WEBVTT - Bloomberg Surveillance TV: September 26th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.560 --> 0:00:40.200 That core PCEE figure which came in banging line zero 0:00:40.280 --> 0:00:43.400 point two percent increase following a zero point three percent 0:00:43.440 --> 0:00:46.320 the prior month, it was revised downward for the prior 0:00:46.400 --> 0:00:49.839 month zero point two percent personal income and personal spending. 0:00:50.159 --> 0:00:52.240 That's where it gets pretty interesting to me, the idea 0:00:52.280 --> 0:00:54.240 that you get to get an upside surprise on both 0:00:54.280 --> 0:00:58.120 particularly personal spending zero point six percent increase versus a 0:00:58.200 --> 0:01:02.920 zero point five percent increase and real personal spending increasing 0:01:03.160 --> 0:01:07.280 zero point four percent versus a zero point two percent expected, 0:01:07.440 --> 0:01:10.000 and it was actually revised upward in the prior reading 0:01:10.040 --> 0:01:10.280 as well. 0:01:10.319 --> 0:01:10.680 I am Marie. 0:01:10.720 --> 0:01:13.280 It seems like, people keep spending and that has been 0:01:13.480 --> 0:01:16.000 the engine that keeps on giving to the American economy. 0:01:16.080 --> 0:01:20.679 People keep spending. Jobless claims yesterday very strong number, and 0:01:21.160 --> 0:01:23.280 now when it comes to PC bang in line. So 0:01:23.319 --> 0:01:25.240 what is there actually look at the data like this, 0:01:25.400 --> 0:01:27.160 what is there actually to worry about? When I do 0:01:27.280 --> 0:01:30.280 see spending though increasing, I do wonder how many people 0:01:30.480 --> 0:01:32.880 are like members of my family who went out concerned 0:01:32.920 --> 0:01:35.040 about the tariffs and are continued to spend now, and 0:01:35.080 --> 0:01:37.040 they are concerned about the holidays coming up, and they 0:01:37.040 --> 0:01:38.640 don't want the prices to go up, so they're willing 0:01:38.720 --> 0:01:40.039 to go out and spend a ton. 0:01:40.120 --> 0:01:41.640 Now, I guess it remains to be seen. 0:01:41.680 --> 0:01:44.640 Yeah, that's one reason why people are listening to earnings. 0:01:45.000 --> 0:01:47.880 Former Saint Louis FED President Jim Bullard joins US now 0:01:47.960 --> 0:01:49.760 and I am so excited to speak with you, Jim, 0:01:49.800 --> 0:01:52.320 because right now I'm looking at all of this data 0:01:52.400 --> 0:01:55.800 that suggests a really strong US market, a really strong 0:01:55.920 --> 0:01:59.160 US economy, people continuing to be able to spend, and 0:01:59.200 --> 0:02:00.360 their incomes rising. 0:02:00.880 --> 0:02:02.920 What about this picture. 0:02:02.720 --> 0:02:05.320 Makes you think that the FED needs to be cutting 0:02:05.440 --> 0:02:06.559 rates more aggressively. 0:02:08.880 --> 0:02:11.480 Yeah, thanks for having me. So these numbers look to 0:02:11.520 --> 0:02:16.520 me like they're consistent with what markets were expecting. I 0:02:16.560 --> 0:02:22.760 think markets have a reacceleration hypothesis and I'm sympathetic with that. 0:02:22.919 --> 0:02:25.920 So I do think the economy will be in pretty 0:02:25.960 --> 0:02:27.919 good shape for the rest of this year and into 0:02:27.960 --> 0:02:32.399 twenty twenty six as some of the new administration policies 0:02:32.440 --> 0:02:37.360 come online. On the inflation side, there was no surprise here, 0:02:37.520 --> 0:02:41.239 so that seems to be very consistent with the committee's 0:02:41.240 --> 0:02:45.320 story that they'll be able to look through inflation and 0:02:45.360 --> 0:02:46.359 then expect it to. 0:02:46.400 --> 0:02:48.120 Fall in twenty twenty six. 0:02:48.200 --> 0:02:53.079 So I think this leaves everything on track to have 0:02:53.200 --> 0:02:56.520 further rate cuts during the next two meetings of the 0:02:56.600 --> 0:02:57.040 f HOMC. 0:02:57.520 --> 0:02:59.679 Just put this new perspective, this is what the market 0:02:59.760 --> 0:03:02.480 was expecting, and so there is this rally across the 0:03:02.480 --> 0:03:05.640 board as people say, Okay, the Fed can keep cutting 0:03:06.080 --> 0:03:09.519 even though you are seeing the strength and potentially reacceleration Jim, 0:03:09.520 --> 0:03:12.400 as you are putting yet year over year core PCE, 0:03:12.680 --> 0:03:15.240 that key metric that the FED looks at, is it 0:03:15.320 --> 0:03:16.440 two point nine percent. 