Latest / The Paul Barron Crypto Show / Fed Meeting: September Rate Cut Pump?🔴Jerome Powell

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Fed Meeting: September Rate Cut Pump?🔴Jerome Powell · The Paul Barron Crypto Show

0:08
Speaker 1: It is now FOMC day, so we'll of course get
0:10
Speaker 1: a chance to hear from Chairpal today will live stream
0:13
Speaker 1: all of that and give you some insights on that.
0:16
Speaker 1: I think you guys will like it. The way we
0:18
Speaker 1: break this down, you're gonna love it. My name is
0:19
Speaker 1: Paul Barre. Welcome back into tech path. I want to
0:21
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Speaker 1: and a great product out there. All right, A couple
0:58
Speaker 1: of points here news in course of many of you
1:01
Speaker 1: probably already know, there is another pause. Guess what no
1:04
Speaker 1: drama remaining A five to two five to five and
1:07
Speaker 1: a half rates are unchanged, and I think this is
1:11
Speaker 1: going to be an interesting next forty five days because
1:15
Speaker 1: I think Chair Palell is going to get a lot
1:17
Speaker 1: of pressure from industry. And what I mean by that
1:21
Speaker 1: is where the market is going. The market is expecting
1:25
Speaker 1: the FED to pause, of course today, and that's what
1:28
Speaker 1: happened this of course in July. But we still got
1:30
Speaker 1: a long way to go before we see lower rates.
1:32
Speaker 1: That's the real question, I think is how to September
1:35
Speaker 1: play out within this. If you look at the performance
1:38
Speaker 1: of bitcoin over the months, let me kind of zoom
1:41
Speaker 1: in on this for you guys, so you can kind
1:43
Speaker 1: of see a little bit better.
1:44
Speaker 2: Here.
1:45
Speaker 1: You can see right there, July has been kind of
1:48
Speaker 1: mixed signals, a little bit more green, but mixed signals.
1:51
Speaker 1: August definitely a red month historically all the way back
1:55
Speaker 1: to twenty thirteen for bitcoin. September kind of the same position,
1:59
Speaker 1: and then on October historically a green month. So maybe
2:03
Speaker 1: that is the play going forward. I have a clip
2:06
Speaker 1: here that I want to get into because this next
2:08
Speaker 1: clip is going to break down really what Chair Powell
2:12
Speaker 1: will have to do to start the process of a
2:15
Speaker 1: pivot take a look.
2:17
Speaker 3: Well, I think things are lining up for that cut
2:21
Speaker 3: and in September. In September, but I can argue that
2:25
Speaker 3: it's it's things have lined up for Wednesday. But the
2:29
Speaker 3: FED likes to sort of gain plan things out. They
2:33
Speaker 3: don't want to be caught stuck having to slash rates.
2:36
Speaker 3: They don't want to have to be caught spiking rates,
2:38
Speaker 3: which was their experience over the past four years. They
2:41
Speaker 3: want to be sort of in control of this conversation.
2:44
Speaker 3: But at the back of Powell's mind is, yes, I'm
2:46
Speaker 3: going to give you some rate cuts, but I may
2:49
Speaker 3: not give you the amount that you want because I'm
2:51
Speaker 3: still worried about inflation. Yes, inflation's in the two range.
2:55
Speaker 3: I'm very happy about that. Speaking as of Powell, but
2:58
Speaker 3: my concern is that I lose control of this credibility
3:02
Speaker 3: that I've hard works so hard to get back. I'm
3:05
Speaker 3: seeing a lot of softness and one thing between Chipotle
3:08
Speaker 3: and McDonald's, and I've seen surveys on this. If I
3:11
Speaker 3: go to Chipotle for ten dollars, I can get two meals.
3:14
Speaker 3: If I go to McDonald's with ten dollars, I'm getting
3:16
Speaker 3: one meal. So there is a reason why Chappoli's doing well.
3:19
Speaker 3: The consumer is still approaching both restaurants with the same
3:23
Speaker 3: sort of budget value type seeking mentality. And to me,
3:27
Speaker 3: the economy is softening, and I'm seeing that across the board.
3:30
Speaker 3: The only thing that's strong for the economy that I
3:31
Speaker 3: see is the hiringcome consumer, the baby boomer, most baby boomers,
3:37
Speaker 3: anything associated with the government and AI and I'm seeing
3:40
Speaker 3: weakness across the board elsewhere.
3:43
Speaker 1: All Right, So a couple of points that he hit
3:45
Speaker 1: on there, and just in comparison, because I think a
3:50
Speaker 1: lot of people would look at this and still say
3:52
Speaker 1: that the market is not necessarily responding well to where
3:55
Speaker 1: inflation is going. If you look at McDonald's. What he
3:58
Speaker 1: was referring to here is is same store sales growth.
4:01
Speaker 1: And this is a big one because it's turned negative
4:03
Speaker 1: for the first time since twenty twenty, really a first
4:07
Speaker 1: time prior to that, because that was, of course dealing
4:10
Speaker 1: with a pandemic. This is this is an impact issue.
4:15
Speaker 1: I think that will affect consumers in a big way.
4:16
Speaker 1: And I think this is also going to a point
4:18
Speaker 1: where companies are kind of in a position now where
4:21
Speaker 1: they're simply saying, hey, we cannot get there again in
4:24
Speaker 1: terms of dealing with these continued pushdowns on our consumer
4:28
Speaker 1: because it's basically destroying our business, especially if you look
4:31
Speaker 1: at McDonald's, which has been one of the most profitable
4:33
Speaker 1: businesses ever. I think this is a much more impact.
