Instant Reaction: The Fed Decides

Risks to the economy are now balanced, Defense says, and 0:00:09.680 --> 0:00:12.520 they're no longer talking about raising rates, but do not 0:00:12.720 --> 0:00:15.920 expect cuts soon. No change in rates today, and the 0:00:15.960 --> 0:00:20.960 statement drops the reference to additional policy firming, now saying quote, 0:00:21.079 --> 0:00:24.840 in considering any adjustments to the target range, the Committee 0:00:24.880 --> 0:00:28.680 will carefully assess incoming data, the evolving outlook, and the 0:00:28.720 --> 0:00:32.280 balance of risks. But before you buy March futures. The 0:00:32.320 --> 0:00:35.600 statement goes on to say the Committee does not expect 0:00:35.680 --> 0:00:38.480 it will be appropriate to reduce the target range until 0:00:38.520 --> 0:00:42.680 it has gained greater confidence that inflation is moving sustainably 0:00:42.760 --> 0:00:46.800 toward two percent. Official say the economy is solid, job 0:00:46.880 --> 0:00:51.320 gains remain strong, and the Committee judges that risks to 0:00:51.479 --> 0:00:57.279 achieving its employment and inflation goals are moving into better balance. Inflation, however, 0:00:57.600 --> 0:01:00.480 has eased over the past year, but remains abated. This 0:01:00.560 --> 0:01:04.520 statement says the economic outlook is uncertain and the Committee 0:01:04.520 --> 0:01:09.119 remains highly attentive to inflation risks. There is no change 0:01:09.120 --> 0:01:12.440 to balance sheet policy, nor does the statement suggest any 0:01:12.560 --> 0:01:15.560 changes are imminent. The Fed will keep the sixty billion 0:01:15.600 --> 0:01:18.120 dollar cap on treasury roll offs and the thirty five 0:01:18.160 --> 0:01:22.800 billion dollar cap on mortgage bonds. The decision today unanimous. 0:01:22.800 --> 0:01:26.200 And one other bit of business, the Fed has extended 0:01:26.480 --> 0:01:29.920 its tight its tighter policies on investment in trading to 0:01:30.000 --> 0:01:34.479 senior staff and any staff with access to confidential information. 0:01:35.080 --> 0:01:36.840 My McKeith, thank you, sir. Let's get to the price 0:01:36.840 --> 0:01:39.480 sanction immediately, look at equities. Equities on the s and 0:01:39.520 --> 0:01:41.840 P five hundred just to touch lower by almost one 0:01:41.880 --> 0:01:44.000 percent on the SMP. On the NASTAG we're down by 0:01:44.319 --> 0:01:46.440 one point four if you just turn to the bond 0:01:46.440 --> 0:01:48.920 market briefly, yield to a lower by about ten basis 0:01:48.920 --> 0:01:51.480 points at the front end now four twenty five sixty one. 0:01:51.520 --> 0:01:53.240 That may face just a little bit so least. So 0:01:53.280 --> 0:01:54.800 let's go through what we got here. We've dropped the 0:01:54.800 --> 0:01:57.120 tightening bias, but on a full embrace of the right 0:01:57.200 --> 0:01:59.160 cut conversation taking place on Wall Street. 0:01:59.200 --> 0:02:01.000 And then a little bit of appointment clearly that you 0:02:01.000 --> 0:02:03.480 can see on the front end with people maybe thinking 0:02:03.520 --> 0:02:05.880 they would lean into a march rate cut, saying not 0:02:05.920 --> 0:02:09.639 thinking ninety times soon, highly attentive to inflation risks. That 0:02:09.760 --> 0:02:12.120 focus may be casting a bit of cold water on 0:02:12.160 --> 0:02:13.080 some of the hopes and dreams. 0:02:13.120 --> 0:02:15.400 C K down five basis points on the tenure just 0:02:15.400 --> 0:02:18.079 showed a four percent here at about three ninety eight. 0:02:18.840 --> 0:02:21.200 Come in a little move here, John and I still 0:02:21.200 --> 0:02:24.400 say we're radically different from when we were earlier this morning, 0:02:24.480 --> 0:02:26.880 or even days and days ago. Yes, we've pulled back 0:02:26.919 --> 0:02:28.960 a little bit. It'll be interesting to see the press conference, 0:02:29.000 --> 0:02:32.760 to say the least, this is well timed. Joining us 0:02:32.840 --> 0:02:36.160 now is Richard Clarida. He is with Pimpco, our global 0:02:36.200 --> 0:02:38.960 economic advisor. He's the former vice chair of the FED 0:02:39.000 --> 0:02:44.840 and far more associated forever with his Columbia University Richard Clarida. 0:02:44.960 --> 0:02:49.320 Ethan Harris, student of Columbia ex Bank of America wrote 0:02:49.360 --> 0:02:53.400 a brilliant piece off his hero at Columbia, Phil Kagan, 0:02:53.480 --> 0:02:56.160 the other day, and he said, we've blown it on 0:02:56.240 --> 0:02:59.600 our inflation studies. We've got to get on trend. And 0:02:59.639 --> 0:03:02.280 for him, the trend is the Dallas trim mean, the 0:03:02.360 --> 0:03:05.080 Cleveland media and the rest of it. What is a 0:03:05.120 --> 0:03:10.040 trend right now, Professor Clarita in inflation, Well. 0:03:09.919 --> 0:03:11.080 Thank you for having me on. 0:03:11.440 --> 0:03:14.959 Tom a good friend of Ethan, and Phil Kagan was 0:03:15.000 --> 0:03:17.639 a colleague and a friend for many years. I look 0:03:17.639 --> 0:03:20.800 at Dallas Fed trimmed mean too. It's running somewhere in 0:03:20.840 --> 0:03:24.560 the mid twos on an inflation that's down a lot 0:03:24.600 --> 0:03:27.160 from a couple of years ago, but it's still obviously 0:03:27.200 --> 0:03:29.959 somewhat above the Fed's long run goal of two percent. 0:03:29.960 --> 0:03:31.720 But I think that's a good reading right now. 0:03:32.320 --> 0:03:34.040 Rich when you look at the pushback, and it's such 0:03:34.080 --> 0:03:36.000 a pushback in this statement, why do you think this 0:03:36.000 --> 0:03:39.040 Federal Reserve is not quite prepared to fully embrace that 0:03:39.160 --> 0:03:41.600 ray cut conversation taking place on more straight. 