December 20, 2024 • 16 mins
Federal Reserve Bank of San Francisco President Mary Daly says she is “very comfortable” with policymakers’ median projection of two interest-rate cuts next year, emphasizing the central bank can turn to a slower approach. She spoke about the Fed's path forward with hosts Jonathan Ferro, Lisa Abramowicz and Michael McKee.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Turning to the Federal Reserve cunning interest rates by another
twenty five basis points this month, but signaling the path
is unclear for twenty twenty five, Fedchaed J. Powell saying
he feels good about the economy, but we are in
a new phase in the fight against inflation. Pleased to
say they're joining us around the table alongside Mike m
Key and us is the San Francisco Fed President, Mary Daily,
President Daily. It's good to see you, Nice to see you.
(00:28):
Thank you for giving us some time. Let's start with
the forecast. Some controversy around the forecast. I'll go through
the controversy. We don't speculate, we don't assume, we don't guess.
And then a month later it found like there was
some speculation and some guessing about policy next year. I
just want to talk about your approach to the forecast.
Was it about the data for you? Or was it
about the incoming administration?
Speaker 3 (00:47):
It's about the data. It's always about the data for me.
We don't know what the incoming administration is going to do.
You know, new administrations, no matter when they come, always
put a slate of programs together, and really, as a
policy maker, I look at I want to see the
net net effects once I see clarity about what those
policies will be. So I was focused on the incoming
(01:08):
information and what it means for the outlook. And today
I feel like we've got policy in a good place,
the economy is in a good place, and we are
prepared for whatever comes before us.
Speaker 1 (01:18):
What happened in the past three months that caused the
FED and perhaps yourself to be much more concerned about
the stickiness and inflation.
Speaker 3 (01:27):
Well, the data happened, and you look at the data,
and what's happened is that there's two things that have occurred.
First of all, the economy remains in a good place,
and the risks to the outlook are equally balanced between
a risk to inflation or a risk to employment. That's
where we wanted our goals to be. And we adjusted
policy when we had confidence that inflation was heading down,
(01:47):
and we adjusted policy some more to ensure that we
have a balanced labor market that continues. So that's where
we are. But then the data on inflation have been
coming in a little slower. I wouldn't even say sticky
or stalled. I would say the progress is just slowed
relative to what we had wanted. But that's a typical pattern.
It's bumpy as you get to the you know, from
(02:07):
point five or two point eight to two it's just
a bumpy path. This okay, go ahead.
Speaker 1 (02:12):
At the same time, some people were wondering if there
was the stickiness. And I'm looking right now at say
the Cleveland CPI now and it actually has ticked up
for the month of December from November. There was this question,
why did the FED cut it all?
Speaker 3 (02:26):
Sure, and again I'm going to reassert that it's bumpy.
You know, remember earlier in the year we had two
months of data and people said, oh my gosh, it's reaccelerating,
and then we had it come down. So inflation data
can't you can't focus on one month or two months.
The most important thing for me was that we needed
to recalibrate policy. I saw this as a close call.
You know, I was seventy five enough to be the recalibration.
(02:48):
We were looking for right size policy to meet the
economy we expect, or do we need more. Ultimately, I
determined that the one hundred basis points was really the
right level. Now I feel we've got that recalibration phase
behind us and we're in the next phase. And the
next phase is really looking at the incoming information. We
can return to a more typical pattern of gradualism for
(03:09):
the fad you know we've been we've practiced that where
you with a lot of uncertainty, you adjust the policy rate,
then you wait watchfully and you see what transpires, and
then you make further adjustments. That's the phase I think
we're now entering.
Speaker 4 (03:23):
From September, the expectation in the markets was going into
every meeting that you'd be cutting Has that changed now?
Should the expectation be that you won't be doing anything
at any particular meeting? And from that question flows a
second question, what are the criteria that you need to
see to decide to go back to cutting rates?
