Global business news twenty four hours a day at Bloomberg dot com, the Radio plus Mobile Act and on your radio. This is a Bloomberg Business flag from Bloomberg World Handquarters. I'm Charlie Pellet. Stalks are hire rebounding from yesterday's drop spawned by concerns tied her molitary policy from Europe to the U S could derail economic growth. SMP five hundred, Indecks up eleven to sixty one, up five tenths of one percent. Naz stank is up thirty five points, up
seven tenths of one percent. Down. Industrial is up a hundred and twenty five points, also up seven tenths of one percent. Tenure down nine thirty seconds had yield one point seven two percent. Gold up ten cents. A little change there. At twelve sixty nine, the ounce crude oil West Texas Intermediate closing in on fifty dollars of barrel forty nine seventy five on w T I hired by two point two percent. I'm Charlie Pellett. That's a Bloomberg
business flash. He's taking stock the FED in focus on Bloomberg Radio on Calfe and Hayes along with pim focus the FED, and focused the European Central Bank, and focus the Bank of Japan and focus. It is a world of central bank Angstome saying, well, someone who knows this central bank angst himself, I think in a certain way.
As Mariana Cortula quota, he's a Bloomberg You columnist, he's a former Minneapolis Fed president, he served there from two thousand nine to fifteen, and he's joining us now to talk about many of these issues and his latest Bloomberg view piece. Uh Nariana, I'd like to start though, with the numbers we've been getting. You know, we've got the Services index from the I s M looking fairly strong.
And then you contrast that to the Atlanta Fed cutting its GDP tracker for the third quarter to two point two because of trade devis at Widen and you pile on that there's a group of Fed bank presidents now who think it's time to raise the key right now. And I bet you don't reason. Is uh no that that would be bet you would win. Kathleen, thanks a lot for having me on. Uh it's a lot of
to join you. I um. In terms of the data, I think that we're Uh, we're still in a situation where we're seeing slow growth, we're seeing a inflationary pressure is remaining subdued. Uh. When I look at my the metrics high follow on inflation expectations, they remain low with the five year five year forward Uh. Tips spreads remain low, and also some of the surveys remain low. So I I don't see it as a time to raise rates
just based on those considerations. But the overwhelming consideration is really the FEDS a limited tool kit with which to deal with downside risks of any kind. Uh. And you want to keep the patient as healthy as possible if you don't have have any treatments if it gets sick, and so that that really argues against raising rates. Uh. I think one of the most compelling argument against raising
race at this point. Professor Cutcota, you are the Lionel W. Mackenzie, professor of economics at the University of Rochester, and Lionel Mackenzie I guess was famous for his work on general equilibrium theory, attempting to explain the behavior of supply and demand and prices. Where do you see inequality this equilibrium in global markets right now? Uh? Great? Question, and uh
a great citational linel Um. I think that, uh. My my own concern remains that I think the interest rates, and this was going to come surprisingly to so many of your listeners, is I think interest rates actually remained too high in much of the world. And I think we see that when people talk about boy, there's too much supply or too little demand, well that's really those those words are really markers for the fact that interest
rates are too high. The interest rates were lower, um than we'll be able to clear up the excess supply on and um and uh to the fact that we have have two little demand at the current point in time because people would start to spend more as opposed to saving, and that would soak up the supply that we we have. So when people and I hear this from many business business people in financial market participants, that they see signs of excess supply and and uh in
sufficient demand out there. But those are all markers that should be it makes you think, boy, interest rates, even though they're historically unusually low, remain too high. So in terms of what central banks should do again, the question gets very interesting. The FETE is getting ready to high grates and boiled boys, they don't do it in November. It's sure looks like the majority is going to vote
for December. And at the same time, now there's these stirrings from the bank in Japan and European central banks saying it seems, you know, this quantity of vising really isn't working, so they're gonna start cutting back. That's a little less stimulus as well. I know you think the central bank should be more stimulative perhaps, but do you agree me to be though that that bond purchases have run out of steam in terms of being able to
boost economies. I would interpret what's going on in the boj a little bit differently, and it's actually they're reaching a policy conclusion that that uh that I had been reaching some of my own thinking a while back, which is it might be better to be targeting prices of
bonds as opposed to trying to target target quantities. What we really believe in the in the economic modeling that we do is it's really prices that matter for economic decision making, not so much quantities, and so buying a certain amount of bonds every month is merely a very indirect way to to get the influence you want, which is on on prices and yields. So I actually took their their statement uh that they made uh recently to
be much more. I thought it was a very healthy move, which is to start to talk about we're gonna be aiming to target UM a certain yield for the for the ten year as opposed to UM buying buying buying assets.
We talked about buying assets. I'm wondering if you maybe could reference, uh, the Obama administration's economic stimulus plan, because you said at the time, I believe that the reason you've decided you didn't vote against it was not that you were necessarily opposed to it, but that economic stimulus
was not a settled question within the world of academia. Yeah. No, one of the unfortunate I should say, one of the fortunate features of an unfortunate event is that, uh, in response to the downturn of of two thousand uh eight, in two thousand nine, we've been able to do a lot of studies to follow up studies to analyze the effect of physical stimulus. UH. Those studies weren't available at the time that I signed a petition you make reference to.
I think now is as usual. There's still more work to be done and more clear to be to be too found. But I think that it seems clear the physical list when we're at the zero or bound interest rates can be very effective as a way of boosting overall output. Alright, just ten seconds. Is there any chance of it? It doesn't raise a key rate by December? Noriana, Yes, there is a chance, and that's the right thing to do, not doing. They should they should not raise rates. All right,
now you're a quo Letkona. Thank you so much. We'd like to get every drop of information and analysis we can out of his former Federal Reserve Bank president in Minneapolis, Noriyanna Coacha Lakota, also a Bloomberg View columnist. We're going to continue our fed in focus here on taking stock. I'm Kathleen Hayes along with Pim Fox, and this is Bloomberg. Coming up on taking stock, will be speaking with Richard Grossman.
He's the head of Halsted Property. We're going to find out about residential real estate values and whether low interest rates will help the market. That's next