0:03:16.720 --> 0:03:18.000 It's not climbing, it. 0:03:18.040 --> 0:03:20.000 Might even be going down to two point eight percent, 0:03:20.080 --> 0:03:23.679 but it's still almost a full percentage point above two percent, 0:03:24.200 --> 0:03:28.120 Is there a feeling that it just isn't really important 0:03:28.160 --> 0:03:30.160 to get it down to two percent that quickly, and 0:03:30.200 --> 0:03:31.200 so you can look through that. 0:03:33.320 --> 0:03:35.800 No, they do want to get it down to two 0:03:35.840 --> 0:03:39.680 percent over the next two years. So you want to 0:03:39.680 --> 0:03:42.040 ask them todian to two percent, I would say, not 0:03:43.080 --> 0:03:47.520 go very quickly to two percent or go under an overshoot. 0:03:47.600 --> 0:03:49.920 So I think you know, usually the way this is 0:03:49.960 --> 0:03:52.400 thought about is that you want to gradually bring it down. 0:03:53.160 --> 0:03:57.120 I think the community's on track to do that, and 0:03:57.200 --> 0:03:59.720 so that part looks looks pretty good. 0:04:00.200 --> 0:04:02.840 So the committee almost looking through inflation. 0:04:03.120 --> 0:04:04.960 Have they been given the green light by the FED 0:04:05.040 --> 0:04:06.960 chair to look through if there's going to be any 0:04:07.320 --> 0:04:10.280 hot print prints upcoming when it comes to inflation. 0:04:10.360 --> 0:04:13.440 Yeah, I do think that the chair at Jackson Hall 0:04:14.360 --> 0:04:18.640 very much signed on to the idea that any inflationary 0:04:18.640 --> 0:04:23.400 effects coming through the tariff channel would be smaller than 0:04:24.240 --> 0:04:29.840 previously anticipated and they're coming later than previously anticipated. And 0:04:29.920 --> 0:04:33.640 so because of that is basically a look through. So 0:04:34.680 --> 0:04:38.120 even though you say, like President Barkin said, well it's 0:04:38.160 --> 0:04:41.640 not getting any better for those that thought there was 0:04:41.680 --> 0:04:45.599 an important teariff component to inflation, that part should go 0:04:45.680 --> 0:04:48.800 away since that's a one time effect, and so that's 0:04:48.800 --> 0:04:51.720 giving the committee confidence that they can go ahead and 0:04:51.760 --> 0:04:55.520 get closer to neutral. They'll still have a you know, 0:04:55.760 --> 0:04:59.279 still be a restricted policy, still putting downward pressure on inflation, 0:04:59.440 --> 0:05:01.960 but not as intensely is what they're doing right now. 0:05:02.400 --> 0:05:05.720 Well, when it comes to inflation, we heard from Governor 0:05:05.800 --> 0:05:07.320 Myron almost insinuate. 0:05:07.400 --> 0:05:08.920 Not right now, but maybe in the future. 0:05:08.960 --> 0:05:11.320 The FED should actually have more of a range in 0:05:11.400 --> 0:05:13.520 terms of their target. Can you see the FED moving 0:05:13.560 --> 0:05:17.120 towards that, maybe targeting two to three percent instead of 0:05:17.279 --> 0:05:18.640 just two percent across the board? 0:05:19.880 --> 0:05:24.480 Yes, a classic issue in inflation targeting. The US has 0:05:24.520 --> 0:05:26.440 come down on the side of just having a target. 0:05:27.040 --> 0:05:32.839 It's simpler communication. It doesn't leave ambiguity around having a range. 