1 00:00:02,360 --> 00:00:06,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. 2 00:00:06,800 --> 00:00:09,360 Speaker 2: Joining us now as the Congressman Frendshill of our consulted 3 00:00:09,440 --> 00:00:12,119 Speaker 2: chairman of the House Financial Services Committee, which the FED 4 00:00:12,200 --> 00:00:15,280 Speaker 2: chair will be testifying before laster on today. Congressman, welcome 5 00:00:15,320 --> 00:00:17,200 Speaker 2: back to the program. So always good to hear from you. 6 00:00:17,239 --> 00:00:20,280 Speaker 2: I'm going to start with a slightly provocative question. I'm paraphrasing, 7 00:00:20,320 --> 00:00:22,439 Speaker 2: care do you plan to work over this very dumb, 8 00:00:22,520 --> 00:00:24,800 Speaker 2: heart headed person a little bit late this morning. 9 00:00:26,920 --> 00:00:29,000 Speaker 3: Well, Jonathan, it's great to be with you. We look 10 00:00:29,040 --> 00:00:31,840 Speaker 3: forward to having Chair Power before the committee this morning, 11 00:00:32,240 --> 00:00:35,320 Speaker 3: and I think he'll face questions on his outlook for 12 00:00:35,440 --> 00:00:38,640 Speaker 3: inflation and therefore what his views are about rate cuts 13 00:00:38,680 --> 00:00:41,240 Speaker 3: coming forward. I think that's the important issue of the day. 14 00:00:41,720 --> 00:00:45,239 Speaker 3: But he'll also probably be complimented by members because the 15 00:00:45,280 --> 00:00:49,040 Speaker 3: FED has recently taken decisions to get out of some 16 00:00:49,200 --> 00:00:52,680 Speaker 3: of the environmental social governance groups that they were involved 17 00:00:52,680 --> 00:00:56,200 Speaker 3: in around climate change, something that House Republicans have never 18 00:00:56,240 --> 00:00:59,160 Speaker 3: thought the FED should be involved in over the past 19 00:00:59,240 --> 00:01:03,680 Speaker 3: few years. We want them focused on price stability, number one, 20 00:01:03,720 --> 00:01:05,600 Speaker 3: and number two, we want them focus on a safe 21 00:01:05,600 --> 00:01:08,759 Speaker 3: and sound banking system. We thought that was a distraction. 22 00:01:09,240 --> 00:01:11,959 Speaker 2: So we've got monetary policy and then we've got bank regulations. 23 00:01:12,000 --> 00:01:14,280 Speaker 2: So Congressman, let's start with the monetary policy first. As 24 00:01:14,319 --> 00:01:16,919 Speaker 2: you're aware, and as I implied with that first question, 25 00:01:17,000 --> 00:01:18,880 Speaker 2: the White House is really ramping up the pressure on 26 00:01:18,920 --> 00:01:21,160 Speaker 2: the FED chair. Do you worry that the chair starts 27 00:01:21,200 --> 00:01:23,000 Speaker 2: to become more worried about the optics of kind of 28 00:01:23,080 --> 00:01:26,520 Speaker 2: interest rates and focused on the data that might justify them. 29 00:01:27,280 --> 00:01:30,720 Speaker 3: I really don't, Jonathan, because since World War Two we've 30 00:01:30,760 --> 00:01:34,520 Speaker 3: seen pressure from presidents on FED chairs, but we've seen 31 00:01:35,080 --> 00:01:37,800 Speaker 3: the FED chairs and the Board of Governors try to 32 00:01:37,840 --> 00:01:40,600 Speaker 3: be data driven in their decisions, and of course they've 33 00:01:40,600 --> 00:01:43,600 Speaker 3: made mistakes over that period of time. Which is while 34 00:01:44,040 --> 00:01:47,800 Speaker 3: the FED is a creation of Congress and I believe 35 00:01:47,800 --> 00:01:51,880 Speaker 3: strongly in an independent monetary policy, it's also true to 36 00:01:51,920 --> 00:01:56,160 Speaker 3: recognize that they're not immune from a criticism. So there's 37 00:01:56,200 --> 00:01:59,520 Speaker 3: a debate, and you've already seen that debate shaping on 38 00:01:59,680 --> 00:02:03,320 Speaker 3: the Open Market Committee itself with the comments from Governor 39 00:02:03,360 --> 00:02:04,919 Speaker 3: Waller and Governor Bowman. 40 00:02:05,360 --> 00:02:07,880 Speaker 1: Christmina, would you be willing or would you support the 41 00:02:07,920 --> 00:02:10,840 Speaker 1: idea of nominating someone to be the next VED chair 42 00:02:11,160 --> 00:02:14,960 Speaker 1: soon so that they can have an outsized influence over 43 00:02:15,080 --> 00:02:15,720 Speaker 1: the committee. 