This is Bloomberg day Break Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world, and straight ahead on the program. Is the Fed really about to press pause on raid hikes?
I'm Tom Busby in New York.
I'm Brian Curtis in Hong Kong. What next for the boj.
I'm Kayleie Lines in Washington where Treasury Secretary Janet Yellen is getting set to take the hot seat in front of the House Financial Services Committee.
I'm Stephen Carolyn London, where tech leaders are gathering as a leading industry body has worn the UK risks, losing its attractiveness for the sector.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg Eleve them three own New York Bloomberg ninety nine to one, Washington, DC, Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius XM one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business app.
You.
I'm Tom Busby, and we begin today's program with this week's latest two day Federal Reserve meeting on interest rates and joining me now to talk about what to expect when the Federal Open Market Committee wraps up on Wednesday. Bloomberg Global Economic and Policy Editor Michael McKee Michael Well.
The FED has lifted the federal funds rate by a staggering five percentage points in the last fourteen months to curb runaway inflation, which is still running at more than double its two percent target, and after ten interest rate hikes in its last ten meetings, many FED watchers feel the FED is going to pause its rate hiking plans and not raise rates this week.
What are you expecting For the first.
Time in many years, I can't even remember the last time I said this. I don't know what the Fed is going to do. It's a close call. They are divided over whether they need to do more and when they need to do more.
If they do more, And while.
Wall Street has settled on the idea that they're going to not raise raids next week, they don't know. It's still an open question of whether they say but we will in July. I think the case could be made either way. And we don't know what the CPI is going to show us on Tuesday. So if we get a strong CPI, then the Fed may lean towards raising rates in June. If it's more benign, as the forecast would have it, then they probably will hold off so
they can see what's happening with the economy. But right now it does look like with inflation, as you mentioned, way above their target, that something more has to happen.
Well, let's go back to that CPI. Do you have any indication of what we're expecting on that and why.
We are expecting a drop in the CPI? The headline CPI down to four point two percent, which puts you in that range of three percent the Fed is anticipating by the end of the year. And why would relate to a couple of things. Prices have gotten less expensive, but in large part it's used cars. They're again declining in cost.
Uh.
The other wild card out there is housing. We've been expecting housing prices to start to fall within the CPI to or a rise at a significantly slower pace. There's some signs of it. It hasn't happened yet, but it's anticipated happen anytime, So that too could add downward pressure.
Well, let's go back to some FED policy makers. They've been out there speaking, not not recently, but at a pause in June. Does not mean the Fed's done with this current cycle of hiking rates now. One of those who thinks we're not done Neil Dutta ahead of US Economic research at Renaissance macro. Let's hear from him right now, because he spoke to Bloomberg very recently.
The economy is far more resilient, as you know, than than than is that is appreciated, and that's going to mean that the FED is ultimately going to have to do more than what's than what's priced.
Now.
What are the chances Mike, that that is right? The FED will have to do more than what's priced in.
Well, I hate to sound like the two handed economists, but I think it's about fifty to fifty. A lot of the data Douce show strengthen the economy. We've had strong job creation. The Jolts jobs data show a lot of job opening still in place. We did see jobless claims rise by a lot last week, but we don't yet know if that's a one off because it was just one week's data, or whether that's the beginning of a trend. But consumer spendings hung in there. We're seeing
signs of business spending still remaining relatively strong. We know that new home construction is relatively strong, so you can make the cases Neil does. The FED is going to have to do more. The other side of the story is that we are going to see consumer spending weekend as people's nest eggs start to dwindle. We're going to see more supply chain problems out there, particularly if the West Coast doc workers go on strike. Housing may not
come down as fast as people want. And we've already picked the low hanging fruit for inflation, and it's just going to get harder and harder to bring it down. And so the FED may not have to do more and just wait until we see the cumulative effects of all the tightening that's been done start to hit the economy.
Well.
Now, we also heard from former Vice Chair of the FED, Richard Clarida, now Global Economic Advisor at PIMCO, when he's talking about possible rate cuts. Now he's not saying until twenty twenty four after more rate hikes this year. Let's hear what he had to say.
The FED has penciled into its productions a pretty sharp slow down the labor market. They have the unemployment rate going up to four and a half percent by the end of the year without any cuts, So I do think if there are cuts, it's really a twenty twenty four story. But yeah, I think the bar's high.
What do you think of that?
