Speaker 1: Just a couple of points, and then we'll bring in
Speaker 1: Bloomberg Steve Matthews for some quick analysis again Semester, saying
Speaker 1: that the FED hasn't seen any progress on inflation and
Speaker 1: that the central bank is still too accommodative. He said,
Speaker 1: there's always a risk when you're tighten to weigh up
Speaker 1: whether or not you're tightening too much or too little,
Speaker 1: But at this point, she said, the larger risk comes
Speaker 1: from tightening too little and allowing very high inflation to persist.
Speaker 1: The big fear is it becomes embedded. She shrugged off
Speaker 1: a question about about slowing down quantitative tightening, saying the
Speaker 1: FED should stick to its balance. She she run off,
Speaker 1: let's get to Bloomberg Steve Matthews. Steve, your main takeaway
Speaker 1: from that interview, Well, there are a couple of things.
Speaker 1: She was asked about the meeting in November, and while
Speaker 1: she would not commit to fifty or seventy five basis
Speaker 1: points as the hYP for November market car pricing, and
Speaker 1: obviously seventy, the overall tone of her remarks was very
Speaker 1: supportive of seventy five basis points. I mean, it was
Speaker 1: pretty clear from her comments that she viewed not saying
Speaker 1: one way or the other. It's kind of a perfunctory
Speaker 1: thing because well, I want to go into the meeting
Speaker 1: and hear what other people are saying, and so it's
Speaker 1: like it's kind of a diplomatic way of some of
Speaker 1: the MC will refuse to commit in advance because they're
Speaker 1: listening at the meeting and want to hear what others
Speaker 1: have to say. But but the reality is the tone
Speaker 1: of her remarks was very much that we need to
Speaker 1: do more, we needed more now, and it was very
Speaker 1: supportively seventy five. The other thing that really jumped out
Speaker 1: was the Laurento Smester is a long time Hawks. She
Speaker 1: worked for the Philadelphia Said before becoming president in Cleveland
Speaker 1: and was worked for very hawkish president. But she said
Speaker 1: that we are all well aligned on policy, meaning the
Speaker 1: entire POEMC And it's like, you know, she's not speaking
Speaker 1: for everyone else, but she's saying, basically, there are no hawks,
Speaker 1: there are no dubs right now. Everybody is pretty much
Speaker 1: on board. And that was interesting. Yeah, we have seen
Speaker 1: some few cracks here as well, But I just want
Speaker 1: to get to what else she was talking about, because
Speaker 1: she did say that they were monitoring financial markets and
Speaker 1: saying that financial markets were functioning. Well, you know, how
Speaker 1: was she How does the FED interpret market action? Is
Speaker 1: the key point I'm trying to do with a quick question.
Speaker 1: I'm trying to ask, Yeah, that was interesting because you know,
Speaker 1: she was saying markets are fine right now. We don't
Speaker 1: see problems. We don't see any reason that with market
Speaker 1: turmoil that would cause us to stop. And I guess
Speaker 1: the one takeaway from that is one of the levers
Speaker 1: the FED poles is by raising rates, they want financial
Speaker 1: markets to react. I mean they want financial conditions to tighten,
Speaker 1: and that that means you know, a higher dollar and
Speaker 1: higher mortgage rates, and you know, presumably lower bond and
Speaker 1: stock prices, and there's a wealth effect through which, you know,
Speaker 1: the the economy is slowed. And so I think up
Speaker 1: until now they have seen these financial market changes and
Speaker 1: if anything, are placed by it, because that's part of
Speaker 1: their goal is to slow the economy, and they haven't
Speaker 1: seen anything disruptive. The most disruptive thing obviously has been
Speaker 1: recently out of the Bank of England and what's happening
Speaker 1: in the in the UK. But that is not alarming enough.
Speaker 1: Right now, I have to say that Jenny Yellen said
Speaker 1: pretty much the same thing in a CNBC interview just
Speaker 1: a couple of hours ago. At the time, I felt
Speaker 1: like some in the market might think that they're asleep
Speaker 1: at the wheel, that they're not seeing that some of
Speaker 1: these things could be visiting US shores. But it seems
Speaker 1: at least at the moment, they feel comfortable. Uh. And
Speaker 1: actually they're not really being very successful in in bringing
Speaker 1: unemployment up, are they. No. No, you have unemployment at
Speaker 1: three and a half percent, and you just had, you know,
Speaker 1: another fairly big jobs report, meaning that job creation ordinarily
Speaker 1: should be uh, to just account for the trend growth
Speaker 1: in the labor market would be around a hundred thousand,
Speaker 1: and they're going more than twice that. So job growth
Speaker 1: is too high in their view, and economy is too strong.
Speaker 1: So alright, Steve, you have a lot more work to
Speaker 1: be done. That that's the key message. A lot more
Speaker 1: work to be done, and we are all on the
Speaker 1: same page. That's what she's been saying. Bloomberg Steve Matthews
Speaker 1: with us and again our chat with Cleveland President Lauretta
Speaker 1: Mester here live on Bloomberg Radio and Television.