People are too optimistic about the prospect of many rate cuts, says Mercatus' Veronique De Rugy

Hey, Steve. Before I get to the rest of the panel, I want to read you something from Larry Summers. I had a conversation with him here in Aspen yesterday and he said my best guess is that there is a bit too much optimism about the pace of disinflation. I don't think monetary policy is quite as restrictive as the consensus view thinks. I'm so curious what you think of that. I, I personally think that monetary policy is very is restrictive and, and what I would challenge Larry to do is to go through, and I know he has his answers to this. What has changed so dramatically about the world from the pandemic that you have this sort of permanently higher funds rate that makes the neutral funds rate that makes the current rate not that restrictive? I think you go back and I'm sort of in Austin Goolsbee's camp on this. You go back historically and it's hard to find a funds rate that that a real funds rate that's been higher. And and that the idea is is that. There's plenty of restraint being exercised by the Federal Reserve on the economy. I think it's just harder to get from 3:00 to 2:00 than it was from 9:00 to 3:00. Veronique, I want to get your thoughts on that and then this PCE number that just came in. I mean, it's the number we're expected, right? I mean, to me it's another signal that I think Larry Summers is right. I think there's way too much optimism. I think there's a lot of people expecting rate cuts. And I think it would be, it would be a mistake, even though it it may actually, if you think about it in terms of interest payments that the higher the rates, the more the larger the interest payments, the more. In a way, because there's no fiscal consolidation on the side happening, the more it feels inflation. So I think it's like, I mean, it's, it's it, it could help temporarily, but I don't think, I think people are too optimistic about the prospect of many rate cuts. And, and I think this doesn't change probably the Fed's calculation. They're not going to raise rates and they're going to wait. They're going to wait longer. And I think that's the right, that's the right thing to do. OK. Ben, do they wait or not at this point? No, I mean this is the, this is the definition of a soft landing. You know, as Steve noted, we've seen inflation come way down. You when you look at inflation outside of housing, I think we have a housing problem in this country a little bit more than an inflation problem. But inflation, we made an enormous progress on inflation over the course of this calendar year. Prior to this print markets, we're expecting about a six and ten chance of seeing a cut in September. That's got to go up with this print. If we get another print next month that's anywhere near .1 or or even 0. Look, I think that you can pretty much lock in that September 25 bits rate cut.