'Not surprising' that Fed doesn't yet have confidence to cut rates, says BNY Mellon CEO

That’s the perfect actual segue to the next question, which is how this recent rate volatility changes your expectation for net interest income and the broader macro environment through the rest of the year. I saw in a recent interview you said that a rate hike is not impossible. That that’s right. I don’t think it’s impossible. That underlines our approach to business generally, which is we’re in the preparedness business. We think the resilience is an incredibly important part of how we operate. That resilience allows our clients to go about their business every day. And that’s obviously the core of what we do, which is to serve our clients. But you’re right, I think there’s a possibility, I don’t think it’s the base case that we would see the Fed raise rates, but if we had incredible continued strength and stickiness and inflation, you can’t completely rule it out. It’s also possible that we won’t get any rate cuts. I think it’s still the base case that we will get some rate cuts. But as you just heard from Chair Powell, the data has not yet given them the comfort that they’re looking for to actually move forward in that direction. It’s not super surprising if you think about all of the underlying tailwinds that the US economy is benefit fitting from right now. You have investor confidence money coming into the United States. You have people wanting to build factories in the United States. Just we’ve just had over the past few days additional industrial policy essentially giving money to build chips fabs here in the United States. We have the dividends that are coming off money market funds. 6 1/2 trillion dollars, 5% yield. The math says $300 billion in terms of dividends coming off that. That’s a percentage point of GDP. 60% of Americans are invested in the stock market. We have $25 trillion in 401 KS and Iras for Americans. They’ve been seeing successive highs in the stock market over the course of this year. That gives confidence. That’s some of that part of what’s driving spending. And we’ve just seen in recent data that spending has been doing quite well, surprising to the upside. So there are these underlying strengths to the economy, which is really powering that. It’s not particularly surprising to hear Fed Chair Powell say what he said. Yeah, fiscal spending as well as you, to your point, the flywheel effect from the broader markets. You did in the quarter take some reserve increases due to commercial real estate exposure. And I’m curious what kind of color you can share about your CRE book and how it’s weathering higher for longer rates, various demographic shifts at this point in time. I know you said on the call kind of so goes the tenure, so goes the market especially in 2025. So our CRE book is really pretty small. We’re a we’re a very modest commercial real estate lender. We have a modest amount of office and so we don’t really view that as a particular story. As far as we’re concerned as a firm we have a very liquid balance sheet. We’re a balance sheet light business. We’re into the capital return services platforms that’s kind of the nature who who BNY Mellon is, but you’re you’re mentioning a a response that I gave in the context of the broader market. And I think as we look at the commercial real estate, certainly clients and other participants in the market, you have to see the wall of refinancing that does come over the course of the next couple of years. That doesn’t really tie to the overnight Fed funds rate. Those borrowers are going to be looking to wear a five year rate, 7 year rates, even 10 year rates. And so over the course of the past two or three months, we’ve had a bit of a March higher in those rates and refinancing for those borrowers will look different at a 4 to 4 1/2 to 5% rate different than it would be if it was 4% or 6% or 7%. We don’t predict those higher numbers, but you can’t completely rule them out. As you mentioned a hike is is possible. You know we’ve talked about the the history here. I want to also talk about the future because you recently announced that you would be the first global bank to deploy an AI supercomputer powered by NVIDIA products. What are the use cases for those and what are the safeguards that you plan to implement to make sure that the AI systems are are functioning and safeguarding the use cases that you have? Well, yeah, NVIDIA announced that, that we were the first bank to deploy one of those superpods. Look, I think that AI is going to be a very important change to the world of commerce, to the world, but also to the financial services industry. If I look at it through the three lenses of our strategy here at the company, being more for our clients, it’s going to help clients be able to see things and understand their data in ways that they couldn’t previously understand. We have software and market for instance that helps clients avoid settlement issues in the post trade market space that’s making life better for them, more efficient for them. We also look at it through a lens of running our company better, which for us it means how do we create more efficiency? How do we help employees to be able to spend their time doing things that are more rewarding for them. How do we help our employees be able to be more productive And the use cases there are being able to get a head start on the day, be able to take large amounts of information, distill it down. So there are so many things. I think this will ultimately a bit be a benefit on both from a revenue point of view and some expense savings, but also from a cultural point of view helping our people be able to spend their time doing the things that they want to be able to do.