Bloomberg: Citigroup CEO Fraser: Powell’s Latest Rate Move Was ‘Jolly Sensible’

Citigroup Inc. Chief Executive Officer Jane Fraser talks about the Federal Reserve’s decision to raise interest rates at a ninth straight meeting, and the prospects for the US economy. She speaks with David Rubenstein at the Economic Club of Washington. (Excerpt from March 23)
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Transcript

[CC may contain inaccuracies] As we talked today, the Federal Reserve has announced that it’s going to increase the federal discount rate by another 25 basis points, which was probably not a surprise to the market. Do you think that was the right decision? No, let me.

I think it was a tough decision was taken a pause. Was he going to increase it by 25 basis or more? I think what he said was, frankly, jolly sensible, if you’ll pardon that British expression. I do that occasionally.

He said we don’t know how much credit tightening is going to come from what’s gone on in the last couple of weeks. We don’t quite know what’s going to happen there. So what we do know that inflation is a real problem. It’s persistent, it’s starting to come

Off. But he has to tackle this. And in NJ, the markets trust and many of us do, because, you know, he has been so clear about slaying the inflation dragon, but he’s going to wait and see what the data shows as to what the impact of the next.

Yes. The last couple of weeks have been that that feels like a very sensible response. So let’s tackle this and make sure everyone’s quite clear that they’re going to tackle inflation hard. But let’s also see what the data is and and adjust accordingly. He has said consistently, I want to get

Inflation factor down percent. We’re roughly was for 25 years. Yeah, but some people say 2 percent is kind of low. It will produce unemployment up to 6 percent and maybe guarantee a recession. Do you think 2 percent is too low? What about 3 percent as inflation,

Though, as we look longer, as we look out longer term in the world? There’s a number of different things that are probably more inflationary in nature. We’ve got to tackle if we’re going to look at moving to greener a greener economy that’s more inflationary.

If we’re going to be looking at building in much more resilience into supply chains that add some costs to the systems. So, you know, 2 percent, it’s going to be quite hard. When we think in the longer run about some of these trends that need to be

Take into account, it’s not impossible, but it’s it could be difficult to shape. However, call you up for your advice as he call you or you call him or you talk to him lately or to Janet Yellen. Do they call you and you’re the one running one of the biggest banks?

Yes, they do call. And what do they say? Call you? They will ask for opinions on things. So I think it’s great to see that we’ve got people that aren’t just telling you what to do or just they’re soliciting advice, trying to understand what’s happening in the economy. What are we seeing?

What are we learning? Because we’re a big global bank. We’ve got operations everywhere. We have a lot of information on it. So they’ll be testing out what they see going on. They’ll be asking for advice. They won’t necessarily take it, but says

That I’m a mother of teenagers. If you’re in if you’re in a board meeting or something like that, does your assistant tell you that there’s a call from the secretary, treasury or the Federal Reserve where they put that right through? Or do you say, I’ll get back to them

When I’m like I my chairman sitting in front of me here? You can attest that I will dump the board to pick up Janet Yellen. How so? Do you see any evidence in the information that that city has that we are heading for a recession, a mild

Recession or some type of recession? If so, when might we think we would see the evidence of that? Yeah, I mean, we’ve certainly been expecting that a recession could well be. Could well be happening in the second half of the year if one does occur.

We don’t think it’ll be that heavy and that hard a recession, because normally when you’re heading into some tough at times, the consumer’s not in such good health. The companies aren’t. The banks aren’t. That’s not the case right now. The consumer is in good health. I mean, the corporate balance sheets are

Strong. People took advantage of a low rate environment to make sure their balance sheets are in good shape and the banks are strong. So the factors that typically amplify a recession and not in the end, not in play at the moment.

So, you know, we have to make sure there’s nothing crazy happens in the geopolitical world that would change it. But we could well have a mild recession. The last couple of weeks could make that a bit more likely between price stability and financial stability. But it’s doesn’t feel like it’s going to

Be a tough one and the U.S. economy is likely to pull out of it pretty quickly.

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