00:00Mark, good morning to you. So let's talk about the press conference with Walsh at the Fed.
00:05I mean, you've been quite a fan of stepping away from forward guidance.
00:09We're supposed to pull more attention onto the data and less on the Fed meetings.
00:12What did you make of yesterday?
00:15It was a disaster. Just absolutely terrible press conference.
00:19As you say, Anna, I'm all in favour of stepping away from forward guidance,
00:23returning to where it was 20 years ago, where people actually look at the data.
00:27I think we've become stupider over the last 20 years as we wait for Fed officials to translate data
00:31that we could have seen a week before. So I'm delighted that we stepped away from forward guidance.
00:35And I also think that Walsh had done a great job until yesterday in terms of that he kind of
00:40sounded quite hawkish.
00:41As you said, he was letting the markets do his work. I have no particular quibble on the policy decision.
00:46Look, it's a very hard job, whether you hold or hike rates. You know what?
00:49It was in the balance either way. So I'm not going to quibble with any of that.
00:52But my issue was with the press conference, where he basically undermined the Fed target,
00:58kind of saying that, oh, yeah, the PC is the way they're measuring until January, he kind of implied.
01:03They might have reassessed it then. He kind of talked about that's the one thing they're really targeting,
01:07but then talked about a bunch of measures. And then the kind of way he talked as if, like,
01:10he was essentially new to the job and kind of working it out as if he was just going along.
01:14And, you know, it would evolve over time.
01:16I have to say it was an extremely disappointing press conference in terms of credibility.
01:21It is bad for the dollar. It's bad for long-end bonds.
01:24So we're going to continue to see steepness in the curve and weakness in the dollar
01:27until that credibility gets back on track.
01:31OK, so you basically got a signal you know what you're doing and you're questioning that.
01:36Would a rate hike restore that credibility, signal that he knows what he's doing?
01:44It might do. I think what's important is if you're going to step...
01:47Look, it's a very hard job. I'm not trying to say this is an easy job to do.
01:50But if you're going to step away from forward guidance,
01:53well, then don't say things that imply you kind of have no authority to do the job,
01:58no idea what's going on. You're kind of feeling your way around it
02:00and that the inflation target may change and kind of undermine both the committee
02:04and the targets and the measurement methods.
02:07So it's not specifically it's the policy. It's the impression you give.
02:11And I thought Warsh had done an incredible job up until yesterday.
02:14But because expectations were so high, people were actually very optimistic
02:17that this was going to be a sensible way to manage policy going forward.
02:21Everyone knew there'd be a transition period.
02:22The data is going to matter more, which means more cross-asset volatility in the short term as we adjust
02:26to that.
02:27But ultimately, people thought this was going to be a good sign and Warsh had kind of conveyed it with
02:31authority until yesterday.
02:32So that's changed. So, sure, if he's forced into a hike, does that really add to his authority?
02:37So if it's kind of seen as, uh-oh, this is a policy mistake,
02:40and now he's been backed into a hike he didn't want to do, that doesn't help.
02:43So I don't think it's whether it does a hike or not.
02:45I think it's the communication going forward.
02:48Look, if a politician talks a lot but says nothing, that's kind of admirable,
02:53but it doesn't kind of build his validation.
02:55It's the same for him. That's kind of crisis policy mode here.
02:58He should not imply he doesn't have a clue what's going on just because he doesn't want to say too
03:02much forward guidance.
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