BiggerNews: The Fed Is Finally Ready to Cut Rates, but How Low Will They Go? w/WSJ’s Nick Timiraos

We're at a key inflection point with the economy right now as we enter the fall of 2024. Inflation is starting to come down, but unemployment is rising at the same point.

And as a result, all eyes are on the Federal Reserve and whether they're going to actually start to cut interest rates.

And this topic about what the Fed is going to do is really important for real estate investors. And as such, we have a great guest, Wall Street Journal chief economics correspondent.

Nick Timme, joining us today to help.

Us understand what is going on with the Fed. And I'm excited for this because Nick is honestly one of the best in the business at making sense of the Fed behavior and also at interpreting what it all means for regular people and.

For real estate investors like us.

Hey, everyone, Happy Friday. Dave here.

We've got a great bigger news show for you today. We're, we're going to be previewing next week's Fed meeting which began on Tuesday, September 17th. And at these upcoming meetings, the Fed is widely expected to announce a cut to the federal funds rate. And that is pretty well known.

But what's not known is how much they're going to cut rates or how.

Fast they're going to do it at the next meeting into next year and.

Well into the future. And we don't know what their strategy is to successfully avoid a recession. So today we're going to get into.

All that with Nick. I'm going to ask him why this.

Particular Fed meeting just feels really important compared to all the other ones that.

We have during the course of the year.

We're going to talk about different policies and some of the politics that go.

Into the different factions within the Fed.

And of course, we're going to talk.

About what this all means for the housing market. I'm super excited about this conversation because real estate is one of the most interest rate sensitive industries.

Maybe it's, it is the most interest rate sensitive industry in the entire economy.

And so as investors and people who operate in the space, we really do need to be paying attention to what's going on at the Federal Reserve. But before we jump in, I just want to give a quick overview of what the Fed is and define a couple of terms if you're not familiar with them. So the Fed is basically a short name for the Federal Reserve. And their job is to set monetary policy for the United States. That's basically what interest rates are going to be. And their job, as assigned by Congress is not, hey, just, you know, make up interest rates and move them up and down. It's this balancing act between what's known as price stability, which is basically what normal people call inflation, and maximizing employment, which normal people call the labor market. And so the Fed is basically always.

Trying to tweak their policy to make.

Sure that we don't have a lot of inflation.

We.

But at the same time, the economy is growing. And obviously this has implications for the whole country, which is why people like me look at this so much and why I'm encouraging all of you to listen to this episode and what Nick has to say, because I think you'll.

Learn a lot about what's coming down the pipe and will help you make decisions about your portfolio well into the future. Last caveat here is that the Fed, while they don't set mortgage rates directly, they actually control something called the federal.

Funds rate, which indirectly has implications for the mortgage rates and for the housing market as a whole. So that's why we pay attention to this.

Hey, guys, one more disclaimer.

This is Dave jumping in after we edited this episode. We've noticed that the audio from Nick's feed was not very good. We apologize for that. But the content and Nick's opinions and information is so good that we're going to air it anyway. It's not unlistenable by any means, but we apologize if there's a lower audio quality than usual.

Okay, let's bring on Nick. Nick, welcome to the BiggerPockets podcast.

Thank you for being here.

Thanks for having me.

Now, you've been on our sister show on the Market a couple times now. We appreciate that. But for those of our audience who don't know you, could you give us a brief bio?

Yeah, sure. I've been a reporter at the Wall Street Journal for the last 18 years. I spent about five years covering housing, housing finance. I've spent the last seven years covering the Federal Reserve, interest rates and economic policy.

And I know for people like you, and frankly, people like me, we look at every single one of the Fed meetings, eight of them every single year. But the one that's coming up in September seems to be of particular importance. Can you explain to us why?

Well, this is the meeting where the Fed is going to cut interest rates. And people have been waiting for a long time for the Fed to cut interest rates. So, you know, that makes it a big enough deal. There's an extra bit of drama because it isn't exactly clear how much the Fed is going to cut interest rates. The market is expecting a quarter percentage point interest rate Cut, which is the normal increment. But some officials sounded like they weren't ready to completely close the door to a larger half point rate cut. So there's maybe a little bit of suspense around that question.

Normally when we go into these types of meetings, we don't really know exactly what the Fed's going to do. They do sometimes signal it. But you said that this upcoming meeting, it sounds essentially like a sure thing that rates will be cut at least a little bit. Why are you so certain about that?

