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Jerome Powell speaking with Marketplace host ky Risdahl at the Macroeconomics and Monetary Policy Conference hosted by the Federal Reserve Bank of San Francisco and that Bank's president Mary Daily. A very interesting discussion with Chairman Powell there, talking particularly about the economic data that we got today, saying that the core PCEE was pretty much in line with expectations, and reiterating the message that we have heard for months from this Federal Reserve. A direct quote from Chairman Powell at the event, we don't need to be in a hurry to cut so once again reiterating that message that the FED can remain patient in the midst of this bumpy road that we are seeing in disinflation. And for more analysis. We are joined once again by Bloomberg's International Economics and Policy correspond that Michael McKee, Mike, thanks again for being with us so slow and steady wins the inflation race. Is that the message you heard from Chairman Palette this discussion.

Jerome Powell speaking with Marketplace host ky Risdahl at the Macroeconomics and Monetary Policy Conference hosted by the Federal Reserve Bank of San Francisco and that Bank's president Mary Daily. A very interesting discussion with Chairman Powell there, talking particularly about the economic data that we got today, saying that the core PCEE was pretty much in line with expectations, and reiterating the message that we have heard for months from this Federal Reserve. A direct quote from Chairman Powell at the event, we don't need to be in a hurry to cut so once again reiterating that message that the FED can remain patient in the midst of this bumpy road that we are seeing in disinflation. And for more analysis. We are joined once again by Bloomberg's International Economics and Policy correspond that Michael McKee, Mike, thanks again for being with us so slow and steady wins the inflation race. Is that the message you heard from Chairman Palette this discussion.

That's what you've got. He didn't say anything new, but he reiterated the position that the FED has taken for quite some time. That they needs to see continue towards a two percent inflation goal, and he finished up just a moment ago by saying, we're not going to take that step of cutting rates until we are confident that we are headed there. That's been the message from the FED for quite some time. He said that I thought one of the most fun questions that kay Risdahl asked was what's wrong with saying you just don't know what's going on? And how are people supposed to take it if you say the same things all over again? And he said basically that we are trying to be humble, and we're trying to be humble about our ability to see the future, and we want to be thoughtful, careful and steady hands in making monetary policy. So they don't want to rattle the markets, and that's going to be the message until they do see the progress they want. He was asked about obviously today's PCE numbers and said they're in line with kind of what they expected, but it's still a bumpy progress and that they weren't good enough to lead the FED to cut rates right now.

That's what you've got. He didn't say anything new, but he reiterated the position that the FED has taken for quite some time. That they needs to see continue towards a two percent inflation goal, and he finished up just a moment ago by saying, we're not going to take that step of cutting rates until we are confident that we are headed there. That's been the message from the FED for quite some time. He said that I thought one of the most fun questions that kay Risdahl asked was what's wrong with saying you just don't know what's going on? And how are people supposed to take it if you say the same things all over again? And he said basically that we are trying to be humble, and we're trying to be humble about our ability to see the future, and we want to be thoughtful, careful and steady hands in making monetary policy. So they don't want to rattle the markets, and that's going to be the message until they do see the progress they want. He was asked about obviously today's PCE numbers and said they're in line with kind of what they expected, but it's still a bumpy progress and that they weren't good enough to lead the FED to cut rates right now.

And maybe this is part of the answer, this idea that the FED has to be humble and not say that they know what they don't know about the economy, but how much more data do they need? We've seen months and months of data that have you know, over the last couple of months have come in a little bit bumpier than they have in months prior. But when the Fed says that they need more data, it does raise a question of how much more data they need before they can make that decision to pivot, doesn't it?

And maybe this is part of the answer, this idea that the FED has to be humble and not say that they know what they don't know about the economy, but how much more data do they need? We've seen months and months of data that have you know, over the last couple of months have come in a little bit bumpier than they have in months prior. But when the Fed says that they need more data, it does raise a question of how much more data they need before they can make that decision to pivot, doesn't it?

Yes, That's the big question on Wall Street is when did they make that pivot? When do they start suggesting they're going to be cutting in the near future. Powell did not discuss that today, did not put a timeframe on it, but on Wednesday night, the governor, in fact, Governor Chris Waller, said he's going to need several more months of data to tell him that they're going in the right direction, which would seem to suggest May's off the table because they'll only get one more months worth of data. The question then is with two months, can they do it in June or do they look to July. Those are going to be the kind of things that are going to have traders on edge as the inflation data comes out over the next couple of months.

