Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: To find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg terminal. We've got to
Speaker 1: start with this one right here, though, Patrick Harker, the
Speaker 1: president of the Philadelphia Fed. Mr President, I think you've
Speaker 1: got a good slot because about an hour ago it
Speaker 1: was much colder than this. Good morning to you. Let's
Speaker 1: get straight into it. Forget about the weather. We've got
Speaker 1: a beautiful backdrop. I want to start here. As we
Speaker 1: sit here today. The biggest risk today is it doing
Speaker 1: too much for you guys or doing too little. Well,
Speaker 1: I think what we need to do is just act,
Speaker 1: and we're acting, and so I think we need to
Speaker 1: move and need to move methodically toward a clearly restrictive stance,
Speaker 1: which we're doing. And then in my view, then we
Speaker 1: either pause, depending on the data, We're gonna have to
Speaker 1: see how this plays out, we get to above three
Speaker 1: point four. By year end, we're at or above three
Speaker 1: point four and then we see we have to let
Speaker 1: some of this play out. We don't have to keep
Speaker 1: climbing climbing, climbing. Then it go down very quickly. Let's
Speaker 1: stay up there and let the economy do its think
Speaker 1: so for how long? Right? And this is point where
Speaker 1: he said keep it there for possibly years and see
Speaker 1: the trickle out effect. We don't know. I mean, we
Speaker 1: really need to let the data play out. You just
Speaker 1: don't know. I'll pray Art, what date are you looking at?
Speaker 1: Inflation number one? For sure? That's the issue that's headline
Speaker 1: of four core for sure, because you know the volatile
Speaker 1: the volatility of energy and food is extreme, particularly because
Speaker 1: of the situation we have in Ukraine and around the world.
Speaker 1: This has been this whole set up in the chairman's speech.
Speaker 1: Don't think of a totemic issue for Wall Street and
Speaker 1: everybody is gonna be tuning in at the top of
Speaker 1: the next hour. What's the message that the Fed would
Speaker 1: like investors to take away today? I don't know what
Speaker 1: the Fed has. I can only speak for myself. I
Speaker 1: think the message is for me that we need to
Speaker 1: get inflation under control. We will do what it takes
Speaker 1: to get inflation under control, and hopefully we can do
Speaker 1: that in a way that does not ruin what otherwise
Speaker 1: is a good economy. You look at the jobs data,
Speaker 1: you look at other parts of the economy. We don't
Speaker 1: want to do this in a way that really just
Speaker 1: squashes the jobs market right now? Is this whatever it takes?
Speaker 1: Or is this Mario dragging whatever it takes? Because everybody
Speaker 1: on Wall Street wants to know, would you risk recession
Speaker 1: to bring inflation down? It's possible, It's always possible to
Speaker 1: have a recession at this point. I don't think it's
Speaker 1: in my forecast that it's probable. I think we can
Speaker 1: we can still do this. There's still a path to
Speaker 1: do this, to have if if there is a recession,
Speaker 1: it would be shallow and short. In my view, there's
Speaker 1: two camps. One says get to the terminal rate as
Speaker 1: quickly as possible to get ahead of inflation. The other says,
Speaker 1: move more slowly because you want to make sure that
Speaker 1: the lags don't bring down the economy. Which camp are
Speaker 1: you in? Again? Where I am is, let's get up
Speaker 1: to the clearly restrictive stance. Three point four is a
Speaker 1: good number. Three point five, and then let's see how
Speaker 1: things play out from there. This word neutral has been
Speaker 1: thrown around a lot in the last couple of weeks.
Speaker 1: You're smiling already, So I talked to me about what
Speaker 1: you think neutral is, what's restrictive? What is it? And
Speaker 1: how do we know it's clearly above free? For sure?
Speaker 1: How much above? Again? I think we just have to
Speaker 1: see today's data. We can talk about that we're seeing
Speaker 1: glimmers of hope, and I emphasize glimmers of hope on
Speaker 1: the inflation front. We're not done and so we need
Speaker 1: to continue to raise raids to make sure that those
Speaker 1: glimmers turned into a clear downward trend. How do you
Speaker 1: know when we have a clear down with Trent and clearly,
Speaker 1: as she pointed out as two ways of looking at this,
Speaker 1: she keep hiking until you see two percent. That's clearing
Speaker 1: where you want to go. You want to get to
Speaker 1: this place where you're restrictive and you're waiting, and you're
Speaker 1: convinced that we've got this trajectory we're moving back down
Speaker 1: towards too. I think what we'd all like is just
Speaker 1: a better understanding of what that world looks like. How
Speaker 1: do we know when we see that world? So clearly
Speaker 1: we have the numbers right, corps and headline. I also
Speaker 1: look at the distribution of inflation. That's how many goods
Speaker 1: and services are about five percent, about four percent. As
Speaker 1: we see that distribution shrinking at you think about the
Speaker 1: beginning of the pandemic was all about use cars and
Speaker 1: some other commodities. Let's start to bring that down because
Speaker 1: right now it's pretty widespread. That to me would be
Speaker 1: a clear sign that we're making progress. Financial conditions are
Speaker 1: an important mechanism for you to get your policy into
Speaker 1: the economy. Would you say we've seen an unwarranted easy
Speaker 1: financial conditions through the summer. I don't know if it's unwarranted,
Speaker 1: but we need to continue to do what we have
Speaker 1: to do with respect of the Fed funds right which
Speaker 1: we've committed, But clearly financial conditions would need to be
Speaker 1: tighter for you to achieve that. Well, no, let's let's
Speaker 1: talk about the housing market, and we've already have a
Speaker 1: very tight We already have a very tight housing market,
Speaker 1: so there already is progress being amazing comfortable. You don't
Speaker 1: believe it's a disconnect between what you're saying as a
Speaker 1: committee and on what you're saying plant and Finance. Not yet,
Speaker 1: Not yet. I mean, it's something clearly watched, but I'm
Speaker 1: not worried about it at this point. Unemployment, you're expecting
Speaker 1: that to rise a little bit, that's the Fed's message.
