kathleen: i'm kathleen hays in new york.will get straight to a quick check of business flash headlines. reports in germany are that volkswagen may have introduced it functions in software to reduce in missions cheating. it battles back the dominant are that would keep the in missions low. vw is set to meet regulators early in the new year. singapore has joined malaysia in drying goldman sachs into an investigation of money missing from the investment fund. singapore police have been examining goldman's relationship with the fund for the year. goldman units have already been charged in malaysia. huawei will be moved out of the gear of the police force and emergency services. removed equipment made by the chinese company after the acquisition of a company that used huawei gear throughout his systems. the world's second-largest economy is in an economic slowdown with no signs of ending. as we head into the new year, we ask our analyst for their predictions around china's slowing economy and its sectors. ♪ i think this is the st

kathleen: i'm kathleen hays in new york.ing to get a check of the latest does this flash headlines. mutual funds are getting no joy in the lap to the holidays -- in the lead up to the holidays, biggest outflows since october 2008. figures from the institute show even though traders and investors dumped mutual funds, they added $25 billion into exchange traded funds. that shows some investors seeing the volatility as a buying opportunity. david: let's have a look at tesla. improving cash flow, putting the risk of a backgrounde in the for now. very strongooks into 2019 and beyond that. shareholders have endured significant swings, exceeding 20% this year in either direction admit concern over elon musk's behavior and tweeting. gap will shutter a three-story location on fifth avenue. the ceo said last month it may close hundreds of underperforming stores and the value of some flagship locations is being scrutinized. ap shares have lost about quarter of their value this year. let's have a look at nissan. looking at shares, we ar

kathleen hays in new york.lysts, investors in the united states are looking for a steep drop in u.s. stocks. it does not necessarily show a decline, but i rebound. what does it mean for asia and stocks? asian stocks? for u.s. stocks, we have qt. the era of qe is over and we have qt. we will tighten monetary policy and you have all of these trade war issues and so on and so forth. in order for it to bounce, we think that there will have to be some resolution for the headline news, that there will have to be some resolution of the chinese-u.n. trade conflict. it's far more than a trade conflict. it's a strategic conflict. it will not be resolved easily. more dovish fed. i think we will have that next year in the have indicated it would by having a lower neutral rate, and i think they are taking note of the volatility and are unlikely to increase it twice next year and that could result in a market rally. but nonetheless we think the u.s. will underperform because i'm more dovish fed -- a more dovish fed is more b

i'm kathleen hays. this is bloomberg.or a seventh straight month, according to early indicators compiled by bloomberg. the trade war seen as a major headwind, but sources tell us that beijing is making an effort to settle the dispute. yvonne: joining us is our government editor in sydney, and we want to bring in our economics editor in tokyo for us. let's start with, where do we stand when it comes to the trade talks in beijing, we are only days away from these talks? >> we are seeing uncertainty on both sides. the chinese do not appear to be clear on what the u.s. wants, and they are not quite sure if the u.s. knows what it wants. so we are only 10 days out and that is the situation. rishaad: should we be surprised that china is so determined at the moment to make peace, to strike a truce? >> i do not think you should, it has been a hard year for them economically, they have seen a slowdown in growth and trillions come off of their stock market. the trade war has been a factor in all of that, so it is in their best inter

let's get the first word news with kathleen hays. esident trump reported big progress in trade talks with his counterpart xi jinping. trump tweeted a deal is moving along and will become preventive if made. the leader spoke in the delegation preparing to go to beijing for the resumption of trade talks. mccain's things -- and came days before the resumption of ties and diplomacy. president trump will welcome the new year with the government in partial shutdown and little indication of agreement to resolve. 400,000 are working without pay and 450,000 are furloughed. donald trump blames the democrats for the death of two children at the border with mexico and stresses is demand for wall funding. u.k. secretary liam fox the chances of brexit happening are 50-50 if parliament rejects new withdrawal agreement -- the withdrawal agreement. he said it would be a sense the government had betrayed the people who voted in the referendum. he said it is a matter of honor for lawmakers to back may. the party of bangladeshi prime minister shaikh a se