I agree with Rich that it is a very high bar for the Fed to cut rates this year, simply because we're sort of running out of time for the bad news to pile up. It certainly can, but the Fed is pretty convinced that it's going to take a lot more, whether it's just sitting on high rates or raising them even further, to bring down inflation towards their two percent target. So they do not want to cut rates.
The only thing that.
Would drive them to do that is if we had some sort of crash in the economy, a slowdown, if growth stayed positive, even if growth went negative for a quarter or possibly even two, although no sign of that at the moment. They're going to want to leave rates where they are. Then the question is, in twenty twenty four, where's inflation and where's the economy? So yes, there could
be rate cuts next year. Once the Fed reaches its peak, it's usually seven or eight months until it starts cutting rates. So it's certainly possible. But I think one thing we have learned over the last two years is that it's almost impossible to predict what's going to happen with the economy.
That's for sure well, and a lot of things are changing.
You know, we talked about the unemployment rate, which you know, the FED has a target of four and a half percent. Now it's just three point seven percent. I mean only six months ago in the year no rate cuts this year that we heard Clara to talk about. But how would that affect, you know, this wide gap in what the FED has said four and a half percent and what it is right now.
Well, I think come Wednesday you're going to have a different number from the Fed. That prediction was made in March, and we have seen stronger than expected labor markets since then, and to get to four and a half you would need a significant deterioration in the labor market, something like we saw in the household survey this past month continuing for the rest of the year. So I think they're going to have to mark up and the FED officials I've talked to have, so they're going to have to
mark up there well marked down moderate. They're unemployment forecasts. We will also get new forecasts for inflation, and we'll see based on what we've gotten from the PCE and the CPI, which have both come down, not as far as they want, but they've come down. We'll see if they anticipate it coming down any faster, which might give a clue as to the policy path.
Yeah, no, and that has been good.
It's moderated a bit in April, which helped consumer spending jump a little higher. May forecast the show continued cooling and prices.
But what should we be.
Watching for again exactly on CPI you said four point two percent still double the Fed's target rate.
We're past the I guess peak danger and we've taken the low hanging fruit off the tree in terms of bringing inflation down. The real question now is how fast do service prices come down. You've heard Japowell talk at that a lot, and those are heavily driven by wages. We're seeing in the jobs numbers that they're still concern about hiring for service industry companies because they were the last ones to be able to fill jobs and unless that stops, or until that stops, we probably don't see
wage gains drop significantly. And so at this point you're looking at some time before inflation moves moves far enough in the direction of what the fence says it wants.
And let's circle back again to housing, because it's such a huge part of what they're watching, a huge part of the economy. Three jobs for every house that goes up. Mortgage rates have come off the recent high, still very high though six point eight one percent, and because there were so few homes on the market, home prices stubbornly high. Mortgage demand is lowered down twenty seven percent from a
year ago. Also, homeowners we just found out so their first annual decline in equity in more than a decade, at least according to core Logic. How important is all this? This uneven recovery in housing, or maybe even a slow down.
Well, Housing can be an important component of GDP, and we have seen it drop off as such in the last couple of quarters because they're not selling very many houses. They are still selling new houses like hotcakes, and builders are throwing them up as fast as they can because
there is housing demand. What we're not seeing is the turnover in existing homes because with low mortgage rates locked in for so many people who refinanced over the last few years, why do you want to trade a three percent mortgage for a six percent mortgage if you're moving. So that does keep supply down and prices go back up, and that will also hurt CPI in the longer run. But we've talked about the delays in getting the declines into CPI. It'll be a while before we saw that.
A lot to watch out for, Michael. Thank you.
That was Bloomberg's Global Economics and Policy editor Michael McKee. And coming up on Bloomberg day Break weekend, decision Day. Also coming up for the Bank of Japan. I'm Tom Busby and this is Bloomberg. This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program a big week for tech in London and Paris with some high profile industry events.
But first, in addition to decision Day at the FED, we also have a decision coming from the Bank of Japan. And for more let's go to Hong Kong and Bloomberg day Break Asia host Brian Curtis and his colleague Doug Krisner.
Tom After surprises from the Bank of Canada and the Reserve Bank of Australia, we look forward to the Bank of Japan meeting in the coming week. But if you're looking for change from new Governor Kazuhua, don't get your hopes.
Up in the beginning of this term. For the governor in particular, you know it goes. You need to build your credibility and the first thing you want is to avoid any animistep so gradual and rhetoric is probably what you should expect for this meeting.
Xavier Barreton there from HSBC Asset Management and perhaps bearing that out, only three out of forty seven economist polled are expecting a tightening move at that meeting. That is down from eighteen in the previous survey back in April.
