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

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Speaker 2: President Donald Trump took to truth Social Friday morning to

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Speaker 2: announce his choice for the next chair of the Federal Reserve.

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Speaker 3: President Trump has tapped FED critic Kevin Walsh Kevin Walsh,

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Speaker 3: Kevin Walsh to be the next FED Chair.

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Speaker 2: Kevin Walsh. He's not a household name, but he's also

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Speaker 2: not exactly a surprise pick. He's a former FED governor

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Speaker 2: who served during the financial crisis, and he was up

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Speaker 2: for the FED chair position during Trump's first term in

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Speaker 2: twenty seventeen. Trump chose Jerome Powell instead. But there's a

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Speaker 2: big difference between the old worsh and the new Worsh.

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Speaker 4: Well, I think the big question that many fedwatchers are

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Speaker 4: asking today is which Kevin Walsh will show up to

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Speaker 4: be FED chair if he is confirmed.

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Speaker 2: My colleague Amara Amokway covers the Federal Reserve. She says

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Speaker 2: that for a long time Worsh was hautious about lowering

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Speaker 2: rates because of the risks of driving up inflation, but

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Speaker 2: recently Worsh has been signaling a shift in position.

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Speaker 4: He does have this track record of being an inflation hawk,

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Speaker 4: but then as he's been in the mix for FED

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Speaker 4: chair has really embraced this idea that for several reasons,

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Speaker 4: he argues that the FED can be cutting interest rates.

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Speaker 2: Here he is on Fox News this summer.

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Speaker 3: The FED has the policy mix exactly wrong. It has

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Speaker 3: a big balance sheet like we're in thea crisis, the

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Speaker 3: twenty twenty pandemic, and has rates that are too high.

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Speaker 3: It needs to shrink the FED balance sheet and cut

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Speaker 3: interest rates.

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Speaker 2: Trump, of course, has put pressure on the FED to

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Speaker 2: cut rates more aggressively, challenging long held norms around the

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Speaker 2: central banks independence, and stoking concerns about how much influence

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Speaker 2: the President will have over the next FED chair.

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Speaker 5: Did Kevin Walsh commit to you that he will push

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Speaker 5: to cut interest.

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Speaker 2: Rates if he has come At the White House Friday morning,

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Speaker 2: reporters asked the President about what he expects from Worsh.

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Speaker 1: But we talk about it, and I've been following them,

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Speaker 1: and I don't want to ask him that question. I

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Speaker 1: think it's inappropriate. Probably it probably would be allowed, but

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Speaker 1: I want to keep it nice and pure. But he

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Speaker 1: certainly wants to cut right, So I've been watching him

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Speaker 1: for a long time.

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Speaker 2: Worsh would replace Fedchair Powell when he turns out in May.

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Speaker 2: But before Worsh can step into the role, he'll need

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Speaker 2: to be confirmed by the Senate, and until then he'll

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Speaker 2: be under a microscope.

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Speaker 4: Is Kevin Worsh going to show up to the FED

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Speaker 4: chair job and defend this decade's long tradition of FED

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Speaker 4: independence and really push for policy that is based on

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Speaker 4: his best judgments of what's happening in the economy. Or

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Speaker 4: is he going to be a person who pushes for

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Speaker 4: policy that is aligned with what the president prefers.

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Speaker 2: I'm Sarah Holder, and this is the big take from

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Speaker 2: Bloomberg News Today. On the show, President Trump has named

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Speaker 2: Kevin Walsh as his pick for the next chair of

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Speaker 2: the Federal Reserve. I sit down with Fed reporter Amara

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Speaker 2: Amokway and Senior Washington correspondent Seleiah Mosen to break down

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Speaker 2: what we know about Worsh, how he might lead the FED,

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Speaker 2: and what to watch out for on the road to

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Speaker 2: his confirmation. So the reason we're here is that in

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Speaker 2: a truth Social post this morning, President Donald Trump announced

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Speaker 2: his pick for the next Chair of the Federal Reserve,

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Speaker 2: Kevin Worsh. Seleia, who is Kevin Worsh.

