Markets are gearing up for the Fed's final policy meeting. The market is betting on another 25 basis point rate cut. Do you think that's the case?
speaker1
speaker2
It's almost certainly the case. When John Williams made the case for 25 basis points and no one else contradicted him, it's pretty obvious that's what they want to do.
There could be more dissension than we've seen, with as many as five members sounding hawkish. What's the debate between hawks and doves?
speaker1
speaker2
The debate is about two things: 1) the greatest risk to the economy (inflation upside vs. labor market downside), and 2) whether monetary policy is currently restrictive.
How vitriolic is the debate? How much common ground is there, and how easy would it be for a new Fed chair to sway members?
speaker1
speaker2
It's not vitriolic at all; arguments on both sides are reasonable. There will be some dissent, but the idea the Fed is losing control is misplaced.
What influence might a new Fed Chairman next year have?
speaker1
speaker2
The Chairman has influence through staff and agenda control, but only one vote. At the margin, you might get an additional cut, but not a lot more if the committee disagrees.
Kevin Hassett is seen as the frontrunner. What do you think of him?
speaker1
speaker2
He's the most likely candidate. Once in the seat, he'll want to achieve the Fed's mission and may be less enthusiastic about significant cuts than he is now while campaigning.
Treasury Secretary Scott Bessent wants to remake the Fed. As a former Fed member, what do you think?
speaker1
speaker2
There's a lot of chatter, and the critique is valid, but the harm is small. People should focus on Chair Powell, John Williams, and the vice chairs.