00:00 Speaker A
An announcement is also expected from Fed Chairman Jerome Powell on Wednesday afternoon, with a decision expected to be made on whether the latest rate cut could be increased or lower. It doesn’t seem like a rate cut is expected here, but you’ve said that we may eventually see additional support from the Fed. How should investors approach Wednesday’s meeting, and what are the key things they want to hear from Fed Chairman Jerome Powell?
00:27 Seema Shah
Yeah, I mean, I think there’s going to be a lot of attention tomorrow. All that remains to be seen is whether there will be any reaction to the Justice Department investigation and what will become of Jerm Powell. Well, we don’t expect Mr. Powell to say much about that, but we do expect him to really focus on interest rate decisions. Well, I think the market is predicting zero chance of a rate cut tomorrow, so that’s our view as well. But I think they’re going to talk a little bit about labor market inflation. Well, there might be a slightly more positive tone regarding the economy and the labor market. Um, but we think that as the year progresses and perhaps inflation-related tariff fears start to fade a little bit around mid-year, the door will open for one or two more rate cuts. So I think it’s important to leave that door open while conveying some optimism about the strength of the U.S. economy.
01:13 Speaker A
Federal Reserve Chairman Jerome Powell has also hinted at the impact of AI, commenting on improving productivity in the past. Do you think we can ask something about that as well?
01:29 Seema Shah
Certainly, I think this will be a key theme for the Fed over the coming months and years. Now, even if he didn’t mention it himself, I’m sure there would be questions about that. This is because the themes of AI, productivity gains, the impact of the labor market on inflation, etc. are very key for central bankers when it comes to policy decisions. Well, we’re already seeing evidence of productivity gains in Q3 and Q4. Certainly that’s part of the story. It’s probably quite early days for the Fed to make policy choices on this basis, but I think this is something that’s been a lot of research for the Fed, the Bank of England, the ECB, a lot of central banks.
02:22 Speaker A
Seema Shah, thank you very much for joining us this morning. Thank you very much.
