1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,760 --> 00:00:09,680 Speaker 2: The FED Governor Stephen Maron joins us now for more. 3 00:00:09,720 --> 00:00:10,480 Speaker 2: Governor Maren, good. 4 00:00:10,400 --> 00:00:11,800 Speaker 3: Morning, good morning, Thanks for having me. 5 00:00:11,920 --> 00:00:13,520 Speaker 2: It's good to see you as always, sir. So let's 6 00:00:13,520 --> 00:00:15,760 Speaker 2: spend some time. How did you approach the committee meeting 7 00:00:15,880 --> 00:00:18,200 Speaker 2: just last week and what was the argument for fifty 8 00:00:18,200 --> 00:00:18,919 Speaker 2: basis points? 9 00:00:19,280 --> 00:00:21,200 Speaker 3: So I approached it the same way approached the first one, 10 00:00:21,200 --> 00:00:23,079 Speaker 3: which is that I think that the FED is too restrictive. 11 00:00:23,079 --> 00:00:25,079 Speaker 3: I think that neutral is quite a ways below where 12 00:00:25,120 --> 00:00:29,440 Speaker 3: current policy is, and given my rather more sanguine outlook 13 00:00:29,440 --> 00:00:31,520 Speaker 3: on inflation than some of the other members of the committee, 14 00:00:31,560 --> 00:00:33,879 Speaker 3: I don't see a reason for keeping policy as restrictive 15 00:00:33,920 --> 00:00:35,800 Speaker 3: for a long period of time as we are. The 16 00:00:35,880 --> 00:00:38,320 Speaker 3: longer you keep policy restrictive, the more you run the 17 00:00:38,400 --> 00:00:41,040 Speaker 3: risk that monetary policy itself causes a downturn in the economy. 18 00:00:41,080 --> 00:00:43,040 Speaker 2: What was interesting about last week, as you know, is 19 00:00:43,040 --> 00:00:45,199 Speaker 2: that a send cup both ways. We also had this 20 00:00:45,320 --> 00:00:48,280 Speaker 2: argument from Presidents Smith of Kansas City FED, who put 21 00:00:48,320 --> 00:00:51,080 Speaker 2: out a long staymen, I've cherry picked a quote forgive me. 22 00:00:51,400 --> 00:00:53,559 Speaker 2: I see the starts of policy as being only modestly 23 00:00:53,600 --> 00:00:57,840 Speaker 2: restrictive financial market conditions appear to be easy across many metrics. 24 00:00:57,840 --> 00:00:59,800 Speaker 2: When you heard that kind of argument, what was the 25 00:01:00,160 --> 00:01:02,040 Speaker 2: a point to what he's saying in markets? 26 00:01:02,200 --> 00:01:04,000 Speaker 3: Yeah, so I'd say a couple things. First of all, 27 00:01:04,040 --> 00:01:05,720 Speaker 3: I'd say that the financial markets are driven by a 28 00:01:05,760 --> 00:01:08,720 Speaker 3: lot of things, not just monetary policy. They're driven, of course, 29 00:01:08,760 --> 00:01:10,520 Speaker 3: in part by monitary policy, but there's a lot of 30 00:01:10,520 --> 00:01:13,080 Speaker 3: things that drive financial markets. For example, I think on 31 00:01:13,120 --> 00:01:14,800 Speaker 3: this program you probably spend a lot of time thinking 32 00:01:14,840 --> 00:01:17,320 Speaker 3: about AI and new technologies. If you have AI or 33 00:01:17,360 --> 00:01:20,119 Speaker 3: a new technology, it could push financial markets higher, which 34 00:01:20,160 --> 00:01:22,240 Speaker 3: would look like an easing and financial conditions, But that 35 00:01:22,280 --> 00:01:25,720 Speaker 3: doesn't necessarily tell you anything about the stance of monitary policy. Indeed, 36 00:01:25,840 --> 00:01:27,800 Speaker 3: very often, in response to a supply shock or a 37 00:01:27,840 --> 00:01:29,920 Speaker 3: positive supply shock, although of course it depends what kind 38 00:01:29,920 --> 00:01:31,920 Speaker 3: of supply shock, you might think that the appropriate sense 39 00:01:31,959 --> 00:01:34,920 Speaker 3: of monitary policy would be lower and not tighter, all 40 00:01:35,040 --> 00:01:36,679 Speaker 3: lse equal, But of course there's