0:03:42.080 --> 0:03:44.640 Well on this one, John, I I actually agree with him. 0:03:45.160 --> 0:03:47.960 I myself, looking at the data they're looking at, would 0:03:47.960 --> 0:03:51.360 have thought March would be too soon. We don't get 0:03:51.400 --> 0:03:54.880 a lot more data in March than we have today. Moreover, 0:03:55.000 --> 0:03:58.720 as you've pointed out on airon I've been watching, you know, 0:03:58.800 --> 0:04:02.200 there is still some upside risk on the inflation picture. 0:04:02.280 --> 0:04:05.000 So I just think good policy of prudence would call 0:04:05.080 --> 0:04:07.960 for getting more information. And I applaud what they did 0:04:08.000 --> 0:04:09.720 in the statement today they did. 0:04:09.920 --> 0:04:10.960 I don't have it in front of me. 0:04:11.000 --> 0:04:13.280 I read Mike's account. Looks like there's a lot of 0:04:13.280 --> 0:04:15.440 red ink in it, and I think that made sense today. 0:04:15.840 --> 0:04:18.800 Yeah, especially with that particular comment. The committee does not 0:04:18.839 --> 0:04:20.719 expect it will be appropriate to reduce the target rate 0:04:20.800 --> 0:04:24.120 until it has gained greater confidence that inflation is moving 0:04:24.160 --> 0:04:27.080 sustainably toward two percent. I'm wondering, which do you think 0:04:27.120 --> 0:04:29.960 that the New York Community Bank ORP issue changes the 0:04:29.960 --> 0:04:32.280 equation even on the margins for the FED? And if 0:04:32.279 --> 0:04:36.960 you are on the FED, for you. 0:04:35.160 --> 0:04:38.720 Given what I know right now, Lisa, I would say not. 0:04:39.120 --> 0:04:42.159 But I do think that the reality is is that 0:04:42.680 --> 0:04:45.200 you know, we have a number of regional banks in 0:04:45.240 --> 0:04:47.400 the US, you know, above one hundred billion, but not 0:04:47.480 --> 0:04:51.080 in that mega category. And the FED FED did what 0:04:51.160 --> 0:04:53.359 it needed to do last spring, and I have no 0:04:53.480 --> 0:04:56.599 doubt that they will be there if further is needed. 0:04:56.600 --> 0:04:59.039 So I'd say right now, this doesn't appear to me 0:04:59.120 --> 0:05:02.520 to be a stemic. But whenever banking is involved and 0:05:02.560 --> 0:05:05.800 you see an unexpected loss, it certainly is on their radar, 0:05:05.839 --> 0:05:06.520 and I'm sure. 0:05:06.320 --> 0:05:08.560 It is rich as you know, As we know, a 0:05:08.600 --> 0:05:10.640 lot of thought goes into the language that gets put 0:05:10.640 --> 0:05:14.040 in this statement that line greater confidence. A lot of 0:05:14.040 --> 0:05:16.440 people are going to stress test that line greater confidence 0:05:16.440 --> 0:05:18.920 for the next one month or so. Neil datsra good 0:05:18.920 --> 0:05:22.559 friend over renaissance, Macro writes in what exactly does greater 0:05:22.640 --> 0:05:25.200 confidence mean? Can you talk to us about that? Rich? 0:05:25.240 --> 0:05:27.560 What do you think greater confidence means? And I'm going 0:05:27.640 --> 0:05:29.400 to ask this question just to wind up TK. 0:05:29.560 --> 0:05:30.000 Is it one? 0:05:30.040 --> 0:05:31.800 CPI print? Is it two? 0:05:32.360 --> 0:05:32.880 Is it three? 0:05:33.080 --> 0:05:33.279 Rich? 0:05:33.320 --> 0:05:33.760 What is it? 0:05:34.440 --> 0:05:34.800 Well? 0:05:34.839 --> 0:05:37.839 I think you know, at the risk of exaggeration, you 0:05:37.920 --> 0:05:40.400 might have nineteen opinions on that on the committee. 0:05:40.440 --> 0:05:41.840 I think the center of gravity though. 0:05:41.880 --> 0:05:44.800 Look, the price inflation numbers have been moving in a 0:05:44.920 --> 0:05:49.280 very good direction six months now. Core inflation or Dallas 0:05:49.279 --> 0:05:52.839 FED measures are definitely close to to percent. But we 0:05:52.920 --> 0:05:56.200 do have an economy in which wage inflation is running 0:05:56.200 --> 0:05:59.400 about a point hotter than probably they think would be 0:06:00.120 --> 0:06:03.280 consistent with the long run goal. So I think implicitly 0:06:03.320 --> 0:06:05.520 they'll be looking at a number of indicators from the 0:06:05.600 --> 0:06:08.760 labor market. We got some good news today on ECI, 0:06:08.920 --> 0:06:11.680 but even with that, ECI is still probably about a 0:06:11.720 --> 0:06:14.520 point hotter than they would ultimately like to see. 0:06:14.760 --> 0:06:19.000 Rich Clarida measured, I'm going to associate it with Allan Greenspan. 0:06:19.080 --> 0:06:19.159 You. 0:06:19.320 --> 0:06:22.160 Yeah, I got to take it back further, but I'm sorry. 0:06:22.200 --> 0:06:25.520 We are slaves to measured in our great fear of 0:06:25.560 --> 0:06:29.000 becoming unanchored. We have regret. We're worried about the Bank 0:06:29.040 --> 0:06:30.960 of Japan. I believe it was back in the early 0:06:31.000 --> 0:06:33.440 two thousands. We need to be measured. 0:06:33.920 --> 0:06:34.680 How do we be. 0:06:34.880 --> 0:06:39.160 Measured after this pandemic and after this original economics? 0:06:41.279 --> 0:06:45.440 Not surprisingly good question there, because a measured was used 0:06:45.520 --> 0:06:49.240 by the Maestro in four to talk about a measured 0:06:49.279 --> 0:06:52.840 pace of rate increases. But certainly now it may enter 0:06:52.880 --> 0:06:56.080 the conversation once they start to cut, and I think 0:06:56.120 --> 0:06:57.479 here you do see the tug of war. 0:06:57.560 --> 0:06:58.839 Folks look at past history. 0:06:58.880 --> 0:07:00.960 They see that when the FED starts to cut, it 0:07:01.000 --> 0:07:03.360 cuts very fast and in big chunks. 0:07:03.680 --> 0:07:04.440 Oftentimes. 0:07:04.839 --> 0:07:07.000 Typically if you go back and look Tom in soft 0:07:07.080 --> 0:07:09.680 landings and what turned out to be soft landings, it 0:07:09.720 --> 0:07:12.720 looks a lot different, more like two or three cuts 0:07:12.800 --> 0:07:15.280 seventy five bases points there. So so I think a 0:07:15.320 --> 0:07:18.200 lot of the measured in this cycle on the down 0:07:18.280 --> 0:07:21.680 direction is going to depend upon how soft the landing is. 0:07:22.000 --> 0:07:22.320 You J. 0:07:22.520 --> 0:07:25.280 Powell thinks the runway for a soft landings in sight, 0:07:25.480 --> 0:07:28.120 but right now that's a forecast, so it will be 0:07:28.200 --> 0:07:30.920 data dependent. Sorry that's a cop out, but I do 0:07:30.960 --> 0:07:32.360 think that it will be data dependent. 