1 00:00:00,320 --> 00:00:01,760 Speaker 1: Just a couple of points, and then we'll bring in 2 00:00:01,760 --> 00:00:05,920 Speaker 1: Bloomberg Steve Matthews for some quick analysis again Semester, saying 3 00:00:05,920 --> 00:00:08,520 Speaker 1: that the FED hasn't seen any progress on inflation and 4 00:00:08,560 --> 00:00:12,280 Speaker 1: that the central bank is still too accommodative. He said, 5 00:00:12,320 --> 00:00:14,720 Speaker 1: there's always a risk when you're tighten to weigh up 6 00:00:14,720 --> 00:00:16,800 Speaker 1: whether or not you're tightening too much or too little, 7 00:00:17,079 --> 00:00:19,600 Speaker 1: But at this point, she said, the larger risk comes 8 00:00:19,600 --> 00:00:24,200 Speaker 1: from tightening too little and allowing very high inflation to persist. 9 00:00:24,280 --> 00:00:27,120 Speaker 1: The big fear is it becomes embedded. She shrugged off 10 00:00:27,120 --> 00:00:31,160 Speaker 1: a question about about slowing down quantitative tightening, saying the 11 00:00:31,240 --> 00:00:33,960 Speaker 1: FED should stick to its balance. She she run off, 12 00:00:34,040 --> 00:00:37,519 Speaker 1: let's get to Bloomberg Steve Matthews. Steve, your main takeaway 13 00:00:37,600 --> 00:00:42,159 Speaker 1: from that interview, Well, there are a couple of things. 14 00:00:42,200 --> 00:00:47,120 Speaker 1: She was asked about the meeting in November, and while 15 00:00:47,360 --> 00:00:51,960 Speaker 1: she would not commit to fifty or seventy five basis 16 00:00:52,000 --> 00:00:55,440 Speaker 1: points as the hYP for November market car pricing, and 17 00:00:55,480 --> 00:01:00,240 Speaker 1: obviously seventy, the overall tone of her remarks was very 18 00:01:00,360 --> 00:01:03,360 Speaker 1: supportive of seventy five basis points. I mean, it was 19 00:01:03,400 --> 00:01:07,959 Speaker 1: pretty clear from her comments that she viewed not saying 20 00:01:08,040 --> 00:01:11,000 Speaker 1: one way or the other. It's kind of a perfunctory 21 00:01:11,000 --> 00:01:13,479 Speaker 1: thing because well, I want to go into the meeting 22 00:01:13,560 --> 00:01:16,479 Speaker 1: and hear what other people are saying, and so it's 23 00:01:16,520 --> 00:01:19,840 Speaker 1: like it's kind of a diplomatic way of some of 24 00:01:19,840 --> 00:01:24,200 Speaker 1: the MC will refuse to commit in advance because they're 25 00:01:24,280 --> 00:01:26,759 Speaker 1: listening at the meeting and want to hear what others 26 00:01:26,840 --> 00:01:29,559 Speaker 1: have to say. But but the reality is the tone 27 00:01:29,560 --> 00:01:31,560 Speaker 1: of her remarks was very much that we need to 28 00:01:31,600 --> 00:01:34,560 Speaker 1: do more, we needed more now, and it was very 29 00:01:34,600 --> 00:01:38,160 Speaker 1: supportively seventy five. The other thing that really jumped out 30 00:01:38,520 --> 00:01:42,200 Speaker 1: was the Laurento Smester is a long time Hawks. She 31 00:01:42,280 --> 00:01:47,600 Speaker 1: worked for the Philadelphia Said before becoming president in Cleveland 32 00:01:47,760 --> 00:01:52,360 Speaker 1: and was worked for very hawkish president. But she said 33 00:01:52,520 --> 00:01:57,680 Speaker 1: that we are all well aligned on policy, meaning the 34 00:01:57,800 --> 00:02:01,400 Speaker 1: entire POEMC And it's like, you know, she's not speaking 35 00:02:01,440 --> 00:02:05,400 Speaker 1: for everyone else, but she's saying, basically, there are no hawks, 36 00:02:05,440 --> 00:02:08,720 Speaker 1: there are no dubs right now. Everybody is pretty much 37 00:02:08,760 --> 00:02:12,400 Speaker 1: on board. And that was interesting. Yeah, we have seen 38 00:02:12,480 --> 00:02:15,480 Speaker 1: some few cracks here as well, But I just want 39 00:02:15,480 --> 00:02:18,160 Speaker 1: to get to what else she was talking about, because 40 00:02:18,360 --> 00:02:20,560 Speaker 1: she did say that they were monitoring financial markets and 41 00:02:20,560 --> 00:02:24,560 Speaker 1: saying that financial markets were functioning. Well, you know, how 42 00:02:24,639 --> 00:02:28,679 Speaker 1: was she How does the FED interpret market action? Is 43 00:02:28,919 --> 00:02:30,560 Speaker 1: the key point I'm trying to do with a quick question. 