a lot of sort 41 00:01:36,680 --> 00:01:39,160 Speaker 3: of what ifs and thinking about the type of the 42 00:01:39,240 --> 00:01:41,600 Speaker 3: supply shock. But I think that it's a mistake to 43 00:01:41,600 --> 00:01:44,480 Speaker 3: look at financial conditions and sort of conclude something automatically 44 00:01:44,480 --> 00:01:46,920 Speaker 3: about the stance of monitary policy. And I also want 45 00:01:46,959 --> 00:01:48,840 Speaker 3: to point out that some of the financial conditions that 46 00:01:48,880 --> 00:01:51,720 Speaker 3: look the easiest, things like the stock market, things like 47 00:01:52,040 --> 00:01:54,440 Speaker 3: you know, sort of various parts of credit spreads. You know, 48 00:01:54,520 --> 00:01:58,680 Speaker 3: those are not necessarily the financial conditions that feed the 49 00:01:58,720 --> 00:02:02,120 Speaker 3: most into economic activity. Yes, the stock marketing, credit spreads matter, 50 00:02:02,160 --> 00:02:03,880 Speaker 3: they matter a lot, But then you sort of think 51 00:02:03,880 --> 00:02:06,280 Speaker 3: about something like housing. I think housing matters a lot 52 00:02:06,320 --> 00:02:08,560 Speaker 3: more for the cyclical position of the economy, and some 53 00:02:08,639 --> 00:02:10,639 Speaker 3: of these things don't matter, but it's that they're only 54 00:02:10,680 --> 00:02:12,200 Speaker 3: part of the picture. And if you look at financial 55 00:02:12,200 --> 00:02:14,400 Speaker 3: conditions that affect housing, I think they're quite tighter. You 56 00:02:14,440 --> 00:02:16,280 Speaker 3: look at financial conditions that are affecting parts of the 57 00:02:16,280 --> 00:02:19,480 Speaker 3: private credit market, that also looks tighter. And I wonder 58 00:02:19,800 --> 00:02:22,240 Speaker 3: if what we're seeing now in some of the distresses 59 00:02:22,240 --> 00:02:25,120 Speaker 3: that you see in private markets means that financial conditions 60 00:02:25,120 --> 00:02:27,480 Speaker 3: have actually been tighter, but it's been masked by the 61 00:02:27,480 --> 00:02:29,000 Speaker 3: fact that we don't get marks for those on a 62 00:02:29,000 --> 00:02:29,680 Speaker 3: regular basis. 63 00:02:29,720 --> 00:02:31,360 Speaker 2: So, Governor, I think I want to give you some time. 64 00:02:31,440 --> 00:02:32,920 Speaker 2: I think we should give you some time on a 65 00:02:32,919 --> 00:02:35,760 Speaker 2: central lignment of yours that this year you believe policy 66 00:02:35,800 --> 00:02:38,919 Speaker 2: is actually passively tightened through twenty twenty five. And I 67 00:02:38,919 --> 00:02:40,920 Speaker 2: don't think that's an argument I've heard many people make. 68 00:02:41,200 --> 00:02:42,840 Speaker 2: You just spend some time fleshing that out. What do 69 00:02:42,880 --> 00:02:43,520 Speaker 2: you mean by that? 70 00:02:43,800 --> 00:02:47,040 Speaker 3: Sure, So my perspective is that there's been a number 71 00:02:47,040 --> 00:02:49,760 Speaker 3: of shocks that have hit the economy, driven in large 72 00:02:49,760 --> 00:02:52,800 Speaker 3: part by economic policy not from the FED, from outside 73 00:02:52,840 --> 00:02:55,880 Speaker 3: of the FED, that pushed neutral rates higher last year 74 00:02:55,960 --> 00:02:57,760 Speaker 3: and lower this year. And so I think if you 75 00:02:57,800 --> 00:02:59,480 Speaker 3: look where my neutral rate is, it's not that I'm 76 00:02:59,520 --> 00:03:01,480 Speaker 3: out of bound for where the rest of the committee 77 00:03:01,480 --> 00:03:03,640 Speaker 3: is unneutral. It's just that I flipped from having one 78 00:03:03,680 --> 00:03:05,800 Speaker 3: of the highest neutral rates last year to now one 79 00:03:05,840 --> 00:03:08,400 Speaker 3: of the lowest neutral rates. And that's driven by things 80 00:03:08,520 --> 00:03:12,520 Speaker 3: like population growth, right, It's driven by things like fiscal deficits, 81 00:03:12,760 --> 00:03:15,080 Speaker 3: and if you think about population growth, right, that's normally 82 00:03:15,120 --> 00:03:17,639 Speaker 3: considered to be one of the biggest drivers of neutral rates. 