Speaker 1: But the same time you're saying that at three five percent,
Speaker 1: it's below the natural rate. So how much of a
Speaker 1: rise is acceptable to you? And what do you say
Speaker 1: to the people who say, yeah, it's just a tiny rise,
Speaker 1: but it was my job. Yeah, I know. And that's
Speaker 1: what's difficult. And this is the balance, right that we
Speaker 1: have to try to find because we know inflation hurts
Speaker 1: the lowest income people in our country, and because of
Speaker 1: losing jobs, it hurts those people the most too, So
Speaker 1: we have to find that balance. How much higher it's
Speaker 1: hard to say exactly. I'm not in the camp of
Speaker 1: it being necessarily at five. We're going into this with
Speaker 1: an incredibly strong job market. This is not like other
Speaker 1: situations we've had historically, so I think we don't have
Speaker 1: to see a rapid rise in unemployment at to get
Speaker 1: inflation on the control at this point. So Adam pose
Speaker 1: it was on earlier and he was talking about how
Speaker 1: there has to be an acceptance of perhaps three for
Speaker 1: a longer period of time that yes, maybe the trajectory
Speaker 1: has to be okay, but that has to be a
Speaker 1: tolerated inflation rate. Do you think that that's appropriate given
Speaker 1: the concerns about unemployment. So I think what's most important
Speaker 1: is we keep moving toward two exactly the pace which
Speaker 1: we get to to. I'm less worried about that, but
Speaker 1: we keep moving forward right and get to a position
Speaker 1: where inflation is consistently going down. That's the most important thing.
Speaker 1: See do you not buy the argument that if inflation
Speaker 1: remains above a certain point, regardless of the trajectory, for
Speaker 1: a long time, it gets into the psyche of Americans
Speaker 1: and then they start to sort of have a self
Speaker 1: fulfilling prophecy inflation. You don't believe that the number one
Speaker 1: risk is getting inflation expectations on actor. We cannot let
Speaker 1: that happen. So so far it's not happened. We need
Speaker 1: to continue to act and make sure it doesn't. So
Speaker 1: are you watching the University of Michigan one to five
Speaker 1: year or five to ten year forecast? Is that's sort
Speaker 1: of the key data point all of the above. You
Speaker 1: look at all the above, whether it's the new York
Speaker 1: Fed survey or tips markets, you know all those measures.
Speaker 1: What's the response function to that? Doing what we're doing
Speaker 1: right now, continuing to move rates up methodically to get
Speaker 1: inflation down. Period. You mentioned the consumer. When you look
Speaker 1: at the economy these days, what do you see? We
Speaker 1: got the PC numbers today, The inflation data were great,
Speaker 1: wages and salaries were great, but spending was weak. Well
Speaker 1: that's a bit expected. Right as we race rates and
Speaker 1: we're trying to slow demand, you would expect that spending
Speaker 1: would come down. Are you worried about recession? I know
Speaker 1: that you say it doesn't have to happen, but what
Speaker 1: do you think the odds are? And uh, is there
Speaker 1: any way to foresee it given the unusual nature of
Speaker 1: this recession and recovery? Um So at this point it's
Speaker 1: not in my forecast that we'd hit a deep recession,
Speaker 1: not at all. Short and shallow is something we keep hearing.
Speaker 1: You mentioned four minutes ago, twelve months ago, the buzzwords.
Speaker 1: You know what that was. I won't mention it because
Speaker 1: it's like toxic around here. Bell Rings ejected. That was
Speaker 1: clearly a massive failure and it wasn't unique to this
Speaker 1: central bank. A lot of people were sat on this
Speaker 1: program a million times. We discussed it with Mike McKee
Speaker 1: a million times. Was also a story that played out
Speaker 1: abroad and then didn't materialize. Do you worry that we're
Speaker 1: doing that again by having this conversation, because I can
Speaker 1: tell you President Harker, every single day, short shallow, short, shallow,
Speaker 1: it's all a here, It's all we hear every single day.
Speaker 1: Do you think we could be getting this wrong again?
Speaker 1: I'm not sure that we'd be getting it wrong again.
Speaker 1: What go back and what did we miss? I think
Speaker 1: what did I miss to where we were not enough
Speaker 1: emphasis on the soft data in a situation is changing
Speaker 1: very rapidly. The data is lagging, and in particular, it's
Speaker 1: lagging in those quick change moments. So more emphasis on
Speaker 1: the soft data is really important. What we're hearing from
Speaker 1: our context is the soft data. They're starting to see
Speaker 1: supply chain constraints ease a little bit. They're starting to
Speaker 1: see some relief when it comes to hiring. Not everywhere,
Speaker 1: but in some cases there's so but and they don't
Speaker 1: plan on laying people off at this point. They worked
Speaker 1: very hard to get the people they have. They don't
Speaker 1: want to let them go. So I think in that situation,
Speaker 1: I'm not sure that we're mischaracterizing a short and shallow
Speaker 1: potential and emphasized potential recession. As you said, though, the
Speaker 1: cyclists move very quickly, and there's a feeling that the
Speaker 1: post financial crisis communication architecture of this Federal Reserve, how
Speaker 1: to you back in the last twelve months, what needs
Speaker 1: to change? I think we need to keep emphasize thing
Speaker 1: that what we know, what we don't know, what we
Speaker 1: can know, what we can't know, and act appropriately. I mean,
Speaker 1: people want to level of precision in a situation that
Speaker 1: we're in where we keep getting hit right issue after
Speaker 1: issue as now it's droughts globally right that where it's
Speaker 1: just impossible to put that level of precision on these
Speaker 1: normal Would you like the dot plot to be thrown
Speaker 1: into the trash? Would you like to see that gone?
Speaker 1: I think we need to continue to communicate with the
Speaker 1: American people about what are our views on the beauty
Speaker 1: of the FED is we have a diversity of opinions
Speaker 1: and that's you see those in the dots. President Harker
Speaker 1: of the Philadelphia FED, thank you, sir, that's good to
Speaker 1: catch up. The key I know you've said it a
Speaker 1: few times. Is that something you'd like to see gone
Speaker 1: out of the summary of Economic projections? Well, I wouldn't
Speaker 1: speak for the FED, but I can tell you Wall
Speaker 1: Street continually misinterprets it as a plan rather than nineteen
Speaker 1: individual forecasts. It's something that the chaman often sometimes leans on,
Speaker 1: when it's when it's good for the chan to lean on.
Speaker 1: Other times it's something the emphasizes. You know, it's such
Speaker 1: a tricky moment right now, because when you talk about
Speaker 1: the data dependency, I just keep going back to two
Speaker 1: one and how the data was wrong, How when it
Speaker 1: got revised in the job's formation, it showed this incredible
Speaker 1: strength that hadn't been foreseen in the same kind of way.