0:05:33.279 --> 0:05:36.120 One of the problems for countries that have had ranges 0:05:36.480 --> 0:05:39.880 is that the top of the range then becomes okay 0:05:39.920 --> 0:05:43.320 as opposed to the midpoint of the range. So it 0:05:43.360 --> 0:05:46.599 can be interpreted as slippage in your commitment to keep 0:05:46.640 --> 0:05:50.240 inflation low and stable, and households do not like the inflation. 0:05:50.360 --> 0:05:53.720 So I think it's incumbent on the fetter reserve to 0:05:53.760 --> 0:05:55.799 make sure inflation stays low and stable. 0:05:56.200 --> 0:05:58.800 Jim, I'm trying to get a sense of how a 0:05:58.880 --> 0:06:02.400 data dependent FED deals with the potential of not getting 0:06:02.480 --> 0:06:05.280 data next week. We're supposed to get the non farm 0:06:05.320 --> 0:06:09.080 payrolls report on Friday, October third, Ostensibly that could be 0:06:09.160 --> 0:06:12.359 after the government shutdown, where we do not get that data. 0:06:12.400 --> 0:06:15.679 Print how problematic would that be for the feeder reserve? 0:06:16.000 --> 0:06:18.040 Given how balanced right now? 0:06:18.080 --> 0:06:20.120 A lot of people feel the risks are. 0:06:22.400 --> 0:06:27.080 Yeah, well, it's disturbing to not get as much data 0:06:27.080 --> 0:06:29.280 as you can on the state of the economy, and 0:06:30.440 --> 0:06:33.760 so that would be a concern. But the FED has 0:06:33.839 --> 0:06:38.719 managed through that in previous episodes around government shutdown, so 0:06:38.800 --> 0:06:42.479 I think it's manageable. But it's not an ideal situation. 0:06:42.960 --> 0:06:45.279 It feels like a really messy moment because not only 0:06:45.400 --> 0:06:48.720 is there questions about are there questions about the integrity 0:06:48.720 --> 0:06:51.200 of the data when we get the data, which data 0:06:51.240 --> 0:06:53.240 to look at what the data is measuring, but they're 0:06:53.320 --> 0:06:56.000 these sort of sea changes that are overlaid on top 0:06:56.040 --> 0:06:59.279 of it. Whether it's different areas, different income earners that 0:06:59.360 --> 0:07:02.400 are earning a lot and able to spend, lower income 0:07:02.520 --> 0:07:05.840 order workers that are feeling the pinch of inflation and 0:07:05.880 --> 0:07:08.960 not seeing the same types of labor gains. I just 0:07:09.080 --> 0:07:12.280 wonder if the FED should think of a new paradigm, 0:07:12.440 --> 0:07:16.880 a new benchmark to chores to understand exactly what the 0:07:16.960 --> 0:07:20.240 optimal employment level is and how they should weigh these 0:07:20.240 --> 0:07:20.800 two risks. 0:07:22.560 --> 0:07:24.640 Yeah, I do think it's a good time to review 0:07:24.720 --> 0:07:29.040 our models and think about how are we going to 0:07:29.080 --> 0:07:32.720 do this over the next decade. Could we do better 0:07:32.760 --> 0:07:36.440 than where we've been. I think we've been more or 0:07:36.520 --> 0:07:40.400 less preoccupied with the pandemic and the reaction to the 0:07:40.400 --> 0:07:44.280 aftermath of the pandemic, but that's pretty much behind us now, 0:07:44.360 --> 0:07:47.480 So now would be a good moment to really do 0:07:47.560 --> 0:07:51.200 a thorough going review of how the FED operates and 0:07:52.120 --> 0:07:55.680 how the models work. I guess one thing I'd like 0:07:55.760 --> 0:07:58.960 to do is have a what some I'd like to do, 0:07:59.000 --> 0:08:01.840 what other central bank sometimes do, is have a parallel 0:08:01.880 --> 0:08:06.920 process where you have a new model getting ready and 0:08:07.360 --> 0:08:10.040 run that in parallel, and then have a cutover point 0:08:10.080 --> 0:08:12.880 at some point in the future where you actually switch 0:08:12.960 --> 0:08:15.720 to the new model. So I think we could do 0:08:15.840 --> 0:08:18.600 things like that, and that's maybe something to consider at 0:08:18.600 --> 0:08:19.120 this point. 