now let's get the first word news with kathleen hays in new york. kathleen: china has announced plans to rein in lending to banks. the banking and insurance regulatory commission says those lenders including world cooperatives must have proper licenses or wind down their businesses. smaller regional banks have become major drivers for shadow banking in china as they seek ways to enhance profitability. south korea says kim jong-un wants more summits to resolve the nuclear impasse that stalled negotiations with the u.s. moon jae-in's office says kim sent moon a personal offer of well-wishers over the weekend. kim said he was willing to meet more often in 2019. delivers his annual new year's speech on tuesday. the australian securities and investment commission will reportedly investigate deals between employers and superannuation funds according to the australian newspaper sagging the asset commissioner -- citing the asset commissioner. the are prepared to ramp up super sector. italy's parliament approved as 2019 budget law, meeting a deadline after a

i'm kathleen hays in new york. david: i'm david ingles in hong kong.ave a look what bloomberg has been told, two top officials of china's was par 4 traded companies have been suspended over losses on bets related to prices of oil. giant sinopec confirmed the suspension, said only they were related to "work reasons." analysts say the market is watching for details on scale of the loss. shares tumbled as a result. kathleen: sure so is betting on my bodies for month-to-month losses after stocks surged 65%. the rally follows the announcement mind-body is to be acquired in a $1.9 billion deal. they have a 30 day window to seek a better offer, which raises possibility of another bid, sending the stock higher. david: shares of blue apron soaring as much as 25% on thursday, catapulting a session gain to more than 48%, collett 50% really, but it cracks the one dollar barrier for the meal kit company, which recorded one of the worst-performing ipo's of the decade and the stock remains down more than 75% for 2018. kathleen: instagram redesigned its platform for h

kathleen hays joining us. r jay powell has a bullish assessment of the labor market ahead of the latest payroll numbers. he said the economy is performing very well overall with strong job creation and gradually rising wages. economists are expecting a healthy rise in payrolls despite some data this week indicating a possible cooling. the new york fed president john williams says a full-blown trade war would be a real worry, though the direct impact on the u.s. and abroad as been relatively limited so far. jesus tariffs are a source of uncertainty, something policymakers and businesses like. he also talked about the fed, saying it is important that markets understand policy and that it is a challenge to get communication right. global private equity firms have told try minister may at the prospect of a no deal brexit makes them reluctant to boost investment in the u.k. mete secretary liam fox investment bigwigs. it is under fire from all sides. russell says going back is no longer possible. >> this is a balance

haidi: that was kathleen hays. people's bank of china says the economy is facing increasing downward pressure and monetary pop -- monetary policy will continue to be supported. the nation is shifting from high-speed sanctions to high-quality growth. tom mackenzie joins us in beijing. the monthly indicators? what other highlights about the fragile balance in the economy at the moment? tom: you will not be surprised to hear the main challenges he highlighted at the university speech was the external pressures from the trade war but also domestically the attempt by chinese policy members to rein in the shadow bank sector. particularly highlighting the slowdown and infrastructure spending. he talked about debt levels. that has been a topic today. he says overall macro debt, total debt is 250% and has been at that level for two years. pretty stable. prescriptiony around attacking it is to let the pressure out slowly well being prepared to support the market as external shocks. he talks about other measures. he says the

kathleen hays in new york.ed a plan 2010 to keep some of the compensation a secret according to an email that has been cited by bloomberg news. working to get him released on bail and that could happen in the coming hours. more about the secret payment plan. the secret payment plan is how he tried to hide how much money he makes from the public. executive considered a plan in 2010 to pay part of the through the dutch company that controls the alliance. without disclosing it publicly, which is key. kelly is also being held at the detention center behind me and said this carried some legal risks. we know that he was arrested at a tokyo air or. when can we expect him to leave jail and get bail? today is day 33 in detention. yesterday, a big shift in momentum for him because they rejected an appeal. -- chances of receiving bail he intends to plead not guilty in a trial. thank you so much. joining us from tokyo. china is now complaining to the u.s. about those espionage accusations. china is urging the u.s. to stop

