I do wonder, though, we say this almost every time we talk to you, how different
is this time around? Is this different from what's been in
the past or is this banking turmoil that we're seeing right now about as
different or just more of the same, like Chair Powell seemed to suggest that is
being ring fenced already? Well, it's it's different in the sense
that it's. It's a smaller banks, it's the regional
banks now that are under stress. Not not the too big to fail banks.
The biggest banks. That's different than what we
experienced in 2008. And, you know, they are smaller and to
some degree have fewer resources to defend themselves.
So I think it's worrisome that we've got this pack west information that came out
after the press conference and after the markets closed.
It just looks like, you know, the markets are moving from
one bank to another. And the vulnerable deer in the herd are
being kicked off. I I I have to say, I worry about this,
but I would like to believe that Jay Powell
has information that suggests that the situation is contained or containable in
this environment does not make sense that the Fed actually took a rate cuts
off the table. The focus is on inflation.
They're trying very hard to separate financial stability concerns system,
banking system, concerns from monetary policy.
Inflation does call for a continuing rate increase increase singular or
perhaps a pause in June. But
we'll see if conditions force them to begin to combine financial stability
concerns with monetary policy decisions. As of today, they did not do that and
they don't appear to believe they have to do that.
Tell us perspective. CAC yesterday and he was talking about
this idea of a preference for a hawkish cause, even though we didn't get that
today, would you see this as being a dovish hike, I guess, in the nuances of
communications that become more important than ever going forward?
Well, I think that I think the messaging is very important, and as I read the
statement, I thought that was on balance dovish.
If if you want to call dovish, that they actually were more suggestive that they
consider a pause. They took the key language of a further
firming out of the statement. And so I saw that as suggesting a pause
might come in June, or at least that that could be on the table in June at
the same time. Chairman Powell emphasized that they
didn't intend to cut rates anytime soon, that those
that kind of decision would not likely be appropriate given the stickiness of
inflation. So, you know, how are you net out those
two? Depends on on an individual
interpretation. But longer term, it's it's a hawkish
position. I think he took today.
There was a question when we saw the surprise high from the RBA, as well as
to whether central banks are trying to move quickly before this so-called
window of opportunity for hiking is over.
Do you believe that window exists? Should policymakers be looking at it in
that way? And does that heighten potentially the
risk of policy errors as well? I'm not sure I buy the argument that
there's some kind of a narrow window of opportunity here.
If the data come in poor or discouraging in terms of inflation and a big if if
the stress in the banking system really settles down,
you cannot rule out that the Fed will continue to move against inflation with
rate hikes. You just can't rule that out.
So one of the things that I thought Chairman Powell emphasized today is it
is truly meeting by meeting. It's true.
Is truly that a data dependent decision making process.
And if the data go badly, well, then we're gonna see further rate hikes, it
seems to me. And I'm not sure I buy the the window of
opportunity argument.