4:38
Speaker 1: So whether or not share Palell is considering these implications,
4:41
Speaker 1: because this could continue to push the market into a
4:44
Speaker 1: potential recession, and I think that would be a problem
4:48
Speaker 1: because trying to pull yourself out from it. We will
4:50
Speaker 1: be airing this live when he goes in front of
4:52
Speaker 1: the press corps and we'll go from them. So Microsoft
4:57
Speaker 1: down seven percent right now after earnings that some of
5:00
Speaker 1: this came over from the CrowdStrike issue, but one hundred
5:03
Speaker 1: billion wiped out in market cap in seconds, So again
5:08
Speaker 1: more indicators that this is much more systemic in terms
5:12
Speaker 1: of where the break is. If you look at just
5:14
Speaker 1: what trueflation is showing, I mean, this looks like a
5:17
Speaker 1: crazy all coin chart going just down, down, down, and
5:21
Speaker 1: we're phasing in. What we're about to do is crack
5:24
Speaker 1: one five, maybe for the first time in a long time.
5:27
Speaker 1: And if we crack one five now we are in
5:29
Speaker 1: a position right now where the government obviously is reporting
5:32
Speaker 1: in around three percent. I think we're in a position
5:35
Speaker 1: of maybe a point of no return, getting into a
5:38
Speaker 1: scenario where we continue to see lacked more and more
5:42
Speaker 1: lack of confidence by the consumer. And that's the concern
5:44
Speaker 1: I think that everybody is looking at right now, make
5:48
Speaker 1: sure and put some questions in over on the side
5:50
Speaker 1: and smash the like button. We're trying to get to
5:52
Speaker 1: the top of the streams with the FOMC meeting, So
5:56
Speaker 1: hit that like button. It does help. Do you like
5:58
Speaker 1: these live streams? If you do, also hit that like butndon,
6:01
Speaker 1: let us know that you do like us to do these,
6:04
Speaker 1: because sometimes I always wonder about the audience whether or
6:06
Speaker 1: not you like, you know, one the recast and then
6:09
Speaker 1: too some of the commentary after or during to kind
6:12
Speaker 1: of give our opinion on how things might look. So
6:15
Speaker 1: just let us know. Here's some comments, we'll take some
6:17
Speaker 1: questions or we'll try to toward the end. So drop
6:20
Speaker 1: some of those in and make it some of those
6:21
Speaker 1: even four chair pal comes on. According to the US
6:23
Speaker 1: Census Bureau, Media and Alcho, income now twenty twenty two
6:27
Speaker 1: was seventy four upper the To rese the upper class
6:30
Speaker 1: in twenty four, you typically need to earn an income
6:32
Speaker 1: of one hundred and fifty three, So quite a bit
6:35
Speaker 1: of difference here in terms of the amount that of
6:37
Speaker 1: course relates to one thing, and that is the value
6:41
Speaker 1: of the US dollar. This is something that we've talked
6:42
Speaker 1: about here on the show quite a bit. The only
6:44
Speaker 1: way you beat this is, in my opinion, is still
6:47
Speaker 1: with digital assets. So it's the only appreciating asset out
6:50
Speaker 1: there that can keep pace with what we're dealing with
6:53
Speaker 1: other things. Investors are reacting to the Bank of Japan's
6:55
Speaker 1: interest rate hike, which is another factor that plays into
6:59
Speaker 1: this on the globe stage, and I would agree that
7:02
Speaker 1: there's a few points here. BOJ says raising its short
7:05
Speaker 1: term interest now out of a quarter will gradually reduce
7:08
Speaker 1: that amount as bonds and buying under a quantitative easing program.
7:12
Speaker 1: Still point of a little bit of pressure over there,
7:15
Speaker 1: because this must be one of Boj's most hawkish moves,
7:19
Speaker 1: given how lois set to the standard. So the rate
7:21
Speaker 1: hike itself was well telegraphed though, so that meaning simply
7:25
Speaker 1: that we're starting to see a lot more things put
7:28
Speaker 1: pressure on economies globally, including what we've seen in China.
7:32
Speaker 1: What we'll see and continue to I think in Europe
7:35
Speaker 1: and then now here in the US. So Palell has
7:39
Speaker 1: a very interesting tight rope to walk here because if
7:43
Speaker 1: he goes too long without a rape cut, the potential
7:47
Speaker 1: here for irreparable damage to what we have as an
7:50
Speaker 1: economy could be a big issue going forward. Here's robld
7:54
Speaker 1: Paell talking about this. Contrary to popular opinions on X,
7:58
Speaker 1: the last two times the BOJ purposefully strengthen the yen.
8:01
Speaker 1: This was sixteen to twenty two. Risk assets took off
8:05
Speaker 1: as a weaker dollar and BOJ intervention are easing of
8:09
Speaker 1: financial conditions and a net injection of liquidity. It also
8:12
Speaker 1: helps China, we'll see. So I think that's the point.
8:16
Speaker 1: There are some factors that we'll play into this. There's
8:18
Speaker 1: another analysis that I think is one to kind of
8:22
Speaker 1: take a look at here. This is Julian Emmanuel who's
8:26
Speaker 1: the senior director of Derivatives, and he breaks down some
8:30
Speaker 1: things here because there is a bit of a warning
8:32
Speaker 1: of what he's looking at on you know, price elasticity.
8:36
Speaker 4: Take a look p ANDNG slower price increases, Kimberly Clark
8:40
Speaker 4: slowing price increases. McDonald's first sales slight since twenty twenty,
8:43
Speaker 4: PEPSI consumers more challenged, nest slate value seeking behavior. We
8:47
Speaker 4: heard from Stompbucks overnight as well.