kathleen hays is here with a look. run us through what the fed did and what it said. it looked like a dovish hike, and yet the markets are not happy. kathleen: just not dovish enough, that's for sure. markets have just sold off, we could be in a terrible arc it, how could the fed possibly be hiking rates? not seem to bother the markets so much because it was expected, 25 basis points, and they did cut the consensus view formed from what everybody says, you distill it down. where do most people see the number of rate hikes next year -- two, not three. that was a significant change. if i met the fed tonight, i'm thinking why did everybody not put more emphasis on that? but it's true. powell said a couple of different ways the fed still has a strong forecast generally, pretty upbeat on the economy. he also said with the volatility you just referenced that it does not leave an economic mark, not just yet. powell's knowledge, inflation came in lower than they expected this year than they thought it would. i want to jump into the chart and show you what he had been talking a

kathleen hays is watching this. rely, coming after a long battle with the modi government. kathleen: it has raised not just for him yet, but for the world, this question of central bank independence, and i think everyone surmising that that is one of the things he is standing up for as he announced his resignation, which was not expected. has been pushing the reserve bank of india to provide more liquidity to the banking system. there is a cash crunch. they want the bank to be able to lend -- -- a little bit of a political tilt here. at the same time, there is a meeting on friday coming up with the broad membership of the board of r.b.i. where there are members of the government included and it was expected that, once again, after people thinking that maybe there was a truth that they would let this calm down about the cash crunch, it would be pushed on modi again. criticizedady been or had some pressure put on him about trying to clean up the banks. he tightened rules on state-run banks. all we know for sure is the

in an interview the day after the central bank's decision, kathleen hays asked him whether financialbalanced right now. bill: financial conditions until october had tightened at all, even as the fed was raising short-term interest rates. stock market up, price is narrow. monetary tightening will only work by tightening financial conditions, you didn't get any traction until october 1. i don't think seeing financial conditions is a problem. only if it becomes so severe it has to be in effect on the economy. broadly speaking, the fed wants financial conditions tighter because it is the mechanism that slows the economy. kathleen: the neutral rate seems to have faded from the major focus it had and it wasn't brought up at the press conference with jay powell following the meeting, but you back in june seems to be of the view that the neutral ray should be overshot a bit because unemployment is so low. do you still see that? bill: i think i am where the fomc consensus is. inflation will creep above 2% and the fed will move to a slightly restrictive monetary policy in response. i would thi

kathleen hays is here with what is driving the fed debate and what the decision means for asian central's continued criticism. kathleen: they should be thankful or wishing that leaders of asian nations would be batching the central banks. it is certainly a big feature as the fed gets ready to wrap up its meeting. donald trump a right hike would be a mistake. -- saying a right hike would be a mistake -- rate hike would be a mistake. it is taking liquidity out of the stock market. a lot of people saying you are painting us into a corner. if they hike, which may be could hurt growth, then that is a problem that possibly they are doing it to show you cannot control them. with this in mind let's look at some reasons why the fed should maybe pause. global stock markets under pressure. look at china in particular. geopolitics like a trade war, brexit. strong dollars thread manufacturing in the u.s. u.s. housing market continues to get weaker. how about reasons to hike. unemployment being low at the top of the risk because that is pushing up wages. interest rates. consumers are spending. confid

we've got kathleen hays.tained the pressure on jay --ell to cause -- paul's pause. he harkens to a wall street journal editorial or they talk about the balance sheet tightening and they say basically forget policies. , many years of successful hedge fund manager had a long conversation with bloomberg television. powellks that jay inherited a situation from janet yellen. onthe way, he thinks stocks should maybe summer down. let's listen to what he said earlier. >> i feel terrible for jay powell and it goes beyond that. his predecessors have done him no favors. --et yellen she was going to said she was going to hike for times and she did not until after trump's election. , is a noosethe time around his neck. heres a very tough road and you are right. trump is making get a lot more difficult and he should just shut up. heard that mr. president, he wants you to keep your mouth shut. mixed signals for financial markets. the on that, bloomberg has done good reporting. a lot of report on capitol hill .mong republica

