Criticism and says he will finish the job. Jay powell is losing patience rallied for at third day while the dollar fell. Asian markets looks set to ask and the gains. Facebook aims to liberalize International Payments with a new digital coin. We hear from Sheryl Sandberg. As we look at the market close in the u. S. , the bond market is where we saw so much action. Looking to the two year treasury note, reflecting jay powell and the individual forecast showing whether they expect to hold her cut rates confirmed what markets have been betting on. The 2year note had a drop of 12 basis points. That is a big move for a piece of paper. Stocks pretty much expecting the fed would be somewhat dovish. You can see some nice gains across the board. The s p 500 near an alltime high. Futures ago the reporting a little bit negative. Look at this green, seems to be growing by the moment. Im wondering, as you look at the asian markets, are we starting to see this optimism . Sophie we are ready to track that rally following the feds dovish stance which could open the door for policy easing. We will in more when they decide on rates today. Plus we have r. B. I. Minutes on tap. In wellington we have kiwi shares continuing to check higher. We have the kiwi dollar on the front foot, jumping as much as. 3 after gdp growth beat estimates. Holding near a fiveyear low which could leave the door open to cut rates again. The kiwi benchmark extending the rally for eight straight sessions hinting at gains as pricing intensifies which has pushed yields to threeyear lows. Back above 54 after reports showing tiger u. S. Supplies and opec agreeing to an early meeting to discuss output cuts and the offshore yuan extending for a third session. Paul all right. Thanks very much. Lets check in with su keenan. Start with the senate. It will vote thursday on a resolution to have arms sales to saudi arabia and other middle eastern countries, in other words, cut them in half. Members of both parties have criticize President Trump for pushing and a billion dollar midl with saudi arabia a anger over the killing of journalist qamar show the jamal. Shouldwn princes role be investigated. Smoking no socalled gun or conclusion about guilt, but there is highlevel saudi liability. He was killed in an stumble last october. U. S. Navy has presented what is it says is evidence in the attack on oil tankers in the strata for moves. It says it has recovered a magnet used to a crowd attach a mine to one of the tankers, which will look similar to mines in a run. The navy offered no evidence about a second alleged attack on the same day. The inquiry into the downing of a Malaysian Airlines flight five years ago has identified four people responsible for shooting down the aircraft. 300 people died when it crashed and investigators are blaming ukrainianians and a citizen. An International Arrest warrant will be issued and Court Proceedings will begin in march. Global news 24 hours a day on and on tictoc on twitter. I am su keenan. This is bloomberg. The top story is the Federal ReserveHolding Rates Steady talking of uncertainty and some members seeing a cut on the horizon. They are not said ready yet and as always it is going to depend on the data. The cross currency is a given. We have our tools. React to anything in principle that could undermine our achievement of our goals, maximum employment and stable prices. Kathleen we are going to show it on the screen because it is the individual forecast on the open market committee. What is important, it is a march meeting. Everybody thought they would see no rate moves, they did not know. What a big difference looking at the plots today. There is a large number that is not sure what theyre going to do. Look at the people who expect a inbasis point cut or 50 2019. Almost half. A big change. What does this mean . Joining us now is the former philadelphia fred president. Great to have you on the show. What do you make of this change . It is complicated. I would love to see the dots matched up as we tried to argue when we introduce the dot plot. We dont have that information. It is hard to make out. It is a split view on the committee. I think while but his vision to do nothing the decision to do nothing was clear, i dont know how you can do other than stand pat, the message Going Forward is confusing. I am not sure jay was as clear on that. Lack of pin that clarity for us. He did say in reference to the dots, even the people who did tendut their dor for a cut to be looking in that direction. Where was and she clear . Where wasnt she clear . To be committee needs clear on the conditions and the circumstances under which a rate cut would be warranted. I think they talk a lot about the Downside Risk and most of the Downside Risks are due to the uncertainty of policy. Mostly trade policy. We have seen over the last six ,onths trade policy go from theres going to be a deal between china and the United States. On and off again. React to twitter comments and day to day policy negotiations to conduct Monetary Policy. That is a mistake. It should not be drawn into that. Economy isthe u. S. Doing well. The stock market is near an alltime high. The labor market is strong. Inflation rates low. Maybe too low for some. Economic growth is still above trend. Economy,rket, the people seem to be worried about the prospects of what happened to trade negotiations and World Economic growth. Im concerned about that too. It is not there yet. Week to week negotiations and noise and news is not the information under which the fed ought to be reacting. I am concerned jays comment mightthe role of the fed derail the economy. I think that is dangerous. It puts an onus on the fed, youve heard me talk