? (Anchor) 00:00.070
one of the key questions for investors in twenty twenty six is what the fed will do with interest rates not to mention who will be the next chair for more on both fronts let's welcome in robert kaplan he's the former dallas fed president now vice chairman at goldman sachs it's
? (Anchor) 00:13.390
always good to see in person welcome back
Robert Kaplan (Vice Chairman) 00:15.190
good to see you alright
? (Anchor) 00:15.950
let's start with the meeting that just ended would you have voted for a cut
Robert Kaplan (Vice Chairman) 00:21.130
i probably on the margin would have argued against a cut
? (Anchor) 00:24.570
but yes i
Robert Kaplan (Vice Chairman) 00:25.730
i think we're going to head into a firming in twenty twenty six due to regulatory relief tax benefits tax refunds continuation of the AI boom and i think a lot of the weakness we've recently seen the job market it's it's a little bit of tariffs on small business but it's the the
Robert Kaplan (Vice Chairman) 00:47.800
shutdown it was going to have a negative effect the shutdown 's now over and i'm worried that we're now at neutral do you wanna be at neutral when inflation 's running above target
? (Anchor) 00:58.630
so when you say firming you're talking about inflation firming further from from here
Robert Kaplan (Vice Chairman) 01:02.750
i think the GDP growth is gonna firm i think inflation may be sticky in the first half of the year but we'll have to see but the way i would handle this is the my attitude once the meeting is over decisions made now the debate is what we do from here and i need to see either a
Robert Kaplan (Vice Chairman) 01:23.670
deterioration in labor or an improvement in inflation in order to act so
? (Anchor) 01:27.670
you wouldn't be one of those who would be willing to run it hot so to speak and protect against against the downside in labor like a like a waller for example who told steve liesman today the labor market says you can cut again
Robert Kaplan (Vice Chairman) 01:44.150
yeah so yeah i think we bought our insurance my attitude would be we just did seventy five basis points we we more than bought our insurance it's against a cyclical slowing i think a lot of the weakness in labor is structural tariffs are hurting small business disproportionately
Robert Kaplan (Vice Chairman) 02:01.190
anticipation of AI is a structural issue and i don't think i think we bought enough insurance and we need to make sure we haven't been at target on inflation for now four years and i want to make sure we get back down to target
? (Anchor) 02:14.310
so do you not believe that four six on the unemployment rate is legit you think it's skewed
Robert Kaplan (Vice Chairman) 02:19.630
it's a little bit for two reasons again we just had a shutdown and you got this jump in labor supply i have a feeling over the next few months it would not shock me if that jump in labor supply gets revised down i i don't think you're gonna see a persistent jump in labor supply
? (Anchor) 02:36.510
what do you make of the dissents the divided nature of the fed you in many ways are representative of what we're seeing and hearing from the chair that's actually taking place in the room how does that resolve itself
Robert Kaplan (Vice Chairman) 02:50.430
so the reason the divide got more accentuated is they were getting close to neutral at four and a quarter four and a half you can debate it but i'm i'm more calm i think neutral is in the range of three and a half to three and three quarters and three quarters percent inflation
Robert Kaplan (Vice Chairman) 03:10.430
plus three quarters to one percent real and the reason the tension increased as we got to neutral is inflation 's running above target do i really want to be at neutral i i think it may turn out to be fine but i think that's the tension i think that tension now is behind us in
Robert Kaplan (Vice Chairman) 03:26.070
that they did it now with questions what do they do from here but if i was against it in december i certainly don't want to see any more i want to see some evidence that inflation 's improving and we may get it but i want to see
? (Anchor) 03:39.150
it but but the risks are still two sided you could wait to see what happens with inflation but the labor market takes a turn for the worse and it might be too late to deal with it i mean at some point the market might be worried about a mistake
Robert Kaplan (Vice Chairman) 03:53.270
so this is where you have a good debate and i think it's healthy chris waller is arguing he's more worried about weakness i would argue we just had a shutdown the shutdown 's now reversed we've got big tax refunds and tax incentives going into next year we still have the AI
Robert Kaplan (Vice Chairman) 04:10.390
productivity boom and i think we bought enough insurance but that's that's a good thing that you have that debate