83 00:03:17,960 --> 00:03:19,760 Speaker 3: And it's part of the reason why people think that 84 00:03:19,760 --> 00:03:23,200 Speaker 3: neutral usually moves very very slowly, because population growth changes 85 00:03:23,360 --> 00:03:26,960 Speaker 3: only very very slowly as new technologies and cultural trends 86 00:03:27,320 --> 00:03:29,680 Speaker 3: drive people to have fewer kids over time. But we 87 00:03:29,800 --> 00:03:32,760 Speaker 3: experienced the last few years thirty years worth of population 88 00:03:32,840 --> 00:03:35,120 Speaker 3: growth change in only three years. Right, when you look 89 00:03:35,160 --> 00:03:37,720 Speaker 3: at the rate of population growth, it changed more in 90 00:03:37,720 --> 00:03:39,160 Speaker 3: the last three years than it did in the previous 91 00:03:39,160 --> 00:03:42,400 Speaker 3: thirty years. In both directions. It round tripped completely. And 92 00:03:42,440 --> 00:03:44,680 Speaker 3: so if the drivers, if the drivers of changes the 93 00:03:44,720 --> 00:03:47,160 Speaker 3: neutral rate, accelerate over time, it would only make sense 94 00:03:47,200 --> 00:03:48,960 Speaker 3: to me that the neutral rate itself would change more 95 00:03:49,040 --> 00:03:51,600 Speaker 3: rapidly over time as well. And so that's pushed neutral 96 00:03:51,680 --> 00:03:54,720 Speaker 3: higher last year and lower this year, which means that 97 00:03:54,760 --> 00:03:57,600 Speaker 3: policy is passively tightened. Because what matters for the stance 98 00:03:57,640 --> 00:03:59,920 Speaker 3: of policy is where you are relative to the neutral rate. 99 00:04:00,200 --> 00:04:02,040 Speaker 3: And the neutral is here and policies up here, you're 100 00:04:02,120 --> 00:04:04,440 Speaker 3: very tight. If neutral's here and policies down here, you're 101 00:04:04,560 --> 00:04:06,720 Speaker 3: very loose. But if you stay where you are and 102 00:04:06,760 --> 00:04:10,520 Speaker 3: then neutral goes down, you've passively tightened because the neutral 103 00:04:10,600 --> 00:04:13,320 Speaker 3: rate has shifted, and so policy has grown tighter over 104 00:04:13,360 --> 00:04:15,240 Speaker 3: the course of the year. Now, it's not the case 105 00:04:15,280 --> 00:04:18,040 Speaker 3: that you would expect to see a significant downturn in 106 00:04:18,080 --> 00:04:20,920 Speaker 3: the economy immediately as a result of that, because Montera 107 00:04:20,920 --> 00:04:23,320 Speaker 3: policy works with lags. It hits the economy with long 108 00:04:23,360 --> 00:04:25,560 Speaker 3: and variable lags, as we all know. But if you 109 00:04:25,640 --> 00:04:28,120 Speaker 3: maintain that very restrictive stance of policy for a long 110 00:04:28,120 --> 00:04:31,520 Speaker 3: period of time, you really increase the chances that those 111 00:04:31,600 --> 00:04:34,680 Speaker 3: lags come to manifest and that Montera policy then itself 112 00:04:34,720 --> 00:04:37,520 Speaker 3: induces a downturn in the economy. Why wasn't your descent bigger? 113 00:04:37,920 --> 00:04:39,920 Speaker 1: You were talking about a fifty basis point cut that 114 00:04:39,920 --> 00:04:41,960 Speaker 1: you would have preferred to see in the September meeting. 115 00:04:42,240 --> 00:04:45,599 Speaker 1: Why didn't you go for a seventy five basis basis 116 00:04:45,680 --> 00:04:48,080 Speaker 1: point cut descent last month? 