0:08:19.360 --> 0:08:21.840 Governor Lisa Cook is warning her attorneys are warning that 0:08:22.200 --> 0:08:25.200 the removal of her could cause chaos and disruption in 0:08:25.280 --> 0:08:28.440 financial markets. What do you think the reaction will be 0:08:28.440 --> 0:08:33.000 in financial markets if she is removed. 0:08:33.679 --> 0:08:37.760 I think that the court will insist that she gets 0:08:37.880 --> 0:08:41.360 due process for whatever charges have been made against her, 0:08:41.440 --> 0:08:46.400 so that that would prevent political partisans from just making 0:08:46.520 --> 0:08:50.240 charges against members of the committee without having to prove 0:08:50.280 --> 0:08:55.560 those charges and then calling that cause and allowing people 0:08:55.600 --> 0:09:01.280 to be dismissed from the FMC on that basis. I 0:09:01.320 --> 0:09:05.959 think that, you know, the people on the Supreme Court 0:09:06.040 --> 0:09:09.840 will make the justices will probably come down in some 0:09:09.960 --> 0:09:13.200 way to protect that due process clause. 0:09:16.040 --> 0:09:19.480 Stay with us, Malplindex Savana's coming up off to this. 0:09:28.640 --> 0:09:32.360 Bloomberg's Michael McKee joins us from Washington with a very 0:09:32.400 --> 0:09:33.160 special guest. 0:09:33.559 --> 0:09:34.959 Mike, I'll throw it to you. 0:09:35.720 --> 0:09:38.000 Well, thank you very much joining us this morning. Richmond 0:09:38.160 --> 0:09:41.920 fed President Tom Barkin here on Bloomberg television and radio 0:09:42.120 --> 0:09:45.080 worldwide and on radio they can't see it, but on 0:09:45.120 --> 0:09:46.840 television people can see you have a bit of a 0:09:46.880 --> 0:09:49.800 bandage on your head. You just had one of those 0:09:50.280 --> 0:09:53.160 older people's kind of operations. 0:09:53.240 --> 0:09:55.040 Yeah, there's no truth that it was what happened in 0:09:55.040 --> 0:09:55.720 the last meeting. 0:09:57.240 --> 0:10:00.200 All right, Speaking of the last meeting, we came out 0:10:00.240 --> 0:10:04.400 of that believing that, or at least Wall Street, that 0:10:04.440 --> 0:10:06.840 you're going to cut rates again in October and maybe 0:10:06.880 --> 0:10:09.079 in December. But since then we've gotten some numbers that 0:10:09.120 --> 0:10:13.120 show GDP is hotter, inflation is still running hot, and 0:10:13.320 --> 0:10:17.200 the Javas claims numbers suggest companies aren't laying anybody off. 0:10:17.360 --> 0:10:21.440 So should we have less confidence in the path going forward? 0:10:21.920 --> 0:10:23.480 Well, I don't think you can mark to market the 0:10:23.520 --> 0:10:26.640 next meeting every week, even though that's what the markets do. 0:10:26.840 --> 0:10:29.600 I mean, let's see what happens on the employment side. 0:10:29.600 --> 0:10:31.960 We'll get some important data in a couple of minutes 0:10:31.960 --> 0:10:34.880 here on the inflation side, and I think we'll get 0:10:34.880 --> 0:10:35.800 there when we get there. 0:10:36.320 --> 0:10:38.800 Well, the majority seem to believe, at least according to 0:10:38.880 --> 0:10:41.599 what the chairman tells us, that inflation is going to 0:10:41.640 --> 0:10:44.960 be a one time rise in the price level. And 0:10:45.200 --> 0:10:47.439 overnight we got a bunch of new tariffs, as you 0:10:47.640 --> 0:10:51.120 just saw on a lot of different things from the President. 0:10:51.520 --> 0:10:54.160 How much confidence do you have in any kind of 0:10:54.160 --> 0:10:55.960 inflation forecast at this point? 