Speaker 1: So how do you remain data dependent and look for
Speaker 1: that trajectory if it's so noisy and we're dealing with
Speaker 1: so many different and unfortunately for them, it's the only
Speaker 1: tool they've got, it's the only thing they can do.
Speaker 1: So they can't do They can't say, gee, we wish
Speaker 1: we had the revised numbers yesterday. GDP gets revised up
Speaker 1: and goes domestic income is positive, and that makes uh,
Speaker 1: those two things, don't data there's something clearly wrong with
Speaker 1: the measurement right now, given that gap between GDP and
Speaker 1: g d I. President, how can it's fantastic catch Howe
Speaker 1: you said, this is Blindbeck, we walk them immediately. Here
Speaker 1: the gentleman from St. Louis in Indiana University, James Bullard,
Speaker 1: joins us with all his effort over the years, and
Speaker 1: particularly his research effort a bit ago on regime change
Speaker 1: that had a profound effect seven eight, nine years ago.
Speaker 1: And there's a new phrase from Jim Bullard right now,
Speaker 1: we'll get right to and that is the phrase of
Speaker 1: the moment. Fronting Jim Bullard, what is front moding? I
Speaker 1: think we wanted to pull the rate increases forward in
Speaker 1: time because the inflation that we got in to exploded
Speaker 1: onto the scene, so we had to move more quickly
Speaker 1: than we would have historically. Um, but that's appropriate for
Speaker 1: this situation as we're coming out of the pandemic and
Speaker 1: we've got uh, you know, a lot of fiscal policy,
Speaker 1: a lot of monetary policy during the pandemic. One of
Speaker 1: the questions that Waltz he has had after Chairman Power
Speaker 1: has spoken in the past is he said that, uh,
Speaker 1: at some point it's appropriate to slow the pace of increases,
Speaker 1: and they take that as devish. Others push back and say,
Speaker 1: it's not how fast we do it, it's where we go. Uh.
Speaker 1: Do you agree with that that that the pace doesn't
Speaker 1: really matter as much as what the term pace matters
Speaker 1: a little bit? You do have to get to the
Speaker 1: level of the policy rate that will put downward pressure
Speaker 1: on inflation. Now, and we've been able to get some
Speaker 1: download pressure on inflation during the first half of this year.
Speaker 1: Most of that came through market pricing, not through the
Speaker 1: actual level of the funds rate. But now you have
Speaker 1: to follow through and get the funds rate to the
Speaker 1: to a level that's defensible that you can say, hey,
Speaker 1: I'm I'm putting downward pressure on inflation. We've got an
Speaker 1: EID handle on headline CPI inflation. Uh, this is more
Speaker 1: inflation than we've seen in forty years. We've got to
Speaker 1: get the rate up well. The concern that some members
Speaker 1: of the committee have had is that as you it's
Speaker 1: been market pricing, it's not the full effects yet of
Speaker 1: the tightening, and when that hits, the economy may be weak,
Speaker 1: and then you're doing a disservice by sending us into
Speaker 1: you know, long and variable lags something uttered by Milton Freedman,
Speaker 1: but that was based on data from the fifties and sixties.
Speaker 1: I think today's market, it's partly because of media like this.
Speaker 1: It moved very quickly in response to projected paths of policy.
Speaker 1: And I would site as exhibit number one the housing market,
Speaker 1: which has already slowed down substantially in the spring here,
Speaker 1: and it started to do that before we even made
Speaker 1: much of a move. We would only move twenty five
Speaker 1: or or made one or two moves, and and hadn't
Speaker 1: even started the battlestreet runoff. So I don't think this
Speaker 1: long and variable lags thing is as accurate as it
Speaker 1: might have been historically. I think you're getting a lot
Speaker 1: of the impact now, but we can't just rely on markets.
Speaker 1: We have to get our rate up to the level
Speaker 1: that will put down the pressure on inflation. I've said
Speaker 1: three point seven, five or four percent by the end
Speaker 1: of this year. I'd like to get to that level,
Speaker 1: and sooner is better as far as I'm concerning, A
Speaker 1: lot of people have said neutral is higher than Chairman suggested.
Speaker 1: We were there almost at two and a half percent,
Speaker 1: but the inflation is making that that's a long runner
Speaker 1: that's a long run neutral that that you can read
Speaker 1: that off the summary of economic projections, and that's if
Speaker 1: the economy is on the balanced growth path, inflation was
Speaker 1: at two percent expected to remain at two percent, then
Speaker 1: that would be a logical level for the policy rate then.
Speaker 1: But that's not where we are today. We've got all
Speaker 1: this inflation and we've got a very strong labor market.
Speaker 1: So that's why it makes sense to go well above
Speaker 1: that to a recommended policy rate that's well above that
Speaker 1: has that longer run neutral point. Change for you is
Speaker 1: that how to lift Do you think we go back
Speaker 1: to the old world, the pre pandemic world of low inflation,
Speaker 1: low growth and a lower long term neutral rate. What
Speaker 1: are we going towards? Uh? You know, I don't like
Speaker 1: to get wrapped up in this because this is the
Speaker 1: thing we know the least about. So it's good to
Speaker 1: think about it and it's good to project about it,
Speaker 1: but we don't really know where the where this everything
Speaker 1: will settle out, let's say five to ten years from now.
Speaker 1: But you know, you've got this a media problem now
Speaker 1: where you've got the inflation today, that's where you got
Speaker 1: to fight your battle today. Can you tell me what
Speaker 1: ballets sheet reduction fits into that. We've had numbers like
Speaker 1: a trillion dollars bantons sheet reduction over the next twelve months.
Speaker 1: What is that to you in terms of tightening policy?
Speaker 1: And how does that complement your thoughts? Somewhere right should be?
Speaker 1: And I think it's uh, it is a compliment to
Speaker 1: the rate policy. Um. I'm hopeful that we'll get uh.
Speaker 1: And I do think that we've gotten some downward pressure
Speaker 1: or upward pressure on longer term interest rates through this channel.
Speaker 1: I think that econometric estimates are you know, all over
Speaker 1: the map, they're they're very wide. UM, so we'll we'll see.
Speaker 1: One thing that I think maybe pretty effective here is
Speaker 1: that this is a global quantitative tightening and so you've
Speaker 1: got many central banks moving in the same direction here,
Speaker 1: all at once. That may push longer term meals higher
Speaker 1: and help us keep inflation under control globally. St. Louis Cardinals,
Speaker 1: who had a spectacular August. There's no question you're looking
Speaker 1: like the best team in baseball right now. And they've
Speaker 1: got a manager who is unique, young and different. He
Speaker 1: has a communication strategy that is original. What's the next
Speaker 1: communication strategy for the FED? Is there too much communication? Though? Uh?