0:07:32.480 --> 0:07:34.920 Can the FED afford to be measured well, I mean, 0:07:34.960 --> 0:07:37.720 can the FED afford to be measured and start later 0:07:37.920 --> 0:07:40.880 if we're also bumping up against a political silly season. 0:07:40.960 --> 0:07:44.560 As Tom would say, this has become something that more 0:07:44.600 --> 0:07:47.320 and more economists are looking at. Why not start earlier, 0:07:47.640 --> 0:07:50.640 go more slowly, and be less susceptible to becoming a 0:07:50.680 --> 0:07:51.880 political football. 0:07:53.040 --> 0:07:55.040 Great, great point. It is an election year. 0:07:55.360 --> 0:07:57.960 I noticed historically and you can confirm this on your 0:07:58.000 --> 0:08:01.760 Bloomberg terminal the FED. Historically, the FAT has moved in 0:08:01.840 --> 0:08:04.560 election years in both up and down. So I think 0:08:04.600 --> 0:08:06.640 the Paler FED will do what it needs to do 0:08:07.280 --> 0:08:10.120 this year in terms of adjusting rates, presumably downward. 0:08:10.240 --> 0:08:11.680 But I do agree with you Lisa. 0:08:11.760 --> 0:08:14.200 You know, if you think you're going to cut three times, say, 0:08:14.200 --> 0:08:17.320 which was what the December SEP was, certainly it would 0:08:17.360 --> 0:08:20.480 make sense to get that process going, you know, perhaps 0:08:20.560 --> 0:08:22.880 in the summer and not wait till November. 0:08:23.000 --> 0:08:26.239 Shall we say to dovetable the academics of Richard Clara 0:08:26.320 --> 0:08:29.240 joining us now from the Midwest, Diane Swack of Michigan 0:08:29.320 --> 0:08:33.400 chief economist KPMG, really please to have you here with Diane, 0:08:33.480 --> 0:08:36.320 let me get away from the monetary mumbo jumbo. Diane, 0:08:36.440 --> 0:08:40.120 you are expert on the pulse of corporate America on 0:08:40.200 --> 0:08:43.480 this technology overlay we've witnessed look at the profits of 0:08:43.520 --> 0:08:48.679 Microsoft yesterday and also on this new change in productivity. 0:08:49.000 --> 0:08:52.600 Does this Federal Reserve have any understanding of the new 0:08:52.760 --> 0:08:56.439 productive America? 0:08:56.840 --> 0:08:58.679 I think they do. I think they're watching it very 0:08:58.679 --> 0:09:01.800 carefully with the question is is it something that's sustainable? 0:09:02.000 --> 0:09:04.240 And you know, this is why I agree one hundred 0:09:04.240 --> 0:09:07.360 percent with rich the measured concept, because I think the 0:09:07.400 --> 0:09:09.880 markets really want to see much more aggressive rate cuts 0:09:09.920 --> 0:09:12.480 and the FED. I think they start in May, but 0:09:12.840 --> 0:09:15.560 I think what's important about it is they start before 0:09:15.960 --> 0:09:17.839 the second half of the year, before we really get 0:09:17.880 --> 0:09:20.800 into the summer. And I think that's going to be justifiable. 0:09:20.840 --> 0:09:24.120 But I really think it's important to understand what's going 0:09:24.160 --> 0:09:27.120 on in terms of productivity. Growth picked up in part 0:09:27.280 --> 0:09:30.040 because people are not quitting jobs as much, they're learning 0:09:30.080 --> 0:09:33.280 the jobs they had. We're also finally leveraging all that 0:09:33.400 --> 0:09:37.320 technology that we took on as we pivoted online. 0:09:37.559 --> 0:09:38.600 That's all good news. 0:09:38.600 --> 0:09:41.560 The question is how sustainable is it? And I think 0:09:41.679 --> 0:09:44.640 that's something the FED still hasn't figured out. And that's 0:09:44.679 --> 0:09:46.240 what we're going to see in the minutes. I mean, 0:09:46.280 --> 0:09:49.160 it's really interesting to me that the December meeting, when 0:09:49.240 --> 0:09:51.920 Powell came out and had a much more dubbish tone 0:09:51.960 --> 0:09:55.080 and was pretty excited, and markets got pretty excited off 0:09:55.120 --> 0:09:58.760 of his comments. The actual minutes to the meeting were that, 0:09:58.880 --> 0:10:01.840 you know, hey, we're worried inflation rist search of the upside, 0:10:01.960 --> 0:10:03.959 and so it'll be really interesting to see the minutes 0:10:04.000 --> 0:10:06.120 off this meeting in terms of how they see the 0:10:06.120 --> 0:10:09.560 productivity growth continuing in twenty twenty four. 0:10:09.960 --> 0:10:11.000 And you know, it's a cop o. 0:10:11.160 --> 0:10:13.520 The FED gets to be able to react and be 0:10:13.559 --> 0:10:16.000 data dependent, and Rich is absolutely right about that. 0:10:16.240 --> 0:10:17.160 But that's what they're going to do. 0:10:17.200 --> 0:10:19.640 They're looking at a meetium ma Beetian basis, and I think, 0:10:19.840 --> 0:10:22.520 you know, we'll have enough information by May and June 0:10:22.920 --> 0:10:26.080 to begin those cuts. But I think that measured side 0:10:26.080 --> 0:10:29.000 of it is also really important, because the markets really 0:10:29.040 --> 0:10:31.160 want to take off and put a lot more cuts 0:10:31.160 --> 0:10:33.000 in than the FED is really. 0:10:32.760 --> 0:10:33.400 Willing to do. 0:10:33.600 --> 0:10:35.520 It was a really bizarre sequence to have the chairman 0:10:35.679 --> 0:10:37.880 engage in a conversation about interest rate cuts. 0:10:37.920 --> 0:10:39.160 Then New York Fed President. 0:10:38.960 --> 0:10:41.600 John Williams come out and say, not really talking about 0:10:41.679 --> 0:10:43.120 rate cuts, and then the minute seem to back up 0:10:43.120 --> 0:10:45.559 Williams and not power down. We'll let it go. Let's 0:10:45.600 --> 0:10:48.040 see if they repeat it again. I think today there's 0:10:48.040 --> 0:10:49.960 a feeling they are going to engage in a conversation 0:10:50.000 --> 0:10:52.440 a little bit more openly about the timing of interest 0:10:52.520 --> 0:10:54.080 rate reductions. Do you think they need to draw a 0:10:54.080 --> 0:10:57.680 clear distinction between adjusting rates and easing policy. 