about the hubris and expectations of the of ourving all challenges. We are slipping into that mode again. That is very dangerous. Way paul i want to explore that idea. T is very popular recessions are caused by the fed. You are saying that is too much to expect. Right . It is too much to expect to clean up everybodys mess. They cant do it. Negotiations between europe and the u. S. Or china, what have you, collapse, and play, and thento effect on the u. S. Is reduced through lack of exports, Monetary Policy is not going to offset that problem. That is a policy problem that is not suitable to being offset by Monetary Policy and for people to believe the fed can do that is an exaggeration of what the fed o is capable of doing. The fed needs to be humble about what it can and cant do rather than take the responsibility for the effects of all sorts of policies and what happens in the ecb or the bank of japan, china, whatever. That is putting them in a bad spot and a risky spot. Charles, is there a broader policy problem around inflation as well . Our previous guests thinks the target range is unreasonable. Jay powell double down his commitment to it today. Do you think there needs to be a rethink on realistic targets . Two t for the last 10 years weve had inflationhings, between one and a half and 2 . People are distressed because it is not exactly 2 . That does not bother me. Any country would be happy to and two and a half percent as an outcome. Having said that, the people areocating higher inflation operating on premises that are dangerous. First of all, higher inflation rates bears no cost over the longterm. Inflation, higher inflation bears a cost. It is not free. They have to offset with the belief somehow that means they can engage in stabilization policy. Maybe, maybe not. The second problem is related to that. Over 10 years, people have complained the fed has not been able to get inflation to the 2 target. What makes them think the fed can get to 4 . I dont know. They dont know how to get it to 2 . To the extent there needs to be a rethink of inflation, it has to be, whether the tools the fed has used and the combination of targetsd interestrate and now a system that pays changes thereserves transmission mechanism. Whether the tools need to be rethought to achieve the inflation rates they want. They dont have those tools hitting a higher target is not going to do any good. Kathleen charlie, to what weets, is Donald Trumps t statements, remarks to reporters, jay powell, i dont want him there. How much does that complicate the feds decisionmaking . Every be clear, president has tried to influence the fed. Having president s influence the fed is not a new phenomenon. What seems to be new is the president s willingness to do so publicly. And do so quite publicly and frequently the last six months. I think that is wrong. It is not good policy because the that does is it makes fed in a position where it is dammed if itdoes, doesnt. It makes them difficult to make their case regardless of the political pressure. And then it puts them in a position if they had to cut rates everybody would have said, ok, the fed is caving in to the president. Or even worse, the market. Neither of those are good places for the fed to be. Kathleen thank you so much. Im glad you are in the right place with us today to talk about these issues. That is charles plosser. Lets look at the economic. Mpact joining us is the global strategist founder. You ar were listening to charlie plosser. He doesnt think they need to cut rates right now. They are taking on too much, especially with inflation. As i listen to you and paul theing to charlie plosser, points that came back is the assumption he seems to make the fed is independent. We have seen time and time again the fed follows the market, 2019, the in 2018 and fed raised rates four times without any sign of inflation, andeased it in december threatened to increase to more times. There was no basis for that. Well before the march statement, s showing no cuts. The next move would be a cut because the fed is not going to do it. If the fed remains hawkish, the stock market would plummet and the fed will follow. Once again, what is going to happen . More cuts. Nothing to do with the dot plots. It depends on what the market dictates. That is the feds problem. President trump was prescient in the fed would not listen. We he says he was right and were wrong. The other point is they are talking in terms of inflation after 10 years. They realize it is going to rise slowly. Has it taken 10 years to get that realization . Ae problem the fed has is loss of credibility. That is why they are going to have less impact on the market and they are going to be following the market unless something changes quickly. Paul all right. Komal is staying with us. More from him in a moment. Guest from the city office. He will discuss the impact of the fed policy in asia. Kathleen and mitt romney is pushing President Trump not to go easy on huawei. Tarifthis is bloomberg. Paul lets get back to los angeles and komal. Thanks first thing with us. You are making a point about the independence of the fed. I want to get your thoughts on the effectiveness of the fed. Interestinge very remarks, including this one. Efforts to stimulate growth referred to as pushing on a string. Is that where we are now with Monetary Policy easing . A timelyk yours is question. We are very much in that position. What i meant to say was the fed is much more effective if it wishes to be in crushing inflation. The case of what paul volcker did in 1988 with skyhigh Interest Rates, which crushed caused ad essentially recession. Inflation was conquered by the time the Reagan Administration