Speaker 1: I think we do a great job because I think
Speaker 1: it's good to have a big committee. There's information is
Speaker 1: coming in and continuous time. If you'll appreciate and uh,
Speaker 1: and you have to react. Markets want to know, well,
Speaker 1: you know, what do you think about? What do you
Speaker 1: think about that? Dade twice in this conversation blame the
Speaker 1: media for the mess word. We asked President Hawkin whether
Speaker 1: we should get rid of the doult clock. Do you
Speaker 1: think we should? I've felt that we should do something
Speaker 1: with the dot plot, but we haven't figured out what
Speaker 1: to do. I have talked with you guys about stepping
Speaker 1: out of it. But I don't like the emphasis on
Speaker 1: let's say, three years from now, here's where we're gonna be.
Speaker 1: The information content of that is close to zero. So
Speaker 1: I don't think we should pretend that we're saying something
Speaker 1: when we don't really know. Uh. And we should probably
Speaker 1: keep a shorter term about, well, here's where we think
Speaker 1: we are here. If you have pools up to the
Speaker 1: lunch room at the St. Louis Fed, you know, in
Speaker 1: his retirement, can you have this surveillance team come out
Speaker 1: to celebrate that. Okay, you think he's gonna hit I
Speaker 1: don't know the the the home running hit the other
Speaker 1: day pensioning in the third inning was extraordinary, that grand slam.
Speaker 1: What's the grand slam Sherman Paul has to do before
Speaker 1: the September meeting? What is the communication strategy he needs
Speaker 1: to do to hit a grand stand? Like the gentleman,
Speaker 1: I think he'll do a great job in this speech here.
Speaker 1: Um I I haven't seen it, so I don't know exactly.
Speaker 1: What would you like to just single sense you like
Speaker 1: I just said, I don't know what, but he'll do
Speaker 1: a great job with it, and it's a it's a
Speaker 1: great opportunity and he'll use it effectively to UH to
Speaker 1: lay out the committee strategy. Very diplomatic there than if
Speaker 1: they St. Louis Fed Right now, we have with us,
Speaker 1: of course, Atlanta FED President Raphael Bostick, who has provided
Speaker 1: the intellectual leadership for the region and has really been
Speaker 1: vocal recently about what's going to happen in September. And
Speaker 1: that's where we have to start. Where you said recently
Speaker 1: in a recent interview, that's it's a coin toss between
Speaker 1: fifty and seventy five in terms of how many basis
Speaker 1: points you HiPE. What will determine that coin toss for you? Well,
Speaker 1: for me, it will be the data that comes in
Speaker 1: over the next couple of weeks. You know, PC today
Speaker 1: is actually an important one showing the economy is slowing
Speaker 1: down in an orderly way, which is helpful. But we
Speaker 1: also have a job report that's coming in I guess
Speaker 1: a week from now, and then ten days later we
Speaker 1: have the CPI. I think the three of those together
Speaker 1: will start to give me a sense of the big
Speaker 1: story about how the economy is responding to our policies
Speaker 1: and also just the changing dynamic. And and if it
Speaker 1: comes in strong and start strong, as if there's no change,
Speaker 1: I'll probably be leaning seventy. If it comes in slowing
Speaker 1: like we've seen today, it's the first piece of evidence
Speaker 1: I'll probably lane your fifty. Okay, So is there a
Speaker 1: certain threshold with the jobs data in particular that you're
Speaker 1: looking for because you mentioned that we saw a pretty
Speaker 1: a pretty elevated number the last time around. How is
Speaker 1: that going to inform you what's sort of the cut
Speaker 1: off that you're looking for there? Well, I don't know
Speaker 1: these things. There is some art here, right, So it's
Speaker 1: not if it hits to seventies seven then I'm good, right.
Speaker 1: I do think that you have to think of out
Speaker 1: this as you know, what does the jobs number tell
Speaker 1: us in terms of trajectory and the jobs. You know,
Speaker 1: the economy has been producing a lot of jobs on
Speaker 1: a monthly basis, food people a month, and that's a
Speaker 1: lot um. I think we want to start to see
Speaker 1: that slow, uh, And that would be consistent with the
Speaker 1: idea that our policies are starting to take demand and
Speaker 1: pull it down and reduce that in balance that is underlying, uh,
Speaker 1: the inflation that we're seeing. So that's kind of what
Speaker 1: I'm looking for. And and we'll look through it to
Speaker 1: see if there are particular sectors where there are movements
Speaker 1: that would suggest that that there is some some some
Speaker 1: help that's coming in terms of the demand side. There
Speaker 1: are thousands of traders on Wall Street who are turning
Speaker 1: blue now because they're holding their breath waiting for the
Speaker 1: chairman speech. And I wonder, given the disconnect that we've
Speaker 1: seen between Wall Street and the Fed, and the fact
Speaker 1: that financial conditions have lucied, what's the message that you
Speaker 1: would like them to take away from the Chairman's speech today. Well,
Speaker 1: I think the message is inflation is high, Inflation is
Speaker 1: too high, and we're going to do what we need
Speaker 1: to do to bring it down. And we're going to
Speaker 1: be resolute in our policy to make sure that that
Speaker 1: inflation is well on its way to our two percent target.
Speaker 1: And I think that is the basic message. Um, we've
Speaker 1: been saying that already, right, So that's not a new message,
Speaker 1: but it is. It is important for us to be
Speaker 1: continuing to reinforce that so that there is an uncertainty
Speaker 1: about what we're going to do. You know, we were
Speaker 1: still in the pandemic economy. I try to remind everybody that.
Speaker 1: And one of the things that's been true is that, uh,
Speaker 1: there's the unexpected has happened repeatedly, and so I would
Speaker 1: like for our policy, and I think my my colleagues
Speaker 1: share this, to not be contributing to that uncertainty. We
Speaker 1: want people to understand sort of what our action function
Speaker 1: is and what we're trying to get to, uh, and
Speaker 1: that we're not going to bounce around. We're going to
Speaker 1: be stable, resolute and sure about where we want to begin. Well,
Speaker 1: are you willing? In Wall Street parlance, to be vulcan
Speaker 1: to let the economy go into recession if you need
Speaker 1: to focus more on inflation, bringing that down because the
Speaker 1: costs are higher. Well, you know, inflation is extremely high,
Speaker 1: sort of unimaginable. The levels we're at, we're unimaginable eighteen
Speaker 1: months ago, and so we have to get that under control.