0:11:00.120 --> 0:11:02.480 Yes, absolutely, and I'm sure Rich would agree with me. 0:11:02.559 --> 0:11:06.960 I mean, this is removing the restriction, but not trying 0:11:07.000 --> 0:11:10.040 to stimulate the economy, and I think that's very important. 0:11:10.080 --> 0:11:14.000 They're trying to normalize rates, They're not trying to stimulate 0:11:14.120 --> 0:11:17.640 a moribund economy, and that's a very different scenario as 0:11:17.679 --> 0:11:20.120 when you pointed out from a soft landing and what 0:11:20.280 --> 0:11:23.360 may be at the moment and extremely soft landing. We 0:11:23.440 --> 0:11:26.079 also know that, you know, we're kind of coming in 0:11:26.480 --> 0:11:29.920 really strong in the first quarter on consumer spending, even 0:11:30.360 --> 0:11:34.440 with January and some weather disruptions. You don't mean much 0:11:34.480 --> 0:11:37.320 consumer spending for it to be very robust in the 0:11:37.360 --> 0:11:40.280 first quarter, and that's something that Fed's very attentive to 0:11:40.440 --> 0:11:41.200 right now as well. 0:11:41.360 --> 0:11:44.199 So in the press conference, most certainly rich. There's going 0:11:44.240 --> 0:11:46.480 to be someone who comes up and asks fed Shaw 0:11:46.559 --> 0:11:48.440 J Powell, so how much did you guys talk about 0:11:48.520 --> 0:11:48.920 rate cuts? 0:11:49.000 --> 0:11:49.880 Did you throw out dates? 0:11:49.880 --> 0:11:52.160 Did you throw out what your criteria are? If you 0:11:52.160 --> 0:11:54.960 were on the FED, what would you hope he would say? 0:11:55.240 --> 0:11:58.640 How granular should they be? Given the fact that people 0:11:58.720 --> 0:12:00.720 know they're talking about it, they have to be talking 0:12:00.760 --> 0:12:03.199 about it. Everybody else is talking about it. How much 0:12:03.240 --> 0:12:04.920 do they really telegraph. 0:12:04.440 --> 0:12:11.199 To the market. I'ms Lisa when the press conference is. 0:12:12.840 --> 0:12:16.040 Moving beyond what was in the statement, sometimes because the 0:12:16.160 --> 0:12:18.920 chair wants to move in that direction, or because you've 0:12:18.920 --> 0:12:21.520 got a dividing committee. I think today, and of course 0:12:21.520 --> 0:12:24.199 we'll find out to thirty, I think today is a 0:12:24.280 --> 0:12:27.880 day when the chair on that question in particular, will 0:12:27.920 --> 0:12:31.840 hug the FOMC statement pretty closely, because it was a 0:12:31.840 --> 0:12:34.840 big change from December. Some of it was expected, some 0:12:34.880 --> 0:12:36.520 of it was a little bit more hawkish, and so 0:12:37.280 --> 0:12:39.360 knowing J. Powell, I think today will be a day 0:12:39.400 --> 0:12:41.560 when he gets a question like that, he will hug 0:12:41.640 --> 0:12:45.400 the FMC statement language pretty tightly. 0:12:45.600 --> 0:12:47.800 That's what you do with Bramo questions, just hold on 0:12:47.840 --> 0:12:50.040 to the statement, trying to cap All the question. I 0:12:50.120 --> 0:12:52.559 just wonder how many times they shared the love letter 0:12:52.640 --> 0:12:55.160 from Senate Banking Committee chairs share a brown and the 0:12:55.240 --> 0:12:58.680 letter from Senator Elizabeth Warren had a Democratic colleagues, Rich, 0:12:58.760 --> 0:13:02.319 you've got experience of this under the Trump administration. It's 0:13:02.360 --> 0:13:04.839 often and I'll say it for you. It was inappropriate, 0:13:04.880 --> 0:13:07.679 then it's inappropriate. Now how did you deal with it? 0:13:07.720 --> 0:13:07.920 Then? 0:13:08.360 --> 0:13:11.000 How do you suspect this FMC will deal with it now? 0:13:11.200 --> 0:13:13.960 As you see lines like this from senators down in Washington, 0:13:14.040 --> 0:13:16.160 d C. That I urged the Federal Reserve to ease 0:13:16.160 --> 0:13:18.240 monetary policy early this year. 0:13:18.360 --> 0:13:19.400 How'd you deal with that? Rich? 0:13:21.559 --> 0:13:24.720 Obviously we had to deal with it in a different contact. 0:13:24.800 --> 0:13:28.319 But it goes way way back, and I think FED 0:13:28.400 --> 0:13:33.600 institutionally and Jay Powell individually understands the stakes and I 0:13:33.640 --> 0:13:35.600 think he just thinks this is just part part. 0:13:35.440 --> 0:13:38.280 Of the job, and the FED will, FED will look 0:13:38.320 --> 0:13:38.600 through it. 0:13:38.640 --> 0:13:40.880 And of course the data is breaking in a direction 0:13:41.360 --> 0:13:43.480 where that completely reinforces it. 0:13:43.600 --> 0:13:45.600 Richie Clarido, though, this is a good time to mention, 0:13:45.720 --> 0:13:47.920 of course, this is your public service to the nation 0:13:48.160 --> 0:13:51.640 is with John Snow and Treasury Paul O'Neil. Your work 0:13:51.640 --> 0:13:55.040 of course, is vice chair recently annoyed by the Museum 0:13:55.040 --> 0:13:57.640 of American Financial the Whitehead Award, and I'm going to 0:13:57.679 --> 0:14:00.840 go back there to Paul Voker and others. I'm sorry, 0:14:00.880 --> 0:14:02.640 Richard Claire. At the end of the day, you were 0:14:02.640 --> 0:14:06.439 teaching politics one on one at Columbia. This FED has 0:14:06.480 --> 0:14:08.120 to go into an election cycle. 0:14:08.520 --> 0:14:10.280 No one watching or listening. 