Speaker 3 (03:45):
Well, as you saw from the SEP the median projection
is to rate cuts next year, so that's already not
in every meeting or every other meeting. That's two rate cuts.
I was very comfortable with that meeting, and that makes
sense to me. But we have to agile. I mean,
you know, the thing that's got us here is being
resolute to achieve our dual mandate goals. Price stability was
(04:07):
our focus when inflation was very high. The employment has
come into the frame so that we're focused on both.
But then we also have to be agile. You know,
the world is uncertain, so we pencil into and you know,
as that estimate or that projection gets further from when
we made it, the accuracy of it probably falls. And
so we're just going to continually take in more information,
(04:29):
consider it, and every meeting your listener should think about this.
Every meeting is live from the standpoint that you're debating,
you're discussing, you're thinking what's the right level of policy.
But my projection is that it will take much many
fewer rate cuts next year than we thought. But I'll
watch the economy and see if that works out.
Speaker 4 (04:49):
When we went into the cutting cycle, you were out
front and saying you were concerned about the labor market
and that we needed to make sure that we didn't
lose the gains that we had. Now, at least coming
out of Chairman Powell's press conference, it sounds like the
focus has shifted to inflation again. Are you comfortable with
that as this new phase that he's talking.
Speaker 3 (05:11):
About, Well, I think of it as a new phase
as well, and I would characterize it slightly differently. I
would say that for a long time, a persistent amount
of time protracted, we were focused almost entirely on inflation.
That's because the labor market was quite robust and inflation
was seven six ' five. That was the right way
to focus. Then the labor market came into the frame.
(05:32):
That didn't mean we turned our focus totally to it.
It just meant that after a long period of focusing
only on inflation, we were now focused on both. I
think that is still the case, but I see policy
as already in that position where it's supporting both. That
policy is restrictive. It's going to continue to bring inflation down,
and it's going to do so in a way that
doesn't strangle the labor market, break it and then give
(05:55):
people lower price, lower inflation, but take their jobs. And
that's not what we're trying to do. We're really working
towards that soft landing.
Speaker 2 (06:02):
Mat Now you've used the word we a lot when
you talk about what's happening in the Federal Reserve. We've
had some people who are quite critical of the Federal Reserve,
and Chairman Pouse performance specifically in this news conference. One
excuse that was given was that maybe he was struggling
to reflect the lack of a consensus on the committee.
How much diversity of thought disagreement is there on the committee?
You call it a close call for yourself, but was
(06:23):
there some disagreement on the committee at this meeting?
Speaker 3 (06:26):
Well, you know, I'm not going to speak about the
entire committee when I say, focused on the things we
all agree on, which is price stability and full employment,
on our efforts to get there. You know, what I
would offer is that we have, in my mind, the
healthy level of discussion and disagreement. You know, you don't
want an FMC that things exactly alike. And I believe
(06:48):
that what people are looking at is the fact that
now the world is more uncertain and people are debating
and bringing in their views. And that's appropriate. When it
was a pandemic and there was only one direction that
we were interest rates, we had to do it quickly.
It was obvious everyone agreed. When inflation's high, there was
no disagreement. Right, we're all merging up. Now. You should
expect more disagreement, more differences of opinion, but they're always
(07:10):
framed to the same thing, how do we get inflation
to do and restore or keep full employment.
Speaker 2 (07:15):
When I hear the world is more uncertain a lot
of people here, Well, that's not about the data, that's
about the incoming administration.
Speaker 3 (07:22):
I would disagree. Why would you disagree, because we have
a variety of risks that are the ones we always
deal with. Right the housing inflation. Right now, there's a
substantial housing imbalance in the United States. The models, in
our data and our past experience, I'll say housing inflation
will come down, but we are uncertain about that. Right.
(07:43):
It hasn't come down as quickly as the models would
have predicted, and so that's an issue. The labor market
and consumer spending and growth are much faster and stronger
than people would have predicted at this point. Given the
titaning we've done. There's a lot of uncertainty about the
natural rate of interest, where's the stopping point? And then
of course there's geopolitical risks, the risks of global growth.
