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The big question for everybody, especially for Wall Street, is what happens on September seventeenth.
So this is, as you know, kind of an interesting month because we've got Jackson Hole and then we've got quite a few weeks of data to kind of pull in. So I'm really I think everybody's quite interested in some of the maybe the prints that happened in the last couple of months and kind of where they go from here. So I'm I'm like everybody. I think there was some fascinating conversations at the last FMC, As you know, there
were a couple of cents. I think my interpretation of what's happening, especially in the labor market, is that the first couple quarters, a lot of business people were just saying there's uncertainty enough, and I think they kind of
cooled a little bit on higher side. But the most recent couple of weeks that we've been talking to businesses in the district, there seems to be a burgeoning optimism again that they've kind of digested and they've been agile enough to try to work their way through some of the new policies from the administration and maybe going forward, maybe we'll see a little bit uptick. That said, I still believe there's that the inflation number is trending closer to three than two.
Well, we saw that in the minutes that in general the Open Market Committee felt that inflation was a bigger danger at this point.
Would you say that's your view now?
It would be my view now.
I think with an understanding that what may have happened in the first couple quarters on the labor side, which I think concerned several people on the committee, me included. But I think this PPI was interesting, that print was interesting. But I really believe that when we talked to a lot of a lot of folks in our district, is that if you had to kind of lean or have a bias toward, it would be on the inflation side.
Well, it sounds like what you're saying is that companies may be feeling better about being able to keep employees on the payroll, but they're going to have to raise prices.
I don't know. I think that.
What's interesting to me, Mike is is I think the business has learned a lot in that twenty two to twenty three cycle with the supply chain disruptions, and I think a lot of them really made new decisions with plan b's and c's relative to where their goods come from. And I think they might not have prepared for terrorists, but they might have prepared themselves for other supply shocks. But it seems like they've adapted a lot of their businesses from that experience.
So I actually think that the agility that they created.
From that experience is going to get them through this next few quarters.
Well, then it sounds again that may you've moved toward the middle in terms of whether you should hold rates or cut rates.
You know, it's really fascinating you think about and you have great experience in this when you get to the policy table there when you're talking about it, everything's connected to the to the dual mandate, right, and when inflation is really ramping up, you have a blunt instrument and you act, which is what we did. Now, as you get closer to the optimum dual mandate numbers, it actually becomes more difficult to make decisions on the margin relative
to where that policy rate should go. And so that I think that's where you're seeing a lot of the debate now is you know where's your lean is it? Where do you believe things are too restrictive on the policy rate side or not. I think they're modestly restrictive. I'm still trying to find ways of what's being inhibited in the economy from where are policy rate is today. But I think we're on a good path.
So at this point, it probably would be a mistake for Fairm and Powell on Friday to say definitely we're going to cut as he did last year.
Yeah, yeah, I always can't wait for that speech. I think he keeps it close fast. I wouldn't front round him even if I knew. But I think that we've been doing so much work this year around the framework, around really getting into where how we get this soft landing to two percent without breaking anything.
So I think he has a lot.
Of different directions to go, and I think it'll be a very anticipated discussion.
Well speaking of the framework or about at that point where he is expected to announce what you're going to do. Is it basically going back to the old framework of we will do whatever is best for the economy at the time, as opposed to leaning towards one side or the other.
Of the mandate.
Yeah, I think I'd say maybe two things on that. I think we learned a ton. I mean, think about the disruptions that we're created in that twenty twenty pandemic cycle, and I think it was very instructive what we did and how we did it through twenty twenty. That said, you know, I think those learnings are going to come out in the framework discussion. And I think the thing I'm very interested in the framework is this whole concept
of transmission. I think we can all learn and try to do better relative to how we transmit what we're doing at the table, so one people understand what we're doing and how we're doing it. And so I'm kind of interested in even how we communicate and transmit the activities and actions of the FLMC.
Well, you're on the inside and you're dealing with this all the time, and I'm reporting on it.
So we care about the framework.
But I'm wondering how important the framework actually is in the sense that they adopted a framework in twenty twenty, it didn't work when we get the post pandemic inflation, and the Chairman has already said, well, right after that, we abandoned the framework and we went back to doing what we needed to do at the time.