8:49
Speaker 2: Not great.
8:50
Speaker 4: I FA all of this sort of parting gup. The
8:52
Speaker 4: consumer's not great. It's not great. We're losing price in power,
8:54
Speaker 4: We're losing price in pac can't put prices up anymore,
8:56
Speaker 4: sales it down. What does that mean for the cycre
8:58
Speaker 4: calls for everyone sort of changing into small caps and
9:01
Speaker 4: bind the rest of the market.
9:02
Speaker 5: So again you have to differentiate. And part of the
9:06
Speaker 5: beauty of the market in twenty twenty four is that
9:09
Speaker 5: correlations on a stock basis are so incredibly low that
9:13
Speaker 5: it really is a market of stocks and less a
9:16
Speaker 5: stock market. And what I would say there is think
9:20
Speaker 5: about it. We've been gnashing our teeth for a year.
9:23
Speaker 5: We need broader participation.
9:25
Speaker 2: We need the.
9:26
Speaker 6: Rest of the stocks to catch up to.
9:28
Speaker 7: The mag seven.
9:29
Speaker 5: Hello, We've got it in the month of July. And
9:32
Speaker 5: now everyone's freaked out because part of the story is
9:36
Speaker 5: the give back in the larger tech stocks. In our view,
9:41
Speaker 5: the path to six thousand is likely going to be
9:45
Speaker 5: what you saw in twenty sixteen, what you saw coming
9:48
Speaker 5: out of the first downturn of the technology age, the
9:53
Speaker 5: Internet age in nineteen ninety six, all of.
9:56
Speaker 8: These stocks are going to participate in our view, alright.
10:00
Speaker 1: So his point here was that he wants everyone to
10:04
Speaker 1: kind of state fully invested, and if he fails to
10:06
Speaker 1: explain the derivatives speculation in small caps while megacaps of
10:11
Speaker 1: course sell off. And this is something we've seen. So
10:14
Speaker 1: megacaps starts to move, small comps are on the move,
10:16
Speaker 1: but this usually finishes right before an economic cycle starts
10:20
Speaker 1: to hit. And this means potentially a retracement. I won't
10:23
Speaker 1: say the word that financial lots saying there, but it
10:27
Speaker 1: could happen. We could see a retracement here in a
10:30
Speaker 1: big way. If you look at what's happening over on plymarket.
10:34
Speaker 1: I love this site. We've been just seeing so much
10:36
Speaker 1: interesting stuff here. And what's interesting about it is it's
10:40
Speaker 1: pretty darn close in terms of its predictability. So September eighteenth,
10:46
Speaker 1: there you have an eighty six percent chance we possibly
10:48
Speaker 1: see the raycut. November definitely much higher, and even December
10:54
Speaker 1: yet even higher. So I think clearly we've got a
10:57
Speaker 1: scenario playing out for chair Pale that he may be
11:00
Speaker 1: a little bit stickier to September or Willie, because remember
11:05
Speaker 1: we're still looking at data coming in both on CPI
11:07
Speaker 1: jobs numbers later this week. All of that could have
11:10
Speaker 1: a big factor. We are going to be jumping to
11:12
Speaker 1: chair Pal here in a minute. He comes on at
11:14
Speaker 1: two thirty. Normally he's pretty much on time, so that's
11:18
Speaker 1: just a few more minutes to get rolling here. Interest
11:22
Speaker 1: rates September. You can kind of see people, well, could
11:26
Speaker 1: it happen? Right there is a fifty basis point and
11:29
Speaker 1: a quarter basis point quarterbyss point of course leading the
11:33
Speaker 1: way right now on polymarket, and we continue to see
11:37
Speaker 1: and we'll see I think a lot of more data.
11:40
Speaker 1: That of course is the number one thing that Chairpal
11:42
Speaker 1: calls for all the time, is I need more data.
11:45
Speaker 1: I need more data. It was going to get jobs data.
11:47
Speaker 1: He's going to see some more CPI data. I think
11:50
Speaker 1: as we start to see the CPI start to flow
11:52
Speaker 1: in in August, this will be a big factor of
11:55
Speaker 1: playing into the September decision, which is going to be
11:58
Speaker 1: and could be a big one. The other thing that
12:00
Speaker 1: factors into this, and I kind of wonder how close
12:03
Speaker 1: this is going to align with the election, because you've
12:06
Speaker 1: got November coming up, and October is a typical month
12:10
Speaker 1: where we see a lot of commitment of voters. Obviously
12:13
Speaker 1: most of the mail end will be done and we'll
12:15
Speaker 1: have an idea of where these candidates stand. And of
12:18
Speaker 1: course with that we see a lot of position around crypto,
12:21
Speaker 1: so all of that definitely coming in. We are going
12:24
Speaker 1: to be jumping over there. Make sure and drop a
12:26
Speaker 1: few questions in or in side. We'll try to get
12:28
Speaker 1: to those. Make sure and smash the like if you
12:30
Speaker 1: do like these live streams, because this is one of
12:33
Speaker 1: the places where we give you guys a chance to
12:35
Speaker 1: get back into the conversation. We love that here on
12:39
Speaker 1: the community and of course hopefully this is one of
12:41
Speaker 1: those things that will continue to give you guys insights
12:45
Speaker 1: on your own strategies, how you're moving forward. One thing
12:48
Speaker 1: to be aware of, and this is more bullish I
12:51
Speaker 1: think for digital assets in general. Just in Tether reports
12:56
Speaker 1: record breaking profits five point two billion, that's right billion
13:00
Speaker 1: for the first half of twenty twenty four. Man, this
13:02
Speaker 1: is just like a money printer over there. And then
13:05
Speaker 1: if you look at just be out back stable cooin
13:08
Speaker 1: market as a whole, we are nearing it looks like
13:12
Speaker 1: Cheryl o'palell is coming on busy maybe here in a second.