Speaker 1: That's job one. That's our top priority. Beyond that, you know,
Speaker 1: if if we start to see weakening in labor markets
Speaker 1: but inflation is still too high, we've got to get
Speaker 1: inflation down, like that is the first thing. So, um,
Speaker 1: I'd be comfortable with some weakness in labor markets if
Speaker 1: we start to see some job losses. But to be honest,
Speaker 1: we're far from that today. Right, There's a lot of
Speaker 1: momentum in terms of job creation. And so I'm going
Speaker 1: to focus on the next month and the month after that,
Speaker 1: and you know, I think we won't have to face
Speaker 1: a question like that for quite some time. Well, put
Speaker 1: three questions together into one about the terminal, Right, what
Speaker 1: do you think you need to get to, how fast
Speaker 1: do you need to get there? And then how long
Speaker 1: do you leave it there? So that's three questions and
Speaker 1: once right, so you do well and I'm supposed to
Speaker 1: do this. I know we don't have You've got eight
Speaker 1: minutes to at that time. So so for me, I
Speaker 1: think I want to see our policy get to something
Speaker 1: that's marginally restrictive. I think right now we are still
Speaker 1: in a somewhat accommodated state weekly so I'm looking for
Speaker 1: us to move maybe a hundred basis points, maybe undive
Speaker 1: basis points from where we are. In terms of that movement, UM,
Speaker 1: I'd like to get there sooner rather than later. I
Speaker 1: think that the sooner we get to that that level,
Speaker 1: the faster and the more dramatic our our impact will
Speaker 1: be on the economy. But I also want to do
Speaker 1: it in an orderly way. I want to get to
Speaker 1: that term right, in an orderly way, so that the
Speaker 1: markets and businesses and families don't think that our movement
Speaker 1: is suggesting there's some underlying weakness or something unexpected that
Speaker 1: it's going to make people be concerned. And then in
Speaker 1: terms of staying there, um, I think we should stay
Speaker 1: there for a long time. And I would say I
Speaker 1: want to see, um, the signs of the economy slowingly
Speaker 1: be clear, but also start to see inflation uh really
Speaker 1: moving down to closer to our two percent target before
Speaker 1: we contemplate sort of moving at all. So you know,
Speaker 1: the word I'm using a lot is resolute. I think
Speaker 1: once we get to that level, we want to be
Speaker 1: resolute in and our goal, which is to get inflation
Speaker 1: down to our target. I've got to watch this because
Speaker 1: you mentioned a time you said a long time. What's
Speaker 1: a long time? It could be five days ask the question, right,
Speaker 1: So so for me, I think what what my team
Speaker 1: has told me and what we've seen, uh historically is
Speaker 1: that it takes a long time for the actual inflation
Speaker 1: numbers to move. The economy has got to weaken in
Speaker 1: a lot of ways, it's got to slow down, uh,
Speaker 1: and on some level, the inflation number is the last
Speaker 1: number to move. And so what what I'm where I
Speaker 1: am right now on this is from a typical perspective,
Speaker 1: we would expect maybe eighteen months two years for that trajectory.
Speaker 1: But at the same time, if you look at how
Speaker 1: financial markets responded to our policy when we started moving
Speaker 1: in March, it moved much faster than we've seen historically.
Speaker 1: And we know that in the pandemic, the economy has
Speaker 1: evolved faster than we expected historically. GDP responded much faster
Speaker 1: than the analysts were expecting at the outset. So there
Speaker 1: is the possibility that the movement in inflation could be
Speaker 1: faster than what we've seen in the past. The reality is,
Speaker 1: we don't know what's going to happen, right, and so
Speaker 1: I want but I want people to know that we're
Speaker 1: really focused on the goal, and the goal is to
Speaker 1: see that inflation hopefully goes faster. But I can't say
Speaker 1: that for sure, So we're gonna just have to wait
Speaker 1: and see. I think what we all need then it's
Speaker 1: not the crystal ball is just a deeper understanding of
Speaker 1: your reaction function, and we kind of danced around it
Speaker 1: just a little bit. Can you help me understand the following.
Speaker 1: If the mandate is in conflict at any point in
Speaker 1: the next twelve months, if inflation is still too sticky,
Speaker 1: but the growth side of things, the labor market starts
Speaker 1: moving in the wrong direction, do you need to tolerate
Speaker 1: that to get this lower? Is that something you're willing
Speaker 1: to tolerate. Sure, we have to be open to that
Speaker 1: as a possibility. Look, if if inflation is far from
Speaker 1: the target UH and labor markets and and employment are
Speaker 1: is relatively close to target or on target, someone said
Speaker 1: we already overshot the target. We should be willing. I
Speaker 1: would be willing to see that employment, those employment numbers
Speaker 1: moderate to get us either back to target if we've overshot,
Speaker 1: or maybe a little further away from the target. But
Speaker 1: that further away now, it's still extremely close. And so
Speaker 1: so my concerns in terms of our mandate are not
Speaker 1: very heavily weighted in on the labor market side, much
Speaker 1: more in inflation. There's a belief that seems to be
Speaker 1: embedded in markets that we're going back to what we
Speaker 1: knew ten years ago in terms of inflation being low,
Speaker 1: growth being slow, and that just sort of being the normalcy,
Speaker 1: and that rates will eventually go back to what they
Speaker 1: were accustomed to. You know, say back then, do you
Speaker 1: disagree with this? I mean, this is one of the
Speaker 1: fundamental questions. Are we in for a a sea change
Speaker 1: and how much inflation there is globally and in the
Speaker 1: United States. Well, I think that that's an interesting question.
Speaker 1: I actually think it's an open question if you think
Speaker 1: about what's happened through the pandemic, where we've just we've
Speaker 1: discovered that supply chain strategies where you're relying on just
Speaker 1: one supplier, increases exposure to volatility and outcome and outputs.
Speaker 1: Um businesses are changing those strategies. The ones I talked to,
Speaker 1: they say, look, we're we're no longer going to rely
Speaker 1: on just one supplier, that lowest cost provider, and we're
Speaker 1: going to do this across a number of different suppliers.