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Speaker 5: Kevin Worsh previously served at the Federal Reserve. He was

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Speaker 5: nominated to that role by George W.

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Speaker 6: Bush.

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Speaker 5: He interviewed for the chairmanship back in the first Trump

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Speaker 5: term in twenty seventeen, when those interviews were going on,

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Speaker 5: and eventually J. Powell was offered the job. At that time,

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Speaker 5: then treasure Secretary Stephen Nushan said you should choose J.

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Speaker 6: Powell.

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Speaker 5: And then we saw in November of twenty twenty four

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Speaker 5: when Trump had been reelected and he was looking for

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Speaker 5: hi as your secretary, Worsh popped up again and was

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Speaker 5: part of those interviews. Didn't get that job, but still

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Speaker 5: everyone kind of had a sense that the job that

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Speaker 5: he would really want is the FED chair role.

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Speaker 2: Well, I mean, as you've just laid out, Worsh has

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Speaker 2: had many of the roles you might expect for a

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Speaker 2: future FED chair. He was on the Central Bank Spoort

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Speaker 2: of Governors. He served during the financial crisis. He's been

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Speaker 2: an economic advisor for the president. Trump even said he

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Speaker 2: was Central Casting amara. When you look at his resume,

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Speaker 2: what stands out to you most, What does it signal

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Speaker 2: about his potential approach in this role.

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Speaker 4: I think people some people are comforted by the fact

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Speaker 4: that he knows the institution and that during his time

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Speaker 4: at the FED he played a very key role in

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Speaker 4: helping craft the Fed's response to the financial crisis because

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Speaker 4: he had a lot of ties to Wall Street. But

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Speaker 4: I think what people have been thinking a lot about

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Speaker 4: is the fact that during his time at the FED,

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Speaker 4: Kevin Worsh was seen as an inflation hawk. He was

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Speaker 4: seen as someone who was very concerned about inflation during

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Speaker 4: the depth of the financial crisis, and over the last year,

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Speaker 4: as he's been in the mix for the FED chair,

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Speaker 4: he has become notably more dubvish. But to be fair, Worsh,

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Speaker 4: in advocating for lower rates, has laid out an economic argument.

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Speaker 4: It's not like he's just saying we should be lowering

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Speaker 4: rates for no reason. He has pointed to factors in

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Speaker 4: the economy that he believes should allow the FED to

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Speaker 4: lower rates, including where we are with productivity in the economy,

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Speaker 4: and he's also talked about other things, like his view

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Speaker 4: that the FED should have a significantly smaller balance sheet

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Speaker 4: as a way of opening the door for lower rates.

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Speaker 4: So he's been laying out an economic argument. But I

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Speaker 4: think people see a little bit of inconsistency in the

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Speaker 4: fact that he used to be so concerned about inflation,

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Speaker 4: and then as he's been one of the top candidates

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Speaker 4: for this job, the story has kind of changed.

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Speaker 2: Worsh did resign from the FED Board in twenty eleven

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Speaker 2: over some fundamental disagreements with the central banks post crash strategy.

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Speaker 2: What were at the heart of his issues with FED

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Speaker 2: policy at the time.

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Speaker 4: So he disagreed with the Fed's decision to continue engaging

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Speaker 4: in quantitative easing, that is, the purchase of assets that

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Speaker 4: basically grows its balance sheet. And as he has been

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Speaker 4: in the mix for FED chairs, he's made speeches and

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Speaker 4: appearances over the last year since Trump returned to office,

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Speaker 4: he has continued to talk about how he thinks the

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Speaker 4: fed's balance sheet policies have gotten sort of out of hand.

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Speaker 4: And what is interesting is that that criticism and other

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Speaker 4: criticisms that Walsh has made of the FED since he

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Speaker 4: left have actually been really closely aligned with some of

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Speaker 4: the criticisms we've heard from Treasury Secretary Scott Bessant. Treasury

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Speaker 4: Secretary Bessant had an essay, a very long essay where

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Speaker 4: he laid out several criticisms of the FED, and it

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Speaker 4: was actually striking how similar his criticisms were to some

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Speaker 4: of the criticisms that Kevin Walsh has made up the FED,

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Speaker 4: particularly on the balance sheet. And we heard Kevin Walsh

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Speaker 4: over the summer basically say that there needs to be

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Speaker 4: regime change at the FED and institutional change at the FED,

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Speaker 4: and these are exactly some of the things that Tragy

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Speaker 4: Secretary Besson, who ran point on this FED selection process,

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Speaker 4: has been talking about. And so in that way you

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Speaker 4: can see that Wosh was really aligned with the views

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Speaker 4: of some of the most important figures in the administration.