13:16
Speaker 1: But we are nearing our highest point of stable coin
13:20
Speaker 1: participation ever, so this could be pretty big.
13:24
Speaker 2: Here.
13:24
Speaker 1: Look curious, I think it's coming on. Now here we go,
13:26
Speaker 1: Let's just take a look.
13:32
Speaker 9: Good afternoon, My colleagues and I remain squarely focused on
13:36
Speaker 9: achieving our dual mandate goals of maximum employment and stable
13:40
Speaker 9: prices for the benefit of the American people. Our economy
13:44
Speaker 9: has made considerable progress toward both goals over the past
13:47
Speaker 9: two years. The labor market has come into better balance
13:51
Speaker 9: and the unemployment rate remains low. Inflation has eased substantially
13:56
Speaker 9: from a peak of seven percent to two point five percent.
14:00
Speaker 9: We are strongly committed to returning inflation to our two
14:02
Speaker 9: percent goal in support of a strong economy that benefits everyone. Today,
14:09
Speaker 9: the FMC decided to leave our policy interest rate unchanged
14:13
Speaker 9: and to continue to reduce our securities holdings. We are
14:16
Speaker 9: maintaining our restrictive stance of monetary policy in order to
14:20
Speaker 9: keep demand in line with supply and reduce inflationary pressures.
14:25
Speaker 9: We are attentive to risks on both sides of our
14:27
Speaker 9: dual mandate and I will have more to say about
14:29
Speaker 9: monetary policy. After briefly reviewing economic developments, recent indicators suggest
14:36
Speaker 9: that economic activity has continued to expand at a solid pace.
14:40
Speaker 9: GDP growth moderated to two point one percent in the
14:44
Speaker 9: first half of the year, down from three point one
14:46
Speaker 9: percent last year. Private domestic final purchases or PDFP, which
14:52
Speaker 9: excludes inventory investment, government spending, and net exports and usually
14:56
Speaker 9: sends a clearer signal of underlying demand, grew at a
14:59
Speaker 9: two point point six percent pace over that same period.
15:02
Speaker 9: The first half growth of consumer spending has slowed from
15:06
Speaker 9: last year's robust pace but remains solid. Investment in equipment
15:10
Speaker 9: and intangibles has picked up from its anemic pace last year.
15:14
Speaker 9: In the housing sector, investment stalled in the second quarter
15:18
Speaker 9: after a strong rise in the first. Improving supply conditions
15:22
Speaker 9: have supported resilient demand and the strong performance of the
15:25
Speaker 9: US economy over the past year. In the labor market,
15:30
Speaker 9: supply and demand conditions have come into better balance. Payroll
15:34
Speaker 9: job gains average one hundred and seventy seven thousand jobs
15:37
Speaker 9: per month in the second quarter, a solid pace but
15:40
Speaker 9: below that scene in the first quarter. The unemployment rate
15:44
Speaker 9: has moved up but remains low at four point one percent.
15:49
Speaker 9: Strong job creation over the past couple of years has
15:52
Speaker 9: been accompanied by an increase in the supply of workers,
15:55
Speaker 9: reflecting increases in participation among individual individuals aged twenty five
16:00
Speaker 9: to fifty four years and a strong pace of immigration.
16:05
Speaker 9: Nominal wage growth has eased over the past year, and
16:08
Speaker 9: the jobs to workers gap has narrowed. Overall, a broad
16:12
Speaker 9: set of indicators suggest that conditions in the labor market
16:15
Speaker 9: have returned to about where they stood on the eve
16:18
Speaker 9: of the pandemic. Strong, but not overheated, inflation has eased
16:24
Speaker 9: notably over the past two years, but remains somewhat above
16:28
Speaker 9: our longer run goal of two percent. Total PCEE prices
16:33
Speaker 9: rose two point five percent over the twelve months ending
16:35
Speaker 9: in June. Excluding the volatile food and energy categories. Core
16:39
Speaker 9: PCEE prices rose two point six percent. Longer term inflation
16:43
Speaker 9: expectations appear to remain well anchored, as reflected in a
16:47
Speaker 9: broad range of surveys of households and businesses and forecasters,
16:52
Speaker 9: as well as measures from financial markets. My colleagues and
16:56
Speaker 9: I are acutely aware that high inflation imposes significant hardship
17:00
Speaker 9: as it erodes purchasing power, especially for those least able
17:04
Speaker 9: to meet the higher costs of essentials like food, housing,
17:07
Speaker 9: and transportation. Our monetary policy actions are guided by our
17:12
Speaker 9: dual mandate to promote maximum employment and stable prices for
17:15
Speaker 9: the American people. In support of these goals, the Committee
17:18
Speaker 9: decided at today's meeting to maintain the target range for
17:21
Speaker 9: the Federal funds rate at five and a quarter to
17:24
Speaker 9: five and a half percent, and to continue reducing our
17:27
Speaker 9: securities holdings. As the labor market has cooled, inflation has declined,
17:32
Speaker 9: the risks to achieving our employment and inflation goals continue
17:36
Speaker 9: to move into better balance. Indeed, we are attentive to
17:39
Speaker 9: the risks to both sides of our dual mandate. We
17:43
Speaker 9: have stated the appropriate to reduce the target range for
17:46
Speaker 9: the federal funds rate until we have gained greater confidence
17:49
Speaker 9: that inflation is moving sustainably toward two percent. The second
17:54
Speaker 9: quarter's inflation readings have added to our confidence, and more
17:57
Speaker 9: good data would further strengthen that confidence. We will continue
18:01
Speaker 9: to make our decisions meeting by meeting. We know that
18:04
Speaker 9: reducing policy restraint too soon or too much could result
18:07
Speaker 9: in a reversal of the progress we have seen on inflation.