Yes, instead of June. Now it seems that July is the most likely month for a change in policy. This was from about a third of respondents. The timing appears to be moving back a little because we've heard the governor repeatedly signal the need for continued monetary stimulus. Joining us now in our studios is Taro Kimura, Bloomberg's Japan economists who spent more than ten years at the BOJ.
Taro Kimura, thanks so much for joining us first. This poll was taken actually before we got the stronger than expected GDP numbers of growth of two point seven percent in the first quarter, if it's annualized, Does that change anything for the BOJ.
No, I don't think so. I'm also for the stay and I am expecting the big shift will finally happen the latter half of the next year. So like thing is that the Japan's demand is very weak and although you see a q key strong indicator such as today's GDP, but it's just a rally from a very subdued level due to a pandemic. It's just on a way to recovery. So that doesn't mean, like you know, the BOJ is committing to two percent demand led inflation, but the demand
level itself is not enough to ignite inflation. So that's why BOJ will keep continuing saying steamulus is needed.
A few moments ago, you said you didn't expect a change or an adjustment in policy until the latter part of next year. Did you mean next year or this year? And in either case what would be the main catalyst?
Yeah, I meant twenty twenty four, So I'm putting myself a very late person.
Wow.
Actually wow. But I'm talking about big change. I'm barring the risk scenario that the end is depreciated too much again, or the FED is going to a rate high world again. Maybe there would be a tweak to YCC. But in the base scenario, BOJ want to continue stimulus because looking at with US communication, he's clearly committing to that. He's keeping YCC until he will see a demand led steady two percent inflation, and in my assessment, it's very far
below as I said, in terms of the demand. And at the same time, putting your foot into a BOJ shoes. In history, they've already failed to exit from unconventional manitari policy twice. It was a very scurring experience for bojs. So that's why my take is the BOJ will very very carefully communicate and build a case and finally made a big change in the next year.
Well, that's an interesting point. Laying the groundwork for a policy change. How might the BOJ go about that again, Xavier Barton from HSBC Asset Management.
Next steps maybe further widening of the yield of control bounds and leading the rights to continue to create up steadily. But I think again the BOG is very is being a lot of attention making sure that their actions are not interfering with the l C organic growth that we've been seeing really and it's quite important for them.
Again, that's Exavier Burton from HSBC Asset Management. So, Tara, when the adjustment does come, will it be very gradual like we just heard there, or do you think they'll wait long enough that they can make a more dramatic move.
Yeah.
In the April meeting, as you know, the BOJA announced it.
It will conduct a policy review and it will take a year or maybe a year and a half, and I think the BOGA will use it as a stepping stone to communicate and build a case and actually whether acknowledge is the negative side effects of the current scheme like vacuuming too much JGB But like you know, since the interest rates is already zero, it has not much effect for stimulating so maybe, like you know, whether will make a case to getting back to more for a
normal like controlling the short term ills, but like he will carefully build a case that those the new framework will be still as accommodative enough and like it's it's a sound policy framework. He will communicate like that through a policy review.
I think we can agree that that two point seven percent rate on annualized growth for the first quarter was pretty impressive. Is there the chance though, the growth in the second quarter will be markedly weaker?
Oh yes, looking at this one q GDP, it's behalf of the growth is driven by private inventory. And also looking ahead, like you know, the real wage is dropping. Although like we were expecting the nominal waste growth after the reflecting the result of annual wage hikes, but it's
the nominal wage growth itself is decelerated, the real wage dropped. Furthermore, that implies for the second quarter it's going to be a damping on for a recovery of consumption after the post pandemic recovery of consumption.
It's kind of very interesting because if you look at the equity market in Japan, the NIEK is trading very near a thirty three year high. Is there the risk here that if a waited were to send the wrong signal that that may be kind of or become reflected in equity prices in a rather sharp and negative way.
I think what's happening in the real economy and stock market should be like thought separately. So stock market is, you know, it's like coming over to a price for the first time in like twenty or thirty years. It means like we didn't exceed the price level since nineteen
eighties or something. So maybe like you know, the japan stock I know, a stock price stock expect that suggests, like you know, the investors think Japanese stocks are cheap, and actually Japanese big firms are investing a lot abroad, so that's why they incorporate the growth of the inter national economy to their earnings. But in terms of the domestic real economy still it's weak. So that's why a BOH keeps stimulating. Maybe that's supported for the stock process.
