Asks Blinder for his take on the Fed's tone and if it was hawkish as markets are reading it.
Host (speaker1)
Alan Blinder
Agrees the Fed was hawkish, but not very hawkish. The key point is that inflation has been above target and isn't coming down, which weighs on the Fed.
Notes the positive dot plot story but highlights Powell's unusual dismissal of it due to uncertainty, especially around oil.
Host (speaker3)
Alan Blinder
Confirms the central point is being in the midst of an oil shock. Emphasizes huge uncertainty: prices could go up or down from here, and the shock will seep into other prices beyond gasoline.
Asks how the oil shock translates through the economy and suggests the effects may last longer than markets assume.
Host (speaker1)
Alan Blinder
Agrees effects will probably last longer than markets assume. Compares it to the 'transitory' inflation episode post-pandemic, which lasted a long time.
Asks about the upgraded long-term GDP growth trend (productivity) and how it plays into the Fed's stance, referencing the 1990s.
Host (speaker3)
Alan Blinder
Identifies the productivity forecast upgrade as the notable economic news. It implies the economy can safely grow a bit faster indefinitely.