(08:05):
That's going to be the backdrop. And then you have
a change in administration. So I would say this level
of uncertainty is normal in the sense that we've had
all those things going on, and it's not as excessive
uncertainty as after the pandemic, the financial crisis. Those were
really big periods of uncertainty. So I think if you're
a central banker, you just get used to uncertainty and
(08:27):
you manage.
Speaker 1 (08:28):
It before we get into what some of the uncertainty
about next year could look like. I am curious about
how you're weighing how to preserve the job gains with
the risk of running the economy for too long. And
that's I think something people are struggling with. Is there
an emphasis on the labor market even at the behease
of inflation, just because it's been deemed better for inflation
(08:51):
to be a little hotter as long as people keep
their jobs.
Speaker 3 (08:55):
Yeah, I would characterize it a little differently, But that
is a terrific question. So when we spend you know,
as you know, reserve bank presidents spend a lot of
time in the field work in our district, I have
the whole Western United States, And so I ask people
the question, you know, where are you on this? And
again and again I hear that the economy is sort
of in a good place right. Inflation's coming down, it's gradual,
(09:18):
and the labor market is solid, but there's one job
for every unemployed worker. You know, that's in perfect balance.
And our firms are saying we can find workers, and
our workers are saying we can find jobs, and no
one really wants that to break. So what people do
not want is a recession. And I think one of
the reasons sentiments been rising since the middle of this
(09:40):
year is because the recession risk is now behind us
in people's minds, and they feel good about that. So
what I hear more than you would think is don't
get one tenth off inflation just and then break the economy.
That's like, we can be patient, but you just have
to head for two and we don't want the economy
to break.
Speaker 1 (09:59):
That's why I thought it was interesting that the inflation
forecast for next year was shifted upward even at a
time where the unemployment rate was shifted downward. There was
a sense that that was okay to tap two and
a half percent inflation at the end of next year,
even though it was above two percent. Is that the
sort of feeling right now on the FED to be
(10:19):
more patient with inflation because it's thought of as less
punitive at a level below three percent. Than say, arise
in unemployment.
Speaker 3 (10:26):
Well, let me just say how I think about it,
because here I will speak for myself. I'm not comfortable
with the rate of inflation being two point five, but
we're continuing to work on it, and so we might
end up cutting rates cutting rates less if inflation is
as sticky as that. But what I'm also balancing is
I don't want to see an unnecessary rise in the
(10:46):
unemployment rate just to get a quarter ahead on the
two percent goal. So that is a balancing act. And
I think ultimately we were just looking at the information
coming in and saying, you know, there's a lot of
risks out there. Inflation could rise, but you'll see the
inflation rising was a partly why you saw the rate
cuts pulling back is absent the if we had four
(11:07):
you'd see inflation go up more. And so this is
a balancing act. But I think it also points you
to the dispersion that you saw in the SEPA, which
I see as a feature, not a bug. You should
have some dispersion when the world's uncertain, Otherwise you would
wonder if we're all in an echo chamber. But we're not.
You can see that clearly and you see the dispersion,
and I think that dispersion really represents what we're facing.
(11:28):
We might end up with fewer cuts than two. We
might have to respond and end up with more if
inflation falls faster or you see a significant weakening in
the labor market. And I'm comfortable sitting in that center
court position and waiting for the data to come in
and we'll actually respond as they do.
Speaker 4 (11:44):
Well, do you think there's any chance that you might
have to raise rates next year?
Speaker 3 (11:48):
You know, I don't see that on the horizon right now,
but if we will always remain prepared to do what
it's needed to achieve our goals. But I don't see
that in the span of the most salient risks right
now that I faced. But you know, absolutely that's something
that we never take off the table.
Speaker 2 (12:04):
Who owns the dealt with no cunts? Next year? Come on, reveal,
Who's is that?
