 Ladies and gentlemen, thank you very much indeed for joining us. Early on in the Davos agenda, I've already been here about three days, but that's another story as well. Look, the high-rate reality, an enormous conversation which will take many, many hours, but actually what we've put together here today is the most extraordinary panel, which I guarantee by the end of this panel we will learn something about the high-rate reality. My first question, of course, is are we in a high-rate reality or is this just compared to recent years? Because many of us in this room, myself especially, are of a certain age where we remember this as a rate normality rather than a high-rate reality as well. The story is very familiar here. Fed has gone from close to zero to five and a quarter to five and a half percent. The ECB, down to this man and others as well, 10 straight hikes to a record deposit rate of 4%. Bank of England up to five and a quarter percent from 0.1% in 2020. The Bank of Japan... Well, we'll leave the Bank of Japan because they haven't actually moved yet. But that's another story as well. So, again, we're not calling victory yet. In fact, I've already heard that comment in the green room as well. We're not calling victory on the fight against inflation as well. Too many people of a certain age have looked at Arthur Burns as well. So we know there are concerns and a job seal to be done. But what are the big questions? Of course, ramifications on growth, on corporations, on individuals, on governments as well. Some of the deficits look pretty scary. If we have a downturn, if we have a recession, where's the fiscal leeway as well? That will be a big question. Risk to debt is across the board as well. Meaning for investments, has it changed a lot of the broader parameters? I'm not going to talk for too much longer. I've already said to this amazing panel, please, please, please, if you hear something and you want to jump in, we're going to do this after the first round as well. Absolutely. And for all you ladies and gentlemen as well, I will bring you in if you want to ask a question as well towards the end. Just give me a nod and we'll get you in. And I've been asked by my host just for directorial purposes. If you could stand up, state who you are, and then state your question as well to this amazing panel, which is Geeta Gobinath, who is the first Deputy Managing Director at the IMF. François Villoy de Gallo, Governor of the Central Bank of France, who have already been told will add liveliness to this panel. No pressure there whatsoever. Adina Freeman, well, she was the one who told us that François will do that. She's the chair and CEO of NASDAQ, just deflecting there from Adina, and Chuck Robbins, the chair and CEO of Cisco as well. So we've got an amazing array of policymakers, of corporate leaders as well, and one of the most influential economists in the world. So why don't we start off with you if we can, Geeta, as well? I've already said it's a higher, rather than a high-rate environment. That's my view as well. But just go through what the ramifications are at the moment as you see it from this current environment and maybe a little clue as to where we go next. First of all, it's a pleasure to be here. To start off with, I think we have to focus on what is likely to happen this year. As we know that the markets are expecting central banks to cut rates pretty aggressively, I think that's a bit premature to make that conclusion. We are in a phase where inflation is coming down. It's come down quite a bit. It's surprised how fast it's come down. But yet, the job is not done. We still have labor markets that are relatively tight in the US and including in the Euro area. So we should expect rates to come down sometime this year. But based on the data that we're seeing right now, we expect this to be more likely in the second half of this year. Now, to your question about where we expect rates to head maybe three or four years down the line, I think it's fair to say that compared to the period after the Great Financial Crisis, so post-2008 to 2019, we're looking at policy rates that I would say are on average higher than what we saw during that period. And the reason I say that is because that regime, the post-GFC regime, was time when central bankers were hyper-focused on having too low inflation. And so they were keen on running the economy hot, not moving preemptively. Now we're in a world where we have far more supply shocks that are much more severe. And we've seen that inflation can come back pretty strongly. So we are moving to a regime where central bankers are going to be a little more cautious about running the economy hot and also moving preemptively and not waiting until they see inflation go above target. So because of those reasons, we're moving to a higher rate environment. And of course that has implications. This is normalization, as you said. It's going back to pre-GFC times. But that has implications for the cost of funding around the world compared to that decade of abundant liquidity. Gita, the Fed, in an old world about six months ago, used to talk about cumulative and lagged effects as well, which can last something in the region about 18 months as well. I don't hear much about that anymore. I don't hear about those effects. Has the penny or the shoe still to drop on the effects of these higher rates? Because across the board, and I know it's something we've already discussed in the green room, but for our audience here, it seems to me that a lot of people haven't had to refinance yet. They've still got to refinance globally, whether you're a government, a corporation, an individual over the next few years as well. This could be really tough for many people's own personal balance sheet, for government balance sheet, and indeed for corporates. I think first we have to recognize that there has been a lot of resilience in the economy, despite the rates, heights that we have seen. So we've looked at the estimate of how much of transmission has already happened, and our estimate is that for the US, about three fourths, so 75% of the transmission has already gone through, and we have the rest that's going to happen this year. For the euro area, it's been less because it started later, so there's more of the transmission left. But what is uniformly true is we have households and corporations with stronger balance sheets, and we've seen effects, but we've also seen resilience. Labor markets are slowing, but at a much more gradual pace, which is why I think the IMF, we feel like a soft landing scenario that probabilities have gone up quite a bit because we've had inflation come down without needing that much of a loss in terms of economic activity. I find that extraordinary. You talk about three quarters of transmission. I will move on. I know the point you made on resilience is something that Dean is really