Yes, That's the big question on Wall Street is when did they make that pivot? When do they start suggesting they're going to be cutting in the near future. Powell did not discuss that today, did not put a timeframe on it, but on Wednesday night, the governor, in fact, Governor Chris Waller, said he's going to need several more months of data to tell him that they're going in the right direction, which would seem to suggest May's off the table because they'll only get one more months worth of data. The question then is with two months, can they do it in June or do they look to July. Those are going to be the kind of things that are going to have traders on edge as the inflation data comes out over the next couple of months.

So we do have that possibility still that we will get a cut, perhaps in the second quarter, maybe into the third. Let's bring in Sarah House for some more analysis. She's back with us as well. Sarah's the senior economist at Wells Fargo. Sarah, good to have you back with us. After we've gotten this data on the core PCE just this morning. We've heard the comments in this moderated discussion from Chairman Palell what's your view on where the Fed goes with rates at this point?

So we do have that possibility still that we will get a cut, perhaps in the second quarter, maybe into the third. Let's bring in Sarah House for some more analysis. She's back with us as well. Sarah's the senior economist at Wells Fargo. Sarah, good to have you back with us. After we've gotten this data on the core PCE just this morning. We've heard the comments in this moderated discussion from Chairman Palell what's your view on where the Fed goes with rates at this point?

Yeah, I think ultimately we heard that right now, Chair pal doesn't feel like they need to be in a hurry with cutting rates. It is a big decision, as he espoused multiple times throughout the conversation. But what we heard time and again was that he viewsed the economy as strong right now, and particularly the labor market being in a good place, which does seem to afford them some time to see if inflation can come down a bit further in the months ahead.

Yeah, I think ultimately we heard that right now, Chair pal doesn't feel like they need to be in a hurry with cutting rates. It is a big decision, as he espoused multiple times throughout the conversation. But what we heard time and again was that he viewsed the economy as strong right now, and particularly the labor market being in a good place, which does seem to afford them some time to see if inflation can come down a bit further in the months ahead.

And to that point, Powell said that the Fed can hold rates steady if inflation doesn't come down. It seems to take at least a little bit off the table. The idea that we'd see a rate increase at any point. But is the FED trying to give the market a message that maybe rates are going to stay elevated for even longer than they might have priced in at this point that the that the market needs to kind of get ready for a new normal in terms of where rates go.

And to that point, Powell said that the Fed can hold rates steady if inflation doesn't come down. It seems to take at least a little bit off the table. The idea that we'd see a rate increase at any point. But is the FED trying to give the market a message that maybe rates are going to stay elevated for even longer than they might have priced in at this point that the that the market needs to kind of get ready for a new normal in terms of where rates go.

I think right now it's more just about they need to see more that it's I don't think they're unhappy with with where markets are priced for cuts right now. If you look at what the warp function on the terminal and the most recent SEP they're in pretty close alignment, you know, somewhere close to three cuts when when you round roughly the media in there. So I don't think that this is about really trying to guide the markets in a major way, But it's more about the fact that the data has come and still pretty strong and allse EQL that does point to bringing to reducing the level of restrictiveness a little bit later.

I think right now it's more just about they need to see more that it's I don't think they're unhappy with with where markets are priced for cuts right now. If you look at what the warp function on the terminal and the most recent SEP they're in pretty close alignment, you know, somewhere close to three cuts when when you round roughly the media in there. So I don't think that this is about really trying to guide the markets in a major way, But it's more about the fact that the data has come and still pretty strong and allse EQL that does point to bringing to reducing the level of restrictiveness a little bit later.

And just to bring it back to the data that we saw this morning, is there anything that's in the core PCE it indicates to you that we could see even more bumps along the way.

And just to bring it back to the data that we saw this morning, is there anything that's in the core PCE it indicates to you that we could see even more bumps along the way.

Well, I think just given the degree of the slowdown we saw on services well welcome. I wouldn't expect that to necessarily repeat month in, month out over over the next few months. And at the same time, I think some of the goods inflation that we saw, some of that might have been helped by I might have been gotten a little boost from seasonal So I think we're still likely to see some bumps here over the next over the next few months.

