Fed chief Warsh attends ECB forum with Lagarde, Bailey & Macklem

[00:00:00] Speaker 1: But, you know, we think it's about the right level to keep inflation contained. You know, the other thing I would say, though, is, and this gets a bit back to your forward guidance question, I mean, we've got to be humble. There's a lot of uncertainty out there. Those risks could shift quickly. And the other part of our message is, if the situation changes, we're prepared to take action. [00:00:27] Speaker 2: Do you think, Chairman Warsh, that the inflationary spark that everyone's seeing and feeling is a temporary phenomenon as a result of the rise of energy prices, which have already started reversing pretty sharply? [00:00:40] Speaker 3: Does temporary sound like transitory? Is that what you were trying to sneak into? [00:00:44] Speaker 2: Yes. Is it transitory? [00:00:47] Speaker 3: So I'll build on what Governor Macklin just said. By the way, the four of us all served together in the global financial crisis in different roles. So I would say for us to be back on this stage in this circumstance is great. And they've been incredibly warm to me. President Lagarde has sort of welcomed and encouraged these sorts of new ideas that we've talked about at the Federal Reserve on these series of task forces. And Sarah, my hope is that the results of these can be a public good. If we make progress in thinking about the effect of productivity, the effect of data, new inflation frameworks, this is something we can all borrow and use from. The other thing I'll add is that monetary policy spills over from one of our economies to the other, and it spills back. I think the way Governor Macklin said it right, which is we're all being hit by a series of shocks. In the U.S., the AI shock is leading to a boom in capital expenditures. We see that first and foremost in demand, but I'm confident we're going to see it in supply at some point. So we're spending most of our time trying to monitor those developments. [00:01:50] Speaker 2: Is it inflationary? [00:01:52] Speaker 3: Well, in the near term, we can observe it on the demand side, but it's up to the central bank to decide whether it's inflationary. [00:01:59] Speaker 2: That's why I'm asking. [00:02:00] Speaker 3: Whether in fact it finds its way into a broader set of goods. I don't have any news for you on that, but I would certainly rather be in a position where we have two things, where we recommit, the way I know my colleagues have, to deliver price stability. And the other piece that I'll take note of, which shows some difference, I think, among our nations, is the AI boom is showing itself first and very prominently in the United States. I'd certainly rather have this problem where we have massive capital expenditures instead of thinking years back where we had financial engineering, where we had companies that weren't able to deliver profits, so they would do shareholder buybacks. Well, right now, they're investing in the future because their expectation is the supply side of the economy will expand. And if it does, that has huge implications for monetary policy. But again, I'm not going to make a judgment now. We'll meet again in four weeks. But this is as exciting a time and also as a consequential a time to be a central banker that I can think of at any point, maybe outside of a crisis in my adult lifetime. [00:03:07] Speaker 4: President Lagarde, how do you... Can I pick up on a point that my friend Kevin made? It's the speed at which things change, and that is clearly accelerated by AI. To be open to new... [00:03:22] Speaker ?: To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... To be open to new... Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. [00:17:21] Speaker 1: And the only way we got out of it was we had to have, you know, a big recession to re-anchor expectations. If that happens, you know, we have fundamentally failed to do our jobs. You know, we got to distinguish between a rise in unemployment and inflation and stagflation. They're not the same thing. [00:18:20] Speaker 2: Right. Some people just think of it as slower growth and higher inflation. But clearly, that's not where you... [00:18:27] Speaker 1: It's a much more loaded word than that. Yeah. [00:18:30] Speaker 2: Governor Bailey, you know, on this topic of forward guidance, we make light of it, but it is a bit of a change, a departure from where we've seen central banks in recent years. I know, I mean, you kind of got rid of forward guidance in 2021. You said you did. And how do we determine the difference between a reaction function and forward guidance? [00:18:51] Speaker 5: Well, look, I mean, you know, I think we have to sort of tread carefully through this debate, not least because of the question you've just asked, but I mean, almost anything we say, of course, can attempt to be interpreted as forward guidance. And the second thing I would observe is that, of course, all of us are making policy which is going to have an effect in the future. So we sort of start with that position. I mean, I think where forward guidance has been very difficult, and