I don't think any wrong message will coming out from UETA in the next meeting.
If we take a broader look at the original Abinomics plan and look at the third row about corporate reform. You mentioned a little bit about corporate behavior. Are you seeing enough reform in the economy compared to what was hoped for and expected.
The new corporate governance for Japan's firms are introduced under Aby's initiative, and it has been almost ten years since it has started, so like kind of gradual improvement in the Japanese corporate governance is supporting current rally in Nikki stock prices. But on the contrary, like you know, in terms of the domestic real economy, as I've mentioned, although Curuda has has done extreme stimulus, it proved that that doesn't boost domes take economy.
Well, is there a way in which this policy begins to intersect with the political environment in Japan and the ambitions that Prime Minister Kishida would have.
I don't think that, like you know, such issue will happen in a highly probability. What I mean is that my baseline scenario is a BOJ will keep stimulus, and I think the government will be happy with it. And like you know, Abbey is gone and Kishida, I guess he doesn't have a specific own strong view on the monetary policy, so that's why there will be less pressure from the government's side to the BOJA.
But would the BOJ simply be cautious because it looks like Kishia will soon call an early election.
Oh yeah, if like you know, if the BOJA is seeking for a policy change right now, maybe it's it might be one of the factors that the election will be coming or and maybe they should post maybe it's not a decisive factor, but might be one of the factors. But my guess is whether it doesn't think any change at Also, it doesn't matter to toorrow.
Thanks so much for being with us.
We really learned a lot. Tara Kimura, Bloomberg's japan economist, who by the way, spent more than ten years as an economist at the Bank of Japan. I'm Brian Curtis in Hong Kong along with Doug Krisner. You can catch us every weekday here for Bloomberg day Break Asia, beginning at six am in Hong Kong and six pm on Wall Street.
Tom, thank you, Brian and Doug.
And coming up on Bloomberg day Break weekend, a big focus on tech in London in Paris in the coming week with two high profile tech events.
I'm Tom Busby and this is.
Boberg broadcasting live from the Bloomberg It a active brokers Studio in New York, Bloomberg e levon free oh to Washington, d C, Bloomberg ninety nine one to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixty to the country, Syrius XM Channel one to nineteen to London, DAB Digital Radio, and around the globe the Bloomberg Business app in Bloomberg Radio dot com. This is Bloomberg Daybreak weekend.
I'm Tom Busby in New York with your global look ahead at the top stories for investors in the coming week. Challenges facing the tech industry will be in focus in the coming days in Europe with two big industry events taking place in London and Paris. And for more, let's say to London and bring in Bloomberg day Break Europe Banker Steven Carrol.
Tom, We're heading into London Tech Week, where industry leaders are gathering to discuss the UK technology ecosystem, while over in Paris the focus is on startups and innovation at Viva tech Now. These events are happening at a time when there are questions being asked about the UK's place as a tech hub post bregsit plus, there are broader discussions happening in the industry around regulation, particularly when it comes to artificial intelligence. So to discuss all of this,
I'm joined by our tech reporter Thomas Seal. Tom great to have you with us in studio for this. This is a good time to check in about what the big discussions are in industry because we have all these tech leaders in Europe, particularly coming to London for London Tech Week as well. What are the big themes that you'll be watching out for during these events.
So I think the UK's role, as you say, as a tech hub is really in question at the moment. It's got undoubted strengths for startups, but after that there are big question marks about scale up as they call it in the industry, you know, getting from that one hundred million valuation to a five million valuation. Investors seem to increasingly come from the US or abroad. But beyond that, I think there'll be some reckoning of the Silicon Valley
Bank fallout and the sort of funding landscape. Silicon Valley Bank executives now part of HSBC. Of course we'll be talking. There are panels about sustainability, about diversity and inclusion. I think something that's not on the official agenda so much, but will be a huge topic obviously, is artificial intelligence as well.
Yeah, indeed, I mean that scale up question is really interesting because there was so much was made of the fact that ARM you know, a UK tech name, was deciding to list in the US and NATA in London. That's the sort of thing that particularly politicians can get very antsy about. Let's talk about the interaction between politics
and technology as well. You've been reporting about this complaints really from the industry body Tech UK that the UK risks falling behind if the government doesn't overhaul its policies. What does the industry want from government?
Yeah, that that statement that document from Tech UK was striking. I think some lobby bodies are much more wingy, so when they when they kind of bring out language like that, it's quite striking, and you know, something is a miss. What do they want? I think they complain in the document about the sort of short termism of some government initiatives.
