The Fed holds steady

Katie Martin (0:06)

Pushkin.

Central Banking is a very buttoned up sober affair for very serious people, and if you're looking for drama, you really have to know where to find it. This week, we've had what seems to be a total snooze fest from rate setters in the US, UK and Europe. All of them kept interest rates on hold, so nothing to see here, you might think. But Unhedged listeners know better than that. Beneath the surface, there's drama, there's bust ups, there's tension you could cut with a knife, and we're here for it. Today on the show, backseat drivers and the art of sounding clever when you have no idea what's going on. If any central bankers out there want any tips on that, Rob and I are masters of the art.

This is Unhedged, the markets and finance podcast from the Financial Times. I'm Pushkin, I'm Katie Martin, I'm Mark, it's columnist at the FT in glorious, sunny London, where we're rolling into a nice, long bank holiday weekend. And the forecast is, of course, rain. I'm joined through the miracle of technology by the athlete, the triathlete indeed, Mr. Robert Armstrong, all the way over there in New York City. Robert, are you going to turn into like one of those weirdos who tries to make themselves younger and live forever, like that Brian Johnson fella?

Robert Armstrong (1:25)

No, no. And I just, I mean, I really object to being called an athlete.

I am a large middle-aged man who's trying not to die prematurely. Maybe we could have an acronym for that.

Katie Martin (1:39)

Yes. Listeners, let us know on hedge.ft.com.

Robert Armstrong (1:43)

Well, you know, in your intro, Katie, you missed the most important thing that happened in central banking this week.

Katie Martin (1:50)

I did?

Robert Armstrong (1:51)

You did. You missed it. Jay Powell, chair of the Federal Reserve, made a joke and it was funny.

He did? And this may be the first-

Katie Martin (2:01)

Because they're not known for their jokes, these guys, are they?

Robert Armstrong (2:03)

On the contrary. On the contrary. So Jay Powell, who announced yesterday that he would stay on as a Fed governor when his term as Fed chair expired, said he planned to keep a low profile as governor when he is no longer chair. And one of the questions from the audience was, Mr. Powell, could you say a little bit more about what keeping a low profile means?

And while the question was being asked, Powell deeply bent his knees, so he appeared to be disappearing behind the podium. And it was actually very amusing because he kept a completely deadpan face on while he was doing it. And this will go down in history as the only funny joke a central banker has ever made.

Katie Martin (2:53)

I can't think of another one, so I think you're right. If any listeners can think of any other wacky little jokes from the central bankers, let us know. But I can't think of any others. That's good stuff.

So that's probably the most interesting thing that's come out of central banks this week. No, I don't think that's true.

Robert Armstrong (3:11)

No, interesting stuff has happened.

Katie Martin (3:13)

No, not the joke, but Jay Powell. So, as you were saying, OK, OK. This is his swan song, right? He is over and out as chair of the Federal Reserve, but breaking 80 years of precedent, he is sticking around as a governor with a term that ends in 2028 I mean, I can't lie, it is kind of funny.

This is like, so it clips the wings of Trump's guy at the Fed, right? Stephen Miran, for whom there is now no room at the Fed. Tell us what's going on.

Robert Armstrong (3:49)

Well, let's take a step back and provide some context. Jay Powell had been very explicit, very clear that he would stay at the Fed until this investigation initiated by the Trump administration was over with total clarity and finality. So, to listeners who have not been following this somewhat depressing story, the administration was like, there's cost overruns at the Fed's building. We're going to open a criminal investigation into the Fed chair run by the Department of Justice.

I challenge you to find someone who believably makes the case that this was going on. So anyway, eventually after getting beaten up in court, the hero, the person in charge there, drops the case. Which sounds like the case is over, but she can't quite do it. You know, when she announces she's going to drop the case, she's like, but we could reopen it at any time.