0:14:09.920 --> 0:14:13.400 Has ever seen how political does the FED get, say, 0:14:13.480 --> 0:14:14.040 Labor Day. 0:14:16.160 --> 0:14:18.600 I think the pal FED will not be political, but 0:14:18.640 --> 0:14:23.360 it's inevitable monetary policy will be pulled into the political 0:14:23.400 --> 0:14:27.120 presidential discussion. I think they're prepared for it, and I 0:14:27.200 --> 0:14:30.320 think they have decided or they're deciding what they think 0:14:30.360 --> 0:14:32.480 they need to do based on the economics, and when 0:14:32.480 --> 0:14:36.960 they're ready to go, they'll communicate it. I'm confident they'll succeed, 0:14:37.040 --> 0:14:39.600 but I don't disagree that there is going to be 0:14:40.000 --> 0:14:43.800 an enhanced emphasis and focus and a political element to 0:14:43.880 --> 0:14:44.640 the focus on this. 0:14:45.000 --> 0:14:47.160 In the meantime, there's a real question, Diane about what 0:14:47.240 --> 0:14:50.320 exactly greater confidence means. As John was talking about earlier, 0:14:50.600 --> 0:14:52.800 what metrics are you looking at? I was struck by 0:14:52.840 --> 0:14:55.480 doom spending, which of course caught my eye, but some 0:14:55.560 --> 0:14:58.360 of these areas that might be distorted because of changes 0:14:58.400 --> 0:15:01.560 post pandemic. What gives you the clearest read. 0:15:04.120 --> 0:15:05.760 Oh, I think you're just going to have to continue 0:15:05.760 --> 0:15:08.040 on the labor market and inflation. Those are the two 0:15:08.080 --> 0:15:10.720 most important things. Those are the two most important data 0:15:10.760 --> 0:15:12.800 points to the Federal Reserve, and that's what they're going 0:15:12.840 --> 0:15:15.200 to be watching. I want to just echo something that 0:15:15.280 --> 0:15:17.600 you know, Rich said. You know, we've seen Powell go 0:15:17.680 --> 0:15:22.280 through some pretty hard political times already, and he's proven 0:15:22.360 --> 0:15:25.720 himself to be an institutionalist with the FED on that 0:15:25.760 --> 0:15:28.920 and I think that's a positive thing. The FED doesn't 0:15:28.960 --> 0:15:31.440 have a horse in this race. That said, they will 0:15:31.480 --> 0:15:33.960 be blamed for no matter what they do, no matter what, 0:15:34.240 --> 0:15:36.520 and they know that. And I think that's what Rich 0:15:36.600 --> 0:15:38.520 is telling you, and that's you know, that doesn't mean 0:15:38.600 --> 0:15:40.400 their decisions are going to be influenced by it. It 0:15:40.520 --> 0:15:43.360 just means that they know how to go through the 0:15:43.400 --> 0:15:47.640 hailstorm that's about to hit them. That said, they're looking 0:15:47.720 --> 0:15:52.720 for continued improvement in inflation and continued improvement in services inflation. 0:15:53.240 --> 0:15:55.000 I think they're going to get it, and I think 0:15:55.040 --> 0:15:58.000 they will be moving by May. But the bottom line 0:15:58.040 --> 0:16:01.360 is they want to see that continued. And they're also 0:16:01.440 --> 0:16:04.080 watching the consumer out there pretty closely, because this has 0:16:04.120 --> 0:16:09.359 been a remarkable not only resilient consumer, a defiant consumer, 0:16:09.680 --> 0:16:11.960 showing just how strong they really are. 0:16:12.320 --> 0:16:14.720 Diane my McKee is still listening before he goes into 0:16:14.720 --> 0:16:17.560 that news conference. Questions for Chairman Powell, what are they now? 0:16:20.880 --> 0:16:24.280 The biggest questions are, you know, how do you talk about? 0:16:24.080 --> 0:16:27.840 What is that exact issue is? What does this mean 0:16:27.880 --> 0:16:30.520 when you guys feel confident enough to cut rates? What 0:16:30.640 --> 0:16:32.520 is going to be the criteria? That's what all the 0:16:32.520 --> 0:16:34.680 focus is going to be on. And my guess is 0:16:34.720 --> 0:16:38.320 he's going to talk about it vaguely. And that's the 0:16:38.400 --> 0:16:41.640 problem for financial markets because they want something corincrete. And 0:16:41.680 --> 0:16:44.640 this is when you get as rich about it, but 0:16:44.680 --> 0:16:48.040 you get to the hard part between monetary policy as 0:16:48.040 --> 0:16:49.240 a science or an art. 0:16:49.520 --> 0:16:51.520 This is the art at the moment, Dane. Thank you 0:16:51.800 --> 0:16:54.720 Van swamp there on the latest Let's reset here if 0:16:54.720 --> 0:16:56.800 you are just joining us live on TV and radio. 0:16:57.080 --> 0:16:59.920 It is a special edition of Bloomberg Surveillance. The FED decides, 0:17:00.040 --> 0:17:02.800 the news conference is in about thirteen minutes time. We 0:17:02.880 --> 0:17:05.760 had the decision about seventeen minutes ago. No change on 0:17:05.840 --> 0:17:09.040 interest rates. They drop this bias towards further tightening. There's 0:17:09.040 --> 0:17:11.360 this new line we need to talk about. The Committee 0:17:11.359 --> 0:17:13.440 does not expect it will be appropriate to reduce the 0:17:13.480 --> 0:17:16.760 target range until it has gained greater confidence that inflation 0:17:16.840 --> 0:17:19.960 is moving sustainably towards two percent. So listen to the 0:17:19.960 --> 0:17:21.960 market response to all of this. The rectory market this 0:17:22.040 --> 0:17:24.280 afternoon looks like this. On the S and P five hundred, 0:17:24.440 --> 0:17:26.800 down by zero point nine percent. We're down one point 0:17:26.880 --> 0:17:29.280 three on the net stack LISA in the bond market 0:17:29.920 --> 0:17:32.159 by eight or nine basis points, not session lows on 0:17:32.160 --> 0:17:34.439 bond yields. I have to say this move faded just 0:17:34.480 --> 0:17:36.640 to touch. So the market is looking at the Federal 0:17:36.680 --> 0:17:39.640 Reserve hoping the inch towards interest rate cards. They're kind 0:17:39.640 --> 0:17:41.840 of taking a baby step today, but not fully embracing 0:17:41.840 --> 0:17:42.760 the idea just yet. 0:17:42.840 --> 0:17:44.359 The fact that they sort of said there's still a 0:17:44.359 --> 0:17:46.760 prolonged period of time before we reach our inflation targets 0:17:46.760 --> 0:17:48.880 to cast some cold water. There's store people out there. 0:17:48.960 --> 0:17:50.600 We thought maybe we'd get a cut at this meeting. 