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Speaker 2: And Selia you've mentioned, you know, one of the pivotal

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Speaker 2: moments in Worsh's evolution is that in twenty seventeen he

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Speaker 2: was passed over for the FED chair role. Trump chose

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Speaker 2: Powell instead. Trump has since, you know, basically said he

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Speaker 2: regrets doing so. But I'm wondering, you know, what's changed

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Speaker 2: since twenty seventeen. Why did Trump choose Worsh this time?

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Speaker 5: That is currently what we're reporting out. I'm so curious

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Speaker 5: because ever since the DOJ investigation into Powell and the

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Speaker 5: FED was launched, it really threw a wrench into Scott

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Speaker 5: Besson's process to get Trump to select a FED chair

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Speaker 5: because all signs were pointing to Kevin Hassett, the top

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Speaker 5: economist in the White House, who had previously been a

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Speaker 5: staffer at the Federal Reserve, getting the job. And this

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Speaker 5: is something that Trump himself acknowledged this morning when he

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Speaker 5: truth socialed that worsh is getting the job. His next

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Speaker 5: post was, I love Hassett, I just want to keep him.

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Speaker 5: So that's just confirmation that Hassett was the front runner

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Speaker 5: for many many months there, and Trump would say, I

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Speaker 5: know who it's going to be. I have the guy's

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Speaker 5: name in my head. I'm just not going to tell you.

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Speaker 5: And so then you're looking at the other candidates. You

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Speaker 5: had Rick Reader from Blackrock, you had Chris Waller, who

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Speaker 5: is currently a FED Board governor, and you had Kevin Walsh,

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Speaker 5: and all of them had pros and cons in Trump world. Right,

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Speaker 5: Blackrock is not super popular among the MAGA folks. You

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Speaker 5: have Chris Waller, who maybe he was seen as a

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Speaker 5: steady hand and had shown that he thinks independently from

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Speaker 5: what some people call the group think at the FED,

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Speaker 5: but still he was maybe seen as too institutional of

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Speaker 5: a person. Even though now Trump has said all the

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Speaker 5: other options we would have been great. And then you

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Speaker 5: have Kevin Walsh, who was sort of like the one

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Speaker 5: who got away maybe, And a lot of the time

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Speaker 5: things just come down to relationships. For Trump, who does

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Speaker 5: he already know and he didn't want to repeat the mistake.

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Speaker 5: He did not know j Powell at the time of

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Speaker 5: choosing him. He just knew him from interviews and reading

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Speaker 5: up on him and studying him as he's making the selection.

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Speaker 5: Kevin Walsh, he's known now for a long time.

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Speaker 4: One of the things that the FED chair is going

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Speaker 4: to have to have is credibility in the markets, right,

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Speaker 4: And if you're just seen as a SICKA fan who's

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Speaker 4: just doing the president's bidding, that would likely rattle markets

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Speaker 4: and make people feel unsettled. But if you can make

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Speaker 4: an economic argument for rate cuts that convinces people, then

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Speaker 4: you're on better footing. Right. So intellectual arguments that make

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Speaker 4: the case for rate cuts without appearing like you're just

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Speaker 4: only interested in doing the president's bidding, I think probably

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Speaker 4: helped his case.

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Speaker 2: Jerome Powell's term as FED Chair ends in May, and

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Speaker 2: before worsh can take over, he'll have to be confirmed

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Speaker 2: by the Senate. What the Fed's transition period could look

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Speaker 2: like coming up next. Kevin Worsh's nomination as the next

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Speaker 2: FED chair comes at an intense time for the Central Bank.

