roger ferguson joining us former vice chair and member of the mock panel.er, great to be here and maybe you can address the triple issue of the rising long-term rates -- deficit, inflation, real growth? how is the fed thinking of this backup of the significant backup of the yields since they cut the rates last time around? >> well, first, thanks for having me on, and i think it is a combination of the expectation of the increased deficits, and the fed cutting the rates as the fiscal policy is more stimulative, and the borrowing costs at the u.s. government is going to face is more likely to go up as opposed to going down as we have gone into a bout of what looks like pretty serious deficit spending. >> what is the fed's role when that is the case? no one is saying that, you know, that they need to react to fiscal policy, but in some ways they can't ignore it either. >> well, no, they cannot ignore it, and so what they will do is to run it through the models and think about it, and they want to see if there is an inflation impetus that comes from it, and all

impact the fed as the central bank heads into the two-day meeting, we bring in former vice chair roger fergusonchair of the business council and cnbc contributor. roger, thank you for being here this morning. the wall street journal had an article over the weekend that suggested the fed would look through the weaker than anticipated jobs numbers on friday. do you think that's the case? >> i think that's the case. i think they should look through them. as you point out, it was driven by hurricanes and the strike and the underlining economy is stronger than the labor market would suggest. i think they'll look through them and do what the market expects which is a 25-basis point cut. >> if the market is weaker than anticipated or the numbers not as weaker than anticipated, why not hold off? >> a couple of reasons. one is, this is the week where the fed wants to be in and out. this is just do what's expected. secondly, at the last meeting, they suggested they still have a way to go to get toward neutral. i think the best judgment this time and what they follow is to do what the market expect. it ma

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let's bring in roger ferguson and richard fisher from the great state of texas and the great bank ofth you. the fed is supposed to meet beginning tomorrow. give us an announcement on thursday. they're supposed to cut interest rates again. how does what's happening in bond markets right now -- indeed, other the course of the past several months, affect what the fed might do either this week or in months to come? >> yes. can you hear me? >> yeah, i got you. >> yes. can you hear me? so what i think they'll do this week i think is baked in. i think it's 25 bases points. i think it would be a very surprising move and unnecessarily surprising to do anything other than that. going forward, we'll wait and see. i think there's still very much data dependent. the most recent labor market i wouldn't read into. i think this week is a done deal. i think they'll take a look -- life and active. probably another 25 bases points before the end of the year. then i think it's really a coin toss. >> richard, there are some people out there who say, hey, with the bond market going the way it's been going