117 00:04:48,360 --> 00:04:51,160 Speaker 3: Of course? So look, you know, I think that we're 118 00:04:51,160 --> 00:04:52,840 Speaker 3: a fair way from neutral, and I think that we 119 00:04:52,880 --> 00:04:55,039 Speaker 3: could get there a bit faster. I could imagine getting 120 00:04:55,080 --> 00:04:58,120 Speaker 3: there in a series of fifty clips. I don't think 121 00:04:58,160 --> 00:04:59,520 Speaker 3: it's the case that we need to get there and 122 00:04:59,560 --> 00:05:01,200 Speaker 3: more than that, because I don't think that I don't 123 00:05:01,240 --> 00:05:03,680 Speaker 3: think the economy is dysfunctional right now. I don't think 124 00:05:03,720 --> 00:05:06,240 Speaker 3: that financial markets are dysfunctional right now. I don't think 125 00:05:06,240 --> 00:05:08,359 Speaker 3: we need to move even faster than that for those 126 00:05:08,440 --> 00:05:11,600 Speaker 3: for those reasons. If I did, then you know, I 127 00:05:11,600 --> 00:05:14,440 Speaker 3: would have no problem voting for voting for bigger cuts. 128 00:05:14,480 --> 00:05:16,760 Speaker 3: But I think sort of getting there in fifties instead 129 00:05:16,760 --> 00:05:18,559 Speaker 3: of twenty five's is fine. 130 00:05:18,800 --> 00:05:20,760 Speaker 1: So you would be open to dissenting again for a 131 00:05:20,800 --> 00:05:22,880 Speaker 1: fifty basis point cut if the rest of the committee 132 00:05:22,960 --> 00:05:23,640 Speaker 1: wasn't around. 133 00:05:23,440 --> 00:05:26,400 Speaker 3: For that next month or in December rather. Yeah, well, 134 00:05:26,440 --> 00:05:28,440 Speaker 3: I don't want to commit to that because a lot 135 00:05:28,480 --> 00:05:30,640 Speaker 3: can happen between now and the next meeting. We're getting 136 00:05:30,680 --> 00:05:32,280 Speaker 3: a lot of data, I hope, between now and then, 137 00:05:32,279 --> 00:05:34,600 Speaker 3: and only data about the near term. The data about 138 00:05:34,640 --> 00:05:36,640 Speaker 3: the recent past as well that we don't have, so 139 00:05:36,720 --> 00:05:38,720 Speaker 3: things could change. But if things play out according to 140 00:05:38,800 --> 00:05:41,920 Speaker 3: my forecast, then yes I would Governor. 141 00:05:42,000 --> 00:05:46,160 Speaker 4: Do you think your advocacy for a fifty bait cut 142 00:05:46,320 --> 00:05:49,600 Speaker 4: is hardening the opposition to cuts at all? 143 00:05:50,040 --> 00:05:52,760 Speaker 3: I don't think so. I think everybody is. Everybody is 144 00:05:52,800 --> 00:05:56,279 Speaker 3: doing their own analysis of the economy and inflation in 145 00:05:56,320 --> 00:06:00,120 Speaker 3: the labor market and financial markets too, and coming to 146 00:06:00,160 --> 00:06:02,360 Speaker 3: a conclusion. And you know, I don't think anybody is 147 00:06:02,400 --> 00:06:06,279 Speaker 3: necessarily changing your mind sort of to not support a 148 00:06:06,320 --> 00:06:08,400 Speaker 3: cut just because I want to cut more. 149 00:06:08,640 --> 00:06:11,600 Speaker 4: Is there a lot of discussion at the FED about 150 00:06:11,640 --> 00:06:13,400 Speaker 4: the fact that you're all doing your own analysis, But 151 00:06:13,720 --> 00:06:15,280 Speaker 4: what data are you all using if we're in the 152 00:06:15,279 --> 00:06:17,000 Speaker 4: mis still in the middle of a government shutdown thirty 153 00:06:17,000 --> 00:06:17,760 Speaker 4: four days today? 