James, we've had another 75 basis point rate hike by the Fed, its fourth consecutive big increase. And the Fed also hinted that the pace of future rate hikes may actually start to slow. So what got your attention today? Well that was certainly the key message that they've looked at how much they've hiked to date, and now they want to at least assess what the impact of those hikes have been before they consider another big rate increase. The message is still that they don't think they're at the end yet. They still think further rate hikes are coming, but they want to at least assess how these rate hikes have affected the economy, how they've tightened financial conditions. So they will be perhaps a little bit more forward-looking or a little bit more attentive to how the data is coming in rather than committing to a certain pace of hikes going forward. OK. So if the rate hikes haven't stopped yet, there's still more to come, where do you see rate hikes or rates going in the future? Well, certainly higher. I think it's a little bit more of an open question what that terminal rate is. I would guess that they still are raising at the next meeting and probably the meeting after that. They have taken the level of interest rates now to a rate above their expected long-term rate. So that is telling you that the Fed themselves think that the rate is into restrictive territory. Of course, it's still under the rate of inflation. And there's a debate about how much above the rate of inflation it has to get to be truly restrictive. So that's a bit more of a moving target, and makes watching the inflation data that much more important as well as other indicators of how the economy may be reacting to the rate hikes we've seen. They talk about inflation because inflation is, of course, is still high. We also have US labor market data, which has come out, and it's still showing it's very strong. So how does that factor into the Fed possibly overshooting and causing a hard landing for the US economy? Well, certainly the fact that we haven't seen any signs really of slowing in the labor market. I mean, you have a little bit under the surface. The rate of job openings is not as high as it was at its peak. But unfortunately, in the last month's data it actually went up instead of down, so signaling the labor market is still at the moment very, very tight. They would like to see some signs that that is starting to slow. So they have seen it in the economy. The housing market is definitely slowing. GDP growth is pretty much flat over the last three quarters. It bounced back in Q3, but over the last year, it's definitely slowed. But as long as the labor market is strong, they can't really say that they've had the effect that they want to see. So I think it does increase the likelihood of going until something breaks because you're not getting a little bit of the forward indicators that look, the things are actually starting to slow. Maybe we can now finally pause. And so I think it means that until we see the labor market actually showing some signs of slowing-- Especially with wages as well that seem to be strong. Exactly. I mean, wage growth and the pace of job growth. I mean, the pace of job growth has is still higher than it was in 2019, even as the level of employment is back above its pre-pandemic peak. So yeah, I think the longer that goes, the higher rates get and the higher the likelihood that you get unfortunately, something breaking and a hard landing. OK. Now there's been a lot of chatter, including from lawmakers, about the economic impacts of aggressive rate hikes by the Federal Reserve and whether that has been the best approach. Now, is that starting to factor into the decision making by policymakers? I don't think so. I don't think the Fed responds to the way elected politicians are reacting. I mean, it may make things a little difficult. If anything, it can be counterproductive because the Fed has to assert its independence and make sure that they're not reacting to what politicians are telling them to do. I would say, though, that the fiscal situation does matter. And in terms of the more we get in terms of deficits and additional measures, the more they have to do to raise interest rates. So if politicians really want to make it easier on the Fed, the best thing to do is to sort of get the fiscal house in order. And then maybe we don't have to see as many rate hikes to get the economy on an even keel. What other potential risks do you see to the Fed's outlook going forward? Well, certainly, we've seen these pockets of risk in financial markets. What we've seen in the UK. We still have a lot of geopolitical risks. The dollar is very strong, and we've seen some of the impacts of that around the world. I mean, I think it's hard to know what the next kind of shock is. But the higher rates go, the more likelihood that you have some kind of issue in financial markets. And that's what I'd be watching for. I mean, again, if you're not seeing it come through in a gradual slowing in the data, the worry is that it happens more abruptly. And I want to talk a little bit about the US dollar, which again, continues to outperform against a basket of currencies. But certainly after this, we had have seen a little bit of weakness in the US dollar. Where do you see the US dollar going in the next little while? I don't think it's going down. I mean, I think relative to the Canadian dollar, especially we've seen that there are more limits on the Bank of Canada's ability to raise interest rates than we see in the US. We have more variable rate mortgages. We have higher levels of household debt. We have debt servicing costs that are going to increase pretty rapidly over the next year. And I think the Bank of Canada is aware of that. And so we will see now probably a bit of a gap between policy rates in Canada and the United States. That's going to continue to put upward pressure on the US dollar. You could tell the same kind of story vis-a-vis the euro, where they're seeing still this headline inflation. They don't have core inflation quite as strong, but they have their economy continuing to suffer from the direct effects of the war in Ukraine. So they will be limited in terms of their policy response. All of that seems to suggest the US dollar remains remain strong. And of course, if we do get any kind of risk event, the flight to safety is going to benefit the US dollar as well. So I would say ongoing strength and possibly a little higher from here. James, thank you very much for joining us. You're welcome.