global economics and policy, kathleen hays. the government keeps going. isit of relief, the fed dovish. >> not dovish enough for investors relative to what they lead themselves to believe. legitimate toy say, stock markets around the world falling. conditionsnancial tightening. sending a weakening signal? perfectly legitimate for them to say, what will they do? we think there should be a cause -- pause in rate hikes. they did not signal that. more we are on track for rate hikes. powell said there is no predetermined course. high rate of the uncertainty. the consensus averages it out. is down to two. there is a sense of being very careful. we think the economy is strong. we are just about at neutral. i understand for the stock investor, you have this drop. for many people, they feel this is a reasonable position. what is your position on this? werelked about how markets pricing in a dovish hike. at most, for 2019. what is it going to take for markets to catch up with the fed? the fed will catch up with reality. we have not seen the impact of the previous r

i am kathleen hays. this is bloomberg. rising, then stocks biggest rally since 2009, the rally offering relief from the downturn. rishaad: how long will it last? let's ask our guest. that is the question. >> how are you doing? rishaad: you are not answering the question. >> you saw the rebound in the u.s. lot, then comes back again. , my take isight now there are lots of policy risks ahead and on the table. what you can see in the u.s. and other commercial markets. from the hong kong side, trade what will happen month?ar, next we see lots of things happening next month. trade is january 7, it is a positive news they are meeting. is that 90 days can solve all the problems? i don't think so. like cut off some of the trade deficit is ok. it can help. for others, intellectual property, i think we need more time, but they have opened a positive road. we need more time. this, the market will be quite responsive on these issues. another thing in january we have to be looking at it some of the chinese data coming out. , fourth qua

kathleen hays is here with the latest as voices of opposition grow louder. ushback on this. kathleen: most are convinced it will go down in defeat after much to theresa may's dismay, 17 months of negotiation, the most important deals, negotiation the u.k. has entered into since world war ii. she is determined to get the vote tuesday as planned. it is interesting. many people speaking on the sunday news shows in the u.k., including boris johnson, far foreign minister under theresa may. he said this deal means that you have the power to intercept -- in effect blackmail the u.k. we will stay under their power for too long. steven barclay, the current secretary,uitry -- no plans of further vote, we prepare for a hard brexit but this would be undesirable. as for the you, in france the foreign minister saying talks are close, it is up to britain to decide. donald tusk saying i had a phone call with theresa may. it looks like an important week for the faint of brexit. i would say that is the understatement of the day. theresa may has her work cut out for her. it is

kathleen hays is here, so let's start with the r.b.i.. ference on the first day on the job? kathleen: is-- messages, trust me. for personal reasons, a move that surprised everyone. clearly, he is trying to tell the world that i am the right guy. a press conference held on his first day of office. >> the r.b.i. is a great institution and has a very long legacy. a very rich legacy. i will do everything that is possible. i will try and uphold the professionalism, the core , ands, the credibility more of the reserve bank. kathleen: his supporters agree he might have a bit of an uphill battle convincing investors. for example, he was the one that -- will he do the government's bidding when it comes to banks and bank capital? something the government is pushing the r.b.i. to increase while they have pushed back. of hisfirst test conciliatory approach, he believes in building consensus, and that comes as a member of the broad group of board members and the reserve bank of india where the government will see what kind of stand he takes there. that

rishaad: kathleen hays is here. it is not just donald trump criticizing the fed. t of respected personages as well. kathleen: many market participants. irony is, the more the president has publicly criticized the fed and jay powell, the more it seems to be one of the many factors that he markets so hard, particularly last week. a new -- a bloomberg news team in washington followed up on a story a week ago that they are trying to arrange a meeting between these two men. it comes after the repeated attacks. maybe they are trying to have a rapprochement. is this really a good idea , they may saywell president trump? el-erian, a barrel -- a bloomberg view columnist, now that chief economic advisor to on that owns -- it talks about the things that powell can do better. here is what he said. is understanding that it needs to communicate better. it needs to do two things in particular. juan, show that it is more sensitive to the markets and what is happening outside. what the president has called sentiment feel for what is going on. the fed has to realize that he cannot k