Well, there are two reasons. One is that inflation is back coming down the way it was last year. We're second half of the year. And so the Fed needs to see inflation moving down to its target. It targets 2% inflation using their preferred gauge. Inflation's still a little bit above 2%, but it's in a much better neighborhood than it was last year before. The second reason is the labor market. The labor market looked solid for the first few months of this year. It looks like it's slowing down now. And the question is, is this slowed down to normal or is it going to slow past normal to something weak? If I could give a third reason, I mean, the third reason the Fed is going to cut interest rates in the next meeting. The Fed chair told us in his last speech the time has come to cut interest rates. So he took any kind of suspense out of the will they or won't they cut question. But the reason he did that is because the inflation picture and the labor market picture has developed along those lines.

Yeah, normally going into these types of meetings, analysts are trying to, and journalists like yourself are trying to read the tea leaves and guess and prognosticate about what's going to happen. But they've been pretty candid about the fact that they're going to be cutting interest rates. So I obviously agree that this is almost a certainty here. I'm curious, Nick, if you, if you could just give us some background on how these decisions are made, because I think a lot of America has gotten familiar with Jerome Powell, the chairman of the Federal Reserve, over the last couple of years. Maybe not everyone, but he's become, I think, more of a known figure than previous Fed chairs. But is he making these decisions himself or can you tell us how the Federal Reserve determines what interest rates should be and what direction they're moving them?

So, you know, one answer to your question is he is making the decision. The other answer is that there is a committee of people who have to come up with setting monetary policy in the country and that's called the Federal Market committee or the FOMC. That is the body that meets every six or seven weeks in Washington D.C. it's composed of seven governors who are on the Fed's board. Those people are there because a president has put them there and they have a vote at every meeting. Then there are 12 presidents of the Fed banks. All of them come to Washington for the meeting, they all participate in the meeting, but only five of them have a vote in any year. They take turns every year voting. The New York Fed president, sort of the first among equals of the 12 presidents, he has a vote at every meeting and then the other four are rotated. And so those are the people who actually vote on policy. But anybody who's ever had to lead a committee of 12 to 19 people, it's hard to get 12 to 19 people to agree on anything. So there's a lot of blocking and tackling that happens in the run up to the meeting. In fact, I mean if you look at how the Fed, the Powell Fed has sort of operated recently, they tend to know what they're going to do at the meeting where they're making their decision. So what they're really doing is they're talking through their next school. There's a debate that happens, you know, what should we do today or tomorrow? It's a two day meeting. But then really where do we think we're going to be in six weeks? And so in one way the committee's working through the decision. But again, anybody who's had to get 19 people to agree on anything, there's sort of a group, you know, a steering committee almost. It's called the Troika. The Fed troika is the Fed chair, the New York Fed president who also serves as the vice chair of the FOMC and then the vice chair of the board. Typically those three people, and then a small group of advisors, staff senior advisors to the chair, they are coming up with the options that will go out to the committee.

It's definitely an interesting sort of unique type of organization and organizational structure. And as you said a few times, Nick, it, I imagine it's pretty difficult to get these people to agree on anything. But from my understanding, and please correct me if I'm wrong, there's been a lot of consensus about policy over the last couple of years and these, this group of people has largely been in agreement that rates should started going up in 2022 and should have stayed high up into that point. So first of all, is that, is that correct that there's mostly been consensus.

Yes. You know, they vote on the policy decision, the statement that they put out at the end of the meeting. And if you look at the last time anybody dissented, any of the voting members of the FOMC dissented. The last time that happened was in June of 22. This is now tied for the second longest period in like the last 50 years where you haven't had a dissent. But I do think sometimes people look at the fact that every decision, the last 16 decisions have been unanimous and they say, wow, they're disgroup thinker the Fed, they never disagree on anything. If you read the transcripts of the meetings, you'll actually see that there can be a lot of disagreement, even though they all kind of get to the same place. And I think part of that is when inflation was a raging inferno two years ago, the direction of travel was clear. We got to get interest rates up. And then when it looked like maybe they had gone high enough, there was some debate. Last year there were people who wanted to keep going and there were people saying, guys, we've done enough, let's just cool it for a while. And then I think over the first half of this year there was a lot of agreement that things were getting better, but it was too soon to cut. And now you're getting, I think, to some of these places where if you look at cutting cycles, Jay Powell led the fed to do three interest rate cuts in 2019 when the economy looked like it was slowing down. Inflation wasn't as much of a problem as maybe they thought it was going to be. And there were dissents on all three of those cuts, more than one. And so I think we're now heading into a period where it wouldn't be surprising to see maybe more differences of opinion over how fast you go down the mountain.

