저자: Kevin · 외국인
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2023년 2월 Fed 총재 Mester 인터뷰 내용을 정리하며 채권·금리 흐름을 분석한다. Mester는 연내 금리를 5% 이상으로 올리고 일정 기간 유지해야 한다고 발언했고, 인플레이션 하락에도 고용 훼손 없이 가능하다는 입장을 보였다. 진행자는 금융여건이 긴축되는데 인플레 기대(브레이크이븐)가 오르는 이례적 현상을 지적하며, Mester의 발언을 시장에 강세적으로 해석한다. 25bp 인상으로도 상단 5%에 도달 가능하다는 점에서 매파적 메시지가 약해졌다고 본다.
다듬은 글
well we always like to align you know with where the markets are or not we don't want to surprise the market so the alignment I think is is closer than it was before but you know we're going to set policy to do what we have to do to get back to price stability so we've been raising interest rates we've seen some of that working through the economy we have seen some pressure off the inflation but inflation remains too high and as as you know coming out of the the meeting last time in the minutes showed earlier this week that we're going to have to do a little more to get that back to price stability of two percent so I said yesterday there's only one species of fed official now a greater or lesser Hawk where do you put yourself in that if at all um are you sorry about the audio glitch it's fixed average or medium uh fed funds uh forecast for among that officials of five and an eighth or are you higher or lower than that so as I always said to you I'd like to be known as an owl not a hawk or a dove but for for his wisdom right exactly but it's not up to me to call myself that um you know I see a little more impetus in the inflation measures than my colleagues did at least in December when we put out the last SCP readings the summary of economic projections so I had my funds rate a little bit above the median in that projection and I haven't really seen much change in my outlook for the economy since since that time so I see in that we're going to have to bring interest rates above five percent and we'll we'll figure out how much above that's going to depend on how the economy evolves over time but I do think we need to be somewhat above five percent and hold there for for a time in order to get inflation on that sustainable downward path to two percent but it's maybe significant what you're saying is you haven't seen anything in the interim that causes you to change what your dot was in December no I think I'm where I was because remember I saw a little bit stronger more inflation impetus than the medium did and I also think that um the the labor markets I'm not really seeing a trade-off between the hot labor market and inflation I'm really focused on inflation what we learned over the last expansion the pre-pandemic expansion is that you know the unemployment rate can be very low without necessarily spurring inflation so I'm really focused on the inflation numbers and I don't see that we have to have this trade-off necessarily between labor and price stability in fact I would say I'm greedy I want to have healthy labor markets and a return to product my colleague Joe Kern wants to ask a question but I want to just get one more before before we get to him um the real question I want to ask you is what the heck's going on with the economy we're supposed to be an economy that was right now either in recession or on the way to recession we printed a half million jobs for January we had retail sales go through the roof is this all seasonal adjustment is this economy weakening or is it ignoring the FED when it comes to Greater rates no I don't think it's ignoring I mean we've seen some of the impact with higher rates certainly if you look at the housing market right that's definitely clearly slowing right manufacturing slowed a bit now we have some impetus that suggests that maybe it's not slowing as fast as we thought so you know if you had to sort of characterize what's happened is coming into this year there's probably a little bit more underlying strength and a lot of forecasters thought but there's also some movement good movement on the the inflation measures they are coming down it's just that the level of inflation is still too high which is why coming out of our last fomc meeting the broad you know consensus was among all the participants was that we're going to have to do more which is why you know the statement said ongoing increases Joe thanks Steve president master I'm just trying to get uh some insight into the idea of of maybe 50 basis points and why it might have made sense why it ain't happening theoretically it could still make sense like I think if if you know where you're going or a pretty sure of it and you need to get there you might as well get there is the argument I'm wondering whether uh maybe everybody else is is or some people are more cautious is because we it's there's still data dependency is it possible that something happens more quickly in terms of of a weakness in some area so that is there a reason to just do 25 because if you need to do 50 you might as and go higher than that you might as well do it unless you're leaving an opening for data to come in that shows that you didn't really need to go that high is that why you don't go 50.