154 00:06:18,200 --> 00:06:21,200 Speaker 3: Yeah, so there's a lot of talk about that. Let 155 00:06:21,200 --> 00:06:23,359 Speaker 3: me say a couple things about that. First of all, 156 00:06:23,480 --> 00:06:26,520 Speaker 3: you know, it's my perspective that being excessively data dependent 157 00:06:26,600 --> 00:06:29,960 Speaker 3: makes you backward looking because the data are always backward looking, 158 00:06:29,960 --> 00:06:31,880 Speaker 3: and because of collection lags, because the amount of time 159 00:06:31,880 --> 00:06:34,880 Speaker 3: that you're doing comparisons over right, and given montary policy 160 00:06:34,920 --> 00:06:36,719 Speaker 3: takes lags to hit the economy. You want to be 161 00:06:36,720 --> 00:06:38,919 Speaker 3: forward looking, so you want to make policy based in 162 00:06:38,920 --> 00:06:41,080 Speaker 3: your forecast. Now, there are times when you might not 163 00:06:41,120 --> 00:06:42,719 Speaker 3: have a lot of confidence in your forecast, and so 164 00:06:42,760 --> 00:06:44,880 Speaker 3: you need to be data dependent, but you should be 165 00:06:44,920 --> 00:06:46,760 Speaker 3: data dependent only to the extent that you don't have 166 00:06:46,800 --> 00:06:49,560 Speaker 3: confidence in your forecast. My perspective is that we know 167 00:06:49,640 --> 00:06:51,279 Speaker 3: the size of the shocks that have hit the economy 168 00:06:51,279 --> 00:06:54,640 Speaker 3: this year, things like population growth. That's a known quantity. 169 00:06:54,760 --> 00:06:56,520 Speaker 3: We know what it does to the economy, we know 170 00:06:56,600 --> 00:06:58,359 Speaker 3: what it does to neutral we know the size of that. 171 00:06:58,440 --> 00:07:01,920 Speaker 3: It's not a mystery. So therefore I have a lot 172 00:07:02,000 --> 00:07:06,280 Speaker 3: of confidence in my forecast. And therefore, to the extent 173 00:07:06,320 --> 00:07:07,960 Speaker 3: that we would get data that would make me change 174 00:07:07,960 --> 00:07:10,600 Speaker 3: my forecast, I would then change my policy outlook. Right, 175 00:07:11,000 --> 00:07:12,960 Speaker 3: So the question is that am I missing data because 176 00:07:12,960 --> 00:07:15,160 Speaker 3: of the government shutdown, that would lead me to change 177 00:07:15,160 --> 00:07:18,000 Speaker 3: my forecast. And given so much of my forecast for 178 00:07:18,040 --> 00:07:21,880 Speaker 3: inflation depends on the housing market and depends on the 179 00:07:21,880 --> 00:07:23,600 Speaker 3: housing market, I would assume that I would see that 180 00:07:23,640 --> 00:07:26,200 Speaker 3: in the reporting that Bloomberg and others do, even if 181 00:07:26,240 --> 00:07:28,400 Speaker 3: I'm not getting data in the short term. Now, something 182 00:07:28,440 --> 00:07:31,760 Speaker 3: like that lasts a couple of months, right, Can I 183 00:07:31,760 --> 00:07:33,920 Speaker 3: continue to sort of have this degree of confidence if 184 00:07:33,960 --> 00:07:37,520 Speaker 3: we go six months without data? Absolutely not. So. I 185 00:07:37,560 --> 00:07:39,720 Speaker 3: do think this is something people are attentive to, And 186 00:07:39,760 --> 00:07:42,680 Speaker 3: there's also alternative data, as you guys are aware. I 187 00:07:42,720 --> 00:07:45,960 Speaker 3: find the alternative data on inflation to be not super useful. 188 00:07:46,240 --> 00:07:48,000 Speaker 3: I do find it to be more useful on the 189 00:07:48,080 --> 00:07:50,080 Speaker 3: labor market. And when you sort of look at alternative 190 00:07:50,160 --> 00:07:52,720 Speaker 3: data on the labor market, you see data that's consistent 191 00:07:52,800 --> 00:07:56,080 Speaker 3: with continual ebbing of demand, which again is a signal 192 00:07:56,480 --> 00:08:00,120 Speaker 3: that policy is too tight. If the decline in hiring 193 00:08:00,320 --> 00:08:03,440 Speaker 3: was a result of negative supply shocks from immigration, you 194 00:08:03,480 --> 00:08:05,280 Speaker 3: would see higher wages, and you would see and you 195 00:08:05,320 --> 00:08:08,400 Speaker 3: would see firms and people giving answering surveys in a 196 00:08:08,400 --> 00:08:11,000 Speaker 3: way that indicated that jobs were plentiful or it was 197 00:08:11,000 --> 00:08:13,840 Speaker 3: difficult to find workers. From the firm perspective, you're not seeing. 