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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: So here's the last this this morning, Trade is bracing

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Speaker 2: for economic data after Fed official signal more clarity is

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Speaker 2: needed on President Trump's economic plants. The Federal Reserve Bank

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Speaker 2: of Richmond President Tom Barkin joined US Now for more

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Speaker 2: alongside Bloomberg's Michael McKee, President Parking. Good to see you, sir,

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Speaker 2: to come show once again.

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Speaker 3: Happy to be back with you.

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Speaker 2: The first question we asked Fed officials these days is

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Speaker 2: did you include possible tariff changes in your Roundlook, so

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Speaker 2: let's start that.

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Speaker 3: Did you well, so.

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Speaker 1: You're talking about forecasts we did in December. Yeah, that

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Speaker 1: seems like a long time ago, now, doesn't a lifetime agot?

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Speaker 3: Yeah?

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Speaker 1: No, So I think right now, if you look forward,

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Speaker 1: you have to say tariffs are coming or here are

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Speaker 1: going to be here. It's just incredibly hard to know

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Speaker 1: exactly what it's going to be. So I think the

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Speaker 1: concept of tariffs, sure, but the reality of what specific

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Speaker 1: tariffs are, what specific countries, or what Pacific percent or

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Speaker 1: what Pacific goods we don't know.

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Speaker 4: The market seems to believe that on the margins, this

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Speaker 4: just means the that is going to take its time

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Speaker 4: that you're going to take your time and assess all

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Speaker 4: the data, including all the tariff announcements, and that you're

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Speaker 4: not going to be in any rush and potentially may

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Speaker 4: not cut.

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Speaker 3: It all this year.

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Speaker 4: Do you agree that on the margins, the tariffs and

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Speaker 4: the potential rammifications, the uncertainty would delay you from cutting rates.

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Speaker 1: Well, what I'm hearing from everyone I talk to is

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Speaker 1: just elevated policy uncertainty.

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Speaker 3: And you mentioned tariffs.

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Speaker 1: But deregulation, where is it going to hit, where's the

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Speaker 1: tax plan going to come out, What's going to happen

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Speaker 1: in net migration, energy.

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Speaker 3: Policy, geopolitics.

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Speaker 1: I think there's just a lot of uncertainty in the air,

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Speaker 1: and it's very hard to know what's happening with growth

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Speaker 1: and employment, what's happening with inflation until you get a

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Speaker 1: little more clarity on all of these uncertainties.

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Speaker 5: So what are companies telling you they're going to do now?

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Speaker 5: Is everybody just sitting on their hands? What does this

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Speaker 5: imply for the uncertainty imply for the economy.

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Speaker 1: So I think it's really interesting to look at these

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Speaker 1: optimism indices, and if you go back to November and December,

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Speaker 1: the Richmond Fed and the Lanta Fed and Duke do

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Speaker 1: a survey of CFOs. What you saw was total optimism

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Speaker 1: on the economy went up significantly new administration, Climate for

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Speaker 1: business whatever. Optimism about your own company pretty much flatlined.

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Speaker 1: And I think that's because people are dealing with this uncertainty.

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Speaker 1: We think this will be good, but I don't know

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Speaker 1: how it's going to play out in my business. Small

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Speaker 1: business uncertainty had the biggest jumping, I mean sorry, optimism

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Speaker 1: had the biggest jump in it's forty year history, and

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Speaker 1: then went up again last month. And I think small

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Speaker 1: businesses are saying climate for business now they do more

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Speaker 1: of the hiring. The big businesses do more of the

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Speaker 1: big investments, and so I think it's possible we may

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Speaker 1: see another year like twenty nineteen where consumers are spending

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Speaker 1: and people are hiring, but investment sentiment is still a

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Speaker 1: question mark.

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Speaker 3: And that's what I'm looking to see.

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Speaker 5: Well, what's your kind of baseline for how you're going

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Speaker 5: to judge the economy Given all of the uncertainty. You

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Speaker 5: go into March nineteenth and you have to make a decision.

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Speaker 3: One way or the other.

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Speaker 5: The default, I guess would be to do nothing. Where

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Speaker 5: do you think the economy is going to end up

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Speaker 5: over the next six months while this cloud is over us.

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Speaker 1: Well, the case for weight and see is in fact

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Speaker 1: that you want to wait and see.

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Speaker 3: I mean, I.

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Speaker 1: Start with a baseline economy that's the data has been

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Speaker 1: pretty favorable. I mean, we had a pretty good growth

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Speaker 1: in the fourth quarter, a consumer spendings healthy, inflation, especially

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Speaker 1: the last two months, has come down, and I expect

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Speaker 1: the twelve month numbers to come down nicely over the

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Speaker 1: next couple months as we lap last year's elevated first

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Speaker 1: quarter numbers. Job market seems to have stabilized. So I

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Speaker 1: start with a baseline that's pretty favorable for what we're

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Speaker 1: trying to do, and then you have uncertainty, and it

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Speaker 1: could take us up, it could take us down.

