Rob Kaplan on How the Fed Will Think about the Tariffs
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What is the main topic discussed in this episode?
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Bloomberg Audio Studios, Podcasts, Radio News.
Hello and welcome to another episode of the Oddlots Podcast. I'm Jill Weisenthal.
And I'm Tracy Alloway.
Tracy, there are many dimensions of the ongoing market turbulence and trade tensions that we can't stop talking about. But a big one, and in a way it's almost like people aren't talking about it that much right now because there's so many other things top of mind. A lot of questions about how the Fed is gonna think about what's happening right here.
Right. And I know it's probably not very popular to sympathize with the central bank, but I gotta say, I would I would hate to be Jerome Powell right now because in my mind, the consensus right now seems to be that we're heading for some sort of stagflationary scenario, at least in the short to intermediate term. So higher inflation, lower growth, possibly even recession. And that to me just seems like Like a nightmare scenario for a central bank which constantly has to balance its twin mandate of price stability and low unemployment. Scenario
It's really tricky, right? Because we've sort of been used to environments where it's really obvious, right? So in 2022, 2023, it was clear that they were missing on one specific side, which was the price. For much of, you know, post 2007 or 2008, the story was weak growth, disinflation, whatever. So poor employment. I mean, this is gonna be tricky. And look, when we're talking about restructuring the global economy. economy or the internal economy, these are questions that there is a limit to the degree to which won monetary policy can solve them. Oh yeah. Oh yeah. They can maybe, you know, m may smooth things out a little bit. But yeah, these aren't really monetary policy questions we're talking about here.
Right. And I think we all internalized that lesson in the twenty twenty pandemic, right? We saw all these real world disruptions, supply chain issues, and that gave rise to the infamous transitory inflation, as the Fed called it. And It seems very much like that's a possibility again, right?
Totally. And like we've been saying, we've been going back to talking to all our old supply chain guests because, you know, the whole world may be redrawn. Anyway, we are recording this after the market closed. It's April 8th, 2025. It's 409 PM. We just had another crazy day in the market. S P 500 ended down 1.57%. It had been up over 4% at one point. So we continue to whipsaw. Anyway, I'm excited to say we really do have the perfect guest. Someone we've had actually on the show once before. We are going to be speaking with Rob Kaplan. He is a vice chairman at Goldman Sachs, member of the management committee. Prior to that, he was the president and CEO of the Federal Reserve Bank of Dallas. Prior to that, he had been Harvard.
And prior to that, he had been at uh Goldman Sachs.
What recent market moves and tariff announcements set the stage for today’s discussion?
Truly the perfect guest for right now. Rob Kaplan, thank you so much for coming back on Outlots.
Thanks for having me. Good to talk with you.
Tracy said she wouldn't want to be Jerome Powell. I would still take that job. But I'm just let's start. You're on this let's say, you know, this is all happening a few years ago and you're still at the Fed. How stressful is this kind of environment for charting a course for monetary policy?
Well, the last time we had a tariff issue. Yeah. You gotta go back to two thousand nineteen. I was at the Fed at the time. And you may recall we preemptively Cut the Fed funds rate. Three times. I think we called it a tactical recalibration or something like that.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–3:30
2
What recent market moves and tariff announcements set the stage for today’s discussion?
3:30–4:36
3
How does the Fed view the risk of stagflation amid higher tariffs and a possible recession?
4:36–17:15
4
Why did the Fed pre‑emptively cut rates in 2019 and what can that teach us about today’s tariff shock?
17:15–20:15
5
What are the Fed’s main concerns about inflation, growth and financial‑market stability right now?
20:15–34:50
Speakers
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