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Speaker 1: The market's already pricing in September with a high degree

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Speaker 1: of certainty. What are you really waiting for at this point?

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Speaker 2: Why takes the additional risk of the community deteriority further So,

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Speaker 2: you know, the end of the day, it's probably not

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Speaker 2: going to make a big deal, a lot of difference.

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Speaker 3: But I think you know, given the fact that the

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Speaker 3: market expects the FED to cut once that decision.

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Speaker 2: Is mostly made, and I think you heard today it

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Speaker 2: was mostly made, then why are you waiting for?

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Speaker 3: Why are we waiting? Here's the latest investors turning their

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Speaker 3: attention to the data following yesterday's FED decision, the July

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Speaker 3: payrolls report you out tomorrow, and CPI coming in just

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Speaker 3: two weeks time. Fedchaed Jpower waiting for the numbers before

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Speaker 3: committing to a rake cup. The former Kansas City Fed

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Speaker 3: president Esther George right in this. I found the chair

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Speaker 3: leaned pretty clearly to confirm market expectations for a September cup.

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Speaker 3: While September looks like the meeting to take this action,

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Speaker 3: I think this room to be patient. Esther joined us

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Speaker 3: now for more. Esther waterf to catch up with you.

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Speaker 3: It's been far too long. Thanks for being with us.

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Speaker 3: I want to talk about that word you've used, patients,

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Speaker 3: What underpins that patience? Why should we have patience?

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Speaker 1: Welcome morning. I think my view on this really comes

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Speaker 1: from the fact that we are looking at an economy

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Speaker 1: that is growing and by the reads of the second

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Speaker 1: quarter growing well above it's sustainable long run growth. You've

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Speaker 1: got a strong labor market, and you still have elevated inflation.

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Speaker 1: And I think that combination reminds me that the fedce

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Speaker 1: mandate is a long run objective. And just as we

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Speaker 1: saw earlier this year, the market had priced in a

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Speaker 1: number of cuts only to have to pull back on that.

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Speaker 1: So the central Bank's job is really to pay attention

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Speaker 1: to the data. And as that gets closer, of course,

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Speaker 1: that's going to be more difficult for them, and they

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Speaker 1: recognize that.

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Speaker 3: How big is the risk that we take that strong

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Speaker 3: labor market for grants it?

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Speaker 1: Well, I think you're always looking at this because we

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Speaker 1: don't know with any great certainty where that equilibrium rate

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Speaker 1: is for the labor market. Obviously, we came out of

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Speaker 1: the pandemic during that recovery with a very tight labor market,

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Speaker 1: and so as we watch it normalize, the space between

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Speaker 1: normalization and weakening is one that policy makers are going

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Speaker 1: to be very attentive to. So we'll get a report tomorrow.

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Speaker 1: It will give a clue. I don't expect it'll be

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Speaker 1: definitive and by any means around that. But it is

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Speaker 1: the collection, the aggregate of these reports that begin to

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Speaker 1: give the Committee a better sense of just where that

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Speaker 1: labor market is right now.

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Speaker 2: Ester, you get the sense that this Federal Reserve still

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Speaker 2: embraces the idea of transitory in that basically the inflation

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Speaker 2: was largely due to the pandemic. It's come off the boil,

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Speaker 2: and now some of the ramifications, the ripple effects are

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Speaker 2: just being worked out of the economy.

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Speaker 1: I think that could have a lot to do with it. Lisa,

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Speaker 1: you did see tremendous supply adjustments, and it had been

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Speaker 1: some time since we'd had to pay attention to the

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Speaker 1: supply side of the economy. So as we watched supply

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Speaker 1: and that was true on the labor side, certainly good

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Speaker 1: on the good side, begin to adjust, that creates a challenge,

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Speaker 1: I think for the Committee and understanding just how restrictive

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Speaker 1: is our policy. How do we understand when the economy

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Speaker 1: is approaching an equilibrium, and I think, as they've noted,

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Speaker 1: they are close, those risks are coming into better balance

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Speaker 1: right now, and now, judging how tight their policy is

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Speaker 1: relative to the steady state of the economy, is there

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Speaker 1: real challenge And we heard that yesterday too soon versus

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Speaker 1: too late and making adjustments to that.

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Speaker 2: It seems like the market really believes that the risks

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Speaker 2: at this point are greater potentially on some sort of

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Speaker 2: intereration in the labor market than an increase a surge

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Speaker 2: and inflation. I'm wondering if you think that maybe the

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Speaker 2: Fed would have been prudent to push back just a

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Speaker 2: little bit on that base on what you're seeing, considering

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Speaker 2: that you believe that maybe there should have been a

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Speaker 2: little bit more patients, kind of a little more discipline

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Speaker 2: and viewed on the market.

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Speaker 1: Well, I would agree that the labor market again is

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Speaker 1: coming into better balance for this committee, and you will

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Speaker 1: have to look at some of the subtleties that come

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Speaker 1: in underlying that labor market in terms of the levels

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Speaker 1: of activity and the momentum that you see there. But

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Speaker 1: at the end of the day, committee is faced with

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Speaker 1: an elevated inflation rate relative to the target they've established

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Speaker 1: and the credibility they seek around getting back to that,

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Speaker 1: and in the long run, as we've heard many times

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Speaker 1: from both the chairmen and others, that sets the conditions

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Speaker 1: for a healthy labor market long run. So yes, near

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Speaker 1: term they're going to be watching a lot of those signals,

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Speaker 1: but the real issue, I think at the end of

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Speaker 1: the day their inflation.

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Speaker 3: Mandy, So, I'd like to do two things. I want

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Speaker 3: to share a quote with you, and then I'd like

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Speaker 3: to lean on your experience on the committee. You've got

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Speaker 3: plenty of experience of understanding how all of this works

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Speaker 3: behind closed doors. The stuff that we don't see this

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Speaker 3: is what ever Core had to say. We think in

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Speaker 3: practice it's not very data dependent, and view the cautious

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Speaker 3: evolution of the statement as intended to carry hawks along

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Speaker 3: and avoid dissents. As in your experience when you hear

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Speaker 3: stuff like that, how true is that? How do things

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Speaker 3: come together on the committee?

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Speaker 1: Well, it's true. This is a committee that is consensus driven.

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Speaker 1: They must make a decision and the nature of a

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Speaker 1: large committee with differing views is to try to achieve

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Speaker 1: consensus at some point. That doesn't mean you always get

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Speaker 1: unanimity around that decision, and I think anytime you begin

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Speaker 1: to approach what looks like I think, in their words,

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Speaker 1: better balance, things coming into balance get more difficult. It's

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Speaker 1: not as clear cut as it was when you know

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Speaker 1: you have to ease, or it's not as clear cut

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Speaker 1: when you see an inflation problem emerging that you have

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Speaker 1: to address. And so I suspect there is challenge within

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Speaker 1: the committee of trying to reconcile views and to try

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Speaker 1: to bring a solid consensus to whatever the decision will

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Speaker 1: be at their next meeting.

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Speaker 3: As to this was wonderful and hopefully the team gets

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Speaker 3: to see you in Jackson Holle as we used to

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Speaker 3: as the George there the foremost kinds of City Fed

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Speaker 3: President on the latest Fed Reserve decision