker 1>You know to me, that would be a pretty softish landing,

0:15:15.880 --> 0:15:18.800
<v Speaker 1>even though it could technically be a recession. So I

0:15:18.920 --> 0:15:21.880
<v Speaker 1>think there's a wide range of scenarios now, probably wider

0:15:21.920 --> 0:15:24.240
<v Speaker 1>than we've seen in decades, and I think that's just

0:15:24.320 --> 0:15:27.080
<v Speaker 1>going to be a fact of why for the foreseeable future.

0:15:27.440 --> 0:15:30.160
<v Speaker 1>Rich One question Tom asks quite often every time we

0:15:30.240 --> 0:15:32.320
<v Speaker 1>do this, and we miss him today. Of course he's

0:15:32.360 --> 0:15:35.320
<v Speaker 1>decided to take this week off of all weeks. Tk's

0:15:35.320 --> 0:15:36.640
<v Speaker 1>going to be back with this next week. We do

0:15:36.720 --> 0:15:38.920
<v Speaker 1>miss him. Of course, the more I say, the more

0:15:38.920 --> 0:15:42.120
<v Speaker 1>people will believe me. Right, keep just keep going, Get

0:15:42.160 --> 0:15:44.240
<v Speaker 1>it again, all right, let's Rich, I'll get to the question.

0:15:44.360 --> 0:15:47.160
<v Speaker 1>The question that Tom would often ask is why there

0:15:47.240 --> 0:15:50.240
<v Speaker 1>isn't any descent on the committee? Is today the kind

0:15:50.280 --> 0:15:52.320
<v Speaker 1>of day we would expect someone to put their hand up,

0:15:52.400 --> 0:15:54.840
<v Speaker 1>Rich and just say, I don't see it this way,

0:15:55.000 --> 0:15:59.680
<v Speaker 1>We need to pause? Great question, I well know, and

0:15:59.760 --> 0:16:02.680
<v Speaker 1>five minutes I don't think so, because I think if

0:16:02.720 --> 0:16:05.120
<v Speaker 1>there's going to be a dissent, people would telegraph it

0:16:05.200 --> 0:16:08.240
<v Speaker 1>in their speeches and commentary. And Jay Pale has done

0:16:08.240 --> 0:16:11.320
<v Speaker 1>a remarkable job of keeping a very diverse committee together.

0:16:11.680 --> 0:16:13.560
<v Speaker 1>We could well see a dissent, but I don't think

0:16:13.600 --> 0:16:16.240
<v Speaker 1>it will be today. What is the reluctance to dissent

0:16:16.640 --> 0:16:20.160
<v Speaker 1>on the committee? What's behind that? Do you think? Well?

0:16:20.560 --> 0:16:23.960
<v Speaker 1>Descents are people are not reluctant to dissent, especially reserve

0:16:24.040 --> 0:16:27.880
<v Speaker 1>bank presidents. If you go back, really you'd have to

0:16:27.920 --> 0:16:30.320
<v Speaker 1>go back to vulgar years when you actually had governors

0:16:30.360 --> 0:16:33.880
<v Speaker 1>and indeed, in some cases vice chairs descending. So for

0:16:33.920 --> 0:16:36.440
<v Speaker 1>variety of reasons, maybe we can discuss on a future show.

0:16:37.040 --> 0:16:40.520
<v Speaker 1>Governors are are more hesitant to dissent on a monetary

0:16:40.600 --> 0:16:44.120
<v Speaker 1>policy decision, but reserve bank presidents can and do dissent,

0:16:44.200 --> 0:16:46.560
<v Speaker 1>and during my time there, we had dissents from from

0:16:46.600 --> 0:16:49.800
<v Speaker 1>three reserve bank presidents on some rate decisions. Rich, You're

0:16:49.800 --> 0:16:52.160
<v Speaker 1>absolutely welcome back anytime. I just want to throw that

0:16:52.200 --> 0:16:54.440
<v Speaker 1>out there and we can discuss all about governors and

0:16:54.520 --> 0:16:56.680
<v Speaker 1>the difference prea before we get to the decision, which

0:16:56.720 --> 0:16:59.840
<v Speaker 1>isn't about two and a half minutes away. Any final

0:17:00.080 --> 0:17:02.400
<v Speaker 1>thoughts on what we should be looking for in terms

0:17:02.440 --> 0:17:04.520
<v Speaker 1>of the ruttoric, in terms of the statement, in terms

0:17:04.520 --> 0:17:07.760
<v Speaker 1>of the projections, So obviously what they're going to do

0:17:07.840 --> 0:17:09.720
<v Speaker 1>with with rate hikes, we're going to be watching that

0:17:09.880 --> 0:17:11.920
<v Speaker 1>medium dot. I would also look at the distribution of

0:17:11.960 --> 0:17:14.760
<v Speaker 1>those dots. How many are five, seventy five or six?

0:17:14.960 --> 0:17:17.440
<v Speaker 1>You know, is there a hawkish bias to the distribution,

0:17:17.720 --> 0:17:21.280
<v Speaker 1>and then link that the dot plot to the economic focust.

0:17:21.560 --> 0:17:24.000
<v Speaker 1>If they lower the unemployment rate and they increase the

0:17:24.200 --> 0:17:27.400
<v Speaker 1>inflation number, but they keep the median dot unchanged, that's

0:17:27.400 --> 0:17:31.000
<v Speaker 1>a dublish reaction function. So it's really about communication going forward,

0:17:31.280 --> 0:17:33.320
<v Speaker 1>you know, trying to understand the reaction function as we

0:17:33.480 --> 0:17:35.760
<v Speaker 1>know that the economy is going to look very different,

0:17:36.240 --> 0:17:38.240
<v Speaker 1>you know, three to six months from now. Rich just

0:17:38.320 --> 0:17:40.680
<v Speaker 1>one quick one to a journalist the fivor what would

0:17:40.680 --> 0:17:42.960
<v Speaker 1>you ask in that news conference in thirty two minutes?

0:17:44.840 --> 0:17:48.000
<v Speaker 1>What keeps you up at night a lot at the moment,

0:17:48.520 --> 0:17:52.520
<v Speaker 1>it could be literally everything you're sleeping exactly, Richard, thank you,

0:17:52.760 --> 0:17:55.280
<v Speaker 1>Grey to catch up with the Richard Clouder preemisra