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What Warshs first meeting as Fed chair signals · DEEP INSIGHT

• 0:00
  Speaker 1: The Federal Reserve held interest rates steady today in the
• 0:03
  Speaker 1: first meeting led by its new chairman, Kevin Walsh. The
• 0:07
  Speaker 1: decision to maintain rates at a range of three point
• 0:09
  Speaker 1: five percent to three point seventy five percent for a
• 0:12
  Speaker 1: fourth straight meeting was supported by all twelve members of
• 0:15
  Speaker 1: the Federal Open Market Committee, but new quarterly projections by
• 0:19
  Speaker 1: some FED officials anticipate a rate hike by the end
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  Speaker 1: of the year, and Walsh made it clear that he's
• 0:25
  Speaker 1: ready to break in a number of ways from his predecessors.
• 0:29
  Speaker 2: I don't share the view that was expressed a few
• 0:32
  Speaker 2: generations ago that Federal Reserve chairmen show up at a
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  Speaker 2: podium like this and say, you got to choose, and
• 0:40
  Speaker 2: you're going to have to decide whether you're willing to
• 0:43
  Speaker 2: tolerate higher inflation to put more people at work. I
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  Speaker 2: don't believe in that. What I believe is, if we
• 0:50
  Speaker 2: do our job, we can make strong growth, low prices,
• 0:57
  Speaker 2: and strong employment mutually compatible.
• 1:01
  Speaker 1: For more on today's meeting and the future of the
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  Speaker 1: FED underwsh, I'm joined now by David Wessel. He's director
• 1:06
  Speaker 1: of the Hutchins Center on Fiscal and Monetary Policy at
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  Speaker 1: the Brookings Institution.
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  Speaker 3: Great to see you, to see you.
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  Speaker 1: So Kevin Walsh's first press conference since becoming FED chair.
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  Speaker 1: Before we dive into details, what was the headline for you?
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  Speaker 3: I think the headline was that Kevin Walsh is very
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  Speaker 3: confident he didn't make any mistakes, but he's very reluctant
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  Speaker 3: to show anything about what he thinks about monetary policy, which,
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  Speaker 3: as you pointed out, that nine of the eighteen people
• 1:33
  Speaker 3: who put dots on their projections, Kevin Walsh didn't see
• 1:36
  Speaker 3: a RAID increase in the next year before the year's over,
• 1:40
  Speaker 3: and that's why, and the markets saw that. So Worsh's
• 1:43
  Speaker 3: attempt to we're not going to tell you what we're
• 1:45
  Speaker 3: going to do was kind of undermined by the fact
• 1:47
  Speaker 3: that they have a system where the other people are
• 1:50
  Speaker 3: telling the markets what they think they're going to do. Well.
• 1:52
  Speaker 1: President Trump was asked about that possible rate hike later
• 1:55
  Speaker 1: this year, and also the decision to hold rate steady today.
• 1:57
  Speaker 1: Here's what he had to say, and it needs a
• 2:01
  Speaker 1: bad decision.
• 2:02
  Speaker 3: They held race today whatever, and it looks like they
• 2:06
  Speaker 3: might even raise them later this year.
• 2:08
  Speaker 2: At Ducks Player. Do you have anything it could happen?
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  Speaker 3: I mean, it's hard to believe. It just keeps a
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  Speaker 3: country down, you know. So it's so.
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  Speaker 1: Unusual.
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  Speaker 3: But we have a very good guy over there now,
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  Speaker 3: so I'm guided by what he wants to do. So
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  Speaker 3: I think that Kevin Walsh was not singing the song
• 2:29
  Speaker 3: that President Trump wants him to sing.
• 2:32
  Speaker 1: That helps her explain the President's reaction.
• 2:33
  Speaker 3: He emphasized over and over again, price stability, price stability,
• 2:38
  Speaker 3: price stability, that's a recipe for higher interest rates. I
• 2:42
  Speaker 3: imagine Kevin Warsh talking to the President, and I suspect
• 2:46
  Speaker 3: they talk quite a bit, and Kevin Warsh saying to
• 2:48
  Speaker 3: the President, Boss, the European Central Bank raised interest rates,
• 2:53
  Speaker 3: the Bank of Japan raised interest rates. I have all
• 2:56
  Speaker 3: these hawks on my committee, and I held the line,
• 2:59
  Speaker 3: so be nice to me.
• 3:00
  Speaker 1: Truth social Well, the other big question here is inflation,
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  Speaker 1: of course, as worsh mentioned, and that is still above
• 3:06
  Speaker 1: that two percent target the Fed had set. We just
• 3:09
  Speaker 1: saw last month consumer price index rise at its fastest
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  Speaker 1: rate in three years. How do you think Walsh handled that?
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  Speaker 1: How do you address those concerns today?