0:10:56.559 --> 0:10:59.320 Not much. I mean, what I definitely see happening is 0:10:59.320 --> 0:11:02.400 there are costing increases that suppliers want to pass on, 0:11:02.440 --> 0:11:04.520 there's no question about that, and tariffs are a big 0:11:04.559 --> 0:11:06.200 part of it. But you could put health insurance in 0:11:06.240 --> 0:11:10.120 other other costs in there too, But those costs are 0:11:10.120 --> 0:11:12.160 going to attempt to get passed on to a consumer 0:11:12.200 --> 0:11:16.560 who's frankly exhausted of price increases. And so you know, 0:11:16.559 --> 0:11:19.000 we're seeing a lot of trading down, you know, branded 0:11:19.000 --> 0:11:21.880 to private label kind of choices, but we're also seeing 0:11:21.920 --> 0:11:24.480 people trade off. And it wouldn't surprise me at all 0:11:24.480 --> 0:11:28.040 if people who are forced to accept certain price increases 0:11:28.080 --> 0:11:30.679 therefore don't buy something else on the other side, and 0:11:30.679 --> 0:11:34.400 that's your classic relative price trade off, and that may 0:11:34.520 --> 0:11:37.400 mean that you won't see as much broad based inflationary 0:11:37.400 --> 0:11:41.080 impact as you'd see. You know, price increases on particular 0:11:41.120 --> 0:11:42.040 items we'll see. 0:11:42.200 --> 0:11:45.320 And yet you get PCE in an hour and basically 0:11:45.360 --> 0:11:49.240 you've already calculated the numbers. Inflation's not moving in the 0:11:49.280 --> 0:11:53.199 right direction. So can you still justify or how long 0:11:53.240 --> 0:11:55.440 can you justify cutting rates in that environment? 0:11:55.960 --> 0:11:58.880 Well, we have inflation moving in the wrong direction. Unfortunately, 0:11:58.880 --> 0:12:01.679 we also have unemployment moving in the wrong direction. And 0:12:01.679 --> 0:12:04.240 that was the backdrop of the last meeting, you have 0:12:04.280 --> 0:12:07.880 to ask yourself, you know, how are the risks still 0:12:07.880 --> 0:12:10.920 the same as you saw them two three, four months earlier, 0:12:10.960 --> 0:12:13.600 when you had unemployment in the right direction and inflation 0:12:13.640 --> 0:12:16.959 in the wrong direction. You know. My overall thesis though, 0:12:17.040 --> 0:12:19.240 is that while it's not, you know, ticking in the 0:12:19.280 --> 0:12:23.120 right place, the downside is relatively limited. I see, the 0:12:23.160 --> 0:12:26.960 inflation downside is limited by this customer pushback that I 0:12:27.000 --> 0:12:30.439 just talked about. Also productivity, which I think is we're 0:12:30.440 --> 0:12:33.320 seeing that at real scale, and so that means there's 0:12:33.360 --> 0:12:35.880 less pressure to pass costs on. And then on the 0:12:35.920 --> 0:12:39.280 unemployment side, obviously, labor supply is dropping at the same 0:12:39.280 --> 0:12:41.600 time as labor demand, and that's keeping the unemployment rate 0:12:42.800 --> 0:12:48.320 relatively balanced. And that's the combination of immigration and ravocation 0:12:48.360 --> 0:12:52.000 of temporary status. Also, you know our generation Mike, which 0:12:52.040 --> 0:12:53.960 is leaving the workforce. I mean, you're seeing a million 0:12:54.120 --> 0:12:57.439 three more people over sixty five out of the workforce 0:12:57.800 --> 0:13:01.679 every year, and so you've got less labor demand, low hiring, 0:13:01.679 --> 0:13:04.360 low firing environment, but you've also got less labor supply, 0:13:04.840 --> 0:13:07.679 and that probably means that the unemployment rate increases are 0:13:07.679 --> 0:13:09.240 going to be relatively limited. 0:13:09.040 --> 0:13:12.240 At least you and I are still employed as of today. 0:13:12.600 --> 0:13:13.760 We'll see how this interview goes. 0:13:15.080 --> 0:13:17.800 You suggested that companies in your district are beginning to 0:13:17.800 --> 0:13:19.920 feel a little bit better, or at least some of 0:13:19.960 --> 0:13:24.920 the uncertainty has come off of their planning and their thinking. 0:13:25.559 --> 0:13:27.760 Are these kind of big new tariffs that we got 0:13:27.760 --> 0:13:31.319 today just going to change that mind has the idea 0:13:31.360 --> 0:13:34.680 that ongoing tariffs and ongoing disruption are going to be 0:13:34.760 --> 0:13:38.240 part of this administration and economy. Is that in their planning. 