THE CHANCES FOR NO RATE HIKE, NOW ABOUT 71%. BUT AFTER TODAY'S DATA, OUR NEXT GUEST DOES RECOMMEND A HIKE AT THE NEXT MEETING JOINING US, FORMER FEDERAL RESERVE BOARD GOVERNOR FRED MISHKIN, PROFESSOR AT COLUMBIA GREAT TO HAVE YOU WITH US. IT DOES SOUND LIKE YOU WANT TO MAKE SURE INFLATION IS DEAD. >> TAKE A LOOK AT THE NUMBERS. THE CORE INFLATION IS STILL VERY STUBBORNLY HIGH, 4% LEVEL ON THE PCE DEFLATOR THE NEWS HAS NOT BEEN GOOD THERE. IT'S A LONG WAY FROM THE 2% INFLATION TARGET SO, IT'S TRUE THAT HEADLINE INFLATION HAS COME DOWN BUT THAT DOESN'T TELL YOU MUCH ABOUT THE UNDERLYING INFLATION RATE, WHICH IS WHAT THE FED CARES ABOUT. THAT'S NUMBER ONE. NUMBER TWO IS THE ECONOMY IS STILL VERY STRONG. YOU SEE IT IN TERMS OF THE JOBS NUMBER, THE STOCK MARKET'S STRONG AND SO FORTH. SO, FROM MY PERSPECTIVE, THE FED REALLY DOES NEED TO KEEP RAISING RATES. AND IT'S NOT CRAZY TO TALK ABOUT PAUSING. BECAUSE MIGHT WANT TO SEE WHAT'S GOING ON ON THE OTHER HAND, THE FACT THE NUMBERS HAVE BECOME SO STRONG AND THE LATEST JOBS REPORT INDICATES THEY'RE GOING TO HAVE TO KEEP RAISING RATES. VERY UNLIKELY NOT UNLESS SOMETHING UNTOWARD HAPPENS OR A BIG PROBLEM IN THE BANKING SECTOR BUT I DON'T SEE THAT MAYBE THE FED SEES SOMETHING BUT I THINK THE FED HAS TO SHOW THEY'RE SERIOUS ABOUT GETTING INFLATION DOWN A LONG WAY AWAY FROM -- A LONG WAY AWAY FROM WHERE THEY WANT TO BE TO ME THAT MEANS THEY NEED TO HIKE BUT I CAN SEE A PAUSE IS A POSSIBILITY. A STRONG POSSIBILITY BUT I WOULD GO A LITTLE BIT MORE HAWKISH. >> YESTERDAY IT WAS BULLARD TALKING ABOUT WHETHER OR NOT WE'RE IN MODESTLY RESTRICTIVE TERRITORY. DO YOU NOT THINK WE'RE THERE QUITE YET? >> I DO THINK WE ARE, NO QUESTION IN MY MIND THAT'S THE CASE REMEMBER, BY THE WAY, INITIALLY WHEN THE FED STARTED RAISING RATES, EVEN WHEN THEY WERE DOING 75-BASIS-POINT INCREASES, THE FED WAS IN ACCOMMODATIVE TERRITORY AT THAT TIME IT'S TRUE IT TAKES A WHILE FOR MONETARY POLICY TO TAKE EFFECT BUT TIGHTENING DIDN'T START TO BITE IN UNTIL NOT TOO LONG AGO MY VIEW ON THIS IS WE'RE A LONG WAY AWAY FROM WHERE WE HAVE TO BE UNLESS THERE'S SOME BAD THINGS THE FED IS SEEING THAT I DON'T SEE. THEY REALLY SHOULD -- THE CAUTIOUS APPROACH NOW IS ACTUALLY TO KEEP RAISING RATES AND, IN FACT, MOST IMPORTANTLY, AND I WOULD LIKE TO SEE A RATE RISES, THE TALK OF PIVOT HAS TO GO AWAY. THE FED, NO MATTER WHAT, HAS TO KEEP RATES HIGH FOR A VERY LONG PERIOD OF TIME IN ORDER TO GET INFLATION UNDER CONTROL. IF THEY DID DECIDE TO PAUSE, I THINK THEY HAVE TO BE VERY COMMUNICATIVE ABOUT THE FACT THAT IF ANYTHING, A STRONG BIASED IN RAISING RATES FURTHER, AND CERTAINLY THERE'S NO -- REALLY OFF THE TABLE IS ANY KIND OF PIVOT IN THE FORESEEABLE FUTURE WITHIN, YOU KNOW, REASONABLE PERIOD OF TIME >> DOES THAT MEAN -- SORRY TO INTERRUPT. DOES THAT MEAN IF YOU SAY TALK OF PIVOT SHOULD BE COMPLETELY OFF THE TABLE, THAT YOU HAVE CLOSED THE DOOR ON THE SCENARIO WHERE WE SEE A HARD LANDING, A DEEP RECESSION THE THINKING IS THEY WILL DO THAT, THEY WILL START CUTTING WHEN THINGS GET BAD. >> BUT ACTUALLY -- BUT THEY HAVE TO REALLY BE SERIOUSLY BAD UNFORTUNATELY, WHEN YOU LET INFLATION GET OUT OF CONTROL, THE ONLY WAY YOU BASICALLY CAN GET INFLATION UNDER CONTROL IS BY HITTING THE ECONOMY AND SLOWING IT DOWN. AND I THINK THAT THAT'S THE KEY HERE WE THEY SAID, YOU HAVE TO EARN IT THAT'S WHAT THE FED NEEDS TO DO. THAT'S THE UNFORTUNATE REALITY WHEN YOU'VE MADE A MISTAKE AND YOU ACTUALLY HAD MUCH TOO EASY MONETARY POLICY, WHICH I WAS CRITICAL OF THE FED FOR A PRETTY LONG TIME BEFORE THEY STARTED RAISING RATES. IF YOU GET BEHIND THE CURVE, YOU'RE GOING TO PAY THE PRICE. IF YOU DON'T PAY THE PRICE, IT WILL BE WORSE. IN FACT, INFLATION WON'T GO DOWN, IT COULD GO UP YOU MAY HAVE TO RAISE RATES EVEN MORE THAT'S THE WORSE SCENARIO. BETTER TO BE PRE-EMPTIVE, GE