Speaker 3 (12:09):
Twenty twenty five reveal?
Speaker 2 (12:12):
Salas.
Speaker 3 (12:12):
No, I'm not going to tell you. I'm not rookie.
You know, I know it's not a holiday gift. I'm
willing to give gifts.
Speaker 1 (12:20):
I'm just checking reveal.
Speaker 2 (12:22):
President Day is going to stick with it someplace to
say thank you, Mia Kay, thank you as well, Sir
President Mary Danny is still with US. President Daidy, you
were all about the data, not about the administration change.
We do want to talk to you about how you
would approach changes in policies from the incoming administration though
across many dimensions immigration taxes, but the big one I
think for many tariffs, what's your approach going to be
(12:43):
next year?
Speaker 3 (12:44):
So we have all the tools and evidence from prass
historical periods, we can think about how these things will
affect the economy. You know, one of our biggest tools
of figuring out how things will affect the economy is
talking to CEOs of small, medium, and large companies, and
we've already engaged in doing that. So when we're out
there in the field talking to people from across the country,
(13:04):
and I'm spending my time in the twelfth district, we're
hearing that their sentiment is up. They're really optimistic that
they've been cautiously optimistic. They see the Fed's interest rate
path falling and they feel good about that. They see
the economy as the procession risk is behind us, and
they feel positive in general about some of the things
(13:25):
that they think may change going forward. Now, whether that
materializes or not, we will wait and see. But I
feel that sentiment alone is causing us to have some enthusiasm,
some cautious enthusiasm, if you will. One thing that we
hear is that for firms that are worried about the
immediate impacts of tariffs on their business, they're just building
(13:47):
up some inventory so that they can have some insurance.
And so that's something you'll start to see in the
data already, but I haven't seen that in such an
outsized way that I think it's going to change the
course of the economy.
Speaker 1 (13:59):
One thing that you say President daily is that we
have experienced from the past of tariffs, of some of
the immigration bands or limits, but is this time more
difficult just because of where we're coming from. It is
a more inflationary time after a pretty big stimulus package
injected into the economy.
Speaker 3 (14:17):
You're feeling like an economist, like when you think of
state dependence, right, The impacts of policies affect are affected
by the state of the economy. So one thing that
is on my mind is that we already have inflation
above two percent, and so we have to work hard
to get inflation down to two percent, and that is
an economy that's just a little more vulnerable than it
(14:38):
would be if we had inflation, you know, at two percent,
or when we came in to the tariff discussion or
trade discussions last time, it was below two percent. So
I feel, on the other side, the real side of
the economy is very is very strong or solid, and
so we're in a good position. But it does it
is on my mind, and inflation is already elevated.
Speaker 1 (14:55):
Well, does that make it that tariffs are more likely
to be inflationary than they have?
Speaker 3 (14:59):
And it's really hard to sa. I mean, one of
the things you learned from doing this kind of a
job at while is that it really depends on the scope, magnitude,
timing of tariffs and whether our companies in the United
States are positioned to use substitutes and manage and you
see this happening. We already went through. Another feature that
might make it less challenging is that in the pandemic,
(15:22):
firms reshored, near shored, friendshured, and you saw a lot
of that behavior already taking place. So we'll see we
just have about a minute.
Speaker 1 (15:30):
But in being agile, how concerned are you that people
are going to label decisions as political.
Speaker 3 (15:37):
I don't feel concerned about that. I think what we've
done well and is talk to the American people. That
chair does that in meetings. We do that, and we're
telling them we are only focused on inflation and full employment.
Those are the goals Congress gave us. We're going to
do our best to navigate the incoming information, whatever causes it,
(15:58):
and make the good decisions, make the best posicians, and
then be humble about having made the wrong one or
the right one and redo it so and think about
it again. So that's how we're going to approach it,
and I think ultimately people will judge us by whether
we're successful.