yeah so Joe it's a good question about tactics about where how you know to get to where we need to get to you know I I'm on the record saying that at the last meeting I saw a good economic case for doing 50. because my view of the Outlook hadn't changed and I do believe we're going to have to move our policy rate above five percent at a 50 at the last meeting would have brought the top of our target range to five percent but you know other people on the committee had different views and so that's what the value of having people sit around the table as we come up with sort of a consensus view now at every meeting right we go do that same kind of analysis we look at where the economy is we look at the incoming data we project out where we think the economy is going understanding that the economy can evolve in different ways than expected and then we set our best policy path but I think the message coming out of the meeting was we've got to keep going a little bit more we've come a long way we brought the funds rate up quite a bit but we still have a little more work to do in order to sure that we get back to price stability and making sure that we're commit making sure we're committed and people understand our commitment is what's going to be able to get us back to price stability we support a 50 at the next meeting I don't go I don't prejudge right I go into the meetings and I'm going to look at the data and we're going to have a new set of forecasts and that's going to help guide where we need to get to but that's a tactical decision that we make at the meeting right it's got to be based on where we're going how much the economy is slowing in terms of getting demand back in line with Supply and of course the supply chain issues are also improving so there's two things going on demand is moderating and if you talk to our business contacts and our labor market contacts in my district and I would submit in a lot of the districts right they are businesses are saying that things are moderating so I know a lot of people think that well the date is lagged and you're only looking at the past we have a lot of contacts across the districts that we talk to all the time and that's very important because that's forward-looking they're telling us what they're planning to do Andrew has a question for you president can you succeed at reducing inflation without raising unemployment and on the unemployment front what do you think a politically palatable unemployment rate is yeah yeah well you know this is a interesting labor market to say the least it's it's shown a lot of strength there are structural things going on in the labor market as well as cyclical things so I do believe that we can get demand down um without seeing the same kind of uh rise in unemployment that in in past slowdowns we've seen and in fact when you talk to businesses a lot of them said it's been so painful over the last couple years and they've spent so much effort to hire people that they're going to do everything they can even though they're anticipating some slowdown in demand for their output they're going to do everything they can to keep people on staff so they after we get Beyond this slow down and get back you know on the path to price stability that they'll have the staff they need and in fact some of our firms in our district are still hiring because they're anticipating that if we do have a Slowdown it'll be mild and then we're going to go back to a really healthy economy so I do think that then in this labor market we can get that we can have both we can have healthy labor markets and we can go back to price stability but I also think it's really important to know that if we want to sustain healthy labor markets over time we've got to get back to price dually so that's why I'm very focused on that aspect right we've got to get inflation down we have to get back to our two percent goal in a timely way and that's why I'm focused on that right now the problem president Mester is history is not really on your side you don't have you as I mean the Federal Reserve not you personally doesn't have a terrific track record of bringing down inflation without a recession and this is the other side of Andrew's question which is do you think a recession is likely can you avoid a recession and still get back to your two percent questions so my forecast is that growth will slow this year and be well below Trend um I still hold to that forecast so when you're that low you know it doesn't take much of an some kind of shock that you're not anticipating which is the nature of a shock you don't anticipate them that can push you into negative growth for a time but you know when you talk to your business contacts you know they're all sort of preparing for that kind of recession but when you talk to to a one they say it's going to be mild so again I I think we can get back to price stability what's different now Is our commitment to getting back to two percent and all the things we've learned over time about how important it is to have that commitment to communicate it to be very clear about where we're going right as clear as we can without being present we're not present right but to be very clear and that's what's going to get us back to two percent there was a very important concept embedded in Joe's question to you which is one about lags we just had Jim Bullard on from St Louis he said this is 2023 there are no lags anymore I'm overstating what he's saying do you think there are lags that are yet to hit this economy that will I guess offset the need for you to go quite so high so there are two things one is we have been very much different this time in terms of communicating where we're going so what you saw right when well before we made that first rate increase back last year at the beginning of last year right markets had already priced in some of that because we were communicating in advance that doesn't detract from the fact that it does take time for those rate increases to go through the economy so the financial markets reacted but it still takes time to get through and we saw that in the housing market it didn't react immediately it took even in the housing market which is very interest rate sensitive it took some time those lags are still there so I do believe that you know we're going to start seeing you know more of what we've done in the past affect the economy but nonetheless if you just look at at what's going on in the economy now the strength the fact that inflation Still Remains High the fact that you know parts of inflation are coming down but other parts including the important service sector X shelter have not moved we're going to have to do some more but we are making progress on that path Joe uh president Master if if Energy prices um if something happens there I don't know we're using the spr you know take your pick on on what could cause a spike there if and I know you could do core maybe to try to factor