therefore I'm in a very similar place to my colleagues, is that you can get locked into it very easily. You know, I've said a number of times in our committee, it's much easier to put it in place than it is to take it away. And therefore, before you actually go and put it in place, just think about, you know, what we're going to have to deal with as time goes by. Because, you know, it becomes quite problematic after a while, it overstays its welcome. So, you know, I'm also very cautious. Now, but I recognize that, you know, anything we say about the outlook for the economy can be interpreted as a view of the future. And of course, that, you know, we have to sort of, in a sense, do that. But I think we have to be very careful about, you know, getting tied into views on where rates are going to go. So that's the thing that is much more problematic. [00:20:13] Speaker 2: But isn't it important, Chairman Walsh, to give the market a sense of how you're thinking about policy? You don't have to give them a pre-commitment, but the whole reaction function, how you think of how you're going to make policy. [00:20:27] Speaker 3: So I think the most important thing we can do is to get policy right. If our communications tools, if our models, if the way we've been playing things makes it harder for us to go into these meetings, have a family fight with our colleagues, and make the best decision in pursuit of our mandates, if that's an obstacle, we should get rid of it. It is said in recent weeks, well, we need to know more about your action function. If I look at trigger pullers, people that are making decisions in the bond market, you know, range of markets, volatility is not up, it's down. Yields aren't up, they're down. Inflation expectations are down. So I hear this, that as if people don't understand, I think they actually understand quite well. I feel incredible comfort that I'm not sure I had internalized that there is a willingness by my colleagues in the central banking community around the world to go back to first principles. We all want to make the best decisions we can. We've all been burdened with many of the policies that in some sense the Fed created in the 2008 financial crisis. This is a rare moment for us to go back to first principles, ask hard questions, review what we're doing. At the Fed, we've got five outside task forces to shed new light on this. And I'm encouraged because in some sense we each think we're making our own monetary policy, but each of our monetary policies affect one another. And I'm honored to be on a stage with three colleagues who have been in the fight for 15 or 20 years with me and without me. And I won't at all be surprised if six or 12 months from now, each of us are on a better path to deliver on what we've said we're going to do. [00:22:18] Speaker 2: Who's leading these task forces? [00:22:21] Speaker 3: We have news to come. I can tell you likely next week who will be the outside experts. Some of them would have been folks in seats like this in prior years. Some would have been academics in the audience. But we really tried to find the best minds in the economics profession among practitioners, people experienced hands, including people from countries outside the U.S. We're not asking for de Tocqueville to come to America, but sometimes we need a foreigner to sort of see things clearly. And the idea of these is not to prejudge the outcomes. I'm certainly not going to do it. But I think as we make progress on this, I think some of the lessons learned might not just be for the American central banker who's new to this group. But my colleagues on the stage. [00:23:06] Speaker 4: I was going to volunteer for a task force. At the ECB, we went through the same process. And when we started the strategy review, it takes time. And we did bring under the leadership of Philippe Laine, our chief economist, it did take time to bring the, we didn't call it task force, but we had expert committees. We had groups and, and, and it took a couple of years before we actually settled down and all agreed on the key principles, the reaction function, the elements that we would take into account, the measurements of the nature of the supply shocks and the origin and blah, blah, blah, blah, blah. It doesn't happen overnight. It's complicated. It sounds simple when you're at the end of the, of the supply chain, but the whole process is complicated. So I, I really celebrate the fact that you're going into this task force exercise and are prepared to let the best minds participate in that. [00:24:03] Speaker 2: You know, there's also been a lot of talk here about coordination and influence on each other. And, and I am curious, President Lagarde, now that you do have a little bit policy divergence, you guys go in maybe in different directions. Is that, is that a good thing or is that a bad thing ultimately? The divergence between who and who? Policy. I mean, you're raising rates. They're not raising rates. You know, is that, is that disruptive? [00:24:26] Speaker 4: I, I totally endorse the comments made by, I think it was both, um, Tiff and Andrew. We