Speaker 2 (16:11):
You've been generous with your time this morning. We appreciate it,
enjoyed the holidays. Happy to thank you. I was Mary
Daddy there, the San Francisco Fed President,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Turning to the Federal Reserve cunning interest rates by another
twenty five basis points this month, but signaling the path
is unclear for twenty twenty five, Fedchaed J. Powell saying
he feels good about the economy, but we are in
a new phase in the fight against inflation. Pleased to
say they're joining us around the table alongside Mike m
Key and us is the San Francisco Fed President, Mary Daily,
President Daily. It's good to see you, Nice to see you.
(00:28):
Thank you for giving us some time. Let's start with
the forecast. Some controversy around the forecast. I'll go through
the controversy. We don't speculate, we don't assume, we don't guess.
And then a month later it found like there was
some speculation and some guessing about policy next year. I
just want to talk about your approach to the forecast.
Was it about the data for you? Or was it
about the incoming administration?
Speaker 3 (00:47):
It's about the data. It's always about the data for me.
We don't know what the incoming administration is going to do.
You know, new administrations, no matter when they come, always
put a slate of programs together, and really, as a
policy maker, I look at I want to see the
net net effects once I see clarity about what those
policies will be. So I was focused on the incoming
(01:08):
information and what it means for the outlook. And today
I feel like we've got policy in a good place,
the economy is in a good place, and we are
prepared for whatever comes before us.
Speaker 1 (01:18):
What happened in the past three months that caused the
FED and perhaps yourself to be much more concerned about
the stickiness and inflation.
Speaker 3 (01:27):
Well, the data happened, and you look at the data,
and what's happened is that there's two things that have occurred.
First of all, the economy remains in a good place,
and the risks to the outlook are equally balanced between
a risk to inflation or a risk to employment. That's
where we wanted our goals to be. And we adjusted
policy when we had confidence that inflation was heading down,
(01:47):
and we adjusted policy some more to ensure that we
have a balanced labor market that continues. So that's where
we are. But then the data on inflation have been
coming in a little slower. I wouldn't even say sticky
or stalled. I would say the progress is just slowed
relative to what we had wanted. But that's a typical pattern.
It's bumpy as you get to the you know, from
(02:07):
point five or two point eight to two it's just
a bumpy path. This okay, go ahead.
Speaker 1 (02:12):
At the same time, some people were wondering if there
was the stickiness. And I'm looking right now at say
the Cleveland CPI now and it actually has ticked up
for the month of December from November. There was this question,
why did the FED cut it all?
Speaker 3 (02:26):
Sure, and again I'm going to reassert that it's bumpy.
You know, remember earlier in the year we had two
months of data and people said, oh my gosh, it's reaccelerating,
and then we had it come down. So inflation data
can't you can't focus on one month or two months.
The most important thing for me was that we needed
to recalibrate policy. I saw this as a close call.
You know, I was seventy five enough to be the recalibration.
(02:48):
We were looking for right size policy to meet the
economy we expect, or do we need more. Ultimately, I
determined that the one hundred basis points was really the
right level. Now I feel we've got that recalibration phase
behind us and we're in the next phase. And the
next phase is really looking at the incoming information. We
can return to a more typical pattern of gradualism for
(03:09):
the fad you know we've been we've practiced that where
you with a lot of uncertainty, you adjust the policy rate,
then you wait watchfully and you see what transpires, and
then you make further adjustments. That's the phase I think
we're now entering.
Speaker 4 (03:23):
From September, the expectation in the markets was going into
every meeting that you'd be cutting Has that changed now?
Should the expectation be that you won't be doing anything
at any particular meeting? And from that question flows a
second question, what are the criteria that you need to
see to decide to go back to cutting rates?
Speaker 3 (03:45):
Well, as you saw from the SEP the median projection
is to rate cuts next year, so that's already not
in every meeting or every other meeting. That's two rate cuts.