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Speaker 3: We'll just have to see.

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Speaker 4: Do you still see the FED cutting at some point

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Speaker 4: this year.

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Speaker 1: I mean, that's certainly the lean, but we'll see what happens.

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Speaker 4: Could the Fed can potentially see anything that could cause

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Speaker 4: you to contemplate hiking rates.

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Speaker 1: Well, I never take anything off the table, and so

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Speaker 1: if you never take anything off the table, you can't

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Speaker 1: take anything off the table.

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Speaker 3: So I'm not to do that.

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Speaker 1: But you'd have to see an economy overheating, and I

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Speaker 1: don't see any signs of an economy overheating. I see

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Speaker 1: inflation coming down, not going up. I see the job stabilizing.

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Speaker 1: But we got the jolt steady yesterday. It seemed to

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Speaker 1: come down a little bit. It doesn't feel like we're overheating,

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Speaker 1: and I think you'd have to imagine you're seeing an

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Speaker 1: economy overheating.

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Speaker 5: Let me go back to the base case idea at

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Speaker 5: this point, do you think that interest rates are suitable

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Speaker 5: for this economy? For a while, the Fed was saying

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Speaker 5: we need to cut because we're still tight.

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Speaker 3: But if you can't, is that okay?

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Speaker 5: Are you looking for data that will tell you to

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Speaker 5: cut or are you looking for data that.

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Speaker 3: Will tell you to hold well.

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Speaker 1: So I supported the recalibration we did obviously in the fall,

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Speaker 1: and that's because with inflation in the twos and unemployment

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Speaker 1: weakening at the time, the one number that seemed out

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Speaker 1: of range was having the FED funds rate at five

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Speaker 1: point three.

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Speaker 3: So we've brought down one hundred basis points. Sin's at

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Speaker 3: four point three.

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Speaker 1: I still think that's moderately restrictive, but we'll learn as

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Speaker 1: we go, and if what happens is the economy comes

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Speaker 1: back strong, you have to ask yourself questions about how

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Speaker 1: restrictive you really are. If the economy weakens further, you

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Speaker 1: can adjust appropriately. If inflation continues to come down, you

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Speaker 1: could say, yep, I'm having the impact.

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Speaker 3: I want to have. If it doesn't, you know, you

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Speaker 3: ask yourself those questions.

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Speaker 1: And so I think we've recalibraated to a place that

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Speaker 1: is more sensible, given you know where the economy sits

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Speaker 1: right now, and I think it leaves us well positioned

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Speaker 1: on whatever happens.

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Speaker 5: But to go back to a very old fed term,

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Speaker 5: what what would your bias be towards cutting?

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Speaker 1: My bias is to see what happens and then react appropriately.

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Speaker 1: As I said, I think if you look at the

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Speaker 1: last sep, there's a lean in there, you know, toward cutting,

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Speaker 1: but let's see what happens.

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Speaker 2: That suggests you might be equally as open to hiking.

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Speaker 2: Is that a case?

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Speaker 3: That's another good way to ask the exact same question.

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Speaker 3: So I think the lean is toward better. Let's see

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Speaker 3: what happens.

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Speaker 2: So you would be up into doing so, as I

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Speaker 2: said earlier line this morning, But I just want to

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Speaker 2: understand how open minded you are.

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Speaker 3: Oh, I'm open.

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Speaker 1: I'm always open minded on what happens with the data.

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Speaker 1: If you see an economy that overheats, you'd have to

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Speaker 1: respond to it. I don't see an economy yet close

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Speaker 1: to overheating.

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Speaker 2: There was some questions about whether we are accommodative right

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Speaker 2: now restrictive? Can I just finish that the Federal Reserve

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Speaker 2: chat check down. I'm sure you watched the news conference

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Speaker 2: set that you were restrictive, then said financial conditions were accommodative.

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Speaker 2: Can you square that circle so well?

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Speaker 3: So?

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Speaker 1: I do think we're somewhat restrictive. I don't think we're

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Speaker 1: hugely restrictive. We're a lot less restrictive obviously than we were,

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Speaker 1: you know, six months ago.

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Speaker 3: But we'll see as we go.

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Speaker 1: And like I said, if inflation continues to come down,

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Speaker 1: that would be a positive sign. If the economy continues

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Speaker 1: to you know, perform at a decent but not overheated level,

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Speaker 1: that's a sign. But if you start seeing an economy,

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Speaker 1: you know, heat up, yeah, then you'd have to ask

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Speaker 1: yourself those questions.

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Speaker 2: President Barkin appreciate your time, as always said, thank you

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Speaker 2: to be here. The Federal Reserve Bank of Richmond President

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Speaker 2: Tom Barkin that