started from different places. We were at 2% interest rates. I think the Fed was at 350 thereabout and you were at 325. Inflations were at different levels as well. And the markets were expecting cuts in various corners. So it's the different, the, the situation was entirely different. I don't regard that as a divergence. I think the commitment is the same to maintaining price stability and doing what it takes to actually deliver on that commitment. [00:25:03] Speaker 2: But sometimes you see wild swings. And I mean, the dollar yen, for instance, is at the highest level in 40 years. Is that, is that okay? Chairman Worsh? [00:25:11] Speaker 3: Well, before we came here, we each, um, told a small story about Governor Weta, who's been a great colleague of many of ours. And we're rooting for his good health so that he can join us on panels like this in a couple of months. Um, if, if this central bank stands for anything, it's staying in its lane on monetary policy. So if you think I'm going to wander into yen policy in Japan, then you're asking way too much of it. [00:25:35] Speaker 2: Well, it, it, it, it's making a move. That's all, you know, Governor Macklin on the markets. You recently, I think, warned about excess, um, just given the AI trade speculation. I think that's very much on the, on the market's mind. Do you, do you see signs of that thinking of irrational exuberance of the great Alan Greenspan? [00:25:57] Speaker 1: Yeah, we've, we've been worrying really of two things and, and I'm gonna, I'm gonna draw Andrew into this. Uh, Andrew chairs the Financial Stability Board. I chair the Vulnerabilities Committee. So, I mean, you know, as governor of the Bank of Canada, I'm looking at this from a Canadian perspective, but at the FSB, we're looking at it from a more global perspective. And yeah, I, I would highlight a couple of vulnerabilities, you know, as, as we've already said, look, there, you know, there is so much potential, uh, to raise productivity growth, uh, with the adoption of AI, with the diffusion of AI, uh, but there, you know, we, we, we've seen this before in when there's a new breakthrough technology. I mean, the, the internet proved to be, you know, better than anybody imagined, created whole new businesses, uh, but we still got the dot-com bubble. Um, it doesn't mean there can't be a period where the market gets ahead of himself and, and you see a retrenchment. So, uh, look, it'd take two sides to make the market, uh, we don't, we don't, we're not in the business of giving investment advice as central bankers. Uh, so, but, you know, from a financial stability point of view, you, you know, you look at the sort of, you know, historical benchmarks, PE ratios, forward ratios, yeah, things look stretched compared to, uh, those. Uh, so that doesn't mean there, there's a problem, but it does mean you need to, you need to take that risk on board. The other, the other risk we've been, been highlighting is we've seen, uh, very large growth of, of hedge funds in the sovereign debt market. And to some extent, uh, that's been very welcome. They've been very efficient in buying and distributing government debt. There's, there's lots of issuance out there, uh, governments need investors. Um, but a lot of this is being done with a lot of leverage, very short term leverage. And that does make you a lot of it overnight in the repo market. Um, and that does make you nervous that if there was a period of volatility and, and, uh, you know, haircuts and repo markets went up, or there was some disruption in repo markets, you could get a, you could get a rapid unwind. Um, you know, again, part of our job is to sort of markets do a good job of seeing the risks that they face individually. They have a harder time seeing the systemic risks. These were, these trades are very low risk for each hedge fund, but when they're all doing something similar, there could be a systemic overlay. And the idea is if we can point that out, the market can, can guard against that risk. [00:28:32] Speaker 5: So, yeah, I mean, look, Kevin referred, has referred to the financial crisis a few times. And he's absolutely right to do that. And one of the big questions, you know, at that time or before it was, is the subprime mortgage market going to be, you know, in a sense, the trigger and the cause of a wider financial crisis? And, you know, we didn't get that call particularly right, frankly. But the, the thing that we have to bear in mind is what we're trying to look for here is sort of tail risk. You know, is there something in these markets that could trigger a wider, you know, a wider consequence in terms of financial stability? And that's, as Tiff said, that's what we're trying to do. You know, Tiff leaves, leads the work in the financial stability board globally to do that. So, yeah, we're absolutely right. So, we look at, you know, we look at the increase in leverage in, in, in core government bond markets. I mean, these markets have changed substantially. I think the thing we've seen actually in the course of the last few months is an increase in, in leverage in equity markets. So, if