kathleen hays is watching this. labor is going down the gauntlet. rdles for the prime minister. what is next? kathleen: this is the week they start debating the deal. the vote is on december 11. what is striking here, this was on a sky news interview. the labor brexit spokesman says it is inevitable the option -- opposition party will introduce a no-confidence motion. deal isrime minister's rejected. this is something that was already sort of stirred by members of her own party, but it was a small portion of the number needed to push this in. part of the reason this is coming to a head, this would lead to another general election for the u.k., and there are so many people opposing it. opposition parties, her own allies in the democratic unionist party in northern ireland, 100 members of her own conservative party. he begins to look harder and harder. labor would like to see a second referendum. they think that would give the british people a chance to take a look at this now they can see what the damages would be. theresa may picked up a couple of en

kathleen hays is here. so far, what has been the consensus view of what is going to happen? en: wouldn't you say, from everyone you interviewed, that even now, even with trump tweets and everything else, one more hike in 2019? excuse me, in 2018, and hoping fewer in 2019. that would be the consensus. president trump, the day before the first-day of a two-day meeting, out in full swing. let's read the latest one. "it is incredible the outside world, blowing up around us. paris is burning, china way down, and another is just rate -- interest rate hike." i am interpreting for mr. trump. "just keep it there." into thearro jumping act, saying the fed should not be hiking the key rate to prove that it is independent in the face of these kind of tweets, i suppose. they should just watch the data. he argues for this. even so, jump into the bloomberg. world interest-rate projections. the bond market, people who bet are saying there is a two thirds chance. it is true. this is up closer to 90% for weeks on end and then it dipped into 80's and 70's. they are going to cause. listen to our

kathleen hays is here with a case-by-case look. serve bank of india's decision to hold, not a surprise. the question is could the move next be a tut? kathleen: that is the question in the air, and they were expected to pause, not hike again. is dying back its hawkish tone. inflation has eased. go to the bloomberg library. here is the key rate holding again, 6.5%. look at what inflation has done. around the middle of the year the bank was concerned inflation would continue to go above target. look how it has fallen below target. it maintained what it calls a calibrated tightening stance. that means a hike is a must as likely as a cut. they forecasted gdp, held at 7.4% even though it fell -- that is for the fiscal year 2018. it fell to 7.2%. urjit patel at the conference said commensurate policy actions could be taken if inflation continues to undershoot. you got to sit back and watch the inflation rate. 3.2%,ut their forecast to a big drop from where it had been. bonds rallied because the r.b.i. said they would have to buy more debt.

he spoke with kathleen hays to discuss what you think of the biggest risks for 2019. >> the biggest riskrt trade policy. we don't know what will happen with the u.s. and china in terms of trade policy. you could have a benign outcome. we see them buying more goods, better access to the market. intellectual property rights, they agree, life goes on. going to press china on its industrial policy? if the u.s. expects china to give on that, they will be disappointed. if the u.s. can get something from china buying more u.s. stuff, they have agreed already. if the u.s. can get more access to the chinese market -- if the u.s. wants china to change its economic policy, that is where china will balk. how much is the u.s. going to push for? -- where how concerned is the chinese economy heading? we have seen the pboc doing more targeted lending facilities, getting active lending money into the economy without going against deleveraging. it is tough. >> they have been trying to deal with excesses in the shadow banking over years. they are trying to tighten up, but the shadow banking system is the s