The government is very keen to pat itself on the back, they say with phrases like we're a tech superpower, slight superpower, but then longer term thinking seems to be somewhat absent, so just that sort of strategic nouse. They also say some more practical complaints such as lab space is very expensive here. Connecting to the electricity grid, which is important if you're, for instance, data center or making micro chips seems to be a problem in the UK. So it
was a sixty page document. It went through sort of more than a dozen different areas and there were quite a few complaints.
But those are two that come to mind. What are the key strong points of the UK's tech industry if we're thinking about it in a post bragsit context, where the government's really keen to promote tech industries one of the sort of things that the UK should be looking to build on.
So you mentioned arm and that is one of the UK's most valuable homegrown champions, and that is an area where the UK definitely sees itself as having a strength, which is why its decision to list in New York was quite a blow. The UK strengths include it'scation system, you know, research university spinouts. A lot of these become really interesting startups, things like Oxford, nanopaor I think again. Then it's the question about how do you get them into becoming a kind of a global company.
To get to that next base here.
Yeah, and then regulation is seen as very strong in the UK. That's not building companies, but it's still really important when you look at the impact something like GDPR had out of Europe, which obviously pre Brexit, the UK helped write that helps set standards and helps shape everything that these companies do well.
In a post bragsit world.
Is that somewhere where the UK could diverge and do something different to what the European Union is doing.
This is a big ongoing debate. I think we're seeing it just this week with AI. The EU has you know, published an AI Act which is quite specific, more so than the UK's approach. The UK has published a white paper which is really pretty vague and delegates of responsibility and it sort of indicates that the UK is trying to be seen as a bit light to touch, a bit friendlier come here, sort of a slightly offshore business friendly alternative.
This is a conversation we've been having on Boomberg Daybreak Europe in the past few days about the rapid rise of our sopacial intelligence, particularly generative AI, and how it should be regulated. We discussed this with Nate Shardan from the Center for Ai Safety. Here's what he told us.
I think voluntary can work. Voluntary can work if it has teeth. We have voluntary regulation for many things, and it's something that can work if it has teeth, and there's different ways to do that. You can design product liability schemes so that people are incentivized to enter into voluntary regulation to be behind liability shields. That's a familiar form of regulatory structure and it's something that would work in this environment.
What exactly needs to be regulated.
Capabilities of models, and another obvious target for regulation is the actual training of the model. We can regulate the chips and we can prevent large training runs from happening. And when it comes to the capabilities of the models, credible third party auditing can be done in order to evaluate them and say exactly what these things can do. I think that if you put AI in charge of things that can themselves cause harm, then the AI can
themselves cause harm. I think it's not hyperboly to imagine that people will slowly but truly turn over control of systems to powerful AI, and that those AI will make decisions that pause. Harm, I think that's not science fiction. That's what people are being incentivized to do.
That's Nate Chargan from the Center for AI Safety. Look, I mean it's a pretty stark warning to say that that's the extent of where AI could go. How well I suppose prepared or well positioned is the UK to take a lead in this area.
The UK is increasingly keen to take a lead in this area. There are calls from UK officials to have some kind of global agency headquartered here. In fact, like the international atomic kind of body has one global agency. Brad Smith, president of Microsoft, was in London meeting officials and he spoke to reporters and he was saying that yes, there needs to be a lot of international corporation. He didn't explicitly endorse London, but he didn't shoot it down either.
He hasn't been terribly favorable when discussing UK regulators in the recent past either after they blocked the takeover of Activision.
Indeed, and he did not roll back those remarks. He also outlined some of the potential safety or regulatory maneuvers that could be used to sort of mitigate some of these dangers. He was saying that there's different layers of AI. There's applications sitting on top. There's the models themselves, which is the main focus, things like chatchbt open AI. And then there's also the infrastructure beneath it, which I thought was really interesting that AI is ultimately working on data centers.
You know, if you're running powerful models, running critical infrastructure using AI, that's ultimately based somewhere. Those processes are somewhere, and so there need to be rules around that as well, and then you could, you know, theoretically.
Have some sort of a kill switch.
Yes, definitely something really interesting to think about when we think about the future of that technology. I did mention Viva Tech in Paris at the start of our conversation, and you know, this is a kind of an ongoing conversation in so many areas after Brexit. Is the competition between European capitals in terms of tech. You know, how is that competition going well?