Well, I think just given the degree of the slowdown we saw on services well welcome. I wouldn't expect that to necessarily repeat month in, month out over over the next few months. And at the same time, I think some of the goods inflation that we saw, some of that might have been helped by I might have been gotten a little boost from seasonal So I think we're still likely to see some bumps here over the next over the next few months.

One of the questions Sarah Spike McKee that got some attention on x and other social media platforms was when Kyritzol asked him does the FED get too much attention to? People pay too much attention? And he said, I think they do pay too much attention to Fed monetary policy, because policies that raise productivity and living standards are far more important over the longer term. Do you agree that maybe the media and the markets put too much tension on every word beed official say?

One of the questions Sarah Spike McKee that got some attention on x and other social media platforms was when Kyritzol asked him does the FED get too much attention to? People pay too much attention? And he said, I think they do pay too much attention to Fed monetary policy, because policies that raise productivity and living standards are far more important over the longer term. Do you agree that maybe the media and the markets put too much tension on every word beed official say?

I think there is certainly quite a bit of focus and sometimes miss other other aspects that you may move the needle quite a bit on economic growth, so areas like fiscal policy, as well as I think some of the other policies that do support labor supply overall, overall supply side things that can all can boost that that productivity as well. So in some ways it's, you know, it's it's Tom Kane's parlor game in terms of what the Fed's going to do, what the Fed's going to do next, that does get so much attention, But I think, but I think to Repel's right in that there are so many other things that need to be considered when we're thinking about, you know, what's what's GDP growth going to be a year from now, two years from now, that can play into.

I think there is certainly quite a bit of focus and sometimes miss other other aspects that you may move the needle quite a bit on economic growth, so areas like fiscal policy, as well as I think some of the other policies that do support labor supply overall, overall supply side things that can all can boost that that productivity as well. So in some ways it's, you know, it's it's Tom Kane's parlor game in terms of what the Fed's going to do, what the Fed's going to do next, that does get so much attention, But I think, but I think to Repel's right in that there are so many other things that need to be considered when we're thinking about, you know, what's what's GDP growth going to be a year from now, two years from now, that can play into.

Speaking with Sarah House, senior economists at Wells Fargo, along with Bloomberg International Economics and Policy correspondent Michael McKee, getting some real action to what we've heard in just the last few minutes from FED Chair Jerome Palett the Macroeconomics and Monetary Policy Conference at the FED Bank in San Francisco. The Chairman, Sarah does put a lot of emphasis on transparency, not rattling the markets with the words that we hear from the Federal Reserve. In the context of the economic data that even we've gotten just today, Do you think that the FED is transparent enough? Does it say too much to the markets, So.

Speaking with Sarah House, senior economists at Wells Fargo, along with Bloomberg International Economics and Policy correspondent Michael McKee, getting some real action to what we've heard in just the last few minutes from FED Chair Jerome Palett the Macroeconomics and Monetary Policy Conference at the FED Bank in San Francisco. The Chairman, Sarah does put a lot of emphasis on transparency, not rattling the markets with the words that we hear from the Federal Reserve. In the context of the economic data that even we've gotten just today, Do you think that the FED is transparent enough? Does it say too much to the markets, So.

I think they are certainly very transparent. I think sometimes that's still maybe not even good enough for markets in terms of what exactly you know, are are the specific data points they're looking at. When I think, like a lot of us and thinking about the economy, they're taking a lot of different data points into consideration. And I think at times too, given the degree of transparency, it can be difficult to parse through all the different points of views and where that might lead to in terms of the consensus. But I think it certainly beats the alternative where we didn't know what the FED was thinking in years past.

I think they are certainly very transparent. I think sometimes that's still maybe not even good enough for markets in terms of what exactly you know, are are the specific data points they're looking at. When I think, like a lot of us and thinking about the economy, they're taking a lot of different data points into consideration. And I think at times too, given the degree of transparency, it can be difficult to parse through all the different points of views and where that might lead to in terms of the consensus. But I think it certainly beats the alternative where we didn't know what the FED was thinking in years past.

It was interesting as well to hear Chairman Powell bring up politicization of the Federal Reserve as we get closer to an election year, even more into the election cycle, and this idea that the FED could become more politicized as we get closer to that election time. Do you think that, notwithstanding what Chairman Powell had to say about how the FED can't be politicized, that it would go against the fed zone mandate to bring politics into its decision making. Having said that, does the timing of the election cycle play at all into rate decisions? From your perspective, So I.