0:13:38.720 --> 0:13:41.800 Well, I've been describing it as a fog that's created uncertainty, 0:13:41.800 --> 0:13:43.880 and I definitely think in the context of the last 0:13:43.920 --> 0:13:47.480 couple of months, the fog has started to lift. Businesses 0:13:47.640 --> 0:13:49.520 don't know exactly what the tariff will be on their 0:13:49.559 --> 0:13:52.320 sector necessarily, but they kind of have a sense of 0:13:52.320 --> 0:13:56.000 the range. People aren't really following the news every day, yeah, 0:13:56.040 --> 0:13:58.120 the same way they were back in April, and a 0:13:58.120 --> 0:14:00.680 lot of businesses I talk to say, look, I've just 0:14:00.720 --> 0:14:03.319 got to do something. I've got to take action. I 0:14:03.360 --> 0:14:05.959 can't be on the sidelines forever. So I am seeing 0:14:06.000 --> 0:14:08.720 people more in the game now. If you're in a 0:14:08.720 --> 0:14:11.760 particular sector where you see a new announcement. Of course, 0:14:11.760 --> 0:14:15.040 that's going to set you back. And so, you know, 0:14:15.200 --> 0:14:17.800 what I say about businesses in general is not true 0:14:17.800 --> 0:14:20.520 of businesses in every sector. And so there's sectors with 0:14:20.560 --> 0:14:23.400 a lot more clarity and sectors with a lot less clarity. 0:14:23.400 --> 0:14:25.200 And that's I think, just going to be part of 0:14:25.200 --> 0:14:25.760 the game here. 0:14:26.680 --> 0:14:29.000 This morning, we had an investor on who basically said 0:14:29.040 --> 0:14:32.760 markets are rising because of the idea that a year 0:14:32.800 --> 0:14:35.440 from now rates will be substantially lower. Is that the 0:14:35.480 --> 0:14:36.880 right way to look at it? The wrong way to 0:14:36.880 --> 0:14:37.280 look at it? 0:14:37.440 --> 0:14:39.120 Oh, I wouldn't know how to think about, you know, 0:14:39.160 --> 0:14:41.840 how markets ought to rise or not rise. I mean, 0:14:41.880 --> 0:14:44.520 we're very much focused on trying to land the plan 0:14:44.640 --> 0:14:49.000 here and balancing inflation unemployment. As I said, I think 0:14:49.040 --> 0:14:51.000 both of them have ticked in the wrong direction. But 0:14:51.040 --> 0:14:53.840 on the other hand, the downside is limited and we're 0:14:53.840 --> 0:14:55.840 just going to have to, you know, adjust our stance 0:14:55.880 --> 0:14:56.640 as we learn more. 0:14:57.000 --> 0:14:59.240 Well, where's your dot What are you thinking in terms 0:14:59.280 --> 0:15:02.520 of the next couple of meetings? And then for twenty twenty. 0:15:02.240 --> 0:15:05.960 Six, Well, I really like the DOT process for me 0:15:06.120 --> 0:15:11.920 because it's a it forces real integration of your thinking 0:15:12.840 --> 0:15:14.960 in terms of where you think the economy is going 0:15:14.960 --> 0:15:17.800 where you think policy is going. But I don't have 0:15:17.840 --> 0:15:20.520 it as a forecast prediction. It's not, you know, something 0:15:20.520 --> 0:15:23.800 I like to talk about publicly because it adjusts. You know, 0:15:23.880 --> 0:15:26.160 we do mark that dot to market as things go. 0:15:26.320 --> 0:15:29.440 So you know, every meeting for me is one where 0:15:29.440 --> 0:15:31.480 I want to stop and look at the balance between 0:15:31.480 --> 0:15:33.360 how we're doing on the inflation side of the unemployment 0:15:33.360 --> 0:15:34.480 side and make the right decision. 0:15:34.920 --> 0:15:37.880 Well, the story around the fad this week has been, 0:15:38.840 --> 0:15:42.040 shall we say, the debate over where the neutral rate is? 0:15:42.680 --> 0:15:45.600 Where do you think it is? And how fast would 0:15:45.640 --> 0:15:46.480 you want to get there? 