that out but then it seems like it filters through to everything else if if that's why inflation stays stubbornly high would you continue to work on slowing the overall economy when really you're not it's not really why do we have the inflation you can't really address the the energy supply problem so it just seems like that would be a bad reason to go much higher than you need to go in terms of tightening for something you can't really control yeah so Joe it really depends on what's causing that and you know the energy prices arise if it's because demand is still well outpacing Supply then we're going to have to think about what that means in terms of the path of inflation if it's a supply shock which is typical what you what you're I think what you're talking alluding to then right you're exactly right we have to look at what's the underlying inflation rate what are inflation expectations doing which are all important anchoring them keeping them at two percent over the long run so long run inflation expectations are still reasonably well anchored and so we'll have to do that judgment but you're exactly right this is a risk management kind of a process that we have to go through so it really depends on the source of that rise in interest rate we're going to have to go real quickly but we've been giving every beneficial we're talking to a hard time about the following you guys had it wrong when it came to the inflation and policy inflation surged up and the Fed was on the wrong side of that trade why should we have confidence now you have this right this time well you know we're just like every other Economist trying to do the best forecasting job we can I think we reacted well in terms of once we agreed that this inflation impetus was there it wasn't going to dissipate quickly that we were really going to take action we did that and we are very committed to getting back to price stability in a timely way all right president Mr thanks for joining us and okay listen to this look I I just I'll talk about what she just said in a moment but this was scary okay you ready for this look at this I've hey quick note Ricky Carruth on YouTube made a phenomenal review of his shadowing experience with me so if you're interested in that learning more about me or my personality and what I'm like in real life o use that flash sale we've got a 69 off discount for you on all the programs I'm building your wealth the most common right now are zero to millionaire real estate investing and stocks and psychology of money which would come with trading fundamental analysis long term analysis analysis my thesis on the market q a with me and daily Market open live streams and in the elite Hustlers course we've got custom live streams on the weekend never seen this before so obviously the FED officials they regularly bring up inflation expectations and I've never seen this before this just this is the first time I've actually seen this on this particular chart and it's not just this chart it's also when I zoom out even more but let me explain this to you because it's kind of scary and then we'll talk about what Master just said but it and it's scary because of how uncertain or how much uncertainty it creates all right so what I want you to think of first is this blue line right here or inflation expectations this white line are Financial conditions so the higher the white line goes the tighter things are think about it as like 10-year treasure yields interest rates are more expensive the market is crappier right so things things are tougher for businesses and expansion when the white line is up and when the blue line is down it suggests disinflation or deflation even right so generally what you see is as Financial conditions tighten the Market's expectations of inflation go down it was true over here in 18 it was true in the pandemic it's pretty much always true in fact let me show you pretty much always true by zooming all the way out to when this financial uh this this sort of tightness chart started or the break evens chart started over here in the.com bubble you can kind of see the inflation expectations go up over here on the left when we see Financial conditions come down in Great Recession you see Financial conditions up and you see break evens down okay all right so we got that now what is happening that I haven't seen before and this is a little odd because it's it's sort of breaking the tradition of what we usually see and we know it's something the Federal Reserve really pays attention to okay ready for this look at this chart now look on the far right side look at this this is so weird Financial conditions are tightening at the same time as break evens are moving up that's bizarre usually break evens come down as Financial conditions loosen in fact you can kind of see this loosening over here and we loosen expectations over here we uh had this this uh um uh but but I can't say we have much of a correlation between some of these so there's a lot of I guess maybe the way to look at this because as I'm looking at this a little bit more the way to look at this is it's super odd and volatile right now relative to what we've seen in the past right generally again in the longer term as these conditions fall break evens uh arise as the conditions rise break evens fall but right now we're having this sort of bizarre moment where yields are going up expectations for the market are tightening or getting higher but inflation expectations are actually also Rising so it's kind of bizarre because it somewhat the only implication I could pull out of this is that the market is suggesting we need even tighter 5 Financial conditions to actually keep this downtrend moving on the breakevens now that somewhat aligns with what Loretta Master says which look we've got to get above 5.1 percent and what did she really tell us well one of the big things that she reiterated was something that we've heard about in the fomc minutes which is that look the housing market is slowing down and Manufacturing is slowing down slightly but not as much as we'd like notice that kind of combination there manufacturing is slowing but not as much as we'd like or expect housing is slowing and then kind of like yay that's what they want right they're trying to engineer a housing slowdown because the housing slowdown is exactly what reduces demand and spending and that brings inflation down she also is one of the first folks here she was supposed to be the basically the Big Bear who's going oh 50 basis points 50 basis points today she's like ah you know I said 50 last time but I don't necessarily have to say 50 this time I just wanted to say 50 so we get closer to the high end rate of five percent well I mean if they do 25 basis points in the next meeting they'll have the high end rate because remember it's a range when they raise rates they give us a range so if we're at 4.5 to 4.75 now well if we raise another 25 BP what do we get 4.75 and 5.