44 00:02:30,600 --> 00:02:35,160 Speaker 1: I'm trying to ask, Yeah, that was interesting because you know, 45 00:02:36,360 --> 00:02:39,280 Speaker 1: she was saying markets are fine right now. We don't 46 00:02:39,280 --> 00:02:43,320 Speaker 1: see problems. We don't see any reason that with market 47 00:02:43,360 --> 00:02:47,400 Speaker 1: turmoil that would cause us to stop. And I guess 48 00:02:47,560 --> 00:02:53,400 Speaker 1: the one takeaway from that is one of the levers 49 00:02:53,560 --> 00:02:58,120 Speaker 1: the FED poles is by raising rates, they want financial 50 00:02:58,160 --> 00:03:02,480 Speaker 1: markets to react. I mean they want financial conditions to tighten, 51 00:03:02,639 --> 00:03:05,400 Speaker 1: and that that means you know, a higher dollar and 52 00:03:05,560 --> 00:03:10,760 Speaker 1: higher mortgage rates, and you know, presumably lower bond and 53 00:03:10,840 --> 00:03:14,400 Speaker 1: stock prices, and there's a wealth effect through which, you know, 54 00:03:14,520 --> 00:03:18,600 Speaker 1: the the economy is slowed. And so I think up 55 00:03:18,680 --> 00:03:23,720 Speaker 1: until now they have seen these financial market changes and 56 00:03:24,000 --> 00:03:28,639 Speaker 1: if anything, are placed by it, because that's part of 57 00:03:28,680 --> 00:03:31,760 Speaker 1: their goal is to slow the economy, and they haven't 58 00:03:31,760 --> 00:03:34,920 Speaker 1: seen anything disruptive. The most disruptive thing obviously has been 59 00:03:35,320 --> 00:03:38,200 Speaker 1: recently out of the Bank of England and what's happening 60 00:03:38,200 --> 00:03:41,640 Speaker 1: in the in the UK. But that is not alarming enough. 61 00:03:42,040 --> 00:03:44,480 Speaker 1: Right now, I have to say that Jenny Yellen said 62 00:03:44,520 --> 00:03:47,120 Speaker 1: pretty much the same thing in a CNBC interview just 63 00:03:47,160 --> 00:03:49,680 Speaker 1: a couple of hours ago. At the time, I felt 64 00:03:49,720 --> 00:03:52,800 Speaker 1: like some in the market might think that they're asleep 65 00:03:52,840 --> 00:03:55,160 Speaker 1: at the wheel, that they're not seeing that some of 66 00:03:55,200 --> 00:03:58,000 Speaker 1: these things could be visiting US shores. But it seems 67 00:03:58,000 --> 00:04:00,560 Speaker 1: at least at the moment, they feel comfortable. Uh. And 68 00:04:00,760 --> 00:04:03,880 Speaker 1: actually they're not really being very successful in in bringing 69 00:04:03,920 --> 00:04:08,960 Speaker 1: unemployment up, are they. No. No, you have unemployment at 70 00:04:09,000 --> 00:04:12,040 Speaker 1: three and a half percent, and you just had, you know, 71 00:04:12,520 --> 00:04:17,560 Speaker 1: another fairly big jobs report, meaning that job creation ordinarily 72 00:04:17,600 --> 00:04:22,040 Speaker 1: should be uh, to just account for the trend growth 73 00:04:22,279 --> 00:04:24,599 Speaker 1: in the labor market would be around a hundred thousand, 74 00:04:25,120 --> 00:04:28,839 Speaker 1: and they're going more than twice that. So job growth 75 00:04:28,880 --> 00:04:32,040 Speaker 1: is too high in their view, and economy is too strong. 76 00:04:32,240 --> 00:04:34,599 Speaker 1: So alright, Steve, you have a lot more work to 77 00:04:34,640 --> 00:04:37,120 Speaker 1: be done. That that's the key message. A lot more 78 00:04:37,200 --> 00:04:39,359 Speaker 1: work to be done, and we are all on the 79 00:04:39,440 --> 00:04:42,560 Speaker 1: same page. That's what she's been saying. Bloomberg Steve Matthews 80 00:04:42,560 --> 00:04:45,840 Speaker 1: with us and again our chat with Cleveland President Lauretta 81 00:04:45,880 --> 00:04:49,120 Speaker 1: Mester here live on Bloomberg Radio and Television.