It was interesting as well to hear Chairman Powell bring up politicization of the Federal Reserve as we get closer to an election year, even more into the election cycle, and this idea that the FED could become more politicized as we get closer to that election time. Do you think that, notwithstanding what Chairman Powell had to say about how the FED can't be politicized, that it would go against the fed zone mandate to bring politics into its decision making. Having said that, does the timing of the election cycle play at all into rate decisions? From your perspective, So I.

Think it can make the timing of when they're maybe pivoting on policy little bit trickier, if nothing else, just because they want to avoid that look of politicis a politicilation. And so what we did hear from pal today is he said that these decisions, though, are not on a political calendar. And I think just given that it still isn't an easy decision for when they may cut rates this year if they do it all, just based on the risks to both side of the mandates that you know, perhaps the best thing is just to not worry about it at all and just look through, put their heads down and make the best decision they think for the US economy.

Think it can make the timing of when they're maybe pivoting on policy little bit trickier, if nothing else, just because they want to avoid that look of politicis a politicilation. And so what we did hear from pal today is he said that these decisions, though, are not on a political calendar. And I think just given that it still isn't an easy decision for when they may cut rates this year if they do it all, just based on the risks to both side of the mandates that you know, perhaps the best thing is just to not worry about it at all and just look through, put their heads down and make the best decision they think for the US economy.

Really appreciate this. Sarah, thanks again for coming on with us to analyze Chairman Palace comments and of course coming on earlier as well when we got that core PCE data on this good Friday, Sarah House with us there, senior economist at Wells Fargo and Bloomberg's Mike McKee is still on with us for the next few minutes while we sort of dive in a little bit more into what Chairman Powell had to say in this moderated discussion. It did seem Mike, as though, you know, this idea that the FED doesn't want to rattle markets, even on a day when you know we've all got the day off from trading, that that really does seem to be a lot of what drives Chairman Powell in terms of what he has to say that he really doesn't want to surprise markets.

Really appreciate this. Sarah, thanks again for coming on with us to analyze Chairman Palace comments and of course coming on earlier as well when we got that core PCE data on this good Friday, Sarah House with us there, senior economist at Wells Fargo and Bloomberg's Mike McKee is still on with us for the next few minutes while we sort of dive in a little bit more into what Chairman Powell had to say in this moderated discussion. It did seem Mike, as though, you know, this idea that the FED doesn't want to rattle markets, even on a day when you know we've all got the day off from trading, that that really does seem to be a lot of what drives Chairman Powell in terms of what he has to say that he really doesn't want to surprise markets.

If he can get out of a public appearance without markets moving, he considers that a victory. But this is what the Fed's policy has become. It used to be back in the sixties, seventies, eighties, when the FED didn't tell you what it was doing. It used to be that they thought that surprising the markets would be good because it would keep them off balance and they wouldn't necessarily be rushing into to push rates one way or another when the FED didn't want them to do that. But now the Fed's decided that trends, parrency and forward guidance are what really helps them, and it helps get monetary policy into the markets by letting markets know roughly what's going to happen, so that they front run, they anticipate whether rates are going to go up or down. And that's basically what Powell, and he's followed the others since Sally and Greenspan in doing that as chair is trying to tell people what's going to happen, but not give too much detail. As we've been saying this morning. He didn't say much new.

If he can get out of a public appearance without markets moving, he considers that a victory. But this is what the Fed's policy has become. It used to be back in the sixties, seventies, eighties, when the FED didn't tell you what it was doing. It used to be that they thought that surprising the markets would be good because it would keep them off balance and they wouldn't necessarily be rushing into to push rates one way or another when the FED didn't want them to do that. But now the Fed's decided that trends, parrency and forward guidance are what really helps them, and it helps get monetary policy into the markets by letting markets know roughly what's going to happen, so that they front run, they anticipate whether rates are going to go up or down. And that's basically what Powell, and he's followed the others since Sally and Greenspan in doing that as chair is trying to tell people what's going to happen, but not give too much detail. As we've been saying this morning. He didn't say much new.

