Princeton's Mody Says BOE Brexit Panic is Irresponsible (Audio)

European Union. Could that slow the Fed's rate hiking hand this month. We've got a guest coming up who says it's short. Certainly should not and the Bank of England has no business predicting that it breaks. It will cause great harm to the UK economy. Now let's get to Charlie Felton issue with a Bloomberg business flash, and I

thank you Kathleen. Right now, we've got the SMP highn Nestak as well, dal Jones Industrial Average, Laurel by two points little change, their SMP up a point, a gain to point one percent, and Astack Higer by eight a gain of two tenths of one percent. The U S economy expanded at a modest pace across most of the countries since mid April, causing the labor market to tighten. Those employers continue adding jobs and nudging wages higher. We will have more on the Beige Book coming right up here.

On taking Stock. Matt Bosler covers the Federal Reserve for Bloomberg News. He was our guest minutes ago here on

taking Stock. One of the good things here is that, um, you know, throughout this report there's a language about how businesses are feeling generally optimistic about the outlook, which is good because, um, you know, in the minutes of the April f MC meeting that we're just released a few weeks ago, there was a line in there about how most of policymakers business contacts, Um, we're you know, delaying expenditures and sort of waiting for uncertainty around the outlook

to to resolve. And right now we do have the tenure up to thirty seconds with the yield of one point eight three percent. Auto sales, Hey, it is the first the day of the new month. Auto sales softer than predicted and May a bell weather month that may help the Federal Reserve decision decision makers determine whether the economy can handle it. Interest rate increase this summer, GM, Ford, Toyota all reporting sales that fell more than analysts had estimated.

GM shares they are down now by three point three percent. Ford shares down by two point nine percent. Mixed picture for US equities smp hier now by a point. The Dow is down six points, Gold down three forty ounce dropped there of three tenths of one percent to thirty two on Wall Street. Now, let's take a look at some of the other stories making us. Thank you Charlie

from the Bloomberg news room. I'm Ramie. In Essensio. Searchers may have found a new clue in the hunt for egypt Air Flight eight oh four that went down in the Mediterranean Sea last month. Here's Bloomberg's Michael Barr. A French Navy ship has picked up a ping that is likely coming from the all important black boxes from an egypt airplane that crashed May nine. If it is indeed the flight recorders, you could be a major piece of the puzzle as to what happened to Egypt Air Flight

eight oh four. Egypt's Ministry of Civil Aviations as once the black boxes are located, a ship from deep ocean Search we joined the effort in the Mediterranean to retrieve the DEATHA recorders. The Arabs crashed while heading from Paris to Cairo, killing all sixty six passengers and crew on board. Michael Barr Bloomberg Radio for Your Health. Restaurants and food

manufacturers are being asked to hold the salt. Health and Human Services Secretary at Sylvia Matthews Burwell on the new guidelines in terms of what we're doing is creating a situation where the consumers can control. If that consumer wants to add more sodium, they're going to be able to do it. What the consumer can't do now is take it half of the product and have real knowledge about it. Burwell also says seventy of the sodium that most people

consume comes from either prepared or processed food. And the baby born in New Jersey has birth defects caused by the zeke of virus. It's a first in the Tri state region and only the second time it's happened in the US. Hospital officials say the infants thirty one year old mother is asking for privacy at Hackensack University Medical Center as the newborn receives care. The mother is from Honduras,

where she may have contracted the virus. Global News twenty four hours a day, powered by our journalists in more than one fifty news bureaus around the world. From the Bloomberg News Room. I'm Rami Innocentio Charlie, and we thank you, and again recapping a mixed picture for US equities SMP five hundred index higher by a lesser than half a point. Now little change down, Industrials down twelve, a drop of point one percent. I'm Charlie Pelt. That's a Bloombird business flash.