Does it really matter? We talk about it a lot, Does it really matter?
I think you have to have something that kind of frames around what you're trying to accomplish. I mean, you have nineteen people at the table, you're trying to collaborate and trying to have a consensus of some kind. I think there's an expectation of those nineteen that we have at least some sense of how we're going to take and do our work best, and then how are we going to transmit and communicate it after we make the decision.
So I think it matters because I think there's a consistency it creates, even though you've got to have agility as you're doing the work, and how you're going to communicate it after you decide.
So I really do.
I've been there two years and I've been fascinated by it all, and I think we're going to emerge with something that I think is better than what we had.
Well, how do you think you should communicate going forward? Because there are some people who are candidates for to be the next chair who say the FED talks too much.
Yeah, wow, well you hear both sides of that coin all the time. Right, One, do we keep too much to our best?
Two?
Why aren't we doing more kind of transmitting future crystal ball or or or how are we how are we interpreting the numbers to a future event? Uh, you know, the se P and the dot plot is maybe some of that. But I don't hear a lot that we that we don't talk enough or express ourselves enough. I think it's more important where the American public is concerned. As they understand, we do a better job on helping them understand what.
We're doing and why we're doing it. Uh.
And and the dual mandate and the and the crispness of those two mandates help us help us a.
Lot in the role we have.
I have to ask you about the latest presidential twe and the attack on Lisa Cook, Governor Cook. I know that FED officials will always say, we don't let politics come.
Into the boardroom.
We do just what we think we should do on the account, we don't even talk about it.
But you've got to be getting sick of this.
Well, Look, I'm a little philosophical about the whole conversation of FED independence and where our role is in the American economy. We're almost two hundred and fifty years old as a nation. I think there's something to be said. We were built on words, and we continue to debate those words legislatively and judicially, whatever whatever friction we might have with other branches of the government. I think great steels tested by fire. So what we can always eat better,
We can always do this better. But I think the nature of independence and I think, don't believe me, believe other nations that have central banks and don't it seems to work. But I'm always open for the conversation of how do we make it better?
Well?
Do you think the FED has suffered a hit to credibility by the constant attacks from Washington?
So I think the credibility issue is more in are we fulfilling our responsibility and role around the actions of monetary policy and monetary operations? And I think the work we do on behalf of the American people is very important to their lifestyle and their living, and I want to make sure that our reputations stay strong around the
things that we're mandated to do by Congress. Other than that, there's a lot of noise outside of that dual mandate and look, you take this chair, you do this job, and people are going to have opinions, and I'm fine with that.
Well, what kind of reaction do you get from people around the district these days? Do people bring it up and say, are you guys really on the level?
Yeah? We have those conversations several times a week. They're really the most important conversations. What it helps us do is it creates a real time experience and expression that I can take to Washington at the FOMC table. But I don't think we can communicate enough about the value proposition of the feeder reserve. And I think a lot of the things that we do, clearly, the monetary policy thing gets a lot of press and it gets a
lot of notoriety. It's the monetary operations that we spend most of our time doing, you know, safe and sound banks, making sure payments get made every day around the globe, and making sure that the research that we're doing is a value added to the people we serve in the tenth district.
Well, when you talk to people, do they understand why you're not lowering interest rates?
Actually, it's interesting.
So we're going to have two sets of folks that we would talk to, one are going to be business people and finance people that really they understand because they have to. I mean, I'm a former banker. You have to risk manage the cycles of rates to run your bank well and profitably. The general public that we continue to try to reach to give them some sense of what this dual mandate means to them, and I think there's a little bit of perfection in the healthy friction
between full employment and stable prices. And I actually like that friction, and it allows us to kind of balance and rebalance what we're doing on their behalf. And it's one hundred percent on their behalf. If you reach full employment and if you keep prices stable, people can work and thrive. And I think that's an important piece of what the FED does.
Our last question has to follow up on something we always asked esther before you took over.
Predictions for the Chiefs this year.
Oh man, they look pretty good. I love the management, I love their focus. I think their coaching is amazing. I also follow the Nebraska Cornhuskers. You know, hope spring's eternal when it comes to football season. Mike, So, where the Chiefs and the huskers are concerned. I'm very hopeful