Listen: Fed, Randy Woods And Bloomberg discussed on Bloomberg Politics, Policy and Power
"Peter Barnes with Amy Morris, the Fed's vice chairman, Richard Clarita, made clear in an exclusive discussion on Bloomberg this week. But he remains concerned about falling short of the Fed's inflation target. We have a symmetric objective around two percents. Humor centers not meant to be a ceiling. We've operated below two percent. We could operate somewhat above two percent for more on that. We're joined now, by Randy woods. He's an economics editor at Bloomberg news. And Randy to be charitable the fed is reacting to incoming data to be blunt. The fed is doing a one eighty what's say you. That's right of the fed officials have struck a more dovish tone lately, most notably the chairman Jerome Powell last week, and we had a new York Federal Reserve Bank president John Williams, speak again. And he reiterated Powell saying that he's not that concerned about inflation pressures building too much in that he sees the economy's on a good path and is pretty happy with the gradual pace of interest rate hikes. Let's talk about what Mr. Williams said that about gradual rate hikes. He talked about how that is appropriate. How he sees them as being more gradual and more steady specifically asked by a reporter about Powell's comments last week. Saint did the market overall. Reactor's comments in pulling back the number of hikes expect next year to one and he his quotas. I think I think completely consistent with what chairman Powell said of his own view. So he he pretty much reiterated Powell's comments, and in confirmed, the market expectation that you shouldn't expect a lot of hiking next year. And other some market commentators are saying, hey, expect cuts in rates starting at twenty twenty. What about? At recession talk. And this is really just talked about hitting hitting the brakes. Well, I think John Williams would would would have something to say about that. He was very optimistic about the economy said is very strong to labor market's doing very well. So he did not give any indication that the fed is even considering cuts in twenty twenty. I think a lot of the market. Participants are looking at the yield curve in that some some maturity's of the yield curve have inverted as a sign that we could be headed towards a recession that this expansion could could experience you could be long in the tooth now. And that we could be headed for downturn in see cuts in twenty twenty. But nothing that the fed says is signaling that at least from what I've seen the echo roundup is out on the Bloomberg terminal. We have been going through it with a fine tooth comb it talks about how quantitative easing has worked. But with several asterisks explain. Right. So there's a lot of debate in the economic community about quantitative easing, and it's very important debate. Because it's an unconventional policy tool that the fed has not ruled out using again in the future, and because interest rates are so low in may remain low for the foreseeable future. It's very possible. They might have to rely on quantitative easing because they're now at two point two five percents on the rates if we hit a recession now, they can cut it down to zero. And then what do they do? Well, they start buying bonds. Like they did after the last recession. So the so yes, there a lot of people said that it did help can lower long-term interest rates. But there are people saying that it didn't have a dominant factor in loosening up monetary conditions may add a footnote to that one. Hello. We are quantitative type being now the fed is rolling off what fifty billion a month. Right. Randy. Balaji? And and that is part of the reason why market participants to STA tight conduct to connect all the dots. Here are looking ahead and why the N wild. And we're seeing some of this action and the yield curve and take it from there. Go ahead. That's right. And and so the fact that the argument that quantitative easing. Loosened monetary conditions. A lot of people are saying now that they're rolling back that policy, it should be tightening monetary conditions, and is questionable to what extent it's doing that. But, but there's no question that it is to some extent. And there's some people even the Treasury Secretary have floated the idea of instead of hiking rates. Why don't you just continue on with this rollback of the? The quantitative easing that you did and continued with that policy, and maybe even step it up more. Okay. Hashtag Barnes's for Clem here. I but. Peter, okay. And that's okay. Just to just to stay. Anyway, it just it's okay. If the fed Hello is data dependent just me just say that. Okay. That's right. All the fed speakers have been saying their data dependent. They don't see a uptick in inflation. Putting pressure on them. They see possibly going above two percent target, but not much. So the fed is really feeling very little pressure to step up the rate of rate hikes or to hike considerably in twenty nineteen. Randy, thank you. That's Bloomberg economics, editor Randy woods. You're listening to Bloomberg politics policy and power on Bloomberg radio coming up. The Trump administration is removing a key barrier to constructing new."