I was very comfortable with that meeting, and that makes
sense to me. But we have to agile. I mean,
you know, the thing that's got us here is being
resolute to achieve our dual mandate goals. Price stability was
(04:07):
our focus when inflation was very high. The employment has
come into the frame so that we're focused on both.
But then we also have to be agile. You know,
the world is uncertain, so we pencil into and you know,
as that estimate or that projection gets further from when
we made it, the accuracy of it probably falls. And
so we're just going to continually take in more information,
(04:29):
consider it, and every meeting your listener should think about this.
Every meeting is live from the standpoint that you're debating,
you're discussing, you're thinking what's the right level of policy.
But my projection is that it will take much many
fewer rate cuts next year than we thought. But I'll
watch the economy and see if that works out.
Speaker 4 (04:49):
When we went into the cutting cycle, you were out
front and saying you were concerned about the labor market
and that we needed to make sure that we didn't
lose the gains that we had. Now, at least coming
out of Chairman Powell's press conference, it sounds like the
focus has shifted to inflation again. Are you comfortable with
that as this new phase that he's talking.
Speaker 3 (05:11):
About, Well, I think of it as a new phase
as well, and I would characterize it slightly differently. I
would say that for a long time, a persistent amount
of time protracted, we were focused almost entirely on inflation.
That's because the labor market was quite robust and inflation
was seven six ' five. That was the right way
to focus. Then the labor market came into the frame.
(05:32):
That didn't mean we turned our focus totally to it.
It just meant that after a long period of focusing
only on inflation, we were now focused on both. I
think that is still the case, but I see policy
as already in that position where it's supporting both. That
policy is restrictive. It's going to continue to bring inflation down,
and it's going to do so in a way that
doesn't strangle the labor market, break it and then give
(05:55):
people lower price, lower inflation, but take their jobs. And
that's not what we're trying to do. We're really working
towards that soft landing.
Speaker 2 (06:02):
Mat Now you've used the word we a lot when
you talk about what's happening in the Federal Reserve. We've
had some people who are quite critical of the Federal Reserve,
and Chairman Pouse performance specifically in this news conference. One
excuse that was given was that maybe he was struggling
to reflect the lack of a consensus on the committee.
How much diversity of thought disagreement is there on the committee?
You call it a close call for yourself, but was
(06:23):
there some disagreement on the committee at this meeting?
Speaker 3 (06:26):
Well, you know, I'm not going to speak about the
entire committee when I say, focused on the things we
all agree on, which is price stability and full employment,
on our efforts to get there. You know, what I
would offer is that we have, in my mind, the
healthy level of discussion and disagreement. You know, you don't
want an FMC that things exactly alike. And I believe
(06:48):
that what people are looking at is the fact that
now the world is more uncertain and people are debating
and bringing in their views. And that's appropriate. When it
was a pandemic and there was only one direction that
we were interest rates, we had to do it quickly.
It was obvious everyone agreed. When inflation's high, there was
no disagreement. Right, we're all merging up. Now. You should
expect more disagreement, more differences of opinion, but they're always
(07:10):
framed to the same thing, how do we get inflation
to do and restore or keep full employment.
Speaker 2 (07:15):
When I hear the world is more uncertain a lot
of people here, Well, that's not about the data, that's
about the incoming administration.
Speaker 3 (07:22):
I would disagree. Why would you disagree, because we have
a variety of risks that are the ones we always
deal with. Right the housing inflation. Right now, there's a
substantial housing imbalance in the United States. The models, in
our data and our past experience, I'll say housing inflation
will come down, but we are uncertain about that. Right.
(07:43):
It hasn't come down as quickly as the models would
have predicted, and so that's an issue. The labor market
and consumer spending and growth are much faster and stronger
than people would have predicted at this point. Given the
titaning we've done. There's a lot of uncertainty about the
natural rate of interest, where's the stopping point? And then
of course there's geopolitical risks, the risks of global growth.