you look at hedge fund leverage in equity markets, you look at leveraged exchange traded fund markets, those things are changing. If you look at private credit, you know, the questions we're asking is, are those the things that actually can, you know, can move from tail risk into a broader consequence? So, then you have to say, what are the channels through which it can happen? So, at the Bank of England, we're doing a second system-wide exploratory scenario to ask that very question about private credit. That's, that's our job. [00:30:01] Speaker 2: Do you see any other broader risks emerging? And do you agree with the characterization of stretched for the market? [00:30:09] Speaker 5: So, I, look, I mean, we are looking, obviously, yes, we do look at asset valuations because you are living in a world, I mean, you've seen this, obviously, over recent months, where you've got quite a divergence between how, you know, bond yields are moving and how equity markets are moving. Now, I think this, a lot of this comes back to what Kevin was saying about AI. I think it's explicable in broad economic terms. But the question is, you know, is that going to lead to some, some wider stability issues? So, that's on the list. And then, you know, going back to what I was saying earlier, I don't want to reopen it again. But frontier AI is obviously high on the risk as well. So, we've got quite a list of things that we're looking at at the moment. [00:30:43] Speaker 2: I wonder if you, Chairman Warsh, see any signs of excess, trillion dollar IPOs, high margin debt that was referenced. I mean, other things that are going on in this market that remind you of those other times. [00:30:56] Speaker 3: Well, I would say I've been out of this business for 15 years, but I still have the scars from the global financial crisis. I suspect my colleagues do too. We take risks seriously. And that's part of the reason why each of us, I think, at the core have sort of a reformer's heart on this. What can we be doing in the conduct of monetary policy? How should we be revisiting fundamental reforms to supervision and regulation? How should we think about the payment systems that connect us all? So, this conference is principally about monetary policy. I must admit, my first four weeks at the Fed, my attention has been focused on monetary policy. But our governments have tended to give us larger jobs than that. We take it all very seriously. I'm not prepared to sort of make a broad comment denoting risks that are available in the system. But I will say this. This is the biggest time of consequence to each of our economies, I think, in our lifetime. Maybe absent the shocks of 2008 and the COVID shocks, the dramatic change in how businesses do business, how households are thinking about employment and inflation. And so, this is the time we have to go back to first principles. I know at the Federal Reserve with my colleagues, many of whom are here, we're doing that. So, I don't want to sound complacent. At the same time, I do want to say, at least for the United States, this is a time of huge opportunity. And if the Fed can deliver on its remit to deliver prices, I've never been more optimistic about what the growth engine of the U.S. could produce. [00:32:30] Speaker 2: The growth outlook of the U.S. economy this year is what? [00:32:35] Speaker 3: We're playing Mad Libs now. [00:32:38] Speaker 2: Fill in the blank. [00:32:39] Speaker 3: So, I would just say this. Over the last four quarters in the U.S., structural productivity is in the high 2% range. So, potential growth looks like it's trended up. This is a time that the labor markets, hours worked relatively flat. History says that we go from periods of low productivity to periods of high productivity. Nothing is in the bank at this time of consequence. But if the last four quarters are an indication, which is really largely before the advent of the new surge in what artificial intelligence can do, I think there's reason to be optimistic. Now, does that optimism convey into policy in the next six or nine months? It's still too soon to say. [00:33:24] Speaker 2: But strong. But strong. Strong outlook, sounds like. [00:33:27] Speaker 3: You're back to forward guidance. I'm going to disabuse you of trying to extract that. My view, and my colleagues I think have said this better than I, my view is financial markets and the real economy work best. When you look at what's happening in the real economy, when you look at what's happening in the real economy, you make your own judgments. There has been a tendency, and I take plenty of blame from this, the 08 crisis, where we were trying to suppress volatility, where we thought we needed to spoon feed markets to get out of that. That was the right policy for a crisis. It is not the right policy for the time that we have now. And so sometimes unlearning is harder than learning, and I'm going to keep at it. [00:34:08] Speaker 2: Okay, so what are the, President Lagarde, how do you think about the best levers to boost growth in the Eurozone right now? [00:34:15] Speaker 4: Capital market union. 