Well, the big question for everybody,
especially for Wall Street, is what
happens on September 17th.
>> So, uh, this is, as you know, kind of an
interesting, uh, uh, month because we've
got Jackson Hole and and then, uh, we've
got quite a few weeks of data to kind of
pull in. So, uh, so I'm I'm really I
think everybody's quite interested in
some of the maybe the prints that
happened in the last couple months and
kind of where where they go from here.
Um, so I'm I'm I'm like everybody. I I'm
I I think there was some fascinating
conversations at the last FOMC. As you
know, there were a couple of descents.
Uh I 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 um it it there's uncertainty
enough and I think they kind of cooled a
little bit on the higher side. But the
most recent couple weeks that we've been
talking to businesses in the district,
uh there seems to be a a burgeoning
optimism again that they've kind of
digested and and they've been agile
enough to try to work their way through
some of the new policies uh from the
administration and maybe going forward
uh maybe we'll see a little bit of
uptick. That said, I still believe
there's that the that the inflation
number uh is 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 it would be my view now. I 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 uh were on the committee
uh me included. But I I think the the
this PPI was interesting. That print was
interesting. But I I really believe that
that when we talk to uh a lot of our uh
uh a lot of folks in our district is
that if you 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 I I I think that the um
what's interesting to me uh Mike is is I
think the businesses learned a lot in
that 22 23 cycle with the supply chain
disruptions and I think a lot of them uh
really made new decisions with plan B's
and C's relative to where their goods
come from and I think they they might
not have prepared for tariffs but they
might have prepared themselves for other
supply shocks but it seems like they've
they've adapted a lot of their
businesses
from that experience. So, so I actually
think that the the agility that they
created from that experience uh is going
to get them through this next few
quarters.
>> Well, then it sounds uh again that maybe
you've moved toward the middle in terms
of whether you should hold rates or cut
rates.
>> Yeah. You know, it's it's really
fascinating. you you think about uh and
you have great experience in this when
you get to the policy table uh there
when when you're talking about it it it
everything's connected to uh the two the
dual mandate right and when inflation is
is is really ramping up you have a blunt
instrument and you act which is what we
did um now as you get closer to the the
optimum dual mandate numbers it actually
becomes more difficult to make decision
isions on the margin relative to where
that policy rate should go. Uh and so
that I think that's where you're seeing
a lot of the debate now is, you know,
where 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 what's what's being
inhibited in the economy from where our
policy rate is today. Uh and but I I
think we're on a good path. So, at this
point, uh it probably would be a mistake
for Chairman Pal on Friday to say
definitely we're going to cut as he did
last year.
>> Yeah. Yeah. I I I'm always uh can't wait
for that that speech. I think he he
keeps it close fest. I wouldn't frontr
run him even if I knew. But um I I think
that we've been doing so much work this
year uh around the framework around
around really getting into uh where how
we get this soft landing to 2% uh
without breaking anything. Uh so I I
think he has a lot of different
directions to go and I I think it'll be
a a very anticipated uh discussion.
>> Well, speaking of the framework, you're
about at that point where he's 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
were created in that 2020 uh uh pandemic
cycle. Uh and and I think it was very in
very instructive what what we did and
how we did it through 2020. Um that said
uh you know I think those learnings are
going to come out in the framework
discussion and and I think the the the
the thing I'm very interested in the
framework is this whole concept of 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 in even how we
communicate and transmit the activities
and actions of the FOMC.
>> 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 2020.
>> 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. Uh, does it really
matter? We talk about it a lot, but 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 19
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 19 that we have
at least some sense of of how we're
going to take and do our our work best
and then how are we going to transmit
and communicate it uh after we make the
decision. So I think it matters uh
because I think there's a consistency it
creates even though you got to have
agility as you as you're doing the work
to and and and how you're going to
communicate it after you decide. So I I
I I really do I'm 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 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
the 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, do why aren't we doing
more uh kind of transmitting future uh
crystal ball or or or um how are we how
are we interpreting the numbers to a
future uh event? uh you know the SCP and
the dot plot is maybe some of that uh
but I I don't hear a lot that we that we
don't talk enough uh or or express
ourselves enough. I think it's more
important where the American public is
concerned is they understand we do a
better job uh 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 in the role we have.
I have to ask you about the the latest
presidential tweets and uh the attack on
Lisa Cook, Governor Cook. Uh 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 economy. We don't even talk about
it." But you've got to be getting sick
of this.
>> No. Well, look, um I I I'm I'm a little
philosophical about the whole
conversation of Fed independence and and
where our role is uh in the uh American
economy. Um we're almost 250 years old
as a nation. I think there's uh
something to be said. We were built on
words and and and we continue to debate
those words uh legislatively and
judicially. uh whatever those whatever
friction we might have with other
branches of of the government. I think
great steel's tested by fire. So what we
can always be better we can always do
this better. But I think I think the
nature of independence uh and and I
think don't believe me believe other uh
nations that have central banks and
don't uh it seems to work but but uh but
I'm always open for the conversation of
how do we make it better. Well, do you
think uh the Fed has suffered a hit to
credibility by the constant attacks from
Washington?
>> Um I so I I think the credibility issue
is more in uh are we fulfilling our
responsibility and role around the
actions of of monetary policy and
monetary operations. And I think the the
the work we do on behalf of the American
people is very important to their
lifestyle and their living. Uh and um I
I I want to make sure that our
reputation stays strong around the
things that we're mandated to do by
Congress. Uh other than that, it there
there's a lot of noise outside of of
that dual mandate. Uh and look, you're
you you take this chair, you do this
job, and and uh people are going to have
opinions, and I 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 uh we have those conversations
several times a week. Uh they're they're
really the most important conversations.
What it helps us do is it creates a real
time uh experience and expression that I
can take to Washington at the FOMC
table. Uh and but I I don't think we can
uh communicate enough about the value
proposition of the Federal Reserve. Uh
and I think a lot of the things that we
do uh clearly the monetary policy thing
gets a lot of press and it gets a lot of
of of uh notoriety. It's the monetary
operations that we're we spend most of
our time doing. You know, safe and sound
banks, making sure payments get made uh
every day around the globe and making
sure that the research that we're doing
is a value added to to the people we
serve in the 10th district.
>> Well, do when you talk to people, do
they understand why you're not lowering
interest rates? Actually,
it's interesting. I 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 it because they have to.
I mean, I'm a former banker. Uh, you
have to risk manage the cycles of rates
to run your bank well and and and
profitably. uh it's it's the it's the
general public that we continue to try
to reach to to give them some sense of
what this dual mandate means to them. Uh
and and I think there's a little bit of
perfection in in the the healthy
friction between full employment and
stable prices. And and I I I actually
like that friction and and and it allows
us to kind of balance and rebalance what
we're doing on their behalf. And it's
100% on their behalf. uh if you reach
full employment and if you keep prices
stable, people can work and and and
thrive. And I I think that's an
important piece of what the Fed does.
>> Our uh last question has to follow up on
something we always asked Esther before
you took over. Uh predictions for the
Chiefs this year?
>> Oh man. Uh I they they look pretty good.
Uh I I love the management. I love their
focus. Uh I think their coaching is
amazing. Uh, I also follow the Nebraska
Corn Huskers. You know, hope springs
eternal when it comes to football
season, Mike. So, so where the Chiefs
and the Huskers are concerned, I I'm
very hopeful.