Former Kansas City Fed President Esther George Talks Inflation, Warsh

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Lisa Abramowicz** (0:07)
Joining us now, I would love to bring in someone who has known this, who has shaped this event as the former Kansas City Fed president, Esther George. Esther, thank you so much for being here with us. What are you looking for today?

**Esther George** (0:20)
Well, when I come to this conference, I'm always looking for the substance of the topic, for sure. We all understand. Really?

**Lisa Abramowicz** (0:27)
Are you really looking for stable coin right now? Is that really why you're here?

**Esther George** (0:32)
Always. Now, we understand that when the Fed chairman kicks off this conference, that everyone leans in and is listening, depending on what's going on at the time, what he or she has to say.
Today is certainly one of those days.

**Lisa Abramowicz** (0:48)
How different is the mood here this time? I know that it's a little bit more lightly attended just because it's heading into G20, so there aren't as many international central banking leaders as have previously been here. Nonetheless, it does feel slightly different with people wondering where the zeitgeist on the Federal Reserve actually is. How different is that?

**Esther George** (1:07)
Well, it's always different when you bring in a new Fed chairman, right? There is a transition here.
This is his first speech at the podium. And so a lot of attention on what is he going to say, given the buildup to this, from the time he did his first press conference after the FOMC, to what will he say here? He signaled to us at the last press conference of the FOMC that he was going to talk about big questions. So everyone's speculating on what are those big questions.

**Tom Keene** (1:34)
I'm going to be rude. I wouldn't ask this of the President Schmidt of the Kansas City Fed, but I'm going to you as well. The heritage of Kansas City is the agricultural Fed. We see wheat prices where they're going right now. We see the farm policy of President Trump. Is the Kansas City Fed steps out and says enough? How much are we going to see a quality of dissent of presidents and governors given the data ahead? What's going to be the new character of the dissent with great respect for the giant Wayne Angel?

**Esther George** (2:02)
Yeah.
So I think when you come from the heartland, you are very focused certainly on ag, but you are thinking broadly about what do these high prices mean for the long run in our economy. And that of course is the mandate of this institution is to think about the long run. And so I think as people are looking at this inflation data, it is not turning in the direction that the committee had hoped. It is continuing not only to be sticky, but to press forward. And that of course requires a response. And what everyone's watching for is to say, what exactly is that response? Is it words or is it an action with the tool that the Fed has?

**Tom Keene** (2:41)
Like the Supreme Court, where you know they're discussing chit chatting before an important case, do centers talk to each other? Do they go back and forth and say, instead of a little e-mail, I hate this guy? I mean, how does that work?

**Esther George** (2:55)
Well, you have every opportunity at the table to have a frank discussion about your views, to engage with one another.

**Tom Keene** (3:02)
Has the New York Fed president ever looked at you like, oh, Kansas City?

**Esther George** (3:06)
Of course.

**Tom Keene** (3:07)
Okay, I just want to be sure.

**Esther George** (3:10)
No, it is a great opportunity. I don't call it a family fight per se, but I think those decisions demand the kind of debate that this committee has at the table and has to, especially at times like this.

**Lisa Abramowicz** (3:21)
Do you think that most people agree that it was a mistake to cut rates by 75 basis points after the last FOMC meeting here at Jackson Hole? Considering the fact we went from 4.5% to 3.75%, we've seen inflation by any metric pick up at that time. You do have people saying, okay, there are all these exogenous factors, but just looking at the numbers, it looks like we're further away from the Fed's ultimate mandate of price stability.

**Esther George** (3:44)
Yeah, for sure. I don't know if most people think that those rate cuts were a mistake. I might be in the camp of saying those were a bit uncomfortable to me, given the pace of the economy, the level of inflation at the time. And so I think it has raised now, what we hear is, do we really believe policy is restrictive right now and the way that we did at the time those rates were being cut?