0:17:50.680 --> 0:17:52.080 Right that it was a live meeting. We heard some 0:17:52.119 --> 0:17:54.439 people saying that's what they should do right. This casts 0:17:54.440 --> 0:17:56.480 some serious cold water on it. I love the idea 0:17:56.520 --> 0:17:58.440 of what we're going to hear from j Power. Absolutely nothing. 0:17:58.440 --> 0:18:00.680 You will hug that statement. He will say as little 0:18:00.680 --> 0:18:03.919 as possible. He will be as ambiguous as possible. Just 0:18:03.920 --> 0:18:04.399 wait for it. 0:18:04.720 --> 0:18:05.240 We could get a. 0:18:05.240 --> 0:18:07.920 Surprise at last time. And I think Dan Swark was 0:18:07.960 --> 0:18:10.440 absolutely right about the science and the art. John. We're 0:18:10.440 --> 0:18:12.760 coming out of a pandemic. The great miss call last 0:18:12.800 --> 0:18:15.840 year was economic growth. Where were we twelve months ago? 0:18:16.359 --> 0:18:16.879 Doom? 0:18:17.080 --> 0:18:20.399 Gloom totally now total, just total bloom. 0:18:20.720 --> 0:18:24.159 Everybody was wrong playing I was wrong, everybody else was? 0:18:24.240 --> 0:18:27.680 He just taking this personally right now, down right in 0:18:27.760 --> 0:18:28.320 the new studio. 0:18:28.359 --> 0:18:31.680 The brim up him looks beautiful. But the point here, John, 0:18:31.880 --> 0:18:32.960 is it is in art. 0:18:33.040 --> 0:18:36.600 They're making it up as they go after this massive 0:18:36.640 --> 0:18:40.240 pandemic and massive stimulus. So I think today is less 0:18:40.240 --> 0:18:42.520 predictable because I was humbled, less. 0:18:42.280 --> 0:18:42.840 Present, Tom. 0:18:42.880 --> 0:18:44.600 It's important to pause here, and I'm pleased you've brought 0:18:44.600 --> 0:18:46.640 it up. It's important to pause and go over where 0:18:46.640 --> 0:18:48.119 we were, where we thought we'd be, and where we 0:18:48.200 --> 0:18:50.880 actually are. Where we are right now, it's unemployment, sat 0:18:50.920 --> 0:18:54.239 the four percent, inflation's doing better core PC. Last week 0:18:54.280 --> 0:18:55.960 we were talking about a two hand or not a three, 0:18:56.160 --> 0:18:58.920 which is a massive change as well. And GDP Tom 0:18:59.240 --> 0:19:02.360 gross how up in the face of interest rights climbate aggressively. Now, 0:19:02.600 --> 0:19:05.199 this is not a judgment about where we going. This 0:19:05.320 --> 0:19:07.480 is just an observation about where we are, and where 0:19:07.480 --> 0:19:09.160 we are is so much better than where we thought 0:19:09.160 --> 0:19:10.280 we'd be twelve months. 0:19:10.280 --> 0:19:11.119 There, he's been one on one. 0:19:11.119 --> 0:19:12.320 I mean, forget about measured. 0:19:12.440 --> 0:19:15.680 We have a stock market which is voting every day, 0:19:15.760 --> 0:19:18.760 every tick, and I believe since October has been on 0:19:18.880 --> 0:19:19.200 a tear. 0:19:19.280 --> 0:19:20.119 They have to fold that. 0:19:20.200 --> 0:19:22.840 Into the just putting back from old time highs. Robert 0:19:22.880 --> 0:19:25.320 Tip is with US of PGM sixth income alongside the 0:19:25.320 --> 0:19:28.399 former Fed Vice chair Richard Klouda. Robert Tip, You've had 0:19:28.400 --> 0:19:30.240 about twenty minutes to go over this one. Your reaction 0:19:30.320 --> 0:19:30.640 to it? 0:19:32.600 --> 0:19:35.600 Sure, Yeah, you know where we are versus where we expected. 0:19:35.640 --> 0:19:38.040 I mean, we did not have a backdrop for a recession. 0:19:38.200 --> 0:19:41.760 Interest rates were raised for a reason. The system had 0:19:41.800 --> 0:19:44.440 a clean backdrop. It was not one of these backdrops 0:19:44.440 --> 0:19:47.199 that was going to crumble when interest rates were raised. 0:19:47.880 --> 0:19:51.600 It continued right through SVD. The economy has plowed through 0:19:52.440 --> 0:19:56.560 and the Fed is fine tuning the policy at this point. Now. 0:19:56.600 --> 0:19:59.000 They started off with the first notion of cutting rates, 0:19:59.000 --> 0:20:02.040 I mean arguably back in July, Palell talked about how 0:20:02.040 --> 0:20:05.000 they would not wait for two percent inflation. They'll be 0:20:05.040 --> 0:20:06.479 cutting way ahead of that. 0:20:07.560 --> 0:20:07.760 Now. 0:20:07.880 --> 0:20:10.600 September saw a huge U turn, so they were fine 0:20:10.600 --> 0:20:14.200 tuning with maybe like a chainsaw at that point. December, 0:20:15.880 --> 0:20:18.080 you know, they came in and we had a U 0:20:18.160 --> 0:20:20.919 turn and a U turn frankly before that in October 0:20:20.960 --> 0:20:23.000 they called an audible as rates went up to five 0:20:23.040 --> 0:20:26.399 percent and they started to talk down their own higher 0:20:26.440 --> 0:20:30.560 for longer. At this point, they're really balanced. The market 0:20:30.600 --> 0:20:33.080 wants to get two hundred basis points ahead of them, 0:20:33.440 --> 0:20:36.640 which is actually kind of understandable. The five point three 0:20:36.680 --> 0:20:39.159 percent Fed funds rate they're running right now is a 0:20:39.160 --> 0:20:41.520 long way from the two and a half percent that 0:20:41.520 --> 0:20:44.960 they're putting forward as neutral. And inflation is hundreds of 0:20:44.960 --> 0:20:50.399 basis points off its highs and pretty sustainably, you know, 0:20:50.600 --> 0:20:53.800 is down in the threes, if not down at target 0:20:53.920 --> 0:20:57.280 right now for about six months. So their comments, you know, 0:20:57.359 --> 0:20:59.760 suggest they want to see a few more months or 0:20:59.800 --> 0:21:03.080 maybe be a big team of them want to see 0:21:03.119 --> 0:21:04.960 another six months before they go. 0:21:05.080 --> 0:21:06.400 Robert from the parlor game. 0:21:06.560 --> 0:21:09.080 Let's go to what you and Greg Peters do every day, 0:21:09.200 --> 0:21:10.400 which you've got to. 0:21:10.200 --> 0:21:11.520 Be in the market. 