Caught in the Canada trade war crossfire
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What is the main topic discussed in this episode?
On the program on this Friday, we will do our Friday thing. We're gonna talk bonds. Yes, I know. Sorry. Also, when was the last time you posted on LinkedIn? From American public media, this is Marketplace.
In Los Angeles, I'm Cod Rizdal. It is, as I just said, Friday, the eighteenth of September is what this one is. Good as always to have you along, everybody. So look, let's just start, right? Katherine Rampel is at the Bulwork and also MS Now. Heather Long is the chief economist at Navy Federal Credit Union. Hey you two. Ms. Rampel, we begin with you, and I would like your take, your sense, uh, of how Chairman Walsh is doing in his promise not to let people know what the Fed is going to do, the whole forward guidance thing. Because, you know, regional presidents are doing their speaking and there is the dot plot, so we kinda do know, no?
Uh well we certainly know what other members of the Fed of the Federal Open Market Committee are thinking and and how they're digesting the data because they are providing their own form of forward guidance, as you point out, making speeches and and you know, planting those dots on the dot plot. Warsh to t if as as it pertains to Walsh, I think he is trying to not give a hint of where he expects policy to go, but he kind of can't help but give a hint of where he expects policy to go. I mean, part of the reason why the Fed was sort of boxed into raising rates this week is because of things that Walsh had said at Jackson Hole weren't where he basically said inflation's too high and And kind of conveyed that unless we had unusually uh miraculously good inflation reports between then and the the Fed's meeting this week, that
markets should anticipate that the Fed would act. And so the Fed had to act. So there's that. There was also his comment about how they removed a dose of accommodation, which I think a lot of people heard as maybe there will be another dose of something or other that is coming soon. So there's only so much he can he can like corral the other members of the Fed, the the F O M C. But there's also only so much that he can withhold uh uh from markets if he opens his mouth.
Right, right. Which, you know, I mean he's he's he's not a man of many words, but he does sort of have to speak in public sometimes. Heather Long, let me ask you this. Uh on that removing the dose of accommodation thing. Um he also said policy is not restrictive yet. And while I do not want to get into a discussion of the neutral rate, um, what do you think he means by policy is not restrictive yet? That clearly means something's gonna happen, right?
Yeah, it clearly means that he thinks that there's no straitjacket on the economy yet and that he can h this hike is not going to slow growth. He went out of his way many times to talk about the strength of the economy. Uh his final answer was was probably the one that shocked me the most, which is when he flat out came out and said, I don't believe that we need to harm labor markets to achieve our objective. That we can do uh, you know, forget immaculate conception, we can do immaculate disinflation. Uh the holy grail of economics. And so that's what he means by not yet restrictive, that we are not in a place where hiking rates is causing people not to take out loans or not to start businesses or to really change their um objectives.
Yeah.
Yeah.
What is the Fed’s current stance on forward guidance and rate policy?
Sorry, Heather, keep going with the labor market bit, right? Because that answer struck me as well. And and it does seem that there that gives some room to the chairman and the rest of the committee.
Well, there's a lot of tension there. That seems to be where he has tension with the rest of the committee, right? Because in the rest of the committee in that dot plot they released was projecting it could take a long time for inflation to come back down.
Twenty twenty nine twenty twenty nine, which
is not soon. That is not soon. That is not a timely. Um and so it seemed like there that's Honestly, I wasn't sure when he gave this answer and he gave it the very last question asked.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:02–3:39
2
What is the Fed’s current stance on forward guidance and rate policy?
3:39–9:36
3
How are rising Treasury yields affecting banks’ balance sheets?
9:36–17:14
4
What impact will the U.S.‑Canada trade‑war bans on beer, whey protein and other goods have on small businesses?
17:14–20:55
5
How are Vermont‑based cookie‑cutter makers coping with potential Canadian tariffs?
20:55–24:01
6
What challenges do cross‑border snow‑grooming equipment suppliers face under the new tariffs?
24:01–27:07