FED, Laurie Logan, Piggy Collins discussed on Balance of Power


The Federal Reserve bank of Dallas has announced appointment of Laurie Logan as its next president and chief executive officer to explain the significance of this move We welcome now piggy Collins She is our Washington bureau chief So picky tell us about miss Logan So this is interesting David because miss Logan Laurie Logan has been at the New York fed for a while and was very integral in trying to respond to the COVID-19 pandemic when it broke in 2020 She is known and respected as really understanding markets So it certainly is interesting There was a lot of pressure on the Dallas fed to do a diverse search for this candidate that replaced Robert caplan after trading scandal last year So it does remain to be seen whether or not this will be something that a wide group of people feel is a good call but it is someone that is certainly known and has worked in the Federal Reserve system for a long time Yeah I must say I don't know her but from her credentials what her experience has been she must be very competent and very qualified You go to the heart of something that is very tricky and I must say piggy particularly tricky for somebody of my gender in my race to raise the question of diversity Because we don't want to reduce miss Logan just to the fact that she's a woman at the same time This has been an issue raised again and again by Congress and talked about by the fed So she is female which is an advance Is that correct That's right I mean in terms of the Federal Reserve system there's certainly been a lot of pressure as there has been on other industries and other agencies to really look at diversity in the process of hires And we saw at the Boston fed just recently as well where there was a retirement last fall where they appointed a woman to run the Boston fed as well So we are seeing an opening up in terms of diversity but whether or not this will be whatever one would have wanted It still remains to be a question But she is someone who certainly knows the markets very well given her time at the New York fed The question will be how does she transition to this role now at a regional level And when it comes to diversity obviously it's also a matter of race and ethnicity So that will play out as it does Why don't you ask you to stay with us if you would Peggy our Washington bureau chief because we want to turn now to those CPI numbers that came out this morning and welcome Lindsey piggs as she's stifle chief economist So Lindsey thanks so much for being with us To go to you first they came out They're a little less than they were last month higher than expected and they're still at a 40 year high So what do you make of these numbers Well I think it's pretty clear that inflation is still at an elevated level We did see a slightly slower pace of ascent coming down from that 8.5 to 8.3 but at this point I think the market is looking at the fact that inflation is still elevated And it's likely to remain elevated for some time continuing to put pressure on the fed then to maintain a relatively aggressive approach to policy going forward Fascinating And Peggy what did you make of the numbers as well Well I think as we were just talking about the good news is that inflation may have peaked right The numbers are coming down a little bit But in terms of the market reaction it wasn't great because it wasn't as much as people had hoped So there are some silver lining but I think what was digested was that we could remain at very elevated levels of inflation for a longer time than people were hoping Lindsey every he's asking whether it's peaked or not And I guess technically it may have peaked if it keeps going down It came down a little bit But perhaps the most important question is how quickly will it come back down I mean what do you expecting by the end of the year for example with inflation I think it's a pretty aggressive call to say that we've peaked out of inflation at this point The moderate decline is more likely a reflection of the improvement that we saw at the start of the year in terms of loosening international supply chains And of course this was before Russia invaded Ukraine More recently however against the backdrop of a second and third round of lockdowns overseas not to mention the international conflict intensifying it's very likely that we see additional pressures price pressures coming down the pipeline Remember it takes months for disruptions to filter into these price measures meaning the more recent fallout stemming from these variables has likely not yet been felt So whether we're at peak or we return to peak levels again splitting hairs it's likely that inflation does remain quite elevated and we don't see a discernible downward trend until 2023 Lindsay since Jay Powell's news conference last week 75 basis points whether it's on the table or off the table has become sort of a parlor game for us to play Did these numbers make it more likely it's still on the table No they really don't This plays right into the fed's expectations that inflation is broad based and inflation is going to remain elevated for quite some time Even looking at the fed's inflation forecast to the committee is not expecting a noticeable decline in headline prices until as I suggested into 2023 Yes they are looking for some modest improvement by the end of the year And we could still likely see that But again today's report a one month report does not change the fed's pathway And it's likely to reiterate that or reinforce a 50 basis point increase in June but going forward into the second half even with still high prices If the economy begins to soften I would suspect the fed backs off to 25 basis point increases Boy that's interesting Peggy one of the things was the market reaction and I never get the markets right But I was surprised actually that bond yields didn't go up Right I mean I think the question is just really how the market is digesting this elevated inflation for a more persistent period of time It's Lindsay was just saying.

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