We should cut 50 basis points; policy rate should be 3%. Current rate policy is too tight, balance sheet policy is too loose.

If we had my druthers... Governor Moran detailed this in his recent paper... You have to make the transition slowly.

Cutting to 3% would boost small/regional bank ROE and reopen the small bank credit channel.

Uses 3-month bill to 10-year Treasury spread as proxy for bank profitability; spread is currently 60bps vs. historical median of 140bps, explaining lower ROE vs. big banks.

If we steepen the yield curve out, that will open the credit channel for small real estate developers and small businesses.

Last time I was on I was debating this with Steve Liesman. I think we need that credit to flow.

Yes, it could push the mortgage rate up, all things equal.

The problem is less on the demand side for housing than it is on the supply side.

Steepen out the yield curve, lower that policy rate, you start mitigating problems for small banks/businesses.

Small business employment is running -40bps annualized vs. +80bps for large businesses. You start resolving that problem.

Go through with Bowman's bank regulatory relief plan, then in second half of year, start unwinding the balance sheet.

Spelled out things like lowering capital requirements for small bank C&I and business lending. You need to change liquidity requirements.

Overall policy balance would improve between big/small banks and businesses.

I'm not saying overall policy is too tight. I'm saying the rate policy is too tight. The balance sheet policy is too loose.