Asks about bond market feature where Fed has been cutting rates but 10-year yield hasn't moved much.
Host
Roger Ferguson
Action/expectations are at the 2-year yield. 10-year hasn't moved much because inflation expectations and inflation itself have been sticky. Expects yield curve flattening as Fed easing expectations come off.
Market prices two rate cuts this year, expects new chair to cut. Asks how much more the Fed should cut given economic data.
Host
Roger Ferguson
Economic data does not support an aggressive move down by the Fed. Maybe one more and then done.
Asks if PPP loan fraud played out in today's inflation.
Host
Roger Ferguson
Not sure PPP fraud plays out to today's inflation. Broadly, consumers have had different stimuli (equity markets, housing wealth, pandemic checks). Labor market may be healing.
Asks for reaction to David Einhorn's view that new Fed Chair Warsh will cut substantially more than two times this year.
Host
Roger Ferguson
Data are not lining up to allow an aggressive cutting campaign. Market thinking Warsh will start a productivity campaign to cut rates is misguided.
Asks if weak labor market data (JOLTS) could still be a plank for cutting.
Host
Roger Ferguson
Fed is very data dependent. An effort to continue cutting in face of current data would garner dissents.
Asks if Fed should cut rates if AI causes job losses.
Host
Roger Ferguson
Job losses from a shift in labor demand curve (like from AI) is not something the Fed can necessarily deal with. Cutting rates into a growing economy not creating jobs risks stoking inflation.