28th regime and boost the venture capital. Okay, so that would be on the growth front. But I would like to add one thing. Thanks to the veterans at this podium and a few other people, we have a strong, solid, robust banking system, which is strongly well-regulated, well-supervised. And I think we should be cautious about what we are throwing away by way of simplification. So we do simplify things, and I'm delighted that, for instance, the ECB has done away with 40 different set of declaration disclosures that were unnecessary out of the 130 plus. So we have to go through that process. But I think we have to be cautious about how risks actually move. And risks were squarely in the banking system back in 2007, 2008, when we were all together fighting this global financial crisis. Risks travel fast. And there is no limit to the imagination of those in the financial sector who are trying to make money, as is their business, and who are taking risks. But the question is really who eventually ends up taking the risk and sweeping the mess. So I would contend that this regulatory work that we did at the time, we need to be very attentive, as Andrew suggested, to make sure that the risks that have moved and traveled afar, through different structures, bodies, and the different names, are also looked at carefully, and that the right measures are taken to protect the public good, and to protect the principle of who takes risks, bear the responsibility that goes with it. [00:36:12] Speaker 2: The other big topic that I know that you all think about, and is part of your remit, is the balance sheet. And Chairman Walsh, you have talked about before you became Fed Chairman, that the balance sheet was too big in the United States. So it's at $6.7 trillion right now. What level would you be comfortable with it at? [00:36:33] Speaker 3: No forward guidance. No forward guidance. And I'm not going to give you the balance sheet. Okay, we're just among friends. We have a task force for that, too. [00:36:44] Speaker 2: We're going to play drinking game on task force. [00:36:46] Speaker 3: Well, I'll say this, there is no secret that from the 2011 period when I was leaving the Fed through now, I wanted the Fed's balance sheet to be smaller, and I long wrote about and described interest rates should be the dominant means through which we make monetary policy. If we're in a crisis that could be a different set of rules, it's always struck me that interest rate policy is the fairest of the broad constellation of our citizens. Interest rate policy, whether we move it up or down, transmits its way into a new mortgage, credit card debt, transmits its way through a lending channel and credit channel. I've always had a view that the balance sheet works mostly through asset prices, works mostly through signaling effects. My four weeks at the Fed haven't disabused me of that idea. As we're hearing an alarm, that must be my way of saying that I've gone too far on the balance sheet. But we have a task force that you'll find out of outside people that are going to debate this topic, bring it back to my colleagues and me to see whether we can have a judgment about whether the balance sheet should be made smaller. The only thing that I'll repeat here, which I've said repeatedly, is if there's a change in balance sheet policy, it'll be a change of my colleagues in the FOMC and the board. Those decisions will be well deliberated publicly, well understood and will not be implemented until financial markets have come to understand what those are. Well, it took us about 18 years to find our way into this big balance sheet, which, again, in my biased view, borders on fiscal policy took us 18 years to get out of it. It won't it'll take us more than 18 weeks to bring it down to size. I'm open minded on the question. We're not going to prejudge it, but I want interest rate policy to be the working or for monetary policy. [00:38:43] Speaker 2: Governor Bailey, you've been focused on the balance sheet. I guess at one point we were asking how big can your balance sheets get, and now I'm wondering how small they can get. [00:38:51] Speaker 5: Well, there's a nice sort of sense of irony I appreciate from this conversation, because I've been accused of having too big a balance sheet and reducing it too quickly. So, you know, well, really. So can I go back to forward guidance for a moment? Because I've really eschewed forward guidance on the balance sheet, so I really don't step into this world of saying we want ample reserves, we want big reserves, small reserves. My line has always been we will meet the system's demand for reserves, because that's the system's demand for liquidity. Now, we will also spend a lot of time, by the way, understanding why the system wants the liquidity it wants. And also, you know, the key other point, which Kevin has made very forcefully, is that's the way we actually implement monetary policy, through the short-term interest rates, transmitting out of our balance sheets into the system. And that works very well. So, you know, our world is, look, we will meet the system's demand for reserves, we will