(08:05):
That's going to be the backdrop. And then you have
a change in administration. So I would say this level
of uncertainty is normal in the sense that we've had
all those things going on, and it's not as excessive
uncertainty as after the pandemic, the financial crisis. Those were
really big periods of uncertainty. So I think if you're
a central banker, you just get used to uncertainty and
(08:27):
you manage.
Speaker 1 (08:28):
It before we get into what some of the uncertainty
about next year could look like. I am curious about
how you're weighing how to preserve the job gains with
the risk of running the economy for too long. And
that's I think something people are struggling with. Is there
an emphasis on the labor market even at the behease
of inflation, just because it's been deemed better for inflation
(08:51):
to be a little hotter as long as people keep
their jobs.
Speaker 3 (08:55):
Yeah, I would characterize it a little differently, But that
is a terrific question. So when we spend you know,
as you know, reserve bank presidents spend a lot of
time in the field work in our district, I have
the whole Western United States, And so I ask people
the question, you know, where are you on this? And
again and again I hear that the economy is sort
of in a good place right. Inflation's coming down, it's gradual,
(09:18):
and the labor market is solid, but there's one job
for every unemployed worker. You know, that's in perfect balance.
And our firms are saying we can find workers, and
our workers are saying we can find jobs, and no
one really wants that to break. So what people do
not want is a recession. And I think one of
the reasons sentiments been rising since the middle of this
(09:40):
year is because the recession risk is now behind us
in people's minds, and they feel good about that. So
what I hear more than you would think is don't
get one tenth off inflation just and then break the economy.
That's like, we can be patient, but you just have
to head for two and we don't want the economy
to break.
Speaker 1 (09:59):
That's why I thought it was interesting that the inflation
forecast for next year was shifted upward even at a
time where the unemployment rate was shifted downward. There was
a sense that that was okay to tap two and
a half percent inflation at the end of next year,
even though it was above two percent. Is that the
sort of feeling right now on the FED to be
(10:19):
more patient with inflation because it's thought of as less
punitive at a level below three percent. Than say, arise
in unemployment.
Speaker 3 (10:26):
Well, let me just say how I think about it,
because here I will speak for myself. I'm not comfortable
with the rate of inflation being two point five, but
we're continuing to work on it, and so we might
end up cutting rates cutting rates less if inflation is
as sticky as that. But what I'm also balancing is
I don't want to see an unnecessary rise in the
(10:46):
unemployment rate just to get a quarter ahead on the
two percent goal. So that is a balancing act. And
I think ultimately we were just looking at the information
coming in and saying, you know, there's a lot of
risks out there. Inflation could rise, but you'll see the
inflation rising was a partly why you saw the rate
cuts pulling back is absent the if we had four
(11:07):
you'd see inflation go up more. And so this is
a balancing act. But I think it also points you
to the dispersion that you saw in the SEPA, which
I see as a feature, not a bug. You should
have some dispersion when the world's uncertain, Otherwise you would
wonder if we're all in an echo chamber. But we're not.
You can see that clearly and you see the dispersion,
and I think that dispersion really represents what we're facing.
(11:28):
We might end up with fewer cuts than two. We
might have to respond and end up with more if
inflation falls faster or you see a significant weakening in
the labor market. And I'm comfortable sitting in that center
court position and waiting for the data to come in
and we'll actually respond as they do.
Speaker 4 (11:44):
Well, do you think there's any chance that you might
have to raise rates next year?
Speaker 3 (11:48):
You know, I don't see that on the horizon right now,
but if we will always remain prepared to do what
it's needed to achieve our goals. But I don't see
that in the span of the most salient risks right
now that I faced. But you know, absolutely that's something
that we never take off the table.
Speaker 2 (12:04):
Who owns the dealt with no cunts? Next year? Come on, reveal,
Who's is that?
Speaker 3 (12:09):
Twenty twenty five reveal?
Speaker 2 (12:12):
Salas.