Today, absolutely and interesting as well to hear Chairman Powell say that the inflation data, the preferred gauge came in pretty much in line with their expectations. Walk us a little bit through what was some of the most important aspects of that core PCEE data that we got this morning, and do you think that that's going to be more important the economic data or Chairman Powell's words today in terms of how the market reacts when and things come back open on Monday, Well.

Today, absolutely and interesting as well to hear Chairman Powell say that the inflation data, the preferred gauge came in pretty much in line with their expectations. Walk us a little bit through what was some of the most important aspects of that core PCEE data that we got this morning, and do you think that that's going to be more important the economic data or Chairman Powell's words today in terms of how the market reacts when and things come back open on Monday, Well.

There was a little bit of debate in the among market participants that I saw after the pce numbers came out about whether they were good or whether they were bad for the idea of a rake cut, and I think Powell comes down on the side of there isn't much different here, so it will probably limit the reaction on Monday to anybody who is offsides and thinking the Fed might be cutting earlier will have to refigure their portfolio, but for most people it's not going to really matter all that much. The inflation numbers showed some little progress. Services prices inflation came down some, which is something the FED has wanted to see. Goods prices were up a little bit. A lot of that was energy, so it's not as big a deal, but all at all, it was incremental progress towards the Fed's goal, which means that those who think we might see a rag cut in Jue and are probably on the right hand side of the left hand side rather of the tail, and those who think we could go to September or later it would be on the right hand side, and so somewhere in that middle is what's most likely at this point until we get some other data that convinces this one way or another.

There was a little bit of debate in the among market participants that I saw after the pce numbers came out about whether they were good or whether they were bad for the idea of a rake cut, and I think Powell comes down on the side of there isn't much different here, so it will probably limit the reaction on Monday to anybody who is offsides and thinking the Fed might be cutting earlier will have to refigure their portfolio, but for most people it's not going to really matter all that much. The inflation numbers showed some little progress. Services prices inflation came down some, which is something the FED has wanted to see. Goods prices were up a little bit. A lot of that was energy, so it's not as big a deal, but all at all, it was incremental progress towards the Fed's goal, which means that those who think we might see a rag cut in Jue and are probably on the right hand side of the left hand side rather of the tail, and those who think we could go to September or later it would be on the right hand side, and so somewhere in that middle is what's most likely at this point until we get some other data that convinces this one way or another.

Which implies July perhaps, but we'll have to wait and see what that market reaction is as we continue to parse through the core PCEE data, as well as Chairman Powell's remarks that we just heard moments ago from the Federal Reserve Bank of San Francisco. Bloomberg International Economics and Policy correspondent Michael McKee, thanks for coming in on a trading holiday to help us with some of the analysis of what we heard from Chairman Pal as well as that economic data, and our thanks as well to Sarah House, the senior economist at Wells Fargo, giving us some of her analysis of the data that we got this morning, as well as Chairman POW's remarks repeating that the Central Bank, the Federal Reserve can stay in no hurry to cut interest rates after the core PCE data. The PCE deflator came in, in Powell's words, pretty much in line with expectations, but again reiterating that it's not going to be appropriate to lower rates until officials are confident that inflation is on track toward that two percent target, which again Chairman Powell reiterated just this morning that that is the target, and we are going to get more PCE data before the Fed's next decision coming up on May first. I'm Nathan Hager in New York, and you have been listening to live coverage from Bloomberg Radio.

Which implies July perhaps, but we'll have to wait and see what that market reaction is as we continue to parse through the core PCEE data, as well as Chairman Powell's remarks that we just heard moments ago from the Federal Reserve Bank of San Francisco. Bloomberg International Economics and Policy correspondent Michael McKee, thanks for coming in on a trading holiday to help us with some of the analysis of what we heard from Chairman Pal as well as that economic data, and our thanks as well to Sarah House, the senior economist at Wells Fargo, giving us some of her analysis of the data that we got this morning, as well as Chairman POW's remarks repeating that the Central Bank, the Federal Reserve can stay in no hurry to cut interest rates after the core PCE data. The PCE deflator came in, in Powell's words, pretty much in line with expectations, but again reiterating that it's not going to be appropriate to lower rates until officials are confident that inflation is on track toward that two percent target, which again Chairman Powell reiterated just this morning that that is the target, and we are going to get more PCE data before the Fed's next decision coming up on May first. I'm Nathan Hager in New York, and you have been listening to live coverage from Bloomberg Radio.