18:11
Speaker 9: At the same time, reducing policy restraint too late or
18:14
Speaker 9: too little could unduly weaken economic activity and employment. In
18:19
Speaker 9: considering any adjustments to the target range for the Federal
18:22
Speaker 9: funds rate, the Committee will carefully assess incoming data, the
18:25
Speaker 9: evolving outlook, and the balance of risks. As the economy evolves,
18:31
Speaker 9: monetary policy will adjust in order to best promote our
18:34
Speaker 9: maximum employment and price stability goals. If the economy remains
18:39
Speaker 9: solid and inflation persists, we can maintain the current target
18:43
Speaker 9: range for the federal funds rate as long as appropriate.
18:46
Speaker 9: If the labor market were too weaken unexpectedly, or inflation
18:49
Speaker 9: were to fall more quickly than anticipated, we are prepared
18:52
Speaker 9: to respond. Policy is well positioned to deal with the
18:56
Speaker 9: risks and uncertainties that we face in pursuing both sides
18:59
Speaker 9: of our dual Manday eight. The Fed has been assigned
19:02
Speaker 9: two goals for monetary policy, maximum employment and stable prices.
19:07
Speaker 9: We remain committed to bringing inflation back down to our
19:09
Speaker 9: two percent goal and to keeping longer term inflation expectations
19:13
Speaker 9: well anchored. Restoring price stability is essential to achieving maximum
19:18
Speaker 9: employment and stable prices. Over the longer run. Our success
19:23
Speaker 9: in delivering on these goals matters to all Americans. We
19:27
Speaker 9: understand that our actions affect communities, families, and businesses across
19:31
Speaker 9: the country. Everything we do is in service to our
19:34
Speaker 9: public mission.
19:36
Speaker 2: We get the FED.
19:36
Speaker 9: We'll do everything we can to achieve our maximum employment
19:39
Speaker 9: and price stability goals.
19:41
Speaker 2: Thank you. I look forward to your questions.
19:48
Speaker 1: All right, so I mean he's making all.
19:51
Speaker 10: Thanks for taking our questions. Can pretty much entirely expect
19:55
Speaker 10: a rate cut in September. At this stage, I wonder
19:58
Speaker 10: if you think that's a reasonable expect and if so,
20:01
Speaker 10: why not just make the move today?
20:04
Speaker 2: Thank you? So on September.
20:07
Speaker 9: Let me say this week we have made no decisions
20:10
Speaker 9: about future meetings, and that includes a September meeting. The
20:13
Speaker 9: broad sense of the Committee is that the economy is
20:16
Speaker 9: moving closer to the point at which it will be
20:18
Speaker 9: appropriate to reduce our policy rate. In that we will
20:22
Speaker 9: be data dependent, but not data point dependent, so it
20:25
Speaker 9: will not be a question of responding specifically to one
20:28
Speaker 9: or two data releases. The question will be whether the
20:32
Speaker 9: totality of the data the evolving outlook in the balance
20:35
Speaker 9: of risks are consistent with rising confidence on inflation and
20:39
Speaker 9: maintaining a solid labor market. If that test is met,
20:42
Speaker 9: a reduction in our policy rate could be on the
20:45
Speaker 9: table as soon as the next meeting in September. So
20:49
Speaker 9: you asked that why not today, And I would just
20:51
Speaker 9: say again that the broad sense of the committee is
20:54
Speaker 9: that we're closer to the point at which will be
20:56
Speaker 9: appropriate to reduce our policy rate, but that we're not
20:59
Speaker 9: quite at that point yet.
21:02
Speaker 1: Not quiet interesting, So I mean that does mean I think,
21:06
Speaker 1: with the consideration of this, how this may play out.
21:11
Speaker 1: Let's go to this next.
21:11
Speaker 11: Question between now in September. Would you regard it cut
21:14
Speaker 11: in September as sort of the baseline scenario right now?
21:19
Speaker 2: So I guess I would. I would think about it
21:20
Speaker 2: this way.
21:22
Speaker 9: I'll give an example of cases in which it would
21:25
Speaker 9: be appropriate to cut, and maybe that it wouldn't be
21:27
Speaker 9: appropriate to cut. So if we were to see, for example,
21:32
Speaker 9: inflation moving down quickly or more or less in line
21:36
Speaker 9: with expectations, growth remains let's say, reasonably strong, and the
21:43
Speaker 9: labor market remains consistent with its current condition, then I
21:47
Speaker 9: would think that a rate cut could be on.
21:50
Speaker 2: The table at the September meeting.
21:53
Speaker 9: If inflation were to prove stickier and we were to
21:56
Speaker 9: see higher readings from inflation disappointing readings, we would weigh
21:59
Speaker 9: that along with the other things. You know, I think
22:02
Speaker 9: it's going to be not just any one thing. It's
22:04
Speaker 9: going to be the inflation data. It's going to be
22:06
Speaker 9: the employment data, it's going to be the balance of
22:10
Speaker 9: risks as we see it. It's going to be the
22:12
Speaker 9: totality of all of that that help us.
22:15
Speaker 2: Make this decision.
22:16
Speaker 11: And just to follow up on that specifically, in what
22:19
Speaker 11: ways right now, given all you've seen over the last
22:21
Speaker 11: few months, in particular on shelter, on services, et cetera,
22:25
Speaker 11: in what ways are you not confident right now that
22:28
Speaker 11: inflation is on the way back to two percent.