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  Speaker 3: The members of the Federal Open Market Committee who put
• 3:21
  Speaker 3: projections down said they expect inflation to be worse than
• 3:24
  Speaker 3: they expected when they did it three months ago. So
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  Speaker 3: I think worsh is trying to assure people we are
• 3:31
  Speaker 3: going to aim at price stability, we're not going to tolerate.
• 3:33
  Speaker 3: He kept talking about we've been an over target for
• 3:36
  Speaker 3: five years, but he didn't say exactly how he's going
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  Speaker 3: to get there or what he thinks is causing it.
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  Speaker 3: And so I think he managed a very delicate situation
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  Speaker 3: well today without showing very many.
• 3:49
  Speaker 1: Cards when it comes to interest rates. So as we know,
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  Speaker 1: that's a focus for President Trump as well. A unanimous
• 3:54
  Speaker 1: vote today says that there's consensus in how they're viewing
• 3:57
  Speaker 1: the current economic situation. Right, But you mentioned that dot
• 4:00
  Speaker 1: plot where each member sort of says this is where
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  Speaker 1: I think things will head down the line, there's a divide.
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  Speaker 1: Some said that they believe their interest rates will hold
• 4:07
  Speaker 1: or have a modest cut, and others said that there
• 4:10
  Speaker 1: could be at least one hike. How do you read
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  Speaker 1: that divide?
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  Speaker 3: Well, I think that the situation is very uncertain, and
• 4:18
  Speaker 3: what the Fed is saying is right now, we seem
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  Speaker 3: to be at full employment and inflation seems to be
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  Speaker 3: a problem. And I think that if inflation doesn't come down,
• 4:28
  Speaker 3: they will have to raise rates. But people have different
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  Speaker 3: forecasts about what's going to happen. So treading water for
• 4:33
  Speaker 3: now seems fine, But you know it's interesting. Financial markets
• 4:38
  Speaker 3: look to the whole picture today and they expect a
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  Speaker 3: rate hike. So it's going to be very interesting to
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  Speaker 3: see how Kevin Walsh handles this. On one hand, price
• 4:47
  Speaker 3: stability is important, maybe even to him, more important than
• 4:50
  Speaker 3: full employment. On the other hand, he's got to worry
• 4:53
  Speaker 3: about Trump going after him, and he clearly would like
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  Speaker 3: to delay that as long as possible.
• 4:57
  Speaker 1: You and I have spoken before about Kevin coming in
• 5:00
  Speaker 1: and promising regime change, and how the FED operates and
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  Speaker 1: even how they communicate. What signals did you see today
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  Speaker 1: about what that regime change means?
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  Speaker 3: Well, the statement they issued was much shorter, The press
• 5:12
  Speaker 3: conference was shorter, and he refused to give any clues
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  Speaker 3: as to what he thinks lies ahead. He's going to
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  Speaker 3: try and give less of what the insiders called forward guidance.
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  Speaker 3: He also said, in order to make it seem like
• 5:28
  Speaker 3: he's doing something, he appointed five task forces, or he
• 5:31
  Speaker 3: didn't appoint them. He said he's going to have five
• 5:33
  Speaker 3: task forces. I kind of expecting someone to say to him,
• 5:36
  Speaker 3: you know, one more question, Will I have a task
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  Speaker 3: force for that too? But I think regime change, as
• 5:43
  Speaker 3: Nick tim Rose at The Wall Street Journal wrote, is
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  Speaker 3: kinder and gentler than his rhetoric implied when he was
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  Speaker 3: campaigning for the job, and the change is going to
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  Speaker 3: be slower. I think we'll get change. I think these
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  Speaker 3: task forces are wrestling with issues that are important to
• 5:57
  Speaker 3: the FED. How do we think about didicting inflation? How
• 6:01
  Speaker 3: do we communicate? What should we do with our large portfolio?
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  Speaker 3: And so he's sending a signal that we're going to
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  Speaker 3: move slowly. We're going to move deliberately. I'm going to
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  Speaker 3: get a lot of advice from outside the FED, and
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  Speaker 3: then we'll make some decisions. But don't hold your breath.
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  Speaker 1: I just got a few seconds left. But I have
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  Speaker 1: to ask you. You know, one of the biggest concerns was
• 6:18
  Speaker 1: about wash maintaining the Fed's independence under pressure from President Trump.
• 6:22
  Speaker 1: If you're an investor looking at this today, what did
• 6:25
  Speaker 1: you see confidence in that independence?
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  Speaker 3: I think you see confidence because both he and the
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  Speaker 3: other members of the committee seemed prepared to raise interest
• 6:31
  Speaker 3: rates if necessary, even though we know and President Trump
• 6:35
  Speaker 3: said today that's not what he wants.
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  Speaker 1: David Wessell always great to see. Thank you so much.
• 6:41
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• 6:46
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