Bloomberg Talks Former White House Chief Economist Glenn Hubbard Talks Fed Policy, Tax Bill
Jun 18, 2025
Glenn Hubbard dives into the Federal Reserve's tricky decision-making on interest rates, linked to retail sales and job trends. He discusses the complexities of inflation and skepticism around reaching targets. The podcast also highlights tensions between government debt and fiscal policy, along with challenges posed by a tax bill in Congress. Investor concerns about asset valuations are examined amid shifting tariffs and geopolitical uncertainties, urging a reevaluation of market optimism in today's economy.
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Fed Rate Cut Risks and Timing
- The Federal Reserve might reduce interest rates later this year as economic data weakens.
- However, preemptive cuts risk raising long-term yields and undermining their effect.
Inflation Challenges Persist
- Inflation is not yet solved and likely to stay above the Fed's target level.
- Tariff effects on prices have not fully materialized as businesses initially absorb costs.
Fed Signals Matter More Than Cuts
- Small rate cuts signal a Fed shift toward lower short-term rates but won't strongly impact the economy alone.
- The 10-year Treasury yield remains key to inflation expectations and economic impact.