right so you can achieve what she wanted to achieve last time this time with the 25 BB hike that just reiterates what I'm saying over the last few days and quite frankly for a while that I think it would be ridiculous for the Federal Reserve to go 50 now even though that's probably what they should do they'd be shooting themselves in the foot in terms of credibility for what they have left anyway but let's put some of that aside what else uh did she mention that was quite odd or maybe should I say different for fed folks well she talked about basically without using the words the Phillips curve being broken now that's really interesting because generally in order to bring inflation down you have to force unemployment especially if there's a wage price spiral wage price spiral you have to kill the economy Force employment bring things back to normal 1980s all over again Paul volcker right okay fine so since then uh and even prior to that traditional Keynesian thought uh and Via even the the Phillips curve which you know was created in the 90s well after uh John Maynard Keynes and his economic theory series but anyway this Phillips curve was was this idea that hey look in history we always have to force Unemployment uh to to bring inflation down and she made the argument here that no we don't think so we think there are things happening in the labor force that make quote unquote this time different because people aren't laying people off because they went through years of struggling to find people so maybe if everybody's just sort of patient and walks through whatever this is whether it's below Trend economic growth or a shallow recession maybe as long as we can get through the pain of of you know last year and this year and we suffer with our flat earnings or our negative EPS for a year or two and and then we we basically as American Express says spend through the recession and use the savings we built up to sort of survive and get to the other side as businesses and individuals well there may be things just won't actually be that bad and we don't actually have to force unemployment up for inflation to come down that's the argument she just made I mean if you go back and just rewind and listen to it she was pretty clear that we don't need to break unemployment the unemployment rate can be very low without spurring unemployment that stands in complete contrast to what the Federal Reserve basically has been teaching for for decades which is this idea that the Phillips curve says if inflation is low uh the unemployment rate or to get the inflate to get inflation down the unemployment rate must go up because then in other words what labor earners have less pricing power and if labor earners have less pricing power they bring inflation down because this you basically have the opposite of a wage price spiral right labor gets cheaper as it competes for dollars and that enables prices to come down uh as company margins can rise in excess maybe of even their their labor cost savings uh and so so their need to raise prices evaporates and then pricing uh uh comes down Top Line pricing comes down so that's where sometimes pricing power gets a little bit tricky because we generally think of pricing power is oh they can raise prices well look Tyson Foods might be able to raise prices but if their margin you know if they raise prices 10 and their margins are are compressing 20 well they're losing more money right even with higher prices so really like ideally for for a company uh you can actually reduce prices and your costs go down even more because now you could be more competitive against your competitors uh you could be more competitive some more of your product and boom you win right like you you end up making more money at lower prices that's the ideal scenario so I think it's interesting my sort of my big takeaways uh from what Loretta Master said were a inflation expectations are still anchored which I agree with her but they're starting to do something weird it might just be short-term volatility and that the market is now expecting that we have to tighten Financial conditions even more but sure I suppose if you look out and zoom out more sure they look anchored but I I you know I I don't like this recent rise we've had in inflation expectations I think they're going to to pay attention to that and if we have to bring Financial conditions back up to these levels well that's going to be in 10-year treasury yield at four and a half percent and real estate gets hurt even more right uh her taking this strong stance that the Phillips curve is broken we don't actually have to force unemployment because people are hoarding employees also quite interesting and her reiteration once again that the housing market essentially has to keep coming down which is what we've heard your own policy at the beginning of last year the middle of last year and reiterate in the minutes really to me suggests the FED wants 10-year treasuries up they want real estate down that's the goal of the fed and they don't really care what happens in the stock market in the short term we'll see but that seems to be what uh what Loretta Master suggests and it's also interesting that she basically just walked back this idea that she's 50 50.
she made it clear hey like I was 50 to get the upper end to five percent well guess what in the next meeting you can get the upper end to five percent with a 25 BPI right after all 25 25 is 50. so I have to say if she's a hawk and she's listening to her contacts as leading indicators if she's considered a hawk this was bullish and I'm not I don't think I'm trying to be like you know put the bias on or whatever and I want it to be bullish like if this is hockey I tell you you know uh you know this if she's a hawk that was bullish you know whether that's the leading indicators they're seeing or the leading contact stuff they're at whatever right you know they're teal books and their economic reports from their industry contacts whatever you say that was not a bearish fed talk and she was supposed to be one of the Bears that was driving the stock market down over the last few weeks here over this fear
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