going to bring up as well. But I want to get to a policy make. I'm so tempted to ask Francois Villoy de Gallo when we're going to get the first rate cut, because we all want to know, but he's not going to tell us. So... He might. I've already asked Robert Holtzman from the Austrian Central Bank. That wasn't good for the doves out there. I've already asked Maricintino this morning from the Portuguese Central Bank. That was more dovish as well. So, within his first answer, he's going to tell us about the challenges about making that decision about the first rate cut, which, according to Goldman Sachs told me yesterday, it's in April, yeah? So, Chuck, I thought you would resist your own temptation, but you didn't. But let me say some words about the present situation. It's too early to declare victory. I completely agree with Gita. The job is not yet done. That said, interest rate tightening has been quite successful so far, and more successful than one we expected in Davos say one year ago. What we can see on both sides of the Atlantic is something like a soft landing so far. We trace this by the way, a new question, if you listen. What was the role, or what is the role of monetary policy in this soft landing? Were we only lucky due to energy disinflation or were we also talented? Can I stress two facts, at least on the European side, in favor of monetary policy? First, core inflation, excluding energy and food, decreased significantly, in our case from 5.7 to 3.4 already. And second, probably on both sides of the Atlantic, the main achievement of monetary policy has been to anchor inflation expectations and then to prevent speedovers from energy shocks to goods and services inflation. And this is a huge difference with the 70s. That said, I won't answer about this year's interest rate, but let me give a historical perspective and let's say three to four years. What do high interest rates mean? How high could they be? If I think I will focus on our policy rates in the EUR area. If I think in nominal terms, obviously they shouldn't be higher than today. And bearing major surprises, we look at the Middle East, our next move will be a cut probably this year. I will not comment on the season. So not higher than today, but higher than in the past during 2015 to 2022. And to say it this way, the new normal in the future will not be the subnormal we live through during 1522. I think this is an important message. And probably the level of this new normal will depend on two economic variables. First is medium-term inflation. And we could expect inflation to be higher in this future than during the low-flation episode we live through due to the famous 3Ds, de-globalization, demographics, and decarbonation. So it will be probably very volatile, but we will have a better chance to achieve the 2% objective. And the second economic variable is the level of our stars, the so-called neutral interest rate. What is the good thing with our star is, Gita, we will probably agree on that. We don't know exactly where it is. But what I know for sure is that it stopped decreasing, which was a 20-year downward trend. Whether it increased in the recent past, we don't know exactly. But let me say that for the euro area, we estimate our star to be around zero, around zero. It means if you take these two variables, around 2% inflation and around zero for our star, we could expect through the cycle, as an average, real rates for our monetary policy to be around zero. This means through the cycle neutral. And if I look at nominal rates, we could expect them to be around 2% against as an average through the cycle. And I focus on our policy rates. I will stop there. I'll just already tie up something that Gita said with something that you said. You're optimistic about a soft landing. You won't give us the season. Is it going to be a warm season? No, just trying it out. So you won't give us the season, but Gita's already said the transmission effect, and if I'm correct, if I'm wrong, in the US has already had about three-quarters of the effects on borrowers and what have you, but where is it less so in Europe as well? Are we still to see the ramifications of the 4% interest rate across broader Europe? Perhaps two quick comments about the season. Why don't I say anything? I said it should be this year bearing major surprises. But if you allow me, Steve, I don't think it's a relevant question because we are not calendar-driven. We are data-driven, and let me stress it strongly. Second, about the transmission. Gita, you will probably agree that there are two legs in this transmission from monetary decisions to financial conditions and then from financial conditions to the real economy. About the first leg, I think the transmission is more or less over. And in Europe, what is key is the transmission through banks because, as you know, the bank credit channel is about two-thirds or three-quarters in the Europe, much more than in the US. What is more difficult is the second leg, the transmission of financial conditions to real economy and to the borrowers. Here, it's much more difficult to assess. And it strongly depends on various sectors. If I take real estate, for instance, I think most of the transmission has happened already because it's very sensitive to interest rates. For other sectors, we will see. But we have the feeling that the transmission of this monetary cycle is at least as strong and as weak than in the past. Okay, thank you very much indeed for that. You are data-driven, but markets are very often calendar-driven as well. As we've seen, there's this stunning reversal in the level of the yield of the US 10-year from when it was doing the job for the Fed, working with the Fed, and then when it came down to a high three-hand or low four-hand, all of a sudden, I didn't hear the Fed talking about how easy money had got compared to when it was at 5%. But we'll come back to this in a little bit Adina, the markets are, I think, on a hair trigger for when the first cuts are going to be. Again, I saw the note from Mr Hatsius from Goldman's yesterday talking about March, talking about April for the ECB, talking about the Bank of England to follow soon thereafter. Do you think the markets are on a hair trigger for the first rate cut? I think that the markets tend to anticipate. The markets try to predict the future, and what they're basically predicting is that there will be rate cuts. Are they better than the economists who have predicted 30 of the last recessions when they only happened six times? Economists, they always joke about the fact that they are as good as the weatherman, but at the same time, they sound great. But I actually think that this time, there are a lot of signals that would say that there should be rates as we go through the year. The question is when they would start, I would be a little concerned about starting too early, because yes, we're