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00:00 Speaker A
What should the message from the Fed be, do you think, given this economic backdrop?
00:02 Speaker B
So, I think the message from the current Fed is the right one. Things are pretty good, right? Inflation is coming down, rates are coming to a place that’s close to neutral. Maybe they have to go a little bit more, not a ton of work, but but more work. And I think the incoming one, there’s a little bit of a mixed message. They seem to think that rates are a little bit too restrictive, which I can understand. Um, and they’re sending some signals that maybe we’ll we’ll be more aggressive, which again, I also understand, but as you transition from one to the other, who are you listening to and who is the market listening to? So it creates some some uncertainty.
00:41 Speaker A
And I think what what they’re trying to grapple with and maybe what everybody’s trying to grapple with is, is the risk bigger in keeping the pause or is the risk bigger in cutting?
00:52 Speaker B
And that’s a $64,000 question. And and I don’t think, you know, as as we talk about it, there’s a lot of conversation of where the neutral rate is. Where should Fed funds end up? Where is inflation? A lot of talk that AI can really increase productivity, which which it is, right? and bring down inflation. And and so you can be more accommodative. And and so the question is, right, who’s going to be right, who’s going to be wrong? Who is going to be more aggressive in pursuing their philosophy, right? And and I think you can be more aggressive because we are seeing productivity productivity enhancements and a lot of the inflation issues that we’re seeing are in the review mirror not going forward.