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Speaker 2: As Trump continues his relentless quest for lower interest rates.

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Speaker 2: His administration has ramped up the pressure on the FED

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Speaker 2: and FED Chair Jerome Powell. There's an ongoing Justice Department

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Speaker 2: probe into renovations at the Fed's HQ and a Supreme

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Speaker 2: Court case over Trump's attempt to fire FED Governor Lisa Cook.

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Speaker 2: Lawmakers on both sides of the aisle, including Republican Senator

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Speaker 2: Tom Tillis, have registered their concern that the result of

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Speaker 2: all these attacks could be a less independent FED.

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Speaker 6: We've got the Cook, so we have the power case.

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Speaker 6: Both of those, to me are instances of trying to

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Speaker 6: undermine the credibility of the FED independent.

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Speaker 2: I asked Bloomberg, Samara Amokwagh, and Saliah Mosen how those

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Speaker 2: dynamics could affect Congress's decision about whether to confirm Worsh.

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Speaker 4: Tom Tillis, who was on the Senate Banking Committee that

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Speaker 4: does the initial vetting of FED nominees, has made clear

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Speaker 4: that he is going to block any FED nominee until

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Speaker 4: this DJ probe of Chairpowal and the FED is resolved somehow.

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Speaker 4: And then Senator Tillis came out after President Trump announced

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Speaker 4: his pick and reiterated that I am.

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Speaker 6: Placed with the nominee. I think that by most accounts

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Speaker 6: he's well regarded. But we still have to clear the

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Speaker 6: current matter.

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Speaker 4: And so that is a roadblock that the administration now has.

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Speaker 4: Is the Department of Justice going to drop the investigation

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Speaker 4: or find some other kind of off ramp because Tillis

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Speaker 4: has made clear that he's not going to allow this

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Speaker 4: nomination to move forward.

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Speaker 6: The Senate has to stand in the breach. We have

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Speaker 6: to make sure that the FED maintains its independence and

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Speaker 6: we cannot reward any bad behavior.

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Speaker 4: I think also you can expect that whenever worsh does

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Speaker 4: go before the committee, you are going to hear a

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Speaker 4: lot of questions about FED independence because the administration has

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Speaker 4: really up the ante in putting pressure on the FED,

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Speaker 4: from the DOJ investigation to the attempt at firing of

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Speaker 4: Lisa Cook. We did see Senator Elizabeth Warren, who is

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Speaker 4: the ranking member on the Banking Committee, come out and

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Speaker 4: be very critical of this nomination and basically tie that

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Speaker 4: to the fact that there are questions around the FEDS

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Speaker 4: and dependence, and she said that this nomination it is

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Speaker 4: essentially Trump's latest attempt to seize control of the FED.

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Speaker 4: I think you're really going to hear the Senators probably

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Speaker 4: on both sides of the isle at this point, given

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Speaker 4: the DOJ investigation, really pushing Walsh on whether he's going

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Speaker 4: to be independent and how he can assure the public

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Speaker 4: and the markets that he's not going to just do

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Speaker 4: President Trump's bidding.

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Speaker 2: And where does all this leave current FED Chair Jerome Powell.

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Speaker 2: What does a worst pick mean for him?

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Speaker 4: Well, I mean that's the big question, right. I think

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Speaker 4: before the DOJ probe, the feeling among FED watchers was

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Speaker 4: that Jerome Powell was ready to leave. He has been

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Speaker 4: on the FED board for a long time. This is

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Speaker 4: his second term as chair, and you know, I think

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Speaker 4: the expectation was that he was ready to go. The

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Speaker 4: DJ probe has changed everything, and we saw that in

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Speaker 4: the extraordinary statement that chairpal released about the subpoenas that

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Speaker 4: were issued to the FED. At the FOMC meeting, Pale

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Speaker 4: was asked about his future plans and he, again, as

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Speaker 4: he has in the past, declined to say whether he's

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Speaker 4: going to stay or go. But I think the DOJ

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Speaker 4: probe is kind of the bigger issue. It's bigger than

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Speaker 4: who the next FED chair is. It's really what is

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Speaker 4: going to happen with that investigation that I think will

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Speaker 4: ultimately determine whether chairpal stays or goes.

