Asks if Fed was right to cut rates further in December.
David English
Lael Brainard
Fed made right call starting in August to focus on labor market (unemployment ticking up, tariff impact moderate). It was a finely balanced decision; many on committee will want to be on hold for a meeting or two.
Asks which holds more weight now: inflation or labor market.
Yvonne Man
Lael Brainard
Labor market is focal point for majority on FOMC. Unemployment at 4.6%; tomorrow's payrolls will be scrutinized.
Asks if a jump in unemployment would put a cut back in play.
David English
Lael Brainard
Yes, but so far data suggests labor market continues softening but is holding.
Asks about Fed losing inflation credibility after 5 years above 2%.
Yvonne Man
Lael Brainard
It's a risk management exercise. Before tariffs, core inflation was moving back down. Tariffs slowed hiring and raised prices. Hawks dissented over inflation anchor risk, but others got comfort that tariff effect might be transitory.
Asks about risk to market pricing of 2-2.5 cuts this year.
David English
Lael Brainard
Depends on first-half strength. Growth could accelerate from tax cuts and AI investment. May see no cuts until second half. New Fed chair will have to make case for more cuts.
Asks about Trump admin ban on institutional investors buying single-family homes and Fed calculus.
Yvonne Man
Lael Brainard
Heavy-handed move reflecting affordability concerns. Real solution needs more supply, favorable rates, and tax incentives. Fed's role is fighting inflation; admin should support Fed credibility, not attack it.
Asks if Fed has lost autonomy and objectivity due to political pressure.
David English
Lael Brainard
Independence is at risk and crucial for inflation fighting and global dollar confidence. President's unprecedented pressure, including attempting to fire a governor, threatens credibility. Supreme Court case on Jan 21 is crucial.