0:15:47.600 --> 0:15:50.240 Well, you know, I've seen a lot of the stuff 0:15:50.240 --> 0:15:52.520 that's been in the press, and we're studying that, and 0:15:52.760 --> 0:15:55.200 you know I always try to understand all arguments and 0:15:55.560 --> 0:15:58.520 figure out how to integrate them into my thinking. I'd 0:15:58.520 --> 0:16:02.520 point you to the Richmond Fed neutral rate. The lubric 0:16:02.560 --> 0:16:05.440 mathis model. It takes a lot of signal from what 0:16:05.480 --> 0:16:07.480 you see in the real economy, and in the real 0:16:07.520 --> 0:16:10.280 economy over the last couple of years, what you've seen 0:16:10.400 --> 0:16:13.560 is interest rate. I mean, interest rates go up in 0:16:13.640 --> 0:16:17.440 the economy stay relatively healthy, and so that model doesn't 0:16:17.480 --> 0:16:19.680 take a lot of it doesn't has a relatively high 0:16:20.080 --> 0:16:22.720 neutral rate because it takes a lot of signal from 0:16:22.720 --> 0:16:25.720 the current environment. Now, things can change, but that's where 0:16:25.720 --> 0:16:28.080 the Richmond Fed model is right now, and i'd point 0:16:28.080 --> 0:16:31.400 you to that. What number do they have where you 0:16:31.520 --> 0:16:34.320 it moves around based on what's happening in the economy. 0:16:34.640 --> 0:16:38.080 Well, that gets the next question is Chairman Powell saying 0:16:38.120 --> 0:16:41.440 that you really don't want to target the neutral rate 0:16:41.560 --> 0:16:45.560 because it moves around, also saying that for any voter 0:16:45.840 --> 0:16:50.040 to really move things around, you have to be incredibly persuasive. 0:16:50.480 --> 0:16:53.360 Do you find Steven Myron's arguments persuasive? 0:16:53.800 --> 0:16:56.200 Well, I'm looking forward to digging into them with my team, 0:16:56.240 --> 0:16:59.200 and I like every voice in the room and every 0:16:59.320 --> 0:17:00.960 argument in the room. You know, that's what we do 0:17:01.000 --> 0:17:03.360 as a discipline, as we sit down and try to 0:17:03.400 --> 0:17:05.520 take those arguments apart and figure out which parts of 0:17:05.520 --> 0:17:07.880 them really resonate with the way we think about things 0:17:08.160 --> 0:17:10.120 and which parts don't. We're looking forward to doing that. 0:17:10.359 --> 0:17:13.760 Is now on the neutral rate, you know, in general, 0:17:13.840 --> 0:17:16.920 I just want to agree it's not that useful as 0:17:16.960 --> 0:17:21.240 a operational tool. The models out there, even the one 0:17:21.280 --> 0:17:24.040 that I talked about, have a confidence interval of about 0:17:24.040 --> 0:17:28.200 two hundred basis points, and so you could say it's three, 0:17:28.240 --> 0:17:30.200 which is around the SEP media, and you could say 0:17:30.200 --> 0:17:31.600 it's three and a half or two and a half. 0:17:32.280 --> 0:17:34.120 But if you add a two hundred basis point range 0:17:34.160 --> 0:17:36.720 to it, you say, that's not that helpful for making 0:17:36.800 --> 0:17:39.840 operational decisions on monetary policy. What is more helpful, and 0:17:39.840 --> 0:17:42.280 the reason I favor the model we've got in Richmond 0:17:42.880 --> 0:17:45.600 is how are you seeing the economy react real time 0:17:46.080 --> 0:17:48.000 to the level of rates you've got in the market. 0:17:48.040 --> 0:17:50.159 And if you see it weakening, that's a signal that 0:17:50.480 --> 0:17:51.960 maybe you've got it too high. If you see it 0:17:52.000 --> 0:17:53.520 relatively strong, that's the signal. 0:17:53.520 --> 0:17:57.439 The other way, Logan went to Richmond to announce her 0:17:57.600 --> 0:18:00.840 idea of changing the operational rate for the FED. What 0:18:00.880 --> 0:18:01.600 do you think of that? 0:18:02.240 --> 0:18:04.280 Well, I appreciate Laurie making the trip. We had a 0:18:04.280 --> 0:18:07.080 balance sheet conference yesterday that was very well attended and 0:18:07.119 --> 0:18:09.960 I thought lots of thoughtful papers, including hers, and I 0:18:09.960 --> 0:18:13.240 thought she made an extremely articulate, well reasoned argument, and 0:18:13.280 --> 0:18:14.879 I'm looking forward to digging into it further. 