00:00Former Fed Governor Betsy Duke writing, Kevin Warsh is still a hawk. All the action will be in communications.
00:06Betsy joins us now. Betsy, thank you so much for joining us this morning.
00:10Me and Danny are really looking forward to getting your insights on exactly what you think we're going to hear
00:15from Kevin Warsh tomorrow.
00:17So I do think it's all going to be about communications.
00:20And I think the first place he will start is with the statement.
00:24I wouldn't be at all surprised to see the statement itself that comes out after the meeting be significantly revised.
00:31Normally, when the statement's put together, it's put together with a red line of changes from the prior statement.
00:38So even if it weren't a new chairman, you'd probably see the bias change in that statement.
00:45And that would be about all that would change.
00:47I think he'll completely rewrite it. It'll be shorter.
00:52And I'm interested to see if he goes back to the discussion of the balance of risks, which they had
00:58before when we got to the current statement format.
01:02Betsy, do you think he declines to put a dot on the plot?
01:06He might.
01:07But I think his discussion will be more with the committee in general about whether or not to get rid
01:15of the dot plots altogether.
01:17I don't know that he'll get rid of the entire S.E.P.
01:20I don't expect that to go, but I do expect the dot plots to go.
01:24Betsy, I'm still interested in this idea that Kevin Warsh is still a hawk, because what we saw from candidate
01:29Warsh was a different measure of inflation that he preferred, a trim average to get rid of some of the
01:35more volatile components, which would lead you to a lower reading of inflation.
01:38He's talked about the necessity of lower interest rates, and he's talked about the productivity gains from A.I., which
01:45would also allow you to get there.
01:47So what are you seeing that leads you to believe that we still might get a Fed chair that leans
01:53more hawkish?
01:55So there's not any conflict, I don't see, between remaining a hawk but talking about different measurements of inflation that
02:05he's most concerned about, talking about different approaches to bring in inflation.
02:11But remember this, Kevin Warsh doesn't just want to be chairman of the Fed.
02:16Kevin Warsh wants to be a great Fed chairman.
02:18His idols are the great Fed chairman, and that's what he wants to do.
02:23And the Fed's primary job is controlling inflation.
02:27So Kevin's not going to do anything that will let inflation run hot in order to please President Trump.
02:34He is going to really focus on inflation, I think, in a strong way, but he may approach it differently
02:44and he may measure it differently.
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