Yeah, that was going to be. My next question is have there been dissents recently? And I guess because heading into the September meeting, we sort of know that there will be cuts. But my question is, what happens next? You know, like as you said, we sort of know what's going to happen here. But I imagine looking into if there are dissents would be an interesting indicator for myself and our audience to look at to try and understand how quickly rates may come down over the next year or so.

Yeah, I think if this is a quarter point cut, it seems like there was broader support for that. There may be one policymaker who is not comfortable with it or who's not comfortable with a larger half point cut. So that's to be determined. But you know, the committee does defer to the chair, I think in part because they recognize he's trying to balance the trade offs as best he can. And these are close calls. Sometimes people who have dissented, I ask them, is it hard to dissent? And they say, yeah, but it's reserved for those times when you really just have a difference of opinion about what's happening and you want to make clear that you think this isn't the right way to go.

All right, it's time for a short.

Break, but we'll continue our conversation with Nick Timiraus on the other side.

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Thanks for sticking with us. Let's get back to Nick.

I am curious about this debate. Between a quarter point and a half point, how big of a difference would this be? Because, you know, we've gone from near zero to five and a quarter for the federal funds rate. You know, bring it down to 5.4.75. Is that, you know, is the difference really going to matter in terms of business investment financing, or is it really just what kind of signal they're sending to the broader business community, investors and Americans in general?

I think you're right. I think it is more of the signal that you're sending. You know, they ran up the mountain, they've hung up at the top for a while, and now the question is, where are you headed? Where is basecamp? You're going down. They don't know how far down they need to go. And, you know, that partly determines how fast you go. If you think 2% is the right interest rate to be at, that's a neutral interest rate. That's where they thought the neutral interest rate was before they started raising rates to two and a half. And if you had high confidence that you needed to get to neutral quickly and it's that low, then you'd go fast. They don't have that confidence. They think maybe the neutral rate is higher and maybe you should go slower. So it's a question of tactics in the sense also of how do you see the risks right now? How do you see the risks that inflation might get stuck above your target? And how do you see the risks that the labor market might weaken more than you're expecting? And which one of those do you lean into more? I mean, there are clear asymmetries in the labor market where when the unemployment rate starts to go up a little bit, it tends to go up a lot, and it's harder to fix that. You have to cut rates a lot more. So that might be, you know, people who are thinking, hey, let's front load this, let's take out some bigger insurance against that kind of layer market outcome which we don't want. That would be an argument for doing 50. I think an argument for doing 25 here is the economy does not look like it's in a recession. And in the past, when the fed has done a 50 basis point cut in 2001, in 2007, or when the pandemic was starting in 2020, there were clear urgent reasons to move. I do think there are reasons. This time is different. The Fed just raised interest rates a lot more than anybody thought they were going to after a period in which businesses and households thought interest rates weren't really going to have to go up all that much. And so there are reasons to think maybe you'd want to move a little bit faster here, but you don't see a reason to light your hair on fire. Maybe you don't do the move that's reserved for times where your hair is a little bit more on fire.

That makes sense. It's just all a psychological game too, like what they're trying to signal to the economy, trying to. Trying to signal to businesses. So it'll be very interesting to see. I want to follow up on that, but first, just wanted to clarify a term that you used a minute ago, Nick, which is called a neutral rate. This is a concept in monetary policy. High interest rates are generally called restrictive, which is basically where you are trying to cool down the economy a little bit low interest rates people call accommodative or stimulating. So when you lower interest rates, that increases investment and tries to rev up the economy. And then there's this concept of a quote unquote neutral rate, which doesn't really exist, unless I'm wrong, and it's a moving target. But it's this idea that there's this magical number that the Fed can get the federal funds rate to where it's not necessarily trying to jack up the economy. It's also not putting the brakes on the economy. It's sort of, if you use a car analogy, there's no gas, there's no brakes. It's just, just coasting at the same speed. So just wanted to clarify what that is. And ideally, I think the Fed's policy is that they ideally will get to this magical neutral rate and hold there. But that's not usually how it works. They're usually, they're stepping on the gas or stepping on the brakes a little bit and tinkering with the economy as they go.

So.

