Introduces Jim Bianco and asks for his first reaction to the Fed's decision, framing it as 'not as bad as it could have been' and a potential victory for Powell.
speaker1
Jim Bianco
Disagrees, saying it's not as good as it could have been. Wanted more dissents to signal Fed independence and resistance to potential political pressure from a future Trump-appointed chairman.
Questions the rush to cut rates given the SEP projection of significantly stronger growth, lower unemployment, and lower inflation next year.
speaker5
Asks Bianco if the Fed accepting a prolonged period above its inflation target adds to inflationary pressure.
speaker1
Jim Bianco
Agrees the Fed should be worried. Affordability is a major issue with CPI up 27% since COVID. Inflation needs to run below 2% for wages to catch up. Cutting rates does not help affordability.
Asks if the Fed is essentially in a 'wait and see', data-dependent mode.
speaker1
Jim Bianco
If Powell signals 'one and done', it shows he's in control. The risk is a handpicked Trump successor in May who will want lower rates, aligning with Trump's views.
Asks about the Fed buying bonds again due to reserve issues, questioning if this indicates structural debt problems and forced debt monetization.
speaker1
Jim Bianco
The Fed is acknowledging fiscal dominance. The repo market is too small to fund the $38T Treasury market due to QT. Expanding it tells Congress to spend more, which has been a key inflation driver.
Acknowledges Bianco's point but notes the market is responding to the current reality. Both hawks and doves got something they wanted from the meeting.
speaker5
Presents the 'everyone wins' view: debt monetization supports markets without runaway inflation, and asks 'what's the problem?'
speaker1
Jim Bianco
The problem is the incoming Fed chairman, who will be perceived as having a political agenda. The current FOMC missed a chance to signal independence with more dissents.