. : i'm kathleen hays in new york, welcoming you to "daybreak: asia."heir biggest one-day pop since 2009 and asian markets look set

kathleen hays is here. let's start with brexit because the tuesday vote not looking good. next? kathleen: it is good -- not looking good. she is still planning to hold a vote and get people on board with her view this is the best deal, let's vote and move on. some of her colleagues and foes taking to the airwaves. the former u.k. prime minister boris johnson said forget about it. her deal will be like e.u. blackmail, never get rid of their clutches. steve barkley, on her side said we don't have plans to delay a vote. we are getting ready for hard brexit, but that would be undesirable. if everyone would vote, we could not do that. people say theresa may will lose support if the deal is last. as for the e.u. e.u., the french foreign minister said talks are closed. as for the the -- e.u. e.u., the french foreign minister said talks are closed. it is up to the british people. let's take a look at other things as we ponder what will happen to theresa may. john trickett, with the opposition labor party, said they are ready to form a minority government as soon as wednesday. he is

our editor kathleen hays is here to connect the dots. e fed been about this of trade war? kathleen: the federal reserve has been watching and commented, but the longer it lasts and the more shares get thrown back and forth, the more concerned they have been. when i asked myself this question i thought, let's go back through the minutes and see what things came up. there was a dozen references in 10 pages of minutes of the things like trade policy boosting uncertainty. in other words, the sense it is getting worse. trade tensions obviously weighing on global stock market , andment, in their minutes the slowdown of business investment, they have been scratching their head, they list tariffs as one of the reasons this is happening. these trade policies could lead to significant negatives. they said all of this could end up slowing growth more than expected. it is true any interview where a fed bank resident is asked about trade, they talk about maybe no damage yet, but the business as we speak to in our districts are not just talking about u

thank you to kathleen hays joining in on the conversation.e get breaking lines crossing the bloomberg. chinese manufacturer of personal hygiene products. they are considering taking legal action against a research report into the company. they say the company's shares are worth closed -- worth quote "close to zero." the company says the stock will resume trading from 9:00 a.m. thursday hong kong time. we want to watch in the hang seng session. shery: at a time where we see markets rallying in, a little bit of brown as wall street recoups some of those losses. this comes when we had to bring themes in the markets as well as brexit. -- two themes in markets as well as brexit. feeling market open is up half a percent. the qe dollar is not doing much, but we have more positive sentiment for currencies on positive trade news and we will keep you updated when bloomberg comes back. ♪ sophie: 9:30 a.m. in sydney, markets opening in 30 minutes. futures looking tepid. we are seeing a gain as sydney futures get trading. we do have another roundabout ses

kathleen: and i'm kathleen hays. ♪ paul: here are the top stories we are covering in the next hour.jay convince powell is safe at the fed,

speaking to kathleen hays. >> you can catch up on all the interviews you may have missed.om today. check it out. things you may have missed. this is bloomberg. ♪ >> let's check in with the business flash highlights. sales of ban of iphones in germany. the court agreed they infringed or are infringing ip on an injury saving feature. aey would have had to post bond of $760 million. in paris, quite substantially. the stock saw its biggest fault in two years. severalot by ends of billion dollars. the investigation comes as france and the u.k. launched a similar increase. they have been dogged by a series of investigations over the use of middlemen. todots bank has added investor woes. challenging market conditions. estimate lowered their $2 billion. conditions worsened in the last few months. they insist the underlying business remains strong. let's have a look at what is going on market wise. what have we got at the moment? japan in a bear market. carlos ghosn being rearrested. shutdown looking like it is coming down to the wire in the u.s.. we have a trade war in the ba

. ♪ kathleen hays has been watching the news for us. out the action, let's look at the latest fed speak. you see a support for a pause. kathleen: federal reserve officials see a strong economy, but after hiking rates for so long, i think they are wondering when the endpoint will come. what are we hearing from jay powell? powell? u.s. economyll the is currently performing very well overall. but one of the things in the market today was the question, could the market be peaking? let's look at the data people have accumulated. up private tally of jobs 179,000. bottoming and is moving higher. meanwhile, president dow is confident in the economy. the fed is within shouting distance of neutral. this was such an impressive rally today. joining ten-year note in with the 30 year, which is rallying. we have a chart to illustrate what has happened. this year you can see how the rising yield really picked up, got to almost 3%. but today the two-year treasury note, which is defying expectations of where the fed is going. it only pulled back a bit. i