seek to understand very closely why it's doing that. The other policy I have is that I want to take interest rate risk off the central bank's balance sheet, because, you know, with a public balance sheet, interest rate risk should be in the market, not on our balance sheet. And so that's why we're moving to a repo asset side of our balance sheet, because that takes the interest rate risk off our balance sheet, which is what should be the case. [00:40:19] Speaker 2: You mentioned that you alluded to the political heat that you get over this issue. Does that influence the way you think about it at all? I know it's not supposed to. [00:40:27] Speaker 5: No, I think we must have, you know, a sensible policy for moving to, you know, a system where our balance sheet reflects the system's demand for reserves. So, yes, it went up during, it went above that level during the QE period. It's coming down to that level. I want the interest rate risk off our balance sheet. Those are the policies we're pursuing, and I think those are the right policies. [00:40:51] Speaker 2: Speaking of politics, do you get let off the hook, Governor Macklin, because you're, because the prime minister used to be in this seat? [00:40:59] Speaker 1: You know, we get some free advice from elected officials across the country. And, you know, as I tell them, I appreciate understanding what's going on. It's a big country. I appreciate understanding what's going on across the country. But I don't appreciate telling me what we should do with interest rates. You've got your job. We've got our job. And, you know, that needs to be respected. So, I'll just come back to the balance sheet. You know, interestingly, if you compare different central banks, you'll see a pretty wide range of sizes. In Canada, we didn't do QE in 08, 09. Fortunately, in Canada, no banks failed. We did get a big shock, but it wasn't so big that we needed to invoke that emergency policy. We did use QE in the pandemic. It's the only time we have used it. But the fact that we only did it once meant that our balance sheet wasn't as big to start with. And we let the bonds run off, so our balance sheet has run back to its new steady state. And if you compare central banks, as I said, the size of the balance sheets can be pretty different. I mean, Canada's balance sheet is a percentage. Bank of Canada's balance sheet is a percentage of GDP is about a third of the Feds. Now, look, Canada's not the world's global reserve currency. So, yeah, there might be some differences here. But, you know, I think the results of Kevin's task force is going to be very informative to us. And the other thing I'll say about balance sheets is it's a very inside baseball kind of discussion. It's not the sort of thing most Canadians are really that engaged in. But it does, you know, it is how we, you know, there is an element of how do we implement monetary policy? What is the demand for reserves? We've spent, you know, the last couple of days talking about new kinds of money. What do those, what do those potentially mean for our balance sheet? So these are questions we need some thinking on. [00:43:13] Speaker 2: In the short time that we have left with President Lagarde, I did want to get to you on this political point. And because you have been a forceful voice for central bank independence, I know you continue to do so. And you, I mean, I'm like these, these guys, you have to battle more than 20 different governments and leaders. Twenty one. Twenty one. So you're you're a pro at that. I'm just I'm curious if you think that there are if you look across, if you look out and see serious risks to central bank independence, especially in light of the Supreme Court ruling that we got in the United States, letting Fed Governor Lisa Cook keep her job. [00:43:48] Speaker 4: I think, you know, I think, you know, the best way we can actually all do our jobs is to be number one, accountable, number two, independent. And the two come together, you know, and I go to the European Parliament on a regular basis to report on what we do to explain what we do. That's the counterpart for this independence that we have staying in our mandate. The entirety of the mandate is also the sine qua non condition for deserving that independence, which is a precious good without which we would not do a good job. That's my view. [00:44:20] Speaker 2: How did you feel about the Supreme Court ruling, Chairman Warsh? [00:44:24] Speaker 3: We were doing so well, so before the Supreme Court, the Fed acted independently and followed its remit after the Supreme Court ruling, the Fed will continue to do so. I read the opinion on the plane over here. One of the secrets of the productivity led economic growth that I was talking about at the outset is because of the constitutional design in the U.S. it's the foundational element that has given us two hundred and fifty years of outperforming expectations. I believe in Article three judges. I believe in the rule of law will follow the Supreme Court decision. But day to day, the decision reaffirms what President Lagarde already said. We are calling balls and