Speaker 1: That in and of itself means we're going to have
Speaker 1: higher cost basis. There's gonna be upward pressure on prices
Speaker 1: that we're going to have to embrace. And so there's
Speaker 1: a lot of other things that are that are going
Speaker 1: on in the economy. So I said, it's very difficult
Speaker 1: to project that. And so I would say, I think
Speaker 1: inflation is gonna mind it being a little higher than
Speaker 1: what we've seen historically. How much higher and is it
Speaker 1: going to be a material? I think that's still that
Speaker 1: We're just going to have to let things play out
Speaker 1: to understand that. So going back to John's question about
Speaker 1: how long, and you said, you know it could be
Speaker 1: typically it was minutes two years exactly, Why don't we
Speaker 1: freak it down five days a month or you know
Speaker 1: it's been eighteen to two years, could it be much
Speaker 1: longer than that. Could it be that the new FED
Speaker 1: funds rate eventually evolves something closer to three to three
Speaker 1: and a half per said? Is that something feasible? Not
Speaker 1: just could, but is it feasible in your framework? Well,
Speaker 1: I think it's possible. But a lot is going to
Speaker 1: happen between now and when we get to that place
Speaker 1: to where I'll be able to have an understanding or
Speaker 1: a sense of whether that's a new permanent and whether
Speaker 1: there is some new kind of floor that we're going
Speaker 1: to have to push to. But I don't know that now. Um.
Speaker 1: You know the thing that's been helpful, like conversations like
Speaker 1: this are actually quite helpful in making me be sensitive,
Speaker 1: sensitive about what sorts of things we need to be
Speaker 1: focusing on. Me and my team need to be focusing
Speaker 1: on as the economy evolves in the next couple of years.
Speaker 1: So I know they're watching this, so this will be
Speaker 1: something that shows up on their on their list of
Speaker 1: things to do over the next six to twelve. We've
Speaker 1: got about naughty six is left. I want to squeeze
Speaker 1: this in because we we had it the discussion with President,
Speaker 1: but out as well. Let this balance sheet reduction fit in.
Speaker 1: I guess so many questions from bloom Bag subscribes about
Speaker 1: this almost every day. What we're talking about this more?
Speaker 1: What are we're talking about this more? Where does it
Speaker 1: fit in? Well, you know, I think it fits in
Speaker 1: as an additional two of the policy, and the reduction
Speaker 1: of the balance sheet will have sort of a more
Speaker 1: restrictive impact on how the economy evolves. We are very
Speaker 1: early on in the reduction of our balance sheet and
Speaker 1: we're still ramping up in some regards to get to
Speaker 1: a level of um that we can start to reduce
Speaker 1: much faster. For me, I think that it is another
Speaker 1: factor that allows us to say, the economy standing on
Speaker 1: its own, it doesn't need these additional supports. Uh. And
Speaker 1: so the energy in the marketplace is just less uh
Speaker 1: And and that's kind of how it plays out, you know. There,
Speaker 1: I saw the segment you did with with Jim, and
Speaker 1: you know, trying to come up with a hard estimate
Speaker 1: about you know, you know, a hundred billion dollars, what
Speaker 1: does that translate? It's very difficult, but I think it's
Speaker 1: unambiguous that there's less energy that we are contributing to
Speaker 1: the marketplace. Uh. And that means that that the ability
Speaker 1: for the economy to grow faster. It's just been a weekend.
Speaker 1: We've got a guy, But I'm telling you're not going
Speaker 1: to watch some real football in Atlanta. At some point
Speaker 1: you're gonna make it happen. This ace bloom bag. There
Speaker 1: are people that are signposts along the way. There is
Speaker 1: research where you stop and you say, oh. And that
Speaker 1: was a number of months ago with Priamzra truly one
Speaker 1: of the great calls of two thousand twenty two on
Speaker 1: the dynamics of the yield curve. Global head of rate
Speaker 1: strategy at TV Securities Prior readjust here off of the
Speaker 1: Powell's speech, readjust the dynamic between the short term two
Speaker 1: year yield in the benchmark tenure. Sure, thanks for having me.
Speaker 1: I think the front end is all about new dum
Speaker 1: Foot policy, and I think we got a few clues
Speaker 1: from Chapal's comments today. You know, he's he's acknowledging that
Speaker 1: there's there could be pain ahead, and that suggests tolerance
Speaker 1: for pain, I would argue, so also talking about being
Speaker 1: restrictive for quite some time. So this idea that the
Speaker 1: FED will take rates up to terminal and then quickly
Speaker 1: cut rates, I think he's pushing back against that. So
Speaker 1: that front end, I think it is still biased higher
Speaker 1: in rate. We're looking for two year rates to continue
Speaker 1: to rise, really getting close to that terminal level, so
Speaker 1: you know it's at three seventy five or something in
Speaker 1: that range. The long end. I think the long end
Speaker 1: is a lot more anchored because I don't think long
Speaker 1: term neutral rate is a whole lot higher the long
Speaker 1: run neutral rate. There could be a higher short term
Speaker 1: neutral rate, but the long run neutral rate, the fact
Speaker 1: that global growth is going the treasuries are still the
Speaker 1: safe haven acid if you're in risk asses right now.
Speaker 1: The Feds just telling you that that put is much
Speaker 1: further away. I think long end treasuries are actually a
Speaker 1: safe place to be end. So I think that flattening
Speaker 1: bias here continues. The curve keeps inverting. The long end
Speaker 1: I think is much safer than a front end. That's
Speaker 1: all a function of inflation later. The fancy word for pointing,
Speaker 1: the fancy word for pointy is stochastic, and curven versions
Speaker 1: are almost always in every case stochastic. Do we have
Speaker 1: to get used to this? If we have a longer
Speaker 1: fed regime, Are we going to have longer deeper curve
Speaker 1: in version. I think inflation is what is likely to
Speaker 1: make this longer. The fact that inflation is just inherently
Speaker 1: more sticky and a lagging indicator. I mean, growth can
Speaker 1: be slowing, inflation might be the last thing to respond
Speaker 1: to it, and the facts telling you that it's public
Speaker 1: enemy number one. So I do think that the inversions
Speaker 1: that historically have been short lived because inflation has not
Speaker 1: been a problem, and so the Fed has the flexibility
Speaker 1: to respond. They're telling you that if inflation doesn't decelerate,
Speaker 1: that dual mandate is very lopsided, and therefore a period
Speaker 1: of sticky inflation will mean that that inversion, I think
Speaker 1: lasts for much longer than the markets pricing in or
Speaker 1: or that you know people are looking for. Given how
Speaker 1: they're setting up the reaction function here and given how
Speaker 1: little the market seems to be listening to them, how
Speaker 1: do you think this market would respond to a bad
Speaker 1: labor market print, a bad payrolls print on September two?