0:18:15.280 --> 0:18:18.040 You anticipate the FED making a change, Oh, I don't know. 0:18:19.680 --> 0:18:22.800 The Supreme Court if it allows the president to fire 0:18:22.840 --> 0:18:24.919 Lisa Cook. What does that mean for the FED? 0:18:26.080 --> 0:18:30.600 Well, the judicial processes and political processes will operate, however 0:18:30.640 --> 0:18:33.199 they operate. What I do every day is show up 0:18:33.240 --> 0:18:37.520 and try to argue for the best monetary policy we 0:18:37.560 --> 0:18:39.320 can and make the case, as you said, in a 0:18:39.359 --> 0:18:42.399 persuasive way to my colleagues. And that's what I'm going 0:18:42.480 --> 0:18:43.199 to continue to do. 0:18:43.600 --> 0:18:46.919 Well, let's leave it with this. What is the best 0:18:47.000 --> 0:18:51.840 monetary policy right now? Continued rate cuts or do you 0:18:51.920 --> 0:18:52.280 not know? 0:18:52.480 --> 0:18:54.120 At this point? I think you have to be very 0:18:54.160 --> 0:18:57.560 adaptive to what's playing out here. The world I've described 0:18:57.600 --> 0:19:00.719 as one where the labor market isning. It's a low 0:19:00.840 --> 0:19:04.560 hiring environment, but the labor supply is also short, and 0:19:04.560 --> 0:19:07.000 you have to be very attentive to that balance because 0:19:07.000 --> 0:19:10.000 it could get out of balance right similar on the 0:19:10.040 --> 0:19:13.240 inflation side, you do have these cost pressures and four 0:19:13.280 --> 0:19:15.639 and a half years of inflation over target. On the 0:19:15.680 --> 0:19:18.280 other hand, you're not seeing that show up and spikes 0:19:18.280 --> 0:19:21.200 and inflation in the real time numbers. We are seeing 0:19:21.280 --> 0:19:23.399 what seems to be a productivity boom, and so I 0:19:23.440 --> 0:19:26.440 think you have to be very attentive to how little 0:19:26.480 --> 0:19:29.000 we know about how each of our mandate variables is 0:19:29.040 --> 0:19:31.440 going to play out, and so, you know, I feel 0:19:31.440 --> 0:19:33.240 like very adaptive is the way to think about it, 0:19:33.240 --> 0:19:34.800 as opposed and that's part of why I'm not being 0:19:34.880 --> 0:19:38.600 prescriptive into well, it's this many cuts over this period 0:19:38.640 --> 0:19:41.320 of time, because I think we're going to see and 0:19:41.400 --> 0:19:44.240 learn a lot as we go here. 0:19:45.080 --> 0:19:48.520 Stay with us mult Bloomberg Savannon's coming up off to this. 0:19:57.880 --> 0:20:00.440 Let's turn batchday's core PCE results. 0:20:00.440 --> 0:20:03.720 We did see that inline reading of zero point two percent, 0:20:03.840 --> 0:20:08.159 as expected. Ryan Wang of HSBC joins us. Now, Ryan, 0:20:08.400 --> 0:20:10.399 thank you so much for being here. It's great to 0:20:10.400 --> 0:20:12.320 have you on a Friday. What was your takeaway from 0:20:12.359 --> 0:20:14.080 the data, Yeah, thanks so much. 0:20:13.920 --> 0:20:14.399 For having me. 0:20:14.560 --> 0:20:17.719 Well, the data was pretty close to expectations. I do 0:20:17.800 --> 0:20:20.440 think still it's important that the year on year rate 0:20:20.480 --> 0:20:23.520 of core inflation is getting ever so closer to that 0:20:23.560 --> 0:20:26.200 three percent level. It actually doesn't matter what measure of 0:20:26.240 --> 0:20:29.320 inflation you look at, headline CPI, core CPI, either of 0:20:29.359 --> 0:20:31.959 the PC measures, they're all running close to three percent. 0:20:32.040 --> 0:20:33.399 That's not as high as it was a couple of 0:20:33.480 --> 0:20:35.960 years ago, but it's still, of course significantly higher than 0:20:35.960 --> 0:20:37.080