Well, I am the chairman of the Economic Club of Washington, and in that capacity often interview government leaders and business leaders and Jay Powell and had been somebody I'd interviewed before he had worked at my firm a number of years ago Well before he was at the Fed and so we worked out a date that he I would do this interview today and we

had about

700 people there and obviously a live TV audience

David it we we were chuckling the whole time. I mean, this was like a really, a pallet that you don't see at press conferences, a pallet that you don't see every day. It's clear that you two are familiar with one another. What did you want to get out of the interview? Because we know that he's not going to give us any indication about a rate, you know, rate path. He established that at the top of the interview. What did you want to get out of it?

Well, I think it's always good to humanize well -known people, and people can understand them better in the way they make decisions, in the way they kind of handle their job. And I thought humanizing him would be always good. Clearly, when you're chairman of the Fed, you talk in what I've often called Fed speak, which is to say it's very difficult for the average person to understand it. But Jay does a better job than some of his predecessors in speaking in common English because he's not a trained economist. And I just thought giving people an update on his perspectives on the economy would be a good thing. I mean, obviously, as you point out, he's not going to announce at an interview with me that he's lowering interest rates. You can't expect that. But I think he gave a pretty good description of how they decide to lower interest rates or increase interest rates. And I thought it was informative. And therefore, I thought, you know, he accomplished his goal, which is to kind of, you know, show people how he makes decisions. And I accomplished my goal, which is to kind of humanize the chairman of the Fed a little bit more than maybe he otherwise would be.

Well, David, help us understand your relationship. You mentioned that you guys do go back years of course. He was a partner at the Carlyle Group before he went into public service. I'm wondering if you're in touch with him regularly now, if you consider him a friend. Just give us an idea of your relationship with him.

I wouldn't say I'm in touch with him regularly. When you're chairman of the Fed, I think it's someone like me doesn't want to be calling him up all the time. I don't want to look like I'm trying to get information from him. He worked at Carlisle for years, but I wouldn't say I was his closest friend or vice versa. So I know him reasonably well. I've interviewed him, I think, three times or four times at the Economic Club in Washington. And I have a good relationship with him, but I wouldn't say we're close as a friend's, but I certainly like him and admire what he's done for the country and the job that he's had.

You know, what's interesting too, and something we've talked a lot about, David, is the neutral rate and what he thinks about that 2% goal that the Federal Reserve has. He said the neutral rate is probably higher today, monetary is restrictive, but not severely restrictive. I am curious how you see things. Do you think the neutral rate doesn't make sense anymore that it does need to be higher? And what is your expectation or what you think the Fed should be doing when it comes to interest rates right now?

The country will do much better off listening to Jay Powell's views on where the interest rates should go than probably my views on interest rates. But I think it's a general sense that the market is believing that there will be a cut. And I think Jay made it clear that he doesn't listen to the political situation. So I have said in speeches that I thought it would be unlikely that the Fed would want to cut during a presidential election period of time. But I think he's made it clear that that's not his view or the view of the FOMC, that if they think the data warrants a cut, they will have a cut. And therefore, the Fed could do something at the end of July when they meet, or they could do something again when they meet in September. And my guess is that sometime before the Fed meets after the election, they will do something. That would be my current thinking. The economy could change, and obviously data is everything. But right now, the markets are anticipating, and I think the Fed is not shutting down the idea that something could happen before the election.

Before the election, OK. Do you think that the election in any way sways? I mean, we're all human, right? And we can say we're very objective, but we're human and impacted by lots of things that are going on in this world. Do you think that Jay Powell and policymakers at the Fed might be swayed a little bit, a small influence when it comes to the November election, presidential election?

The Fed, everything Jay says is that they don't really pay attention to the election dates. And I think right now, since so many people pay attention to the markets and the interest rates where they are, I think that the Fed will do what the data suggests is appropriate. And when the data gets to the point where they see inflation more or less getting to 2% and the economy softening a bit, I suspect they will not wait until after the election because they don't want to be seen as political. And therefore, while they might be criticized by some for lowering interest rates before the election's over, I just think the Fed has given enough signals, including today, that they're not going to worry about the election. They'll do what the data suggests is appropriate. I

do wonder, David, as you said, you've talked with Jay Powell several times, certainly in this format. So, you know, monetary policy obviously in the economy first and foremost, and there are certain things that Jay Powell will go. You guys laugh about some of the things he will obviously not reveal. But having said that, at the end of the conversation when it comes to the things the Bloomberg audience cares so much about in terms of monetary policy and the economy, what was your key takeaway from Jay Powell? My