Speaker 3 (12:12):
No, I'm not going to tell you. I'm not rookie.
You know, I know it's not a holiday gift. I'm
willing to give gifts.
Speaker 1 (12:20):
I'm just checking reveal.
Speaker 2 (12:22):
President Day is going to stick with it someplace to
say thank you, Mia Kay, thank you as well, Sir
President Mary Danny is still with US. President Daidy, you
were all about the data, not about the administration change.
We do want to talk to you about how you
would approach changes in policies from the incoming administration though
across many dimensions immigration taxes, but the big one I
think for many tariffs, what's your approach going to be
(12:43):
next year?
Speaker 3 (12:44):
So we have all the tools and evidence from prass
historical periods, we can think about how these things will
affect the economy. You know, one of our biggest tools
of figuring out how things will affect the economy is
talking to CEOs of small, medium, and large companies, and
we've already engaged in doing that. So when we're out
there in the field talking to people from across the country,
(13:04):
and I'm spending my time in the twelfth district, we're
hearing that their sentiment is up. They're really optimistic that
they've been cautiously optimistic. They see the Fed's interest rate
path falling and they feel good about that. They see
the economy as the procession risk is behind us, and
they feel positive in general about some of the things
(13:25):
that they think may change going forward. Now, whether that
materializes or not, we will wait and see. But I
feel that sentiment alone is causing us to have some enthusiasm,
some cautious enthusiasm, if you will. One thing that we
hear is that for firms that are worried about the
immediate impacts of tariffs on their business, they're just building
(13:47):
up some inventory so that they can have some insurance.
And so that's something you'll start to see in the
data already, but I haven't seen that in such an
outsized way that I think it's going to change the
course of the economy.
Speaker 1 (13:59):
One thing that you say President daily is that we
have experienced from the past of tariffs, of some of
the immigration bands or limits, but is this time more
difficult just because of where we're coming from. It is
a more inflationary time after a pretty big stimulus package
injected into the economy.
Speaker 3 (14:17):
You're feeling like an economist, like when you think of
state dependence, right, The impacts of policies affect are affected
by the state of the economy. So one thing that
is on my mind is that we already have inflation
above two percent, and so we have to work hard
to get inflation down to two percent, and that is
an economy that's just a little more vulnerable than it
(14:38):
would be if we had inflation, you know, at two percent,
or when we came in to the tariff discussion or
trade discussions last time, it was below two percent. So
I feel, on the other side, the real side of
the economy is very is very strong or solid, and
so we're in a good position. But it does it
is on my mind, and inflation is already elevated.
Speaker 1 (14:55):
Well, does that make it that tariffs are more likely
to be inflationary than they have?
Speaker 3 (14:59):
And it's really hard to sa. I mean, one of
the things you learned from doing this kind of a
job at while is that it really depends on the scope, magnitude,
timing of tariffs and whether our companies in the United
States are positioned to use substitutes and manage and you
see this happening. We already went through. Another feature that
might make it less challenging is that in the pandemic,
(15:22):
firms reshored, near shored, friendshured, and you saw a lot
of that behavior already taking place. So we'll see we
just have about a minute.
Speaker 1 (15:30):
But in being agile, how concerned are you that people
are going to label decisions as political.
Speaker 3 (15:37):
I don't feel concerned about that. I think what we've
done well and is talk to the American people. That
chair does that in meetings. We do that, and we're
telling them we are only focused on inflation and full employment.
Those are the goals Congress gave us. We're going to
do our best to navigate the incoming information, whatever causes it,
(15:58):
and make the good decisions, make the best posicians, and
then be humble about having made the wrong one or
the right one and redo it so and think about
it again. So that's how we're going to approach it,
and I think ultimately people will judge us by whether
we're successful.
Speaker 2 (16:11):
You've been generous with your time this morning. We appreciate it,
enjoyed the holidays. Happy to thank you. I was Mary
Daddy there, the San Francisco Fed President,
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.