44 00:02:17,240 --> 00:02:20,880 Speaker 3: I think it's my base case assumption that Chairman Powell 45 00:02:20,880 --> 00:02:23,400 Speaker 3: will serve out his term and President Trump will make 46 00:02:23,400 --> 00:02:26,480 Speaker 3: a determination on who he thinks should be the next 47 00:02:26,560 --> 00:02:27,520 Speaker 3: chair at that time. 48 00:02:28,080 --> 00:02:30,200 Speaker 1: Well, just the reason why I ask this is because 49 00:02:30,200 --> 00:02:32,239 Speaker 1: some people have speculated that that's what's going to happen. 50 00:02:32,639 --> 00:02:35,320 Speaker 1: We have heard from this administration that they are going 51 00:02:35,360 --> 00:02:38,639 Speaker 1: to consider potential future candidates, and there's a lot of 52 00:02:38,680 --> 00:02:41,800 Speaker 1: speculation that Chris Waller and Michelle Bowman are kind of 53 00:02:41,800 --> 00:02:44,120 Speaker 1: in the running and trying out. I mean, how much 54 00:02:44,160 --> 00:02:47,280 Speaker 1: would you like to see some of this noise taken 55 00:02:47,440 --> 00:02:50,280 Speaker 1: away from the real debate, which is what is the 56 00:02:50,320 --> 00:02:53,400 Speaker 1: predominant risk to markets? Is it potential weakening or is 57 00:02:53,400 --> 00:02:53,960 Speaker 1: it inflation? 58 00:02:55,720 --> 00:02:58,720 Speaker 3: Well, jenn As I say, I think certainly since World 59 00:02:58,760 --> 00:03:02,040 Speaker 3: War Two, the speculation about how presidents feel about their 60 00:03:02,080 --> 00:03:04,760 Speaker 3: FED chairs and who they might nominate to succeed a 61 00:03:04,840 --> 00:03:08,400 Speaker 3: FED chair has just been part of the markets, and 62 00:03:08,440 --> 00:03:11,680 Speaker 3: the markets understand that what's important is that the FED 63 00:03:11,760 --> 00:03:14,720 Speaker 3: gets it right and we focus on price stability and 64 00:03:14,800 --> 00:03:20,399 Speaker 3: if the inflation forecast and inflation expectations are anchored at 65 00:03:20,400 --> 00:03:23,160 Speaker 3: that two percent level, then I think that's certainly something 66 00:03:23,160 --> 00:03:26,560 Speaker 3: that FED should take into strong consideration about a rate 67 00:03:26,639 --> 00:03:29,840 Speaker 3: cut in the coming meetings. And that's exactly the kind 68 00:03:29,880 --> 00:03:32,880 Speaker 3: of work I want them to do, is use data analytics, 69 00:03:33,639 --> 00:03:35,920 Speaker 3: look at the trends in the market, look at their forecast, 70 00:03:35,960 --> 00:03:37,920 Speaker 3: and make that decision to the best of their ability. 71 00:03:38,000 --> 00:03:40,440 Speaker 2: And many of those officials of Follockhurst on the policy 72 00:03:40,440 --> 00:03:44,040 Speaker 2: outcomes of other things. July fourth, we've got the South 73 00:03:44,040 --> 00:03:46,280 Speaker 2: and Post deadline to pass the one big beautiful bill 74 00:03:46,400 --> 00:03:48,640 Speaker 2: July ninth, and other South and Post deadlines to come 75 00:03:48,680 --> 00:03:50,320 Speaker 2: to some kind of trade deal with a whole bunch 76 00:03:50,680 --> 00:03:53,600 Speaker 2: of countries. Congressmen, could you maybe have the FED chair 77 00:03:53,800 --> 00:03:55,280 Speaker 2: a little bit likengke to this morning. Where do you 78 00:03:55,320 --> 00:03:57,320 Speaker 2: think we will be in a few weeks time? 79 00:03:58,800 --> 00:04:01,240 Speaker 3: Well, look, I think certainty is a part of life. 80 00:04:01,320 --> 00:04:04,119 Speaker 3: It's part of the stock market and the bond markets 81 00:04:04,360 --> 00:04:06,720 Speaker 3: every single day. But if I look back at the 82 00:04:06,800 --> 00:04:10,360 Speaker 3: nineteen eighties, we had extraordinarily high inflation, we had high 83 00:04:10,400 --> 00:04:13,160 Speaker 3: budget deficits for the time, we had a defense build 84 00:04:13,240 --> 00:04:18,080 Speaker 3: up underway. We had a dollar that some deemed significantly overvalued, 85 00:04:18,480 --> 00:04:22,400 Speaker 3: and yet Ronald Reagan, through tax cuts through regulatory reductions 86 00:04:23,200 --> 00:04:28,919 Speaker 3: through the right monetary policy between Paul Volker and Alan 87 00:04:29,000 --> 00:04:33,039 Speaker 3: Greenspan saw the economy grow and grow dramatically, and I 88 00:04:33,080 --> 00:04:37,599 Speaker 3: think America is poised to grow dramatically. Look at GDP 89 00:04:37,760 --> 00:04:41,400 Speaker 3: since the summer of the pandemic, it was about twenty 90 00:04:41,400 --> 00:04:45,200 Speaker 3: one trillion dollars. Today it's twenty eight trillion dollars. We're 91 00:04:45,240 --> 00:04:49,440 Speaker 3: the preferred investment location for global investment around the world, 92 00:04:49,520 --> 00:04:52,039 Speaker 3: and I believe that that uncertainty will drop over the 93 00:04:52,080 --> 00:04:55,120 Speaker 3: coming weeks as we have clarity on taxes, clarity on 94 00:04:55,200 --> 00:04:59,360 Speaker 3: regulatory policy, and we dropped the slope, steep slope of 95 00:05:00,000 --> 00:05:03,000 Speaker 3: doible amounts of federal spending coming out of the Biden administration. 