EJ Antoni - Economist, Heritage Foundation Joins Houston's Morning News

Episode Transcript

Speaker 1 (00:00):
Five fifty three is our time here in Houston's morning News, Right,
Jay Powell? Is he a political creature?

Speaker 2 (00:05):
Well?

Speaker 1 (00:06):
Yeah, probably so? Does he not like President Trump? That
it seems pretty apparent. After all, Trump did threaten to
fire him at all. He later said he wasn't going
to fire him. He j Antoni joins us. He's a
economists with the Heritage Foundation. And of course I think
that President Trump suspects that some of the moves that
Jay Powell's making at the FED are anti as much

(00:26):
anti Trump moves as they are good for the economy moves.
Do you agree with that?

Speaker 2 (00:32):
I think that's a pretty fair assessment, Jimmy. I mean,
it's amazing how this guy's tone, Jerome Palll's tone has
completely changed with Trump being at White House versus when
Biden was there talking about how how quickly they were
going to cut rates. They did, in fact cut rates
last year, talked about a lot more rate cuts coming
in twenty twenty five, and now all of a sudden,

(00:53):
even though the underlying data, and that's important, the underlying
data hasn't changed, the story has changed completely, and now
who knows if we're ever going to get rate cuts
this year.

Speaker 1 (01:02):
Yeah, I think an argument could be made. Don't you
agree that inflation has gotten down around that two percent
area where they said that it needed to be before
they would consider more rate cuts. That seems to be
the case now, don't you think.

Speaker 2 (01:17):
Well, exactly. In fact, the Federal Reserve Bank of Dallas
produces an alternative measure of inflation essentially, and that's down
to one point eight percent. On top of that, if
we look at any of the official measures of inflation,
whether you want to look at the consumer price Index
or the personal consumption expenditures price indecks, all of those
things show no increases and prices between February and March.

(01:41):
In other words, inflation has really stalled out, and we
can expect the annual inflation rate to hit that two
percent target probably pretty soon. So if you were going
to actually cut rates, now would be the time to
do so.

Speaker 1 (01:53):
Yeah. Well. J. Poul's excuse seems to be tariffs, the
unknown of terrafs. He thinks the teriffs might add to
the inflation rate. Do you agree or disagree?

Speaker 2 (02:02):
I think that's absolute nonsense. Look, tariffs, if they increase
the cost of item a and consumers spend more on
item A. Now consumers have less to spend on item B,
which means demand will fall for thing B, and that
means the price will fall for B. So you end
up seeing prices go up in one area and down
in another, and overall they stay flat. Tariffs by definition,

(02:25):
are not inflationary. And what's really aggravating here, Jimmy, is
the fact that Jerome Powell, anytime he was asked about
Biden spending trillions of dollars we didn't have, and asked,
is that going to be inflationary? Will there be an
inflationary impact? What did he say? He said, we don't
comment on fiscal policy. We don't comment on what president,
whether President or Congress does. Now, my goodness, how things

(02:48):
have changed. He doesn't even wait to be asked a
question on tariffs. He just goes out in public and
starts opining about it and saying, how these actions are
going to cause inflation?

Speaker 1 (02:57):
Yeah. I think irony of all this is that Joe
Powell was originally picked by President Trump. So but that again,
that was during the first term, and there were a
lot of people who were picked based on recommendations he
got from people who maybe did not have President Trump's
best interested heart.

Speaker 2 (03:13):
That's exactly right. And although you're right he was elevated
by Trump to the chairman slot, he was originally put
on the Board of Governors by Barack Obama, and the
only reason Obama picked him is because Obama needed someone
who has at least registered as a Republican so that
he could get Republicans in the Senate to confirm him.

Speaker 1 (03:33):
So how much longer do we have to deal with
Jay Powell? Obviously Trump is not going to fire him
at this point, So when does his term expire.

Speaker 2 (03:44):
His term's going to expire next year, and we can
definitely expect him to be replaced. I think Trump would
obviously like to do it sooner. The problem is, the
last thing this market needs right now is more uncertainty.
Let's be clear, the markets do not like Jerome Powell.
This guy promised us rates we're going to stay low
essentially indefinitely, and then gave us four seventy five basis

(04:06):
point hikes in a row. He continues to send mixed
messages to markets, So markets don't like the guy. But
if you remove him, it's another element of uncertainty, and
that's the last thing we need right now so Trump
is I think going to let him finish out that term,
which again will be next year.

Speaker 1 (04:23):
A right ej thanks as always appreciated economist ej Antoni.
He's with the Heritage Foundation. That's five fifty seven