00:00But I think right now, policy's in a very good place, slightly restrictive, not constraining the economy so much that
00:06the labor market's faltering, not letting go of the reins completely so that inflation has no bridle.
00:12And that's a good place to be.
00:15So being in a wait and see the data mode and wait and see how the conflict resolves is a
00:20really nice place to be.
00:21And so we'll see. The scenarios are we could leave that completely like it is this year, and that would
00:27be a good restraint on inflation, but not so restrictive to hurt the labor market.
00:32We could find ourselves, if inflation really took off, not my modal outlook, but if it did, you know, then
00:39we'd have to adjust the policy up.
00:40If we found that the labor market was faltering or that this conflict ended quickly and the inflation started to
00:47come back down, we could adjust like we had planned in the SEP.
00:50I think it was one cut that was penciled in for in the March SEP policymakers, the median of the
00:57policymakers, one cut for this year.
01:00That's about where I was in March. At this point, I think, you know, I wouldn't be surprised if the
01:06market pricing is for zero cuts this year.
01:09And that's really taking on board the fact that the oil price shock persists, at least for the end of
01:14the year.
01:14So that's the short term. What's your view on the long term, where the 10 year ends up?
01:21The 10 year rate. Ten year T-bill. T-bill. Oh, yeah. Well, that's got a variety of factors in
01:27it.
01:27So I would be I don't you know that I really I'm I you know, clarity, clarity above certainty.
01:35But but seriously, I think that there's a lot of factors pushing the 10 year up.
01:39And one of those factors is our policy. The other factor is a lot of concern about where all of
01:46these things are headed, what's going on with inflation.
01:49A lot of it is just how financial market regulation is changing, the global, the geopolitical risk.
01:54And so at this point, I think what you know, you I've always cautioned people not to use the 10
02:00year as an indication of just inflation expectations.
02:03There's also a term premium, lots of other things in there and a risk premium.
02:07And I think the world when there's a lot of uncertainty, it tends to move that in a way that
02:12doesn't align completely with our policy.
02:14So our policy, you know, what you think what I would look at if you want to know how and
02:20this wasn't exactly your question,
02:22but it's an important question to me, do people still believe we can achieve two percent inflation?
02:27And if you look at medium and longer run inflation expectations, they're well anchored and haven't budged in the oil
02:33price movement.
02:34But what has moved is short term. But that's logical. Right.
02:37People are already paying the higher price of the pump. So, of course, their short term inflation expectations have gone
02:42up.
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