This is taking stock the FED in focus on Bloombird Radio. I'm Kathleen Hayes, my co host Pim Fox. Out of the office this afternoon, we're gonna take a look at Brexit now, in particular warnings last month stark warnings from the Bank of England that a vote to leave the European Union by the UK, the so called Brexit, could slam the brakes on growth in that area, push up unemployment,

stoke inflation, and spook forward investors. And the feder Reserve, of course, has expressed some concern about not knowing the result of the June Brexit before it votes on US monetary policy on June fifteenth. Joining us now as a guest who has slammed the Bank of England for making such statements, saying that it is cynically exploiting its authority. Ashoka Modi joins this now. He's a Bloom Review contributor.

He is also a visiting professor in International Economic Policy at the Woodrow Wilson School at Princeton University, and previously was Deputy director in the I m f S Research and European Departments, and so much more. Professional Moody, welcome to the show. Thank you, thank you very much. So what do you think would happen? Let's start there. Do you think the brigsit won't have much impact on the

UK economy if that occurs. I think Brexit will have some impact, but how much impact it has will depend also a lot on how how the policymakers and the UK authorities behave Uh. If they if they create a sense of panic, uh, then there will be panic. But if they calmly and they take it as a matter of course, Uh, then I think it's a very manageable process. Is uh, Governor Karney Mark Arney, the head of the

Bank of England, Is he waiting into political waters? Is that implicitly what you're saying that he's trying to help the government in his position that Brexit should not occur. But what what Mr Kearney and the Bank of England have done are two things. Does they say that not only will Brexit cause problems, but it is already causing problems, That growth has slowed down, that investment has slowed down

because of the fear of Brexit. The problem with that statement is that there is simply no evidence for that the UK economy has slowed down. But we completely understand why it has slowed down. Has slowed down because once again austerity has been stepped up and the world economy is slow, world trade is barely growing, and that pretty much explains the slowdown of the of the UK economy. So for him to add that there is a Brexit

related uncertainty said is just a completely ad hoc. But the more most serious problem that the Bank of England has created is by saying that if there is Brexit, there will be panic and in effect civilization. As we know it will come to an end. And I think that it's completely a response because they're creating a narrative which is likely to become full self fulfilling if they continue this way. A central bank's role, a central bank's role has to be to stop the planet, to state

calm and stop the pandits. I think whether it was a political gesture or not, it was clearly unnecessary and ill advised. I have kept quiet, waited till bregsit decision was taken, and then acted as a centralman. Should I want to ask, do you want to switch? Here's just a bit, but look at India where they had of India's Central Bank or gam Rajan, who uh is Indian by birth, has lived in work in the the United States for many years. Professor, very well respected at the University

of Chicago. He's been almost three years running the central bank in India. Many politicians now or some anyways saying he should leave. He hasn't cut rates enough. Today he said, just what, I don't want another term. When my three three years are up, I'm leaving. Do you think India's heading in the right direction without ragu Rajan? Well, look, they let there are two different things one how the

political system has treated Ragu and that's that's completely abominabous. Uh. There is I think a small group, in fact, maybe one politician who has been hounding him. And I think I think if India wanted to keep Ragu, the Prime Minister should have been out there on the stump, Uh telling his party folks to to keep quiet and to go away. And and because this is completely uncalled. But Ragu is, as you said, quite rightly, one of the

most distinguished economists of his generation. And India is fortunate that you know, he he feels it is part of his obligation to to be a senior policy in get in in India. Now it's luck we leaves. You know, I don't believe that an individual mix or breaks and institution. And you know there will be other people who will come and who will do a very fine job. But I hope very much, but in the estate that he continues.

You know, he has himself said that the dusk is not yet done, and I think he should stay and and did the dusk alright, A Shokmote, thank you so very much for joining us. Uh looking at the Bank of England saying there is no evidence that Brexit fears are slowing the economy. There's a lot of factors doing that. And as for India, very fast growing, important economy in the world. Now, maybe they should try to keep their current central bank chief, A Shokomoti. Joining us from Princeton University.

I'm Kathleen Hayes. This is taking stock on Bloomberg Radio, but in Focus. Brought to you by Willoughby's since eighteen ninety eight, New York City's boutique camera store for precision craft at hostile blood and like a Camera's, plus a full selection of grow, pro, action and adventure cameras. Willoughby's at the corner of Fifth Avenue and thirty first Street