strikes as best we can. We're taking seriously the reform objective and and we're going to deliver on the high promise that Congress gave us to deliver price stability in the context of our dual mandate. And when we do that, we don't have to worry about politics. We don't have to worry about judicial intervention. We get to look in front of us because it's a challenging step. [00:45:34] Speaker 2: OK, we have a minute left. I'm going to ask everybody one quick quickie for everybody to quickies, actually. Governor Bailey, I'll start with you. So favorite economic indicator right now. Sorry, your favorite economic indicator right now. [00:45:48] Speaker 5: Oh, that's a trap question as well. You see, that's a trap question into forward guidance. Oh, God. [00:45:55] Speaker 1: Thank you, brother. I'm trying. I'll tell you what. I'll answer it. Oh, there you are. My inflation forecast. Oh, there you are. [00:46:05] Speaker 2: Governor Bailey, you have to answer. [00:46:08] Speaker 5: Well, look, we look at a whole range of data. Oh, God. I mean, look, honestly, if you sat through our meetings, you would see more data than you could ever dream of. The other thing I say, look, I'll say this. I spend a lot of time going around the country and I talk to a lot of businesses and it's absolutely imperative that we stay in touch with the economy. [00:46:25] Speaker 4: President Lagarde. Inflation outlook, balance of risk, underlying inflation, transmission of monetary policy. Thank you. [00:46:34] Speaker 2: Chairman Warsh. [00:46:35] Speaker 3: I guess I have the last word. With the data project, the data task force, my hope, my aspiration is that 9, 12 months from now, we're going to be using new technologies to understand what's happening in the real economy in a contemporaneous, real-time way. That positions us as central makers to make better decisions, that we're no longer going to have to rely solely on data that we get from government agencies with mismeasurement problems that have surveys that are no longer relevant, that every business we know that are leading in our country are using new data sources to make better decisions. My favorite data is upon us, and if we do our jobs, we'll be here a year from now, and we'll say we've discovered data that helps us make better decisions. And we live up to our promises, we strengthen our credibility, and politics stays at bay. The conventional wisdom that we hear from time to time tells us nothing. Monetary policy works with long and variable lags, as we know, and many of these indicators are echoes of history. We need indicators that tell us what things are when we look out our window today, so when we make judgments, when we next convene, they're as close to real-time as possible. [00:48:03] Speaker 2: I thought you were going to say the dots, since you didn't do one. [00:48:07] Speaker 3: I'm going to let one panel discussion go without me sort of wagering on the dots. There will still be dots for a short time, at the very least, but we have a task force for that, and we'll revisit it. [00:48:20] Speaker 2: Do you have a least favorite economic indicator, President Lagarde? What did you say? Least favorite economic indicator that gets too much attention. [00:48:28] Speaker 4: Those that are wrong. [00:48:32] Speaker 2: Governor Merkel, help me out. [00:48:34] Speaker 1: What I'd say is, especially a lot of the monthly data, it can be very volatile, and sometimes the market over-rotates on the last number. You've got to correlate it with other things. You've got to smooth it a bit. The last monthly number is never going to be the best indicator. [00:48:58] Speaker 5: So I'll give you one that we're wrestling with at the moment, and have wrestled with for years. And it's obviously relevant, which is oil and gas futures prices. So they are terrible indicators in history. The problem is that everything else is also a terrible indicator. [00:49:17] Speaker 2: Very good. Finally, you know, when we were coming into this year, everybody was talking about rate cuts. Is anyone still talking here about rate cuts? Show of hands. [00:49:27] Speaker 5: Well, that's a nice try. Is that a no? That's a nice try at forward guidance. All right. I tried. [00:49:31] Speaker 2: Thank you all very much for the candor. [00:49:34] Speaker ?: And for your turn now. Thank you. Thank you. Thank you. [00:50:36] Speaker 6: Thank you. Always brings together the leading voices of today. Not only that, but we invest in the next generation of economists who will shape the debates that will follow. Our final item of business this year is to recognise the best of this year's Young Economist submissions, as judged by an expert panel, while also taking your votes into account. It's my pleasure to now hand over to President Lagarde to award the prize. Thank you. [00:51:47] Speaker 4: So, congratulations to all the finalists of the Young Economist Prize. For all of us, you're playing a key role, not so much because you're going to fund our pension fund going forward, but also because you are feeding us with new ideas, with your creativity, your research and your