22:30
Speaker 2: I think it's just a question of seeing more good data.
22:32
Speaker 2: We have seen.
22:33
Speaker 9: The last couple of readings have certainly added to confidence,
22:36
Speaker 9: and we've seen progress across all three categories of core
22:41
Speaker 9: PCE inflation that's good non housing services and housing services.
22:44
Speaker 9: So it's really just, you know, we had a quarter
22:48
Speaker 9: of poor inflation data at the beginning of the year,
22:50
Speaker 9: then we saw some more good inflation data. We had
22:53
Speaker 9: seven months at the end of last year, you know,
22:55
Speaker 9: we just want to see more and gain confidence. And
22:58
Speaker 9: as I said, we have we did gain confidence, and
23:01
Speaker 9: more good data would cause us to gain more confidence.
23:06
Speaker 2: Holby, thank you.
23:10
Speaker 4: Last the Financial Times bolish than I thought it might.
23:13
Speaker 12: You pointed to three cuts in twenty twenty four with
23:15
Speaker 12: core infleetion at two point six percent and the unemployment
23:17
Speaker 12: rate at four percent. Since we're now at that level
23:20
Speaker 12: in terms of inflation and already beyond what was projected
23:23
Speaker 12: for the labor market, I'm just wondering if that rate
23:25
Speaker 12: path is back to being the best guidepost for policy
23:28
Speaker 12: rather than let's say, the shallower one laid out in
23:30
Speaker 12: the gene sp.
23:33
Speaker 2: You know.
23:33
Speaker 9: So I would just say, really, the path ahead is
23:37
Speaker 9: going to depend on the way the economy evolves, and
23:41
Speaker 9: I can't really give you any better forward guidance on
23:44
Speaker 9: it than that. We didn't, of course do an sep
23:46
Speaker 9: at this meeting. We will do another one at the
23:48
Speaker 9: September meeting. I would just say, I can imagine the
23:52
Speaker 9: scenario in which there would be everywhere from zero cuts
23:56
Speaker 9: to several cuts, depending on the way the economy evolve,
24:00
Speaker 9: and I wouldn't want to lay out a baseline path
24:03
Speaker 9: for you there today. I've said what I can say
24:07
Speaker 9: about September and about today.
24:08
Speaker 13: Though, Nick Timorro to the Wall Street Journal, Cher Powell,
24:18
Speaker 13: you've said before that you wouldn't wait until inflation got
24:20
Speaker 13: to two percent to cut rates because of how inflation
24:23
Speaker 13: is lagged. Does that apply for the labor market too.
24:27
Speaker 13: If the labor market is back in equilibrium, why is
24:30
Speaker 13: restrictive policy and potentially very restrictive policy given the high
24:34
Speaker 13: real funds rate warranted right now?
24:39
Speaker 9: So this is the very reason that we're thinking about
24:42
Speaker 9: about You know that we've said in our statement that
24:46
Speaker 9: we're going back to looking at both mandates and that
24:49
Speaker 9: we think the risks are coming back into balance.
24:51
Speaker 2: We think what the data broadly.
24:53
Speaker 9: Show in the labor market is an ongoing gradual normalization
24:56
Speaker 9: of labor market conditions, and that's what we want to see.
24:59
Speaker 2: You know, we've seen that period a couple.
25:00
Speaker 9: Of years and a move really from overheated conditions to
25:04
Speaker 9: more normal conditions. We are watching the labor labor market
25:08
Speaker 9: conditions quite closely.
25:10
Speaker 2: And that's what we're seeing.
25:12
Speaker 9: If we if we start to see something that looks
25:14
Speaker 9: to be more than that, then we're well positioned to
25:16
Speaker 9: respond that's that's part of what we're thinking.
25:20
Speaker 13: And when you talk about.
25:21
Speaker 1: Us going and react a little bit here to these
25:24
Speaker 1: comments from Chair Powell would seem to be a bit
25:26
Speaker 1: more dubbish going forward. Looks like a rake cut could
25:29
Speaker 1: be in the cards much more strongly for September. Let
25:32
Speaker 1: me go back to the.
25:33
Speaker 6: Better news on inflation. I wonder how that cuts the
25:36
Speaker 6: other way. If you're seeing more softness in the labor
25:39
Speaker 6: market than what you would expect, does that change the
25:43
Speaker 6: calculus on what you're looking for out of the inflation numbers?
25:47
Speaker 6: To recalibrate, paulicy.
25:49
Speaker 2: So we have growth isn't one of our three.
25:52
Speaker 9: We have two mandates, as you know, the labor market
25:55
Speaker 9: maximum employment is one and stable prices in another. So
25:58
Speaker 9: we weigh you know, those two things equally under the law.
26:02
Speaker 9: When we were far away from our inflation mandate, we
26:05
Speaker 9: had to focus on that. Now we're back to a
26:07
Speaker 9: closer to even focus. So we'll be looking at labor
26:10
Speaker 9: market conditions and asking whether we're getting what we're seeing,
26:13
Speaker 9: and as I said, we're prepared to respond if we
26:15
Speaker 9: see it's that it's not what we wanted to see,
26:18
Speaker 9: which was you know, a gradual normalization of conditions if
26:21
Speaker 9: we see more than that, and it wouldn't be any
26:23
Speaker 9: one statistic, although of course the unemployment rate is generally
26:26
Speaker 9: thought to be a single a good single statistic. But
26:30
Speaker 9: we'd be looking at wages, we'd be looking at participation,
26:33
Speaker 9: we'd be looking at all the things surveys, quits, hires,
26:37
Speaker 9: all of those things to determine the overall status of
26:39
Speaker 9: the labor market.