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Speaker 2: And Telia, You've done a lot of reporting on the dollar.

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Speaker 2: I'm wondering how markets more broadly reacted to this pick.

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Speaker 5: Yeah, we saw markets rally. Markets are happy with the choice.

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Speaker 5: So far, it looks like it's someone who, as Trump

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Speaker 5: said acknowledged yesterday when he was teasing everyone, what I've

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Speaker 5: made the decision you're going to hear about tomorrow. I

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Speaker 5: don't know why he didn't just tell us right then

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Speaker 5: in the moment, but he said, this is going to

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Speaker 5: be someone that the world of finance already knows well.

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Speaker 5: And because of that, we're seeing a rallying that it's

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Speaker 5: someone who understands how the institution works, understands. Hopefully, if

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Speaker 5: you understand how it works, that means you understand the

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Speaker 5: importance of independence, but also someone who maybe Trump trusts. Therefore,

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Speaker 5: there will be fewer tweets and truth social posts about

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Speaker 5: the FED chair being a bonehead, and all the other

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Speaker 5: names that Trump has called j Paul.

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Speaker 2: The relationship that Worsh would have with the committee matters

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Speaker 2: a lot, and consensus or dissent matters a lot, and

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Speaker 2: how interest rates will be set moving forward. What do

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Speaker 2: we know about how the current FED board might receive Worsh.

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Speaker 4: I mean, my understanding is that when there's an new chair,

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Speaker 4: the fellow policymakers want to give that chair a fair shake, right,

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Speaker 4: they want to give him the opportunity to lead. Obviously,

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Speaker 4: this is someone who is nominated by the President and

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Speaker 4: confirmed by the Senate, and I think the feeling is

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Speaker 4: that that person should be given the benefit of the

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Speaker 4: doubt to make their intellectual arguments and to lead the institution.

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Speaker 4: But again, I don't think it's the case that policymakers

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Speaker 4: are going to go along with something that they don't

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Speaker 4: think is right, that they don't think is right for

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Speaker 4: the economy. And so we will really see how, if

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Speaker 4: he's confirmed, how Worsh interacts with his fellow policy makers,

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Speaker 4: and the extent to which he's able to bring them

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Speaker 4: along with where he thinks policy should be headed. Jae

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Speaker 4: Powell is known as having been really successful at this

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Speaker 4: and so it'll be interesting to see if Walsh is

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Speaker 4: able to have that same influence and that same ability.

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Speaker 4: I think this is something that often gets lost in

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Speaker 4: conversations about the FED. The FED Chair is just one

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Speaker 4: one of twelve people who votes on monetary policy. Okay,

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Speaker 4: twelve people have to go in there, vote and come

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Speaker 4: to a consensus or not right. And so you know,

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Speaker 4: we've seen President Trump really criticize Chair Poal and put

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Speaker 4: all this pressure on him for not lowering rates. But

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Speaker 4: the reality is the Chair has to drive the committee

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Speaker 4: that votes on interest rates toward a consensus. And over

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Speaker 4: the last couple of months, we've seen that it hasn't

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Speaker 4: always been easy for even Chair Pal to do that.

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Speaker 4: We've seen dissents, We've seen people say actually, we shouldn't

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Speaker 4: be cutting rates, or we should be cutting rates. And

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Speaker 4: so even if Walsh is inclined to cut rates, he's

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Speaker 4: going to have to convince his fellow policy makers that

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Speaker 4: that is the right thing for the economy at that time.

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Speaker 4: And we know that a lot of these policy makers

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Speaker 4: our strong economic heavyweights in their and they're not going

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Speaker 4: to go along with something that they don't feel is

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Speaker 4: in the best interests of the economy, and so it

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Speaker 4: will be really interesting to see how this all plays out.

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Speaker 4: If we're in a situation where worsh is pushing for

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Speaker 4: lower interest rates and the rest of the committee is

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Speaker 4: not willing to go along, how will President Trump reacts

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Speaker 4: because no FED chair can push through rate cuts on

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Speaker 4: his own.

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Speaker 4: Hello,