energy. So, you are clearly important to all of us, whether we are professors, central bank governors, and any other smart, including journalists, actually, who have been paying close attention to what you do and what you say. So, to all of us, thank you very much. So, yesterday, we had the pleasure of hearing this excellent group of PhD students, and you shared your research with us. Beyond that, I also hope that all of you, you had a chance to go and listen to their pitch at each and every stand, where they were presenting their views, ideas, and the research that they have conducted. Now, reaching this stage of the competition, I have to tell you, in case you didn't know, is in and of itself, no matter who is the winner, a real achievement. Because there were more than 100 applicants, who all were PhD students, all came from the best universities, and they were all very, very good. But you cut that group of the top 10, and you are, as a finalist, a success. So, bear that in mind, that I'm going to have to give the name of the one who is selected. So, you papers actually speak directly to the theme of this year's forum. How do we shape Europe's future? And they remind us how much we gain when we bring new voices, new ideas, new evidence into our discussion. Behind the scene, and to select actually the one who is the winner, it's not just the votes that you all have registered earlier on today. There was a selection committee, which has been extremely busy evaluating the finalist's papers. They took into account academic quality, policy relevance, and, of course, they took into account the votes of the participants through the online voting portal. I'm going to actually ask them to please stand up when I pronounce their name, because they did the job of reading all these papers. You did not. Well, some of you did, but not so many. So, I'm going to ask you to stand up. Seriously, Jordi Galli, please. Where is he? Is he gone? He went to the loo? He went to the loo? [00:54:31] Speaker ?: Yeah. [00:54:35] Speaker 4: Hélène Ray. Hélène. And colleagues from the ECB, Philippe Hartmann, the chair, Joao Souza, and Sébastien Schmid. Up. Thank you to all of you for this work that you did for us. Now, I would like to ask you, yet again, to applause, because the finalists are going to join me on stage. Please join on stage now. Come on. I think you're supposed to approach one at a time, if I understand. And I'm going to give each of you a certificate that includes your name and the fact that you are a finalist in this exceptional contest. Now, do I hand over now, one after the other, or do I announce the one who is winning? State director, please. And then only the winner. Oh, gosh. Okay. I'm sorry. I'm sorry for you all. It's a bit grueling, but I have to do that. So, shall I receive them? [00:56:02] Speaker ?: Okay. [00:56:03] Speaker 4: So, calling you to join me is Simone Zanela Cavallero. Pedro Martinez Burruera. Max Marginetik. [00:56:39] Speaker ?: Congratulations. [00:56:40] Speaker 4: Marina Hoch. Hoch. Congratulations. Luigi Falaccioni. [00:57:00] Speaker ?: Congratulations. [00:57:00] Speaker 4: Luigi Falaccioni. [00:57:01] Speaker ?: Congratulations. [00:57:02] Speaker 4: Lennath Nerman. Lennath Nerman. [00:57:19] Speaker ?: Katerina Nikalepchi. [00:57:21] Speaker 4: Katarina Nikalepchi. [00:57:22] Speaker ?: Katerina Nikalepchi. [00:57:22] Speaker 4: Katerina Nikalepchi. [00:57:23] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:57:32] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:57:35] Speaker ?: Katerina Nikalepchi. [00:57:36] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. [00:57:38] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:57:43] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:57:46] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. [00:57:48] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. [00:57:50] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:57:55] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:58:10] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:58:15] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:58:20] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:58:40] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:58:55] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [00:59:10] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:01:57] Speaker ?: Katerina Nikalepchi. [01:01:58] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:02:40] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:02:44] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:03:46] Speaker ?: Katerina Nikalepchi. [01:03:47] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:03:55] Speaker ?: Katerina Nikalepchi. [01:03:56] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:03:59] Speaker ?: Katerina Nikalepchi. [01:04:00] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:04:20] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:04:23] Speaker 4: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. [01:05:10] Speaker ?: Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi. Katerina Nikalepchi.