who better to ask than my first guest tonight, jonathan powell. as prime minister tony blair's chief of staff and the chief negotiator on the northern island peace process and powell has worked closely with the clinton and bush administrations and knows a thing or two about trying to make peace with your enemy. for the last six years he's taken those dialogue skills to north korea and he joins me here now. welcome to the program. >> thank you. >> so, you have recently returned in the last couple of months. first and foremost, what mood did you find there? >> well, i think they were very pleased with the success of the step they took in january in reaching out to the south koreans and then the sategy they have unveiled since then has been enormously successful. with the olympics, the charm offensive, reaching out at the southern summit. i think they are feeling quite pleased with themselves with the progress so far. >> and donald trump, how did that come in? >> they were very keen to study donald trump when i was there in december. they were reading

jonathan powell, who was tony blair's — the former prime minister's chief of staff, who says yes, bombing you have to talk to them. we have seen president ashraf ghani of afghanistan now saying he is to have no preconditions set for talking with the taliban, and that would have been inconceivable to many people a few years ago. is there that more conciliatory path? i agree you need both of those running concurrently. jonathan does brilliant work, but that would not appeal to the extremists and the terrorists had there not been the more military solution at play at the same time. so yes, there ought to be a military response, but my point is a military response is not enough and it never has been enough. you do need the heart and minds battle at play and you do need the theological response. but talks, even talks, would you advocate... well, i can't imagine us talking with isis, i mean which of the demands are we going to accede to? not with the leadership necessarily, but with footsoldiers, those who can be reclaimed. i mean when you look at the approach that some european government had

jonathan: you really think so? looks any powell uberhawk. jonathan: what gives you that indication?uke: he wants to get up the hill. he wants to go marching up the hill with rates. he has room to get down the other side. i just think he is going to continue down that path, and the risk is just too much. that be the way we get 2020 as our problem -- would be the way beget 2020 as our problem area. jonathan: that is really interesting. diana, this is still in accommodative federal reserve, isn't it? diana: it is, but that is the point. that raises the likelihood that you get more hikes. the federal reserve is concerned that we have had unprecedented stimulus when the labor market is tight. we do not want to be caught behind the curve, but we want to see other language. the next two meetings will be important. it is important to see what happens with the dots. we expect the medium. to signal one more hike this year. we agree that you get three hikes this year and possibly another three next year. jonathan: joe, you like the 90 basis point real yield? joe: yes, i think so. ,t shorter en

. >> jonathan powell telling that to our christiane amanpour. that's interesting, right?he administration hated it and did give you a texture of the interactions in the white house. >> well, the north koreans study the u.s. very, very closely and they have to especially right now. they need sanctions relief of president trump. they need a lot of things from the u.s. and so it's a critical time for them and they'll study absolutely everything and talk to everybody and not surprised they're reading books that americans read, as well. >> very interesting. just to sort of picture that that is the way to gain entry into the thinking in the white house. of course, right? but also fascinating. thank you so much. really appreciate it. >>> white house official tells cnn they have scraped the daily communications staff meeting in the wake of a vulgar remark of senator john mccain's health. more on this ahead. ility may do to their retirement savings. that's because they have a shield annuity from brighthouse financial, which allows them to take advantage of growth opportunities in

jonathan: you really think so? joe: jay powell just looks that way. jonathan: what gives you that impression? up thee wants to get hill. he wants to go marching up the hill with rates. toust think he is going continue down that path, and the risk is just too much. that is really interesting. , this is still in accommodative federal reserve, isn't it? thea: it is, but that is point. that raises the likelihood that you get more hikes. the federal reserve is concerned that we have had unprecedented stimulus when the labor market is tight. we do not want to be caught behind the curve, but we want to see other language. the next two meetings will be important. them to signal one more hike this year. we agree that you get three hikes this year and possibly another three next year. jonathan: joe, you like the 90 basis points? joe: yes, i think so. at shorter ends of the occur -- of the curve. jonathan: staying with me are you all. coming up, the auction block. ricky holding often -- auction -- turkey holding auctions. this is bloomberg. ♪ jonathan: i'm jonath

jonathan: you bring up the inflation story and jay powell and his followers for higher inflation. whether they were solo global central bank at the moment, and whether they are still sensitive to global financial conditions. in jay powell's mind, he's basically saying that this overstate investors the influence of the federal reserve on global financial conditions. that was the takeaway from his speech by a lot of people. do you think he is adult dating the that -- understating the fed's role on financial conditions? mr. buchanan: you probably do have to look at financial conditions and understand that there is a time and a place for financial conditions and the real question is, if financial conditions got disrupted in a meaningful way, would that fed put reengage. our view is it may be off the table i think the fed understands we run a very delicate situation, not only in the u.s., but globally, and that the removal accommodations need to be done with care and it needs to be done with active feedback from the market. if the signals like curve were to come close to inverting, i t

jonathan: might, you bring up the in placement -- inflation story and jerome powell.he other thing interesting in the speech this week is whether they are still sensitive to global financial conditions. in jay powell's mind, he is basically saying markets overstate the influence of the federal reserve on global financial conditions. that is the takeaway of the speech by a lot of people. do you think he is understating the fed's role? george: you probably do have to look at financial conditions, and understand there is a time and place. the real question is, if financial conditions got disrupted in a meaningful way, would that reengage? is it may beiew off the table. i think the fed understands we are in a difficult situation not only in the u.s., but globally, and that the removal of accommodation needs to be done with care and active feedback from the market. you get signals like if the curve were to come close to inverting, i think the fed is going to pay attention to that. jonathan: let's talk about the fed, george. has the fed put changed? i don't mean just where

jonathan: great to have you with us. still ahead, the final spread, featuring fomc minutes including jay powell. this is bloomberg real yield. ♪ on a thin: it is time for the spread. we have brexit negotiations continue. south korean president mine meeting with president trump. fomc minutes and the bank of england's mark carney, jay powell you and other central bankers will be at a conference for the bank and we will see if minister isprime named now that the government program has been agreed upon. with me, our guests. let's begin with you. btp's totally battered through the week. we wondered when the political risk would bite, are they a buy yet? >> you could say it is difficult to get a whole bunch of stuff through and that is right. it will be so much rhetoric from them right from the beginning of when they get things done and how they will be successful and get brussels to support them. , i want to see this at 170 or 180. the european sovereign crisis is not that long ago. to compensate 200 you. not when 60. jonathan: if we do -- is this about an increase of btp supply, two different things

think jerome powell talked about asymmetry or asymmetric range for what the fomc is predicting, around 2%. that has told us that they are willing to withstand inflation going above 2%. jonathanthis is a really good point, george. it is something i think we've all got to try to understand, the reaction from the federal reserve. trying to understand the sensitivity of the fed to higher inflation prints. does the federal reserve move with surprises to the upside, or is in it overshoot to some extent? aboutly on, they talked prints. >> early on they talked about transitory factors and the idea they were not willing to withstand an overshoot. right now, we think they can go over 2%. actually, 2% to 2.4% is a reasonable amount to overshoot. lisa: yes, i think there are willing to tolerate some overshoot. we've heard williams talk about it. maybe we should move the inflation target higher. given that we under shot for so long, i think that is something they're willing to tolerate, as long as it is not a germanic overshoot. jonathan: mike, you bring up the inflation story, the other thing that was interesting in the speech this week, is whether they are still sensitive to global fin