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Jerome Powell is preparing to get his message out, for what could be a tense hearing: Ferguson - YouTube
Channel: CNBC Television
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when you are a fed official going before
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congress
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what exactly are you preparing for and
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how is jay powell going to prepare for
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what could be expected to be a massive
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grilling from senators this morning
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well i think uh chairman powell's
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preparing for two things first he's
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preparing to get his message out
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remember this always starts with a
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prepared statement and so i think he's
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going to use that to sort of lay
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his message and be very very clear
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and then obviously he's preparing for as
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you point out i think what could be a
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pretty tense hearing
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with questions around you know inflation
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obviously front and center the fed
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moving very aggressively at its most
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recent
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meeting and
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though it didn't get much notice in
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public
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a monetary policy report that suggests
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perhaps even much more to come
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using the word unconditional about his
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commitment to reduce inflation so i
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think he's expecting a pretty tough set
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of questions and hopefully i'm sure
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he'll have the answers that he needs
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you've been behind those boardroom doors
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before you were an insider there
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i wonder how much more
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how much strategizing could the fed do
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right now to further tackle this problem
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or do you think the fed is doing just
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about all it can
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look i think the fed is doing what it
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can insofar as it only has a couple of
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tools three tools and they're using all
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of them
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first they've been moving monetary
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policy um as you point out aggressively
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and signaling more to come with this
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notion of unconditional commitment to
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reducing inflation
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secondly um you know their words are i
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think really quite consistent with that
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message across the board uh with the
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notion of you know 75 basis points
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possible for the next couple of meetings
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again historically high historically
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aggressive moves and then obviously
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they're moving the balance sheet as well
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that third one people they approximate
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roughly the equivalent of a 25 basis
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point tightening
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so i think they're doing you know all
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the things that they can do the
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challenge as jay powell points out is
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that some of these matters are out of
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their control
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i've been listening to your reports
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boeing toyota others talking about
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supply chain issues that may last in
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wellington next year obviously energy
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prices being driven by global uh
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forces and so i think the challenge is
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while they're attempting to do
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everything they can
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as jay powell has said and others have
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not everything is in their control and
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that i think creates a very challenging
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situation for them so so i mean roger if
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you look at the way things are shaping
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up right now
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we talk about the types of questions jay
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powell is going to face
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it was maybe nine months ago
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you and i both know that recessions are
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inevitable economies move in cycles they
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expand and they contract the worry right
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now has now tilted much more towards a
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story about a recession in the coming
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months or perhaps maybe by next year
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how exactly then do you square and tell
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that story to elected lawmakers when you
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know a recession is coming but that it
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might not be the worst thing in the
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world if it does
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well i think the way
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people should talk about it is we see
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the great pain of inflation inflation is
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a hidden tax on you know many many lower
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income people middle income people
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constituents are complaining about it
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the congress has given the fed the
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mandate to keep price stability and
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frankly you know they've done that
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because they know during these difficult
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times
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that there may be some pain
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i think the other thing that jay powell
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will say is he has already talked about
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you know pretty narrow
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path towards a so-called soft landing
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so he's talking about soft landing
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soft-ish landing he's talk a little bit
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about pain so i think he's going to also
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remind people that he is trying to be
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very consistent and balanced in his
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message
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i think he's going to attempt to avoid
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the recession word but i think you'll
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hear things such as bumpy
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pain
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and importantly you know this is the
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price we must pay
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to get inflation out of the system and
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he's also going to say something else
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which is you know in order to have
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sustainable job markets which is the
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other part of the fed's mandate they
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really have to drive inflation out of
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the system so he's going to i think link
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it to you know the dual mandate as well
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all of that i think will be the best he
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can do
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none of the lawmakers are likely to
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embrace this notion of a very very
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slowing economy may be tilting the
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recession but that's why you have an
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independent central bank
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you
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