00:00 Speaker A
Here with a closer look at the split Fed is Rob Kaplan, Goldman Sachs vice chairman and former president and CEO of the Federal Reserve Bank of Dallas. Rob, great to see you as always. So you say here, uh, you were not surprised the Fed held in April. The Fed you argue, they want to be risk managers, you say Rob, not prognosticators. What does that mean, Rob? Explain that for us.
00:30 Rob Kaplan
What I’m saying is, if I’m at the Fed, uh, I want to, we’re in the middle of a fog. The war is very uncertain. We know there’s a price spike on oil, but we don’t know is when the war is going to get resolved. Uh, once you’ve get the Straight of Hormuz open and you begin the period of healing in the oil price, you know, I think we’ll get a better read on um, on what the effect is on prices and what the effect is on growth. Right now we don’t know, and I would rather if I were at the Dallas Fed just to be non-committal at this point. I think that’s the best way to manage the risk is to be non-committal.
01:21 Speaker A
What did you make Rob of the commentary we got today from Fed officials who dissented this week. Neil Kakari’s comments, they certainly got some attention. Uh Kakari saying here, I believe the FOMC should offer a policy outlook that signals that the next rate change could be either a cut or a hike depending on how the economy evolves. What did you make of that?
01:50 Rob Kaplan
So, I I respect and understand why three of the presidents uh descended the way they did. I probably would not have. And the reason, uh I don’t know that there’s an issue here. Uh the market is already, uh I think factoring in two-sided risk. I think the statement to the outside world reads like the risks are two-sided. I think it’s probably mainly inside the Fed that people know the history of how the language got crafted. But but I’d say I probably the bar for me would be higher to actually descend. Having said that, they’ve made their statement, uh has it really changed the perception out there in the market? I doubt it cuz I think the perception was already there. Uh so I’m focused on other things, and I would be focused on other things. And one of those other things is the AI adoption, um the AI compute infrastructure build, the fact that AI is likely to be disinflationary as it’s adopted over the horizon. And so you have a number of structural changes in the economy and a number of cross currents, and then the war just creates a fog in the middle of that. It would make me want to do less, not more in terms of what I said.