Speaker 1: So define which market? I think there could be some
Speaker 1: risk assets that could be actually comforted by a weaker number,
Speaker 1: because then that might mean the Fed may have to
Speaker 1: respond and may not hike as much I would actually
Speaker 1: argue would be risk negative. I think bad data is
Speaker 1: bad for risk assets, and you know, and and and treasuries.
Speaker 1: I think it's it's good for long data treasuries. But
Speaker 1: the front end, I think chap ill is telling you, well,
Speaker 1: you know, we're gonna have to tolerate some pain. Inflation
Speaker 1: is still the data print that I think the market
Speaker 1: will respond a lot more. I think sensitivity will be
Speaker 1: higher to inflation because that's what the Fed's watching. A
Speaker 1: weaker payroll report, If it means a weaker wages down
Speaker 1: the road and ultimately weaker inflation, I think it can
Speaker 1: allow the FED to slow down, but not with inflation
Speaker 1: running as high as it is right now. So I
Speaker 1: still think that CPR report, unfortunately in another blackout, is
Speaker 1: probably the lynchpin for the seventy five or fifty, And
Speaker 1: we didn't get much from j Power, But I think
Speaker 1: they're trying to move us out of just the pace
Speaker 1: of hikes to that end point and how long they
Speaker 1: stay there as ultimately what will tighten financial conditions. Priamzra
Speaker 1: we are in Jackson Hall talking about the FED, talking
Speaker 1: about the United States, and so I feel a little
Speaker 1: strange doing this, but we need to pivot to Europe
Speaker 1: because that is really where the incredible action is, at
Speaker 1: least in the markets today. As people start to think
Speaker 1: about a seventy five basis point Reid hike by the
Speaker 1: e c B, do you foresee this as actually a
Speaker 1: real possibility and something that could sustain some of the
Speaker 1: moves that we've seen that are quite dramatic in the
Speaker 1: German bond market, in the Italian bond market, and certainly
Speaker 1: in the euro right. So we're still looking for fifty
Speaker 1: um now is there a is for seventy five? There
Speaker 1: is when you're just starting out in the hiking cycle.
Speaker 1: You could make the same case for the FED should
Speaker 1: they have gone the first hike have been seventy five,
Speaker 1: and the Minute suggests that it might have been had
Speaker 1: we not had the Russian invasions. So I think it's
Speaker 1: a possibility. They need to set the market up more.
Speaker 1: They also need to look at unintended consequences. I think
Speaker 1: e CV is on a much harder position than the
Speaker 1: FED because they're dealing with an energy crisis that's only
Speaker 1: going to get worse as as as winter sets in um.
Speaker 1: You know, our thought is that fifty is still a
Speaker 1: sizeable number, especially for the Eurozone that's been dealing with
Speaker 1: negative rates for so long, that they would still start
Speaker 1: with fifty. But I think if they set the market up,
Speaker 1: they talk about how they're going to address the problem
Speaker 1: and the periphery, because they're related. You go seventy five,
Speaker 1: the periphery is going to underperform um, you know that.
Speaker 1: I think if they're able to set it up between now,
Speaker 1: there's still a lot of time. I guess between now
Speaker 1: and their September FED meeting, it's possible, but that's not
Speaker 1: our base case. Three. How much of this is resulting
Speaker 1: from the strength that we're seeing in the dollar from
Speaker 1: FED policy so far to date. Is that what's forcing
Speaker 1: us to even be having this conversation about a seventy
Speaker 1: five basis point rate high in Europe, which was unthinkable
Speaker 1: just months ago, right. I think the dollar is responding
Speaker 1: to the diverging economic environments and to a different central
Speaker 1: bank reaction function, where the FED has a really strong
Speaker 1: labor market, you know, the unemployment rate well through nehru Um,
Speaker 1: and I think that's what strengthening the dollar, creating the
Speaker 1: issues for the rest of the world. They're going to
Speaker 1: have to respond. I don't think it changes FED policy.
Speaker 1: Are other central banks responding to that type of financially,
Speaker 1: you know, to the to the fact that they've got
Speaker 1: an inflation problem that gets worse. Um, you know, yes,
Speaker 1: and I do think that they're not targeting any effects,
Speaker 1: but it works through the the effects channel will impact
Speaker 1: the economy, and that's what the central banks are taking
Speaker 1: it into account. Absolutely, I'm sure it was. It was
Speaker 1: an input into the idea of going fast more than
Speaker 1: fifty lisa. If excuse me, if Europe, if Europe does
Speaker 1: not act bald, if the United States keeps on this track,
Speaker 1: what does Mark McCormick say for TV securities? What are
Speaker 1: the ramifications of a resilient or even a dollar out
Speaker 1: of new strength. I think, you know, ultimately there are
Speaker 1: self limiting aspects to dollar strength. It tightens conditions, starts
Speaker 1: putting down repressure on inflation over time. So it's not
Speaker 1: something that can happen right away. There are some limits.
Speaker 1: But in the near term, especially as I think the
Speaker 1: market grapples with the fact that you're not going to
Speaker 1: get the FED responding to slowing economic you know, conditions
Speaker 1: on the growth front, the dollar tends to be also
Speaker 1: safe haven acid, and so I, you know, are we're
Speaker 1: positive on the doll in the near term with an
Speaker 1: idea that there are limits and we just have to
Speaker 1: the markets of forward looking and at some point we'll
Speaker 1: realize those limits are being felt in the economic channel.
Speaker 1: And you know, I think that's why there's a limit
Speaker 1: to it. But I don't think they're close to that
Speaker 1: limit just yet. Right let me flip the tables here.
Speaker 1: I asked the i G and the distress, how I
Speaker 1: yield people, how they interpret full faith and credit? How
Speaker 1: do you interpret the price declines the giant historic bear
Speaker 1: market of say corporate paper and a little bit of
Speaker 1: a rally recently. How do you interpret the losses that
Speaker 1: we've seen in the i G market? What does that
Speaker 1: signal to you? So, I think most of it is
Speaker 1: still an interest rate story, the fact that there's duration risk,
Speaker 1: there's inherent interst rate risk in these bonds. It's not
Speaker 1: as much the defaultress. I think defaultress because only just
Speaker 1: started to get, you know, repriced higher. It's the fact
Speaker 1: that interstrates have risen. Born funds have seen significant outflows.