continued. The first time. The difference now is the growth is slowing, inflation is low and you cant just push money into the system to cause Economic Growth and inflation to rise just as you did in the other direction, making growth to come down. That is the point of that note. World, theround the European Central bank and the bank of japan, they are both positioned if they need to to do more, cut negative rates further, i more bonds. Is it something about the world . What has changed to bet rates are low and inflation does arise the growth is not bad if you look at japan and the u. S. . That is a great question. What has changed is the way in which the global Central Banks reacted to the 2008 financial crisis. If you go back and see how we reacted to the Great Depression and what changed after 1939 when the economy came back, we had access world demand which came from the second world war, demand for armaments and labor, which was a structural change. That is what got us out of the Great Depression. It was not monetary changes or increasing Interest Rates one way or the other. By contrast in the aftermath of 2008 we have a quintuplets playing of the Balance Sheet. We have the ecb which increased the Balance Sheet substantially. The bank of japan has 100 of japans gdp and mario draghi is going to leave office october 31 without ever raising interest aboutand also talking further stimulus before he leaves office. Hat is a change we had a structural problem of increasing employment, providing skill and education. We tried to do it through monetary means. The best example is the comparison with 2003 when germany, the sick man of europe, brought that to great health because of what the chancellor did. Clarify. I want to you are saying fiscal policy. The government needs to take steps. That is what people say when they look at europe and japan and other countries. Fiscal, with a special note involving structural changes. ,hey need to involve education vocational training. That is the german example from 2003. Pouring cash through Monetary Policy or fiscal policy. Employment tax credit would work. Paul all right. , a bloombergar opinion columnist. Thanks for joining us. There is more to come on daybreak asia. Stay with us. This is bloomberg. Quick check of the business headlines. Airbus is back at the Paris Air Show with new orders for its latest plane. Includinght customers an indianirlines and budget carrier. That takes overall demand above 200. It has a greater range than the boeing 737 max and can connect destinations that have not been seen as cost effective. Kathleen Harley Davidson plans a local Chinese Company to develop models that will launch by the end of next year and which may be offered in thailand and indonesia. They have been forced to look abroad as part of a plan to sidestep tariffs. Paul elon musk is putting a new spin on henry fords model line. The customer can have any color as long as it is black. Starting next month it will cost a thousand dollars to have a black, blue, or silver tesla. President trump calls on congress to ratify the new nafta after mexico signs off on the agreement. The latest from washington next. This is bloomberg. The latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. We start in the u. K. With a race for prime minister. It looks unbeatable in the race to succeed theresa may as the u. K. Prime minister. The latest conservative vote pushes him further ahead of his rivals. The candidates left standing in the race will face a vote from the partys grassroots members. Johnson says the u. K. Is leaving the European Union with or without a deal. On to the u. S. , the Federal Reserve left rates on hold indicating an increasing readiness to cut for the first time in more than a decade. Jay powell talked about uncertainty and race to the case for action to bolster the economy. He also made reference to being patient on borrowing costs and is forecasting a bigger mess on the 2 inflation target this year. We are committed to our symmetric 2 inflation objective and are aware weakness could precipitate a difficult downward drift. The trade representative says he will speak to his at the g20. Terparts the talks are being touted as a possible catalyst to revive trade negotiations. And meansways Committee Say we are clearly talking. Weare going to meet and, have the same objective that you and the other members have, if we can resolve these issues in a that improves this relationship and preserves the competitive advantage of the United States, we have an obligation to do that. News 24 hours a day powered by 2700 generalist journalists and analysts. Im su keenan. This is bloomberg. Paul lets check on some stocks to watch in asia and get over to sophie in hong kong. Sophie in tokyo we are watching , in opposition to electing its chairman. And a news report the Industry Association is considering punishing him over in information leak. Estimates,n beat marking its return to growth amid a transition to cloudbased computing. Semiconductors are on watch after a fell 20 year on year in may and regional chip stocks will be in focus as apple has asked suppliers to shift from china. Mitt romney is trying to prevent President Trump from doing what many in Congress Fear he plans to, go easy on huawei is part of a trade deal. He estimated that she has submitted an amendment to an act and we will get details from a reporter. How far can romney actually go to keep huawei on a blacklist . Congress does have tools at its disposal. Historically congress has been, has not had an appetite to go after the president. Amendment would layout conditions to remove while way from a blacklist. It remains to be seen if the house would even go along with it.