26:40
Speaker 2: But we're looking at it now.
26:42
Speaker 9: I would say again, I think you're back to conditions
26:45
Speaker 9: that are close to twenty nineteen conditions, and that was
26:49
Speaker 9: not an inflationary economy broadly similar labor markets, then I
26:53
Speaker 9: think inflation was actually core. Inflation is actually running below
26:56
Speaker 9: two percent, So we don't think I don't now think
26:58
Speaker 9: of the labor market in it's current state as a
27:02
Speaker 9: likely source of significant inflationary pressures. So I would not
27:08
Speaker 9: like to see material further cooling in the labor market,
27:12
Speaker 9: And that's part of what's behind our thinking. The other part,
27:14
Speaker 9: of course, is that we have made real progress on inflation,
27:18
Speaker 9: and we've got growing confidence there that we are not
27:22
Speaker 9: quite there yet, but we're going more confident that we're
27:25
Speaker 9: on a sustainable path down to two percent. So those
27:28
Speaker 9: two things are working together, and we're factoring those both
27:31
Speaker 9: into our policy.
27:33
Speaker 1: I mean, come on, that's as clear as it could be.
27:35
Speaker 1: He's saying we are on the path that these cuts
27:37
Speaker 1: it's going to happen. This is the pivot zone.
27:40
Speaker 2: Not wanting to.
27:40
Speaker 8: See any further cooling in the job market?
27:43
Speaker 2: Why not?
27:45
Speaker 8: Or would you consider preemptive cuts to prevent if you
27:48
Speaker 8: saw risks of an unexpected cooling? Is that something you
27:51
Speaker 8: would cut ahead of time for.
27:52
Speaker 9: So I wouldn't say I wouldn't want to see any
27:56
Speaker 9: other cooling. It would be more of a material difference.
27:59
Speaker 9: If we we'd be looking at this and if we
28:01
Speaker 9: see something that looks like a more significant downturn, that
28:04
Speaker 9: that's that would be something that we would we you know,
28:07
Speaker 9: we would have the intention of responding to. So in
28:12
Speaker 9: terms of I don't think of it that way. I
28:15
Speaker 9: think of it as you know, we're we're actually in
28:17
Speaker 9: a good place here. We're balancing these two risks of
28:20
Speaker 9: you know, go too soon and you undermine progress on inflation,
28:24
Speaker 9: wait too long or don't go fast enough and you
28:28
Speaker 9: put at risk the recovery. And so we have to
28:31
Speaker 9: balance those two things that's the nature of having two mandates,
28:34
Speaker 9: and I think we this is how we balance them.
28:37
Speaker 9: It's a rough balance, but you know, it does feel
28:40
Speaker 9: like that. Again, the labor market feels like it's in
28:41
Speaker 9: a place where it's it's just a process of ongoing normalization.
28:45
Speaker 9: Four point one percent unemployment is still historically low, and
28:51
Speaker 9: you know, we'll just have to see what the data
28:52
Speaker 9: show us.
28:54
Speaker 8: And just to phone quickly, I wanted to see what
28:56
Speaker 8: you thought of the recent Jolts report, which did show
28:59
Speaker 8: hiring grows high, has come down even below twenty nineteen levels,
29:03
Speaker 8: layoffs remain low. So it painted a picture of very
29:07
Speaker 8: statically remarked. Is that sustainable in your view or something
29:11
Speaker 8: that is worrying?
29:12
Speaker 2: Thank you?
29:13
Speaker 9: So I think all of the data points continue to
29:15
Speaker 9: point to kind of the direction we would want to see.
29:17
Speaker 2: So that was taken.
29:18
Speaker 9: As you know, there was a decline in job openings,
29:22
Speaker 9: that was good. Today's ECI reading was a little softer
29:26
Speaker 9: than expected, so that's that's a good reading. It shows
29:30
Speaker 9: that wage increases are still at a strong level, but
29:33
Speaker 9: that that level continues to come down to more sustainable
29:36
Speaker 9: levels over time.
29:37
Speaker 2: That's exactly the pattern that we want to be seeing.
29:40
Speaker 9: So I think the data we've been seeing in the
29:42
Speaker 9: labor market are broadly consistent with that normalization process. Again,
29:46
Speaker 9: were closely monitoring to see whether it starts to show
29:50
Speaker 9: signs that it's more than that.
29:53
Speaker 2: See Steve Lee spin CNBC, mister chairman.
29:59
Speaker 7: Back in mar you talked about cutting rates as a process,
30:02
Speaker 7: and in June you talked about the idea that well,
30:05
Speaker 7: one rate cut wouldn't do anything. So I wonder if
30:07
Speaker 7: you can try to fought in Kobe's question, talk about
30:13
Speaker 7: are you weighing the economy right now in terms of
30:17
Speaker 7: its ability to withstand multiple rate cuts? Talk us through
30:20
Speaker 7: the process that you're thinking or is it just one
30:23
Speaker 7: rate cut? Or are you in the process now I'm
30:24
Speaker 7: thinking that rates need to be normalized here, thank you.