So, Nick, I wanted to ask about inflation because, you know, obviously on this podcast we are mostly real estate investors, aspiring real estate investors, and one of the major drivers of inflation over the last couple of years has been real estate. Whether in home prices or rent prices, construction costs have all gone up. It has been a major contributor. And I'm curious if you've heard anything or there's any concerns that lowering interest rates, which in turn could bring down mortgage rates. And just as a reminder, Fed doesn't control mortgage rates. Everyone, but they, they indirectly influence mortgage rates. And so if mortgage rates come down, is there risk that the real estate side of the economy may start to see outsized inflation again?

Yes. I mean, that's a concern you've heard all year long, particularly from more hawkish commentators or policymakers who were worried about keeping inflation too high. If you think about the risks of higher inflation, a lot of those have faded this year. The labor market, for example, wages are coming down. The labor market doesn't seem like it's as big a threat of higher inflation. So if we're going to have inflation come back up, you're not seeing it from commodities, you're not seeing it from import prices. So where is it going to come from? The argument you hear probably most right now is, well, if the Fed cuts too much and they stimulate the economy too much, maybe you'll see it, and maybe you'll see it exactly as you laid out in the housing sector. I Think if you think back to December when we saw a pretty big move in rates, rates came down quite a bit because the Fed was signaling they were done raising rates and they were talking about when to start cutting this year. You saw mortgage rates come down and you saw maybe activity pick up in the first quarter. And so there was a lot more angst, maybe especially among these hawkish commentators or policymakers that, see, this is why you don't want to overdo it. You're not totally sure you've done the job on inflation and you don't want to have to get back on the horse and chase it. I think now there are more questions about whether the market is really as, as resilient as maybe it seemed earlier this year. So I'd look every week at the Mortgage Bankers association purchase application series and as we've seen interest rates come down to below six and a half percent over the last month. I mean, look, I know it's, it's no, you're looking at August, it's a seasonally slow period, but you haven't seen a lot of lift from the purchase app series. In fact, it's pretty much stuck near the lowest levels that it's been for a very long time. So there are reasons to think that maybe we've just exhausted the pool of buyers who can handle a purchase when interest rates were closer to 7%. You see, you know, inventory picking back up. I do wonder if the resale market is going to create more of a competition now for the new builder market. You know, builders, they had a pretty good situation with resale inventory being so low for the last year and so there, I think there are more questions now about is a 6 and a half percent or a 6% 30 year fixed rate mortgage really going to provide the pickup that you would thought. And I think it'll be an important ingredient in whether the Fed can achieve a soft landing. If the economy is really slowing here, you're going to want to see housing construction stabilize and pick back up. That could be an important pull for the economy here if, if things are really slowing down.

I share some of those question marks with you. I think a lot of people in this industry assume, oh, mortgage rates go down, appreciation, housing prices just skyrocket and that could happen. No, but there are a lot more questions to your point. We don't know how much demand will come back. And even if demand increases, you know, the supply question is still a big question mark. We're seeing more inventory come on. And if inventory comes back to the market in a proportionate way to all the new demand from lower interest rates. That might mean that we have a modest growth or normal growth in the housing market. We just don't know. But I was curious about this because you mentioned earlier, Nick, that the risks that the Fed is sort of balancing is risk to reigniting inflation versus risk to the labor market. I just wanted to clarify for everyone to make sure is that a real estate sort of has this special part in recessions and interest rates because it is such a highly leveraged industry. And what that means is basically that, you know, we all know this, but when you go out and buy a property, you usually use debt. And construction companies use debt, developers use debt to finance a lot of their operations. And so real estate, more than most industries in the United States, are very sensitive to changes in interest rates. Where you think about a manufacturing company, you know, as Nick and I were talking about the difference between a, you know, a 5.25 federal funds rate and a 4.75, you know, it's going to take a while for that to hit the manufacturing industry, but that might hit the construction industry the day after it happens. It might take deals that didn't pencil yesterday to deals that do pencil today. And so in a lot of ways, real estate is sort of out front and sort of is the first reactor to interest rate changes. And why, personally I think, and it sounds like Nick and a lot of other people have heard this as well, is that if rates come down, it could reignite real estate, maybe in a positive way, but also potentially in an inflationary way as well.

All right, we have to take a quick break, but stick around because later in the show, Nick's going to tell us what the Fed has already indicated about their path of rates, not just.

For this next meeting, but for the.

Next couple of years.

So stay tuned.

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We're back with Nick Timiraus from the Wall Street Journal. Let's dive a little bit more into.