0:21:11.760 --> 0:21:14.639 Are you being in the market clipping the coupon or 0:21:14.680 --> 0:21:18.359 can you actually still pop a good total return this year? 0:21:19.960 --> 0:21:20.200 Yeah? 0:21:20.240 --> 0:21:23.240 I think big picture, the market is going to clip 0:21:23.320 --> 0:21:26.800 a good return. I think that your spread products, you know, 0:21:26.880 --> 0:21:30.239 as we've said, starting off, put out a piece at 0:21:30.240 --> 0:21:33.239 the end of twenty twenty two yield his destiny. You 0:21:33.320 --> 0:21:35.879 are going to clip that coupon. But we've seen the 0:21:35.880 --> 0:21:40.080 market seventy five one hundred basis points on either side 0:21:41.280 --> 0:21:45.119 of four percent roughly, and I think we're going to 0:21:45.160 --> 0:21:47.600 continue to see these big swings. Right now, the market 0:21:47.640 --> 0:21:50.920 wants to go in the dutish direction. But this powle 0:21:51.040 --> 0:21:54.840 fed is aware that the second big woop move higher 0:21:54.880 --> 0:22:00.880 in inflation in the seventies came with hostility in the Mideast, 0:22:01.119 --> 0:22:03.439 with volatility in the Middle East and a big increase 0:22:03.440 --> 0:22:06.760 in oil prices. And we have full employment around the world. 0:22:07.400 --> 0:22:10.760 We've seen very high inflation that brought about higher wages. 0:22:11.760 --> 0:22:14.000 All of that is in retrograde right now. They're going 0:22:14.080 --> 0:22:17.680 to want to make sure they have that really under 0:22:17.680 --> 0:22:20.120 control before they turn aggressively here. 0:22:20.240 --> 0:22:21.960 It's a good point, Robert, and I expect that we 0:22:22.000 --> 0:22:24.280 will hear from Fetcher J. Powell. They are watching the 0:22:25.160 --> 0:22:28.680 issues and the conflict in the Middle East carefully, Rich Clarita, 0:22:28.920 --> 0:22:31.640 one thing that was really notable about the December press 0:22:31.680 --> 0:22:34.879 conference was that Fetcher J. Powell had an opportunity to 0:22:34.920 --> 0:22:38.400 push back against that rosy outlook, the sort of flooding 0:22:38.440 --> 0:22:41.280 into risk assets that Robert Tip was talking about and 0:22:41.280 --> 0:22:42.720 that so many people have embraced. 0:22:43.000 --> 0:22:44.159 He didn't push back. 0:22:44.400 --> 0:22:45.959 Do you think it's going to be the same at 0:22:46.000 --> 0:22:48.959 this press conference that he will just say ultimately, the 0:22:48.960 --> 0:22:50.919 markets will do what we want, what they want to do, 0:22:51.200 --> 0:22:53.800 we're watching something else and we're on a good glide path. 0:22:55.440 --> 0:22:55.760 Again. 0:22:55.840 --> 0:22:57.720 I think this is going to be a press conference 0:22:57.760 --> 0:23:00.560 where it will make sense for the chair to to 0:23:00.640 --> 0:23:02.359 really hug that FMC statement. 0:23:02.400 --> 0:23:03.440 There was a lot of red ink. 0:23:03.480 --> 0:23:07.159 It was therefore a reason it gave the message that 0:23:07.480 --> 0:23:10.280 you know, basically trying to dissuade folks from pricing in 0:23:10.320 --> 0:23:13.040 that March adjustment and talk about they want to see 0:23:13.040 --> 0:23:16.200 the considerable and additional evidence and so I think that's 0:23:16.200 --> 0:23:18.520 a pretty good place for him to spend most of 0:23:18.560 --> 0:23:21.800 the day, at least on those sorts of questions. 0:23:21.840 --> 0:23:23.280 I have to say, Rich, you're not hyping up this 0:23:23.320 --> 0:23:27.359 news conference until it sounds like I can't repeat. I 0:23:27.400 --> 0:23:30.080 appreciate the honesty, though, Robert Tip. Just finally, I'm getting 0:23:30.080 --> 0:23:31.920 a load of people right in to say, what's the trade? 0:23:31.920 --> 0:23:34.120 What's your favorite trade right now? Robert, after what you've 0:23:34.160 --> 0:23:34.520 just heard. 0:23:35.800 --> 0:23:39.320 Yeah, I think that it's not the whether the cuts 0:23:39.400 --> 0:23:41.280 price in are correct or not. I think it's the 0:23:41.359 --> 0:23:44.360 timing and the shape of the curve, the ends. 0:23:44.119 --> 0:23:44.639 Of the curve. 0:23:45.200 --> 0:23:47.480 You know, whether you're looking at the next six months 0:23:47.560 --> 0:23:49.840 or whether you're looking at the tenure or the third 0:23:49.920 --> 0:23:54.840 year point, those look more reasonably priced than some of 0:23:54.920 --> 0:23:59.440 your two year out interest rates that are really banking 0:23:59.560 --> 0:24:03.639 on two hundred basis points of interest rate cuts in 0:24:03.680 --> 0:24:07.200 the next eighteen months. And I think if you can 0:24:07.359 --> 0:24:10.760 stay in the market and clip that coupon, avoid rolling 0:24:10.840 --> 0:24:13.359 up the yield curved, and also make some money on 0:24:13.400 --> 0:24:16.440 the tactics of trading this wide range on rates, I 0:24:16.440 --> 0:24:18.120 think it's gonna be a very good year for bonds. 0:24:18.200 --> 0:24:20.480 Robert Hip, thank you. Sir, from Pajim on the latest 0:24:20.520 --> 0:24:22.720 from the Fed for reserve for more his Bank for 0:24:22.720 --> 0:24:25.400 America's Mike Gape and the chief economist, Mike, you've got 0:24:25.400 --> 0:24:27.720 the Fed going in March. Do you like what you 0:24:27.800 --> 0:24:30.320 hear today? We make in that closest step, another baby 0:24:30.320 --> 0:24:31.520 step towards you'll cool. 0:24:33.200 --> 0:24:33.560 We are. 0:24:33.760 --> 0:24:37.560 I think you can interpret the statement as saying risk 0:24:37.600 --> 0:24:40.680 to the outlook our balance, therefore, our guidance should be balanced. 0:24:40.760 --> 0:24:43.680 And then did we debate a rate cut today? Yes, 0:24:43.720 --> 0:24:46.560 we did, just not for very long. What we need 0:24:46.640 --> 0:24:49.920 is more confidence before we cut rates. And I do 0:24:49.960 --> 0:24:54.720 think that involves seeing more progress on services inflation and 0:24:54.800 --> 0:24:57.880 more progress on wages, because as you know, a lot 0:24:57.880 --> 0:25:00.960 of the disinflation has come from goods price. Those declines 0:25:01.000 --> 0:25:04.000 may not persist. So the Fed we'll see more of 0:25:04.040 --> 0:25:06.280 that data. I think they can get there by March. 