96 00:05:03,200 --> 00:05:06,320 Speaker 2: A congressman just away from the events in Washington, DC 97 00:05:06,480 --> 00:05:08,479 Speaker 2: this morning, we'd love a comment from you on the 98 00:05:08,480 --> 00:05:11,440 Speaker 2: news of this morning elsewhere, particularly in the Middle East. 99 00:05:11,480 --> 00:05:14,599 Speaker 2: The President posting on social media just moments ago on 100 00:05:14,680 --> 00:05:17,880 Speaker 2: a truce between Iran and Israel, a very frustrated post 101 00:05:17,920 --> 00:05:20,880 Speaker 2: from the President. Do not drop those bombs addressing Israel. 102 00:05:20,960 --> 00:05:23,800 Speaker 2: If you do, it's a major violation. Bring your pilots 103 00:05:23,839 --> 00:05:26,400 Speaker 2: home and do it now. And the tone as we 104 00:05:26,480 --> 00:05:29,640 Speaker 2: understand of the President leaving making his way to the 105 00:05:29,720 --> 00:05:33,320 Speaker 2: NATO summit in Europe, was a very frustrated, very frustrated 106 00:05:33,360 --> 00:05:36,600 Speaker 2: president of the United States with Israel, with Iran, and 107 00:05:36,680 --> 00:05:39,279 Speaker 2: hopeful that maybe we can establish a long lasting truce 108 00:05:39,320 --> 00:05:41,040 Speaker 2: in the Middle East. Do you think we can establish 109 00:05:41,040 --> 00:05:43,320 Speaker 2: peace through strength in the Middle East? And how much 110 00:05:43,320 --> 00:05:45,960 Speaker 2: of a change is that with this administration relative to 111 00:05:46,279 --> 00:05:48,599 Speaker 2: the bad administration over the last few years. 112 00:05:49,720 --> 00:05:52,400 Speaker 3: Well, I do think peace comes through strength, and that's 113 00:05:52,600 --> 00:05:56,200 Speaker 3: been demonstrated by President Trump, both in the Middle East 114 00:05:56,240 --> 00:05:59,520 Speaker 3: with his Abraham Accords in his first term and with 115 00:05:59,600 --> 00:06:03,920 Speaker 3: his ffforts to end Iran's a dismissal of the West. 116 00:06:04,440 --> 00:06:08,200 Speaker 3: All during the Obama administration and Biden administration, we had 117 00:06:08,240 --> 00:06:11,960 Speaker 3: appeasement from the Democrats in the White House. They funded 118 00:06:11,960 --> 00:06:15,479 Speaker 3: Iran's missile operation, they relieve sanctions, they let them sell 119 00:06:15,520 --> 00:06:19,479 Speaker 3: all their oil on the open markets. They facilitated that 120 00:06:19,640 --> 00:06:23,839 Speaker 3: money going then to the houthis Hesballah Hamas, and we've 121 00:06:23,839 --> 00:06:27,200 Speaker 3: seen the damaging position on that. And so Trump is 122 00:06:27,240 --> 00:06:32,680 Speaker 3: returning to his pressure on Iran through ending the nuclear program, 123 00:06:32,720 --> 00:06:34,960 Speaker 3: not delaying it. And I think it's going to change 124 00:06:35,000 --> 00:06:37,039 Speaker 3: the balance of power in the Middle East for the better, 125 00:06:37,400 --> 00:06:40,599 Speaker 3: and I think it demonstrates peace through strength. And also 126 00:06:40,600 --> 00:06:43,360 Speaker 3: I think President the President going to the NATO meeting 127 00:06:43,400 --> 00:06:46,839 Speaker 3: will demonstrate that again as European countries now commit to 128 00:06:46,880 --> 00:06:50,760 Speaker 3: spending five percent of their gross domestic product on defense, 129 00:06:51,160 --> 00:06:55,600 Speaker 3: standing up a stronger, more robust industrial base and defense 130 00:06:55,680 --> 00:06:58,520 Speaker 3: posture for Europe. I think that's good for the Atlantic Charter, 131 00:06:59,320 --> 00:07:01,799 Speaker 3: for NATO, and I think it's good for future peace 132 00:07:01,800 --> 00:07:02,520 Speaker 3: in the Middle East.