The labor market side of things. So we've seen weaker jobs numbers. We've also seen a lot of revisions to previous jobs reports downward that are showing some weakness in the labor market. But can you give us some historical context? How would you describe the state of the labor market today?

Well, the economy is just very, you know, if you try to compare this period to past periods, it's very weird. This is a very weird time. It's not a normal business cycle. We went through the pandemic. The pandemic was like a year long hurricane or blizzard and it sort of froze everything. So waking up from that has just been weird. I think the question now is, what's normal? Do we get back to normal in the labor market? Do we? And do you stay there or do you kind of slow, keep slowing past it? You know, you said something about how responsive the economy is going to be to lower interest rates here. And if people, there's a quote, it's attributed to Bob Toll. I don't know if Bob Toll actually said this, but there is no mortgage rate that can convince somebody to buy a house if he or she's worried about losing his or her job. And so I think that's where we are right now is, you know, the economy is just not adding as many jobs as it was six months ago. That's one of the reasons you see the unemployment rate ticking up here. You've also seen a big increase in the number of people available to work. And so the unemployment rate can go up because the labor supply is growing faster than the knuckle jobs that are being created. And that's what you have right now. The unemployment rate can also go up because people are actually getting pushed out of their jobs, they're being fired. And if you look at permanent job losers, that number has drifted up a little bit. But it hasn't drifted up enough to explain the increase in the unemployment rate to 4.2% in August from 3.4% in April of 2023. That was the low, but it is, you know, it is cooling down. Last week the Labor Department put out a number. They look at job vacancies, job openings, and if you just compare the number of open jobs to the number of unemployed people at the peak of this cycle in March 22, when businesses were just in a panic to hire people back, there were two openings for every unemployed person. The number that came out last week for July showed that we were down to 1.1, a little bit below 1.1 job openings for every unemployed person. And that's actually below where it was before the pandemic. When the pandemic hit, we were about 1.2. So you now just see a labor market that is less tight. There are more people looking for work. It's taking people who lose their jobs, who come into the job market without a job. It's taking them longer to find a job. You know, maybe we stay here. That wouldn't be for the Fed. If you could just hold this at a 4.2% unemployment rate, that would be fine. The worry is that when you see, when you look at the unemployment rate, it never just stays in a solid, in a straight line. It's either going down or it's going up. And right now it's going up. And these things, look at the charts, they look like hockey sticks. They go up by a little bit and then they go up a lot. And the Fed doesn't want to have a 5%, 5 and a half percent, 6% unemployment rate here.

And do you have some historical context for that, Nick? Because that's definitely true. How long after unemployment rates start to go up does it usually peak out? And I know that there's a lot of variables like Fed policy there, but what are we looking at here? What is a normal recessionary cycle or cycle of weakness in the labor market look like?

Well, so some people may have heard of something called the samble. It's this economist at the Fed who identified that you use a three month average of the unemployment rate. So when that goes up by half a percentage point from the low over the previous 12 months is always, you know, it has always coincided with a recession. Once you've gone up by 50 basis points on the unemployment, you keep going up quite a bit more. And it just gets to this idea that you, you, you think about a tipping point where businesses are, you know, they're not sure if they need the workers, they're not sure if they need the workers. And then it's like a beach ball that you've held onto water. Once you decide, oh, business is just too weak, I do not need these people anymore, I'm going to let them go. The beach ball pops up. And so that's kind of captured by the SAM rule. Now, there was a little bit of a market freak out, if you recall, in early August because after the August payroll number came out, we triggered the SAM rule. That was the first time that you could say that the three month average of the unemployment rate had gone up by half a percent from the previous 12 month low. And we're still, after the August numbers that came out in early September, you know, we're still above that, that threshold now. Now, Claudia Song, who's the economist who's, you know, popularized this, this approach, she said there are reasons to think that it may not, you know, it may be a little bit of a false positive. And if you look at something like permanent layoffs, you know, permanent layoffs are not what is driving this increase in the unemployment rate. But I do think it's a sign that the labor market has cooled. And all along the question, I think this year has been, it's like you took a glass of hot water and you put it in the freezer. Is it just going to, is it going to get to some level and stay there or is it going to keep freezing and you're going to take out ice at some point? And do you want to take it out before it's completely frozen? I think monetary policy is not science. There's no boiling point or freezing point for the economy. But that sort of captures the principle here. You're testing a trend and does that trend continue?