The UK loves to roll out UK politicians love to roll out a line that there are more startups, more unicorns in the UK than I think France and Germany together. But people have liken Brexit to a slow puncture. I think that France probably has you know, seized on this opportunity, so as Amsterdam, so as Estonia, you know, and I think London still is probably be the best place in Europe for things like fintech. But yeah, it's a much more active competition than perhaps it would have been.
It's a battle certainly between those capitals to guests, secure those new businesses and to grow them as well. Thanks very much to Bloomberg Tech reporter at Tom Sealed there as we look ahead to London Tech Week and we will bring you key interviews from that event on Bloomberg Daybreak Europe.
I'm Stephen Carroll in London. You can catch us every.
Morning here for Bloomberg day Break Europe, beginning at six am in London and one am on Wall Streets.
Tom.
Thank you, Steven.
And coming up here on Bloomberg day Break weekend, turbulence in the US banking industry and focus as Treasury Secretary Janet Yellen heads to Capitol Hill.
I'm Tom Busby, and this is Bloomberg.
This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. As fallout from the recent US bank failures continues to reverberate through the economy. Treasury Secretary Jenet Yellen gets ready to testify before the House Financial Services.
Committee this coming week.
For more, let's add to our Bloomberg ninety nine one newsroom in Washington and Bloomberg Sound On. Co host Kaylee lines.
Yeah, Tom, the Treasury Secretary has to do this every year, appear before the committee to give her annual testimony on the state of the international financial system. It's happening this coming Tuesday, ten am Eastern time, And of course it follows the drama over the debt ceiling and the Treasury's ability to borrow, as well as multiple bank failures in the US earlier this year. So I'm guessing she may
be in for some tough questions. And I have some questions now for someone who knows all things Treasury, Christopher Condon, who covers that in economic policy for us here at Bloomberg. So, Chris, thank you so much for doing this. What do we anticipate Yellen is going to be asked and then say? On Tuesday?
There are a couple topics that Republicans on the Hill are particularly interested in grilling Yellen about Number one. There's an executive order that's in the works, has been in the worst for a very long time within the Biden
missstration that would seek to restrict outbound investments to China. Now, this would complement other policies like export controls and inward investment restrictions that are there for national security reasons, as the Biden administration says, and Yellen has said before that this coming order would complement those. And basically the idea is to prevent China from using US money to develop technologies domestically that it's prohibited from buying from the US
and other countries. And so, you know, let's not allow them to use US venture capital companies that bring in cash and know how crucially to help develop technologies that the United States doesn't want them to have. Now, this is controversial. A lot of Republicans are very outful about the effectiveness. In fact, Patrick McHenry, the Republican from North Carolina who is chairman of this committee, wrote a letter to Yellen last month expressing his severe skepticism. Let's say
about how effective this would be. China really doesn't have a shortage of capital flowing into the country. It's not like they're dying that they have a big capital counsel. Plus, he pointed out in the letter, he asked, Yellen, you know, well, can you give me examples of past instances where US investors helped China develop technology we didn't want them to have. I think he's responding to some concerns in the venture
capital community that these restrictions might be overly broad. The administration has promised that they would be narrow, but they have given zero details publicly so far.
So that's kind of on the international level, But I wonder what kind of domestic facing questions she may get, given we have seen bank failures. Given she will be testifying just hours after we get an inflation print here in the US, the day before the Federal Reserve makes its rate decision, how is she likely to characterize the US economy at the moment.
First of all, she's got a line that she's going to use. She has used it for months and months. She sees a path for the US economy where inflation can be brought down close to the Federal Reserves target two percent from PC inflation without dramatically increasing unemployment. That's, you know, the proverbial soft landing. I would hope that she would get pressed on that. I have myself tried to press her.
Okay, you see this path.
But one might say that if you saw a ten percent chance of that, what probability do you sign to it? Is it greater than fifty percent? Is it lower than fifty percent? I would personally would love to hear members of Congress press her on that, and some hopefully will, because this line about seeing a path is a little bit overly vague.
All right, well, we'll see how she can characterizes it. Come Tuesday, Janet Yellen going to be in the hot seat. Thank you so much to our Chris Condon, who covers the Treasury Department for us here at Bloomberg News, and Tom I'll send it back to you.
Thank you. Kaylee.
That was Bloomberg sound On co host Kaylee Lines, reporting from our Bloomberg ninety nine one newsroom in Washington, and you can hear sound on weekdays one to three pm on Bloomberg Radio. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day.
I'm Tom Buzzby.
Stay with US top stories and global business headlines are coming up right now.