The future of self-driving cars

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**Rima Reis** (0:32)
On the program today, the week that was, because it's Friday, also the future of self-driving cars, and a story about retirement with a plot twist. From American Public Media, this is Marketplace.
In Portland, Oregon, I'm Rima Reis, and for Kairizdol, it is Friday, the 31st of July. Good to have you along, everyone. It has been quite a week in the economy, and we've got about seven minutes or so to sort through it. So let's get into it. Here with me are Sadeep Reddy of MS Now, and Katherine Rampel with The Bullwork. Hey, you two. Hi, Rima. Hey, Rima.
Okay, so of course, I've got to start with the Fed, which said on Wednesday, yeah, no, we're not raising rates. Even though there was some notable dissent, a good family fight, as Warsh put it. Sadeep, what do you make of that decision?

**Sadeep Reddy** (1:31)
There were a lot of confusing things coming out of the Fed chair, and I think the fact that we had several dissents, every dissent was notable. It was really just the reality that being a vague and non-committal Fed chair on inflation doesn't really work when the last three Fed chairs have been communicating really fairly clearly and not leaving doubts with the market.
There are a couple of problems that Chairman Warsh has now. The markets love to test Fed chairs in their first year. They love to test their resolve and credibility, and to have a Fed chair come out of a meeting like this and have all sorts of headlines about the credibility of the leader of the central bank is generally not a good thing. The other is that he's in a bit of a bind here in that a huge driver of the inflation problem is the Trump war in Iran. And it's a war that on any given day, you get three different messages between war and peace and somewhere in between. And so you don't actually know where that's gonna go. And if that is a key driver of the worst of the inflation, there is continuing underlying inflation as well. But the ups and downs of that conversation are really bleeding into this non-committal stance from the Fed chair. And maybe he is just trying to avoid creating ir from the person who appointed him right off the bat. And that's why he's staying non-committal right now. But the rest of the committee is gonna have to come together and make a decision about whether they have credibility and resolve in this case.

**Rima Reis** (3:09)
Well, what do you think, Katherine? Because yeah, Chairman Warsh keeps saying he's serious about getting inflation back to 2%. How do you square that messaging with the Fed holding rates steady again?

**Katherine Rampell** (3:20)
I think that's really the challenge here. The chair was asked a couple of times by reporters during the press conference, if you are so laser focused on getting inflation under control, can you explain why you haven't raised rates yet? Because Warsh, of course, had been very critical of the Fed under his predecessor's leadership for acting too late. And Warsh couldn't really answer or didn't or chose not to answer. One thing that's a little bit unclear to me is, Warsh has said that he really admires the late chair Alan Greenspan. And Alan Greenspan was often deliberately opaque. I mean, he was quoted, I'm going to bungle the quote, but he's quoted as saying repeatedly some version of, if you think you've understood me, you've misunderstood.
That he was trying to be deliberately ambiguous and difficult to read. And it's a little bit, I have trouble parsing whether Warsh is deliberately cultivating some sort of opacity here, or if he thinks he's being clearer than he is. Certainly, the markets responded to that press conference by not necessarily believing that the Fed is going to do whatever it takes to quote another Fed share to get inflation under control in the near term. And that's why you saw yesterday long-term yields go up and then today kind of across the yield curve, yield interest rates go up.

**Rima Reis** (4:52)
Right. Well, Warsh wants the Fed to say less and listen more to what markets are telling it, but then the markets are trying to read the Fed too. So how does that not turn into one big feedback loop? Sadeep?