- Fed interview process is going well
- Had a great interview for Chair
- Have not spoken to the President
- Cutting rates again is the right thing to do
- Don't want to make a policy mistake, moving carefully in 25 bps increments
- Private sector data are telling a consistent story of a weak labour market
- Tariff uncertainty and wondering what AI might do for productivity has kept CEOs reluctant to hire
- Financial markets are a puzzle
- Main street America is seeing high rates on mortgages and car loans; conditions are not loose
- Should see downward pressure on mortgages if the Fed continues to cut the policy rate
- If loose financial conditions are going to cause a boom, it should be seen in the labour market; so far it isn't
- Estimate of inflation now is around 2.5%, with nothing that seems set to jump
- The beige book did not show that things are rosy and booming
- May see GDP weaken at the end of the year
- The concern with AI is if it is structural change in labour demand, which the Fed's cyclical tools cannot address
As a reminder, Fed's Waller is a dove so these comments and his support for more 25 bps cuts are not new information at all.
