C studio for a recap of today's Fed decision.

So, Brian, you had the last question.

They're trying to drill down a little bit more on the jacket, wears the final question of the decade.

I don't think about that.

That's right.

Wow.

Wow.

Well, tell you, the Fed didn't give me anything for that.

So what do you mean?

They gave you so much information today?

They told you that they don't really understand what's happening between labor and wage inflation, that there's like a faint signal there.

They've told us that we have no idea what's happening with inflation.

It feels like, overall, what was the biggest takeaway for you?

Yeah, well, I mean, the headline was obviously that nothing really happened in this meeting.

So the Federal Reserve kept rates at the current range of 1.51 point 75%.

They did have a fresh round of dot pop projections that indicated the median died, basically saying no change in 2020 with maybe one rate hike in 2021 another one in 2022.

But as Jay Powell said, it might be too much to pay attention to each of those dots, especially with the economy kind of at the point where it's at right now, where we really don't know if the next step is going to be a rate hike or rate cut.

Although it seems like a lot of the questions really focused on what sort of heat we would need to see in the economy to actually warrant some sort of raise in the federal funds rate, which is what I asked him.

I said, Well, if the labor market does get hot because you have said that you don't see it as hot right now, what would you need to see in order to try to see something like that and then maybe want to raise rates?

And here's what you had to say really Wages.

I mean, there's so many other measures that suggests that the labor market is, I'd like to say the labor market is strong.

I don't really want to say that it's tight.

Someone asked me a question about a hot labor market that was in the Humphrey Hawkins hearings.

S o.

I'll say that the labor market is strong.

I don't know that it's tight because you're not seeing wage increases, you know, ultimately, if it's tight, those should be should be reflected in higher wage increases.

So it does come down to that.

Um, you know, we look at countless measures of of labor market, you know, labor utilization.

And there's so many.

It's too many to count.

But the one that has that is kind of suggesting that year it's a healthy number that you know, the sort of 3.1% average hourly earnings number is a decent number.

3.7% for production on supervising workers is more lt.

Um, Ultimately, though, we'd like to see to call it hot.

You'd want to see heat you'd want to see.

You know, higher wages, call a hot, you'd want to see heat.

And he's talking about really wage inflation.

And that fits in with the overall theme, not just wages.

But he'd like to see overall inflation and what he said persistent inflation before he would see a case from raising rates.

But as is for the time being, sounds like the Fed is pretty content with doing nothing and keeping rates steady, as is well and Brian.

I think it was striking to me that the theme of the press conference I mean, there were some repo questions and, you know, Soltan Post are made a cameo appearance, basically.

But that was sort of for the nerds over here.

I mean, the mainstream theme of the press conference was, What is the deal with labor market?

And at what point would you start to view it differently?

Because the only real change they made right and the projections was lowering the unemployment rate forecast for next year, the year after and their overall Nehru.

But there's still 6/10 of a percent above on their long term estimate where the unemployment rate is today.

And so I'm just surprised that the Fed continues to insist that the economy, I think they're basically mean, palatable view.

The economy has more slack, but I think there's still underestimating the labor market.

Yeah, and they're underestimating labor market.

But they're also underestimating, in my view, what the actual projections for inflation should be as a result of that, right, because I think we've come to terms with the idea that the Federal Reserve has not seen any sort of pressure on inflation as a result of unemployment blowing through time after time the Federal Reserve's own estimates for where unemployment really should be.

And we can get to the nitty gritty of the Phillips curve itself.

But regardless, it was still kind of peculiar that the S E.

P s continued to project that the Fed will hit its 2% target exactly and achieved 2% core PC by 2021.

When we've already seen that the Fed has persistently undershot and only breach to 2% basically one time since it's actually established that target in 2015.

And it was interesting because a lot of inflationary pressures air really just kind of psychology.

It's what they call rational expectations, getting markets to actually get toe low and stable inflation by simply messaging to the world that this is an economy that will have low and stable inflation.

You could do that in a Fiat currency world, but the Federal Reserve has not really acknowledged that actually, there might be a risk of continuing to undershoot it by 2021.

Maybe we don't have 2% and maybe we likely won't have 2% by 2021.

But I think the Federal Reserve has kind of continued to anchor expectations or at least say explicitly that it's going to be there by 2021 because it doesn't want to lose hold of that.

That was a question from Nick Timiraos at The Wall Street Journal, but Powell punting on that as well, saying, We don't have any explicit goals for right now.

We have that 2% target, and we're optimistic that we'll be able to have that Brian Chang live in D.

C.

Great job today.

Investors sack Guzman here.

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