All right. Well, that's definitely something I'm going to be keeping an eye on. There's a lot of different labor market data out there, but the job openings and unemployment rate are good ones for everyone to track. If you want to be following along here, Nick, I know you don't have any background information that we don't know about, but I think a lot of our audience is probably curious where mortgage rates, where interest rates are going to be in the next year or so. I won't ask you about mortgage rates, but federal funds. The Fed does release something called the Summary of Economic Projections, where they at least give out some ideas of where they think the, the, the target rate will be in the, in the near future.

Can you just tell us a little.

Bit about what the Fed is saying? About the next few years.

Yeah. So the summary of economic projections is important. The Fed doesn't get together and agree on this. Everybody's sort of putting down their own forecast. What, you know, we in the press write about is sort of where the median is, where the 10th of the 19 participants in the center are. And think back to the conversation we were having about 25 versus 50. What really matters for monetary policy and for the economy is the path of rates over the next few years. What is the market pricing in right now? Because the economy reacts to that. The economy doesn't necessarily react on the day the Fed cuts interest rates. If markets are anticipating a rate cut.

It'S when the bond market begins to price in a lower interest rate. Mortgage rates have come down even though the Fed hasn't made any interest rate cuts yet because the markets are anticipating what the Fed is going to do. And it's really when the Fed either ratifies or more importantly, doesn't ratify the market expectation that you could see, say, interest rates go up. So, you know, the SEP here is going to be very important at the September meeting. The September meeting is a weird meeting because the, the sep, the summary of economic projections, is provided in calendar space. So in March, you know, they're putting down how many interest rate cuts or increases they see, where they see interest rates at the end of the year. We're doing the same thing in September, knowing full well, and we know full well there's only two more meetings after this one. So you're basically writing down where you think interest rates are going to be. The meeting after this one, at the December meeting, they're also writing down where they see interest rates at the end of 2025, 2026. It's all conditioned on their forecast. So where are interest rates going to be at the end of next year? You know, if you think inflation is going to come down a lot, you're going to have more interest rate cuts. If you think the economy is going to be quite weak, you're going to have more interest rate cuts. They tend not to project that they're putting this down assuming appropriate policy. And so it tends to provide sort of a more optimistic scenario for the economy, as if we really thought there was going to be a recession, you would act now to try to head that off. But nevertheless, you know, the interest rate projections have shown the Fed cutting interest rates a couple of times this year. In March it was three cuts. In June it was one cut. We're back at least to three cuts now. September November, December, one one cut of 25 basis points seems like the minimum that people expect for this year. And then the question is, how many more you get next year do you get down to, you know, three and a half percent, 3%, you know, we'll, we'll find out.

Well, something I will certainly be watching and we'll make sure to update our audience on regularly about what's going on. Nick, last question here is we know.

A lot of what might happen at.

The next Fed meeting, but what, as a experienced Fed watcher, are you going to be looking for from the meeting and the subsequent press conferences that come after?

You know, I think the question really right now is how forward leaning does the Fed plan to be if they think the economy and the labor market is weakening more than they might have anticipated? So Jay Powell gave this speech at the Jackson Hole conference at the end of August. It's a big conference every year that the Kansas City Fed puts on in Wyoming. Powell speaks every year. He knows it's a big stage, so he tries to say something. And this year he seemed like he was on his front foot. You know, we're trying to stick the soft landing here. And part of doing that means not getting too far behind. You kind of want to stay ahead of things. So the question right now is, you know, how, how do they live that? How do they operationalize that? Does that mean we're cutting by 50 basis points in September? If you're not cutting by 50 basis points, if you're only doing 25, do you think you're going to have to do a little bit more in November and December? Are you going to keep going down at 25 basis points a pop until the labor market tells you, you know, you should go faster? So I think the question right now is really around defining how forward leaning, how preemptive might they try to be here if inflation is getting worse? They can't do that. They have to still worry about inflation. But if you really think you've cut off the risks of higher inflation of a stuck sticky last mile, which was the concern.

Over the last year was that you'd get to 2.5%, then you just stay there. If you think you now have, have dealt with that worry, can you go faster or do you run the risk of letting this soft landing slip through the fingers?

All right, well, I will be following suit, Nick, and looking at some of the same indicators that you just mentioned. Thank you so much for joining us today. We really appreciate you sharing all of your insights and research with us today. We will make sure to link to Nick's bio and contact information in the Show Show Notes below. Nick, thanks again for being here.

Thanks so much for having me.

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