key takeaway from the interview and with my discussion with him is that he's a man who's very much on top of the data. He enjoys the job, not worn out by it, doesn't say, well, as to me, I have got all this pressure on my shoulder. I think he can deal with it quite well. He's used to it. He's been the chair for quite some time. I think he's reasonably happy now with where the economy is. Remember, we didn't go into the hard landing that everybody was predicting. People thought there would be a recession last year or this year. That didn't happen. So whoever gets credit for it, the Fed deserves some share of that credit because they manage the economy into a really nice, soft landing, so -called. And so right now, while unemployment is going up, I don't think it's going up by a level that's scaring people. I think the markets are in pretty good shape and the economy is in pretty good shape. He

didn't want to comment on the market, the idea of the so -called Trump trade returning after this weekend's horrific event. He was clear about that up on top of the interview. I'm curious about your view and what you think is being priced into markets right now. David, the Fed chair not weighing in, but politically what is being priced in right now? Well,

clearly, the events of the weekend, no doubt, scared a lot of people about the violence that is still prevalent in this country in many areas, unfortunately. And so fortunately we did not have an assassination, though one person did die tragically and another person is still in the hospital for the wounds that that person suffered as well. Trad -sad situation, obviously the investigations will figure out what the federal, what the Secret Service could have done differently or better. I'm not an expert in that area so I just can't say what they will find. But clearly, you know, we haven't eliminated violence from our political situation, unfortunately.

David, you've served in the federal government, your chief counsel to the U .S. Senate Judiciary Committee, subcommittee back in the 70s, deputy assistant to the president for domestic policy during the Carter administration. The democracy has faced other periods before. It feels rather heavy today. Is there something different this time around? You are, I feel like it's safe to say, a student of history. You respect past leaders and what they've done. How do you make sense of this particular political and historical period? Well,

it's difficult to really put it in context right now because you can't really tell what the historical impact it is until many years afterwards. But right now the country seems to be fairly bitterly divided between the Democrats and Republicans. And it wasn't the case 50 years ago or so when John Kennedy ran for president against Richard Nixon in 1960. They campaigned in most of the states because they didn't know how the states would go. Now the country's fairly divided so we know how almost all the states are going to go. There are only five or six, maybe seven states where it's a kind of a swing state. So it's much different than it used to be. The tensions between both sides seem to be much greater than they used to be. Bipartisanship is something that is not as common as it used to be in Washington, D .C. So I don't know whether the events of this weekend will scare people into saying we should try to be less, I'd say, violent in our rhetoric and less condemning of other sides. But clearly President Trump has suggested that he would make a more unifying speech than he otherwise was going to make. And I think President Biden's speech last night was designed to also have a unifying impact. Whether we can unify our country in a way like this, that way I think we should, I don't know, but it will probably have some beneficial impact, though obviously the events were tragic.

David, are you optimistic, given the heated political environment right now? I'm

optimistic that the country in reasonable shape economically. Politically, we can do more than we should, than we have been doing to kind of bring the country together. And that part, the jury is still out. But I'm hopeful that while the events were tragic over the weekend, that they'll have some beneficial impact in getting both sides, Democrats and Republicans, to try to work together more cooperatively.

Jay Powell said to you, predictions are very difficult, especially about the future. When you think about the future for the United States politically, economically, what's top of mind? And curious if you have any plans to maybe want to be at the Federal Reserve. You guys talked about if it's a good job. Well

I think it's really hard to kind of say that all of a sudden we're going to eliminate all the schisms that we've had in the last couple of years. Clearly, there are a lot of tensions between the two political sides. Jay Powell has been appointed by a Republican president and reappointed by a Democratic president. And he's done a really good job of kind of walking a fine line of not trying to be seen as political or Democratic or Republican. I think he deserves a lot of credit for that. I think he's done an excellent as chairman of the Fed. All

right. I'm not going to ask you then about chairman of the Fed. If you have any thoughts. But you

can answer if you want. Well,

I think he's done a good job. And remember, this is not a job that anybody really thinks is an easy job. Many people who have emerged from the job, you know, are generally applauded after they've served. But when they're serving, very often they get criticized by both sides. And it's hard to be chairman of the Fed. And in fact, as one chairman of the Fed once said, William McChesney Martin, my job is to take away the punch bowl at the party, which is to say, take away all the fun that you would want to get. And so that's the job of the chairman of the Fed, is take away the punch ball. And people don't like that.

Absolutely.