kathleen hays is in our new york studio. with you, talkff about the treasury trade.een bouncing around today and i'm curious if we are getting similar moves when it comes to the bond market. kathleen: we've had a big rally in the bond market and that was kicked off by the decline in stocks. market ishe treasury off the best levels of the day. .75.now up about it is not just stocks, you had the large, unexpected drop in consumer confidence. we will talk more about that in a minute. note option, you had the 67% allotment to indirect dealers which includes foreign central banks. larry lindsey speaking to bloomberg earlier. saying you shouldn't go to fast on rate hikes. he said the message from the stock market is telling the fed you are going to fast, just slow down. they: and alluding that can't admit they were wrong. we did have that economic news, the consumer confidence number is a little bit troubling. >> i think consumers are just adjusting to the fact that economic growth will slow down going into the next year. i think we might see further declines. >> forgive m

the global economics and policy editor kathleen hays is here with a case by case look and the reserve india's decision to hold no surprise. kathleen: the signal they gave was a bit surprising but they kept the key rate at 6.5%. they are dialing back their hawkish tone. a couple months ago the head of the r.b.i. said in a tub of rate cuts was off the table. we will jump into the bloomberg. you can see this chart from our library. the key rate is 6.5%. look at inflation. in the spring, going into summer, look how that has eased. following oil prices -- nevertheless the r.b.i. didn't really signal a cuts exactly because they are staying in atl liberated -- in a calibrated tightening stance. year 2018the fiscal gdp forecast at 7.4%, well below 8% that has been seen. he did open the door. he said there will be commensurate policy actions if inflation undershoot spear they cut the inflation forecast to a range of 3.2%. there were no headlines made as it turned out on the question of central bank independence. bonds had a nice rally out of the meeting because among other things, the r.b.i. i

kathleen hays is here with a look at shaktikanta das, the new man in charge of the r.b.i. we heard he saw cuts from the central bank. kathleen: definitely he mentioned that is what he would like to see. wasexactly his job when he economic affairs secretary, but anything he has said and is saying now about interest rates, about what the r.b.i. should be doing, will be more scrutinized than ever. that makes good sense. he was the economic affairs secretary, which is part of the ministry of finance from 2015 to 2017. he was -- he then oversaw will be moving forces towards a program which is still controversial. was it needed? nevertheless he has been a member of the finance commission and he was one of the sherpas at the last g20 meeting for india. he has a lot of experience in government. what else do we know about him? put it in the context of his challenge, they want more control over the r.b.i.'s functions. they particularly want help with the budget deficit ahead of the general election next year. this is a very important thing for mr. modi. pushing on the reserve bank o

on friday, the new york fed president spoke exclusively to bloomberg kathleen hays in new york afterpeople in the markets should understand the fed does not care about market prices for themselves. it only cares about market prices and terms of how it affects the economy, the unemployment rate -- rate, and inflation. the fed is not there to take away the markets pain, it is there to follow monetary policy. objective ofe sustainable employment and price ability. the fed filed it back yesterday. they went from three hikes in 2019 to two as a medium estimate. they answer to some language that suggested maybe they will not do as many gradual rate hikes. they added the issue of financial conditions being a factor that they will follow. they added the notion that they are watching what is happening in the global economy. they did dial it back. maybe they did not dial it back as much as the market would like but they did dial it back. >> as you may recall, in february, when you came to bloomberg, we had just had a big drop in stocks. you said this is not going to affect the fed, this is sma

our local -- kathleen hays asked dudley if conditions are at the correct level right now. >> financiall october, hadn't tightened at all , even as the fed was raising short-term interest rates. the dollar was not doing much, the monetaryf policy tightening, that's only work by tightening financial conditions. that was not getting traction at all until october 1. the fact that the fed to seeing tightening of financial conditions, i don't think that is a problem. that will only be a problem if it become so severe that it has too big of an effect. >> let's talk about the neutral rate because that has faded from major focus it had. it was not even brought about the press conference with jay powell following the meeting. the viewne were of that the neutral rate should be overshot a bit because unemployment is so low. do you still feel that? >> i think i'm pretty much where the fo key -- foc consensus is where inflation could creep 2%, and the fed will move to a slightly restrictive monetary policy in response. short-termnk interest rates will rise above what is neutral. the problem is, we d