198 00:08:13,600 --> 00:08:16,560 Speaker 2: Say, developments in private credit as as well as evidence 199 00:08:16,560 --> 00:08:18,400 Speaker 2: that we're restrictive. Perhaps it was the fault of our 200 00:08:18,440 --> 00:08:20,320 Speaker 2: pairs that this didn't come up much of the news conference. 201 00:08:20,360 --> 00:08:23,160 Speaker 2: I was somewhat surprised did it come up much in 202 00:08:23,200 --> 00:08:24,920 Speaker 2: the meeting, the two day meeting last week. 203 00:08:25,240 --> 00:08:28,800 Speaker 3: Well, I mentioned it at the meetings as a reason 204 00:08:28,840 --> 00:08:33,120 Speaker 3: why it was potentially a mistake to make to make 205 00:08:33,640 --> 00:08:37,200 Speaker 3: very confident inferences from the stance of equity markets to 206 00:08:37,320 --> 00:08:41,480 Speaker 3: the stance of monetary policy. But other than that, I 207 00:08:41,480 --> 00:08:43,640 Speaker 3: think that sort of folks were focused on it on 208 00:08:43,720 --> 00:08:46,480 Speaker 3: private credit as a financial stability risk and sort of 209 00:08:46,480 --> 00:08:48,400 Speaker 3: thinking about how much should we care about this? What 210 00:08:48,720 --> 00:08:50,840 Speaker 3: are the risks? You know, you know, what are the risks? 211 00:08:50,840 --> 00:08:53,360 Speaker 3: Where could this go? Just sort of analyzing it from 212 00:08:53,400 --> 00:08:56,680 Speaker 3: a financial stability perspective, Whereas I was making the point 213 00:08:56,679 --> 00:08:58,640 Speaker 3: as well that there's a chance that because we don't 214 00:08:58,640 --> 00:09:01,560 Speaker 3: get marks on these things very frequently, that distresses are 215 00:09:01,600 --> 00:09:04,640 Speaker 3: actually greater than we thought they were, especially when you 216 00:09:04,640 --> 00:09:06,640 Speaker 3: think about the share of credit that has been created 217 00:09:06,679 --> 00:09:09,280 Speaker 3: in private markets in the last few years, you know, 218 00:09:09,280 --> 00:09:10,880 Speaker 3: so it's slowed down recently, but over the last few 219 00:09:10,920 --> 00:09:13,000 Speaker 3: years it's been a greater share of credit that's been 220 00:09:13,040 --> 00:09:14,840 Speaker 3: extend into the economy, and so it could be that 221 00:09:14,880 --> 00:09:15,760 Speaker 3: we're just not seeing it. 222 00:09:15,800 --> 00:09:17,920 Speaker 2: Do you think we're missing something here because somebody guests 223 00:09:17,920 --> 00:09:20,840 Speaker 2: come on the program and say it's idiosyncratic, just signs 224 00:09:20,840 --> 00:09:23,520 Speaker 2: of isolated fraud, not a big deal, not systemic, not 225 00:09:23,559 --> 00:09:24,120 Speaker 2: broad enough. 226 00:09:24,360 --> 00:09:27,640 Speaker 3: Do you share that view? So, you know, look, I 227 00:09:28,000 --> 00:09:31,439 Speaker 3: think that probably at the end of the day, that's 228 00:09:31,480 --> 00:09:33,640 Speaker 3: what it is. However, I do want to make the 229 00:09:33,679 --> 00:09:38,559 Speaker 3: point that when you get series of seemingly uncorrelated, non 230 00:09:38,679 --> 00:09:42,920 Speaker 3: systematic problem sorry, non systematic issues like that, it can 231 00:09:43,000 --> 00:09:46,760 Speaker 3: be an indication that montary policy is restrictive. We've seen 232 00:09:46,800 --> 00:09:48,880 Speaker 3: this in the past. When you have a series of 233 00:09:48,920 --> 00:09:53,520 Speaker 3: seemingly uncorrelated, uncorrelated credit problems that had been masked for 234 00:09:53,520 --> 00:09:56,080 Speaker 3: a while and then suddenly come to light, it tells 235 00:09:56,120 --> 00:09:57,840 Speaker 3: you something about the stance of montary policy.