30:29
Speaker 9: Yeah, I can't really say that honestly. You know, we're
30:33
Speaker 9: we we've seen, you know, significant movement in the labor market,
30:37
Speaker 9: and you know, we're very mindful of this question of
30:40
Speaker 9: is it just normalization or is it more We think
30:42
Speaker 9: it's just moral normalization, but we want to be in
30:45
Speaker 9: a position to support the labor market. At the same time,
30:47
Speaker 9: we're seeing progress on inflation, so you know, we actually
30:51
Speaker 9: got to this. We raised rates a year ago at
30:55
Speaker 9: the July meeting, and if you look at the situation
30:57
Speaker 9: in the economy, a year ago, employment sorry, inflation was
31:02
Speaker 9: over four percent. It was a completely different economy. Now
31:05
Speaker 9: we've made a lot of progress in the labor market,
31:07
Speaker 9: as I think, you know, unemployment was in the threes,
31:10
Speaker 9: mid threes. So it's a different economy, and I think
31:14
Speaker 9: it's time. It's coming to be time to adjust that
31:17
Speaker 9: so that we support this continued process. The thing we're
31:21
Speaker 9: trying to do is you know that we have we've
31:25
Speaker 9: had this really significant decline in inflation and unemployment has
31:30
Speaker 9: remained low, and this is a really unusual and historically
31:35
Speaker 9: historically unusual and such a welcome outcome for the people
31:37
Speaker 9: we serve. What we're thinking about all the time is
31:40
Speaker 9: how do we keep this going? And this is this
31:42
Speaker 9: is part of that. We think we don't need to
31:45
Speaker 9: be one hundred percent focused on inflation because of the
31:48
Speaker 9: progress we've made. A twelve month headline at two and
31:51
Speaker 9: a half, core at two point six, you know, it's
31:54
Speaker 9: way down from where it was. The job is not
31:56
Speaker 9: done on inflation, but nonetheless we can afford to be
32:00
Speaker 9: in to dial back the restriction in our policy rate,
32:03
Speaker 9: and I think we're just as part of a process
32:04
Speaker 9: in terms of what that looks like. I mean, I
32:07
Speaker 9: think most rate, you know, you would you would think
32:10
Speaker 9: in a base case that policy rates would move down
32:13
Speaker 9: from here. But I don't want to try to give specific,
32:17
Speaker 9: you know, forward guidance about when that might be because
32:19
Speaker 9: at the pace at which it might happen, because I
32:21
Speaker 9: think that's really going to depend on the economy and
32:23
Speaker 9: that's highly uncertain.
32:25
Speaker 1: So a couple of points that he's making there, and
32:28
Speaker 1: I want to interject here for a minute, just because
32:30
Speaker 1: he's kind of getting some of the same questions, But
32:32
Speaker 1: he hit on two major points. And he was talking
32:34
Speaker 1: about the data injection that they're talking about, and he's
32:37
Speaker 1: not necessarily looking for broader data, and he's not or
32:42
Speaker 1: I should say, he's looking for broader data and not
32:43
Speaker 1: necessarily a data point. So if we were to see
32:47
Speaker 1: a little bit of a move in labor or something
32:49
Speaker 1: else in maybe even in CPI, it doesn't appear that
32:53
Speaker 1: it's going to adjust their adjustment for September. I know
32:58
Speaker 1: that it's a right now he's saying September in the sense, yes,
33:01
Speaker 1: we're going to do it in September, but he's definitely
33:03
Speaker 1: alluding to the fact that September could be the thing
33:06
Speaker 1: in terms of a rake cut. And again, if you
33:08
Speaker 1: look at some of the true inflation data, I'm just
33:10
Speaker 1: going to go over to food and beverage real quick.
33:12
Speaker 1: Look at the fall off right here. This is the
33:14
Speaker 1: annual right here, that's food away from home. Basically, that's
33:17
Speaker 1: the restaurant industry, and I mean it has absolutely just
33:20
Speaker 1: cratered over the last sixty days. And those kinds of
33:24
Speaker 1: pressures coming from the economy shows the weakening spirit of
33:28
Speaker 1: the American consumer. And I think this is a thing
33:30
Speaker 1: that is most concerning to retailers, obviously, to businesses of
33:35
Speaker 1: all type, is seeing those kinds of erratic behaviors. The
33:38
Speaker 1: only thing really going up right now, I think was
33:41
Speaker 1: medical utilities. We're holding flat health right there, rising over
33:45
Speaker 1: the year. But if you look at household daily items
33:48
Speaker 1: all going down, obviously alcohol, tobacco, clothing going down. The
33:52
Speaker 1: point being is that we are seeing this slide. And
33:55
Speaker 1: I think what shar Powell he's trying to get to
33:57
Speaker 1: is that September is most likely going to see it.
33:59
Speaker 1: Whether we see a fifty basis points or quarter still
34:02
Speaker 1: up in the air, but I think he's got one
34:03
Speaker 1: more data set to come in. If CPI comes in
34:06
Speaker 1: soft meaning in a good position and would continue to
34:09
Speaker 1: see that downtrend, I think we're going to see the
34:11
Speaker 1: quarter in September. I want to go to the poll
34:14
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Speaker 1: If you look at the market right now with bitcoin,
34:45
Speaker 1: it has this is on the five minute chart, just
34:47
Speaker 1: showing some of the move. But remember this is a little
34:49
Speaker 1: bit of downtrend because right there in the beginning of
34:51
Speaker 1: his assessment, he simply said, hey, we're not cutting rates,
34:55
Speaker 1: and we don't know if we're going to cut rates,
34:56
Speaker 1: but then he started to loosen up a little bit,
34:58
Speaker 1: and I think the market is starting to read through
35:01
Speaker 1: the lines that they're really not much more than one
35:04
Speaker 1: or two data sets away from a retracement in this economy.
35:10
Speaker 1: The concern he has, and you can can tell it
35:12
Speaker 1: because he did mention a couple of times, is that
35:15
Speaker 1: we don't want to overpress this. Because we overpress this,
35:17
Speaker 1: we could push the economy into a tailspan. That's the
35:21
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35:24
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35:29
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