Join us right now for more on the battle against inflation. We will talk about the number after all, former Kansas City Fed President Esther George. Thank you for for joining us. I don’t know if you had an opportunity to hear that. I I’d love just to hear your reaction to it before we even get into where things really, really are going. Yeah. Andrew, good morning. You know the Federal Reserve has a particular mandate and so it must obsess on the inflation number. And I think you hear that from policy makers right now, they are going to make sure that the last mile here is 1 where they remain focused on restoring price stability. So I think for the Fed, this has always been an area of focus and it’s certainly right now it is very much in focus for them. If you were to compare your your anxiety, if you have it about inflation versus employment, where would it be? And I say that because we were just talking before with Joe Lavonia and I’ve been monitoring a lot of the Jason Furman comments even over the past week. And he made one which was that he thinks that if in fact the Fed would lower interest rates in this calendar year, that it would be a function of a weak employment situation, not necessarily the inflation picture. So it’s a good point. And I I think this is the tension right now for policy makers. They have to weigh the risk around loosening this policy too soon or keeping it too tight and risking employment. Of course, as you know, they have a dual mandate. They care about both of these things very much, but the one they control most directly is going to be that inflation number and they must gain their confidence to get back to 2% in a fairly timely way if they’re going to retain credibility and keep inflation expectations anchored around. When you say timely way, you’re not in the camp that says you know what, they’ve gotten through the hard part. They can get to 2% eventually and they can take their time to do it. You think that there’s actually an urgency to it. I think there’s always an urgency to it, Andrew. And that doesn’t mean that you have to double down and get there tomorrow. But I do think as they look at their forecast, and this has always been true, they are, they have allowed inflation to drift down and it’s it’s done that. But as they look to see their confidence in that 2%, those forecasts have been pushing out. And so far, I think with inflation expectations anchored, that has been appropriate. What I’d be watching for is, and I think the committee is too, they don’t want to see those expectations change. That’s what allows them to be patient. That’s what allows them to take their time to look at the data right now. But should investors think that a hike could be on the table, Esther, I do think that I don’t know that that’s a base case, Melissa, but I do think they need to be aware that the committee right now is saying inflation is holding in in a way that isn’t continuing that steady decline. And I think under that scenario they are keeping all of their options on the table including a rate increase. Now again I I don’t expect that but I do think it’s it’s a signal that the risk can move either way and they have to be very attentive to that in trying to figure out whether the risk is is towards TIPS towards a hike or towards a cut. Esther, I’m just, I’m just curious you know do you think the if if we stay where we are right now, does that merit a hike in your view or do we need to see an upward trajectory in inflation? I think the committee has been pretty clear and signaling they think they’re done with the hiking part and it is still their expectation that inflation will continue to come down. When I listen to the Fed speakers, whether or not they talk about cutting this year or not, I think they are continuing to look for confidence in their forecasts and believe that inflation will come down. So yes, I do think that if inflation begins to turn on somewhat of a consistent basis, obviously they understand what the instrument is, they have to respond to that. But I think for now, they seem pretty comfortable in this wait and see mode. Esther, What? What do you make of all the commentary by economists and others who say, you know what, as you get closer to the presidential election, despite how independent the Federal Reserve may want to be, may want to look all of that, that there is always a little bit of authority on somebody’s shoulder saying maybe we should, we got to be careful about how we do this. Again, by the way, for the credibility of the Federal Reserve. So Andrew, as you know, this is one of the great features of how Congress designed this institution was to provide political insulation around it, if you will. And having served on that committee, this isn’t a part of the discussion when you are deciding what allows you to meet your mandate. So yes, we’re in an environment this year where the election will loom large, where people will interpret the Fed’s actions relative to who it helps, who it might hurt, and that just comes with the territory. But I think the public should be confident that the Federal Reserve is really focused on the information it’s getting in and making the decisions that they believe are in the long run interest of the economy.
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