0:25:06.320 --> 0:25:08.879 So I'd say the statement was broadly in line with 0:25:08.920 --> 0:25:09.280 our thinking. 0:25:09.680 --> 0:25:14.040 Michael Gape And how aggregated are we or disaggregated are there? 0:25:14.080 --> 0:25:17.399 To America's out there in America flat on its back? 0:25:17.920 --> 0:25:23.080 And then the prosperous America is witnessed by Microsoft's profit yesterday. 0:25:23.840 --> 0:25:27.280 Yeah, there is you know, the economy is bifurgate, bifurcated. 0:25:27.320 --> 0:25:29.080 I think more broadly you could just say, you know, 0:25:29.160 --> 0:25:33.280 industrials and goods versus services. The industrial side of the 0:25:33.320 --> 0:25:37.120 economy has been suffering. Regional banks, obviously with news headlines 0:25:37.160 --> 0:25:40.960 this morning, still continue to struggle, but the consumers in 0:25:41.000 --> 0:25:43.680 good shape. The services side of the economy is doing well. 0:25:43.880 --> 0:25:46.600 Tech earnings are doing well. It has been kind of 0:25:46.800 --> 0:25:51.400 a rolling recessionary story where certain segments of the economy 0:25:51.440 --> 0:25:53.760 have had problems at different points in time, but the 0:25:53.800 --> 0:25:57.560 economy overalls has powered through. So thinking about it in 0:25:57.600 --> 0:25:59.920 that way, Tom, I think makes a lot of sense. 0:26:00.240 --> 0:26:02.720 Michael, I love hearing the bustle and the hustle behind you, 0:26:02.760 --> 0:26:05.280 and I imagine everybody's saying, the balance of risks, how 0:26:05.280 --> 0:26:07.720 do we get the greater confidence in equation is coming down? 0:26:07.800 --> 0:26:09.600 What does that mean? So what do you think that 0:26:09.680 --> 0:26:13.200 means in terms of how much you've got to get 0:26:13.200 --> 0:26:14.879 in terms of data underbelt? 0:26:16.880 --> 0:26:18.720 So I think they can get there by March in 0:26:18.760 --> 0:26:21.840 the following way, and that they'll get February PCE and 0:26:21.880 --> 0:26:26.320 they'll get the CPI and the PPI for that next 0:26:26.320 --> 0:26:28.800 pc I'm sorry the January PCE. But then they'll get 0:26:28.920 --> 0:26:32.159 CPI and PPI for that February PCE print during the 0:26:32.200 --> 0:26:35.760 blackout period, so they'll have two more inflation reports. They'll 0:26:35.800 --> 0:26:40.000 get more information on where is services inflation, where is sheltered, 0:26:40.000 --> 0:26:42.920 They'll get more wage data in the next two employment reports. 0:26:43.200 --> 0:26:45.600 I really think it's about that side of the ledger. 0:26:45.680 --> 0:26:48.200 For some on the committee for Governor Waller, he says 0:26:48.240 --> 0:26:50.800 the components don't matter. I just look at inflation, so 0:26:50.880 --> 0:26:53.840 his bar may may be lower, but others are really 0:26:53.920 --> 0:26:56.359 kind of concerned about that good services trade off and 0:26:56.440 --> 0:26:58.199 worry that services are too sticky. 0:26:58.400 --> 0:27:01.600 And it would optionality written this way because it can 0:27:01.640 --> 0:27:04.000 mean whatever they want it to mean, Lisa at any 0:27:04.040 --> 0:27:06.160 time over the next few months, which. 0:27:06.000 --> 0:27:07.880 Is the reason why he's going to hug that statement 0:27:07.960 --> 0:27:10.399 so close and everyone's going to be happy. And then you. 0:27:10.640 --> 0:27:13.280 Really, so I'm going to read a statement or read 0:27:13.320 --> 0:27:15.080 the minutes, and it's going to say in there it 0:27:15.200 --> 0:27:17.679 is written, it's gonna it's going to actually say it. 0:27:18.320 --> 0:27:20.320 Richard Clarity, let's come to you and just wind things 0:27:20.400 --> 0:27:21.960 up and put a bow on it if we can. 0:27:22.280 --> 0:27:24.480 This has been a single mandate Central Bank for the 0:27:24.520 --> 0:27:26.639 last couple of years where they focus on inflation and 0:27:26.680 --> 0:27:29.080 getting it back down towards two percent. Can we talk 0:27:29.080 --> 0:27:31.199 about the other side of the Jewel mandate? Is there 0:27:31.280 --> 0:27:33.560 anything to worry about in the labor market? 0:27:33.600 --> 0:27:38.200 From your perspective, the labor market is in a very 0:27:38.200 --> 0:27:41.679 good place. If anything, it's it's running a little hot. Uh, 0:27:42.400 --> 0:27:44.159 But I do think there's a path for that to 0:27:44.280 --> 0:27:48.440 adjust under the under the outlook. So yeah, the labor 0:27:48.480 --> 0:27:50.800 market is, you know, that's what we want maximum employment. 0:27:50.840 --> 0:27:53.600 We're at perhaps a little bit more than maximum employment. 0:27:53.640 --> 0:27:56.520 But but wage inflation is decelerating. We saw on the 0:27:56.560 --> 0:27:59.040 e CI, and I think that that's what they're factoring 0:27:59.080 --> 0:27:59.760 in for this year. 0:28:00.040 --> 0:28:02.679 Continuing there, Michael Gape, And do you agree? 0:28:03.720 --> 0:28:04.040 I do. 0:28:04.119 --> 0:28:07.199 I would say if concerns would be about the dispersion 0:28:07.240 --> 0:28:10.520 of employment growth, which is pretty narrow focused in leisure 0:28:10.520 --> 0:28:14.080 and hospitality and education and health, and then remaining growth 0:28:14.080 --> 0:28:16.560 in the private sector is basically flat. But I agree 0:28:16.600 --> 0:28:19.520 with Rich the labor market's in a good place and 0:28:19.560 --> 0:28:21.160 it's helping to drive the outlook. 0:28:21.240 --> 0:28:22.120 Mike can I You've got to run. 0:28:22.119 --> 0:28:23.639 It's great to get you cool. Michael Gape In there 0:28:23.640 --> 0:28:26.040 of Banks for America looking for a March interest rate reduction. 0:28:26.200 --> 0:28:29.560 Richard Clarida, Thank you, sir, and congratulations on that Whitehead Award. 0:28:29.720 --> 0:28:31.800 Truly prestigious, Sir. We appreciate your time.