00:00Well, Matt Maley is the Chief Market Strategist at Militeback & Co.
00:04Thank you, Matt, for joining me.
00:06Let's start off in the U.S.
00:07So the Fed holding interest rates steady.
00:10Is this the right move, in your opinion?
00:12And what does that say about Kevin Walsh's approach?
00:16Well, yeah, I definitely think it was the right move, at least for right now.
00:20And it's kind of interesting because he definitely was able to, you know,
00:24kind of assert or reassert the Fed's independence under his leadership.
00:30By being somewhat forceful with his comments.
00:34But at the same time, he's not signaling that the Fed's going to be doing anything imminently in terms of
00:41rate hikes.
00:41But there's no question that his comments were more hawkish than people had been thinking going into it.
00:48And so we still have elevated odds that we'll see a rate hike before the year is over.
00:54I don't know that will be what happens.
00:57But it definitely has investors thinking a little bit differently about the Fed's role in the marketplace over the coming
01:04years.
01:06Interest rates held in the U.K. too.
01:09But the Bank of England's Andrew Bailey is warning that the Iran deal will not stop a spike in inflation.
01:16How concerning is this, do you think, for the U.K. economy?
01:21Well, it's definitely a concern.
01:23I mean, you know, one of the things that I think people have been relying on was that we will
01:29see a dramatic drop in oil prices.
01:32And, of course, they've already come well off their highs.
01:35The question is, how much lower will they fall from here?
01:38Of course, the stock market, especially here in the U.S., has been pricing in that the straight-up Hormuz
01:44will reopen for quite some time.
01:47So, you know, we wonder how much of that is already priced in.
01:50And, more importantly, if the prices don't come down as much and if the officials for both the U.K.
01:58and the U.S. are correct and the inflation remains sticky and stubbornly high,
02:03that's going to, you know, create some problems for a stock market that's very highly valued right now.
02:09Matt, how would you assess the current inflation outlook in the U.S. in comparison to the U.K.?
02:17Well, the thing is that, you know, if you look at the official consensus numbers, the U.S. inflation outlook
02:24is a little bit lower than the U.K.,
02:28but still, at the same time, they're above the targets that the central banks are looking for.
02:34And as much as Chairman Walsh said yesterday that he's given a little bit more leeway, he still wants it
02:42lower than it is now.
02:43He still wants a two-handle here in the U.S.
02:46So that means there's still some more work to do, especially when you have both countries saying that inflation remains
02:53sticky.
02:53To what extent does the decisions in one central bank affect the decisions in another?
03:00Well, you know, there doesn't seem to be any direct contact, although I'm sure the central bank,
03:07well, we all know that central banks around the world speak with each other frequently,
03:11but there's no question that the correlation between these two countries is very, very high.
03:17And so with the U.S., I think Walsh sent a clear signal that he's not going to be quite
03:25as dovish as some other Fed chairs have been in the past.
03:28And it also tells me that what people refer to as the Fed put may be a little bit further
03:34out of the money than it has been in the past.
03:36That will have an impact on the U.K. and other central banks as well.
03:40Really briefly, if you will, what would you say is the outlook on both those economies as the global geopolitical
03:47uncertainties remain?
03:50Yeah, I think that the growth is still there.
03:53It's still solid, but it's still low.
03:55It's not as strong as people are thinking.
03:58And then with both central banks saying that inflation will remain sticky, if they're correct,
04:04that could create some headwinds before the year is over.
04:08Matt Maley, thank you very much indeed for that.
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