Speaker 1: So it's a supply demand issue for IG corporate that
Speaker 1: has resulted in in those higher rates or or lower
Speaker 1: prices as you talk about. I don't think recession is
Speaker 1: still being priced in. So if growth starts to falter,
Speaker 1: which is actually our call, and we actually start heading
Speaker 1: to a recession and we see the FED not responding
Speaker 1: because they're still worried about inflation, I think that's when
Speaker 1: defaultress starts to reprice. So you know, it's hard for
Speaker 1: me to be very positive on even credit here because
Speaker 1: even though the interest rate we talked about with you
Speaker 1: know that the tenure is probably fair around three percent here,
Speaker 1: but that defaultress premium can rise if the economy starts
Speaker 1: too slow. Now, I think that's the key to watch.
Speaker 1: A lot of the work has been done on the
Speaker 1: interest rate front. I just worry a little bit about
Speaker 1: the growth side and is that getting priced in appropriately. Prayer,
Speaker 1: thank you and congratulations again on just an absolutely brilliant
Speaker 1: cool on this yield curve two stands. Prayer was looking
Speaker 1: for forty, maybe fifty, perhaps even I d print version
Speaker 1: than that, and we got forty pretty quickly after those comments. Pratty,
Speaker 1: thank you so much. Andrew Hollenhorst with us now from City. Andrew,
Speaker 1: you're looking for seventy five basis points in September. Did
Speaker 1: you hear what you wanted to hear from this FED chair?
Speaker 1: I think when we heard today was really a change
Speaker 1: in tone more than any kind of new information. And
Speaker 1: I think that's really important, and that's what we've been
Speaker 1: highlighting ahead of this speech, the idea that this was
Speaker 1: an opportunity for the FED to kind of recalibrate and
Speaker 1: read message shorter, narrower, more direct. That's exactly what fed
Speaker 1: Share Powell gave us UM and really didn't leave any
Speaker 1: opportunity for a devish interpretation. I think that's what's important.
Speaker 1: So a lot of the phrases were even phrases that
Speaker 1: he'd used before. A lot of this was verbiage that
Speaker 1: we'd heard before. UM. But the typical conversation app your
Speaker 1: FED speak is I hear from clients and I think
Speaker 1: it was hawkish. Maybe they read something different that was dubbish.
Speaker 1: There was just no room for that, and then maybe
Speaker 1: the kicker was quoting Paul Vulker. So I think it's
Speaker 1: pretty clear where share Powell is moving here. I think
Speaker 1: he's being cautious and trying to have kind of a
Speaker 1: continuous movement towards a more hawkish tone and a more
Speaker 1: hawkish policy orientation. I think that's all there. When he
Speaker 1: did clarify, Mike McKee picked up on this, this idea
Speaker 1: that at some point they will slow down. That again,
Speaker 1: that exact language was used at the July OMC. Some
Speaker 1: analysts took that to me and that they would slow
Speaker 1: down in September, And here he clarified that, no, there's
Speaker 1: really still a choice between fifty and seventy five bases points.
Speaker 1: Is going to come down to the data. Um. I
Speaker 1: think that Jobs Report LESA was highlighting consensus expectations are
Speaker 1: expectations around three hundred thousand. I'm not sure that that's
Speaker 1: enough of us slowing to really say that we have
Speaker 1: this under control. We're looking right now at at Nazak,
Speaker 1: at the slower by one nine percent sage reaction with
Speaker 1: somewhat tepid and now it has accelerated in terms of
Speaker 1: the decline. How have we really fully assessed what fed
Speaker 1: share Powell was saying in the bond markets with the
Speaker 1: front end going to three point four two, given it
Speaker 1: in your view, we could get somewhat higher than that
Speaker 1: in the next year or so. I think it does
Speaker 1: come back to the data, and I think markets need
Speaker 1: to be convinced by the data. So we have FED
Speaker 1: rhetoric now that's more clearly pointing in the direction of
Speaker 1: further tightening of financial conditions. It was interesting also that
Speaker 1: share Powell mentioned the June Summary of Economic Projections when
Speaker 1: he talked about that in July. He said that's still
Speaker 1: a pretty good baseline for where policy is going to
Speaker 1: play out um with interest rates, And what he said
Speaker 1: in this speech was we're going to update those expectations
Speaker 1: those projections at the September eform CE, so clearly keeping
Speaker 1: the door open here for more hawkish policy orientation. It
Speaker 1: will come down to the data, and I think the
Speaker 1: interpretation of the data. So we saw core inflation that
Speaker 1: slow in July, maybe going to get a weaker saw
Speaker 1: after core inflation reading again in August, looking through to
Speaker 1: the underlying strength and still looks like there's a lot
Speaker 1: of underlying inflationary pressure that's gonna be hard to get down.
Speaker 1: Powell mentioned the view around inflation hadn't really changed after
Speaker 1: that July print, but that's where is the inflation data go.
Speaker 1: That's gonna determine the FED goes in the market. Andrew,
Speaker 1: one final question. If we get to sustain average two
Speaker 1: thousand nine farm perils, what does that do to the
Speaker 1: holland Or's call. I think it really leaves our call intact.
Speaker 1: Our call is that the BED will get rates to
Speaker 1: four percent, probably this year, move beyond that next year.
Speaker 1: And I think what that kind of a number would
Speaker 1: be telling you is that the job market is still
Speaker 1: creating jobs at a pace that is pushing the unemployment
Speaker 1: rate lower. And we know the unemployment rate is currently
Speaker 1: at a level that's generating excess wage pressure. I think
Speaker 1: we heard from share Powell and maybe even more clearly
Speaker 1: from Atlanta Fed President Boston, who you had on earlier,
Speaker 1: that even as the job market slows, this is a
Speaker 1: FED that's gonna lead of rates higher. And then in
Speaker 1: fact they're looking for that slow down in the job
Speaker 1: market because that's where there's a supply demand in balance.
Speaker 1: And unfortunately that's something that the economy has to go
Speaker 1: through now to bring inflation down. Andrew Hollen host with
Speaker 1: a big coal for some big hikes still to come
Speaker 1: from this Federal Reserve of City. Andrey, thanks Obama this tonight.
Speaker 1: This is the Bloomberg surveillance podcast. Thanks for listening. Join
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