seeing the right direction of travel with inflation. I think that Fed is also expecting the direction of travel to moderate, meaning it's going to get harder and harder to continue to bring the rate down, so they're going to expect that, which is also good. But they also want to make sure that they feel like they've really gotten to a state of stability around the rate before they start making significant moves in the interest rates phase. That would mean, I would say that I don't know when that's going to be. I'm not going to try to predict that. But the markets do try to predict it, and what happens in the markets as a result of this notion that there could be a lower cost of capital as you go through the year is that investors can start to think about how they model company earnings over the future more successfully. They could say, well, I know that the cost of capital is not likely to go up, so then I can at least put in a stable cost of capital as a foundational element of their model. They also know that inflation is coming down, so they also know that the cost of doing business is also moderating. So that also gives them more confidence. And if you're a borrower, if you're trying to do M&A or you're trying to expand your business, you also know your cost of capital as a company is not going to be higher. Like if you borrow now, you're not something you have to borrow at a higher rate later. So I think all of that builds more confidence in the market, which, of course, does show up in the market values. Well, last year it was a very, what I would say, top heavy market performance that kind of brought all the indexes up. I mean, you're starting to see in December and into January a broader based improvement in valuations. Because I think that the broader market, small caps are now starting to show some improvement in valuations and others because they know that the cost of capital is likely to be stable to lower going forward. And I think that will also drive an interest in investors wanting to put risk capital to work, which means IPOs could have, you know, we could actually have the IPO market open back up again. And we are seeing a lot of interest. We have about, you know, 85 companies who filed to go public on NASDAQ who are wanting to go out into the market. And so I think that they're starting to gain more and more confidence that that could happen in the first quarter or second quarter. Most likely more in the second quarter, but there'll be some bellwethers in the first quarter. Your great team has put together a lot of stuff for notes for me about resilience as well. But I really want to talk about the changing business model and evaluate business models because we all know in 1997, 98, 99, the NASDAQ went to the races on the back of pretty shaky business models. It was more about the thematic. And this time around there is a fear that it's excitement about the thematic again, whether it's crypto, whether it's AI, what have you. And again, there's a brilliant chart I saw comparing Cisco in the 90s to NVIDIA now. And OK, it was a very specific frame, but it was very interesting looking at the exuberance about the business model and the multiple to sales as well. So I think it's great that investors are having a reality check again now, but has that process still a long way to go? Well, I mean, first of all, there's always going to be an opportunity for speculation in the markets. And that is a fact of the markets, meaning, again, the market's trying to predict the future, right? So the future of technology, and they're going to get excited about that. And they think that the next generation of AI is really going to have a sea change effect on the economy, on companies, on industry. They're going to, they're going to lean in there. And that's kind of part of the benefits of having the markets be open and available. I think that at the end of the day, though, the earnings have to follow, right? So as you know, you can have moments in the markets that can get dislocated from reality, and sometimes the reality catches up, and sometimes it doesn't. I think now, though, today, if you look at the tech industry, you look at what's really driving valuations in the markets, there are some great companies doing, you know, with that very strong earnings, very strong revenue growth, driving the markets up. And they also have a lot of promise of what AI can generate for their business in the future. And then you also, I think, have companies that have spent 2021, 2022, sorry, in 2023 becoming more resilient, focusing on getting positive cash flow, focusing on actually building up. They don't want to be in the situation where they're at the mercy of the markets either. So they've spent their time, you know, kind of calling their investments, making it so they're making certain conviction bets, and driving a positive cash flow if they're not already profitable. And I think that will also make them stronger if the markets come back, cost of capital goes down, investors are more confident, and they're more resilient. That actually, I think, is good for markets, good for the company, good for the economy. And that's what we talked about last year. Last year, we were talking about exactly that, you know, this notion of getting to a point of financial resilience is actually much better for the sustainability of the economy. Sure. But I guess the question I'll raise in a moment is have central banks aided that longer term resilience, or actually hit a lot of the demons in the club which will only come out during a prolonged period of high rate. I'll come back to that, because I want to get to Chuck. Chuck, you've already surprised me in the green room because one thing that Cisco has done is made one very large acquisition in the last six months, and one smaller one that I've seen. And I was going to come to you and say, actually the high rate environment isn't affecting your dealmaking. If it's the right company with the right fundamentals and the right cash flow and you've got enough cash in the bank, then you're just going to do deals regardless. But actually you've already said to me, actually no it really is affecting how we are making our decisions. It's great to be here. I think look, you referenced the big deal that we are still waiting on regulatory review and approval for, which was Splunk, which we're paying $28 billion for, largely financed through debt. And in that case, their financials were strong enough to support the interest payments and everything else from a cash flow perspective. So it made a lot of sense for us. As you know in tech to your point, a lot of these companies are not profitable. A lot of the startups are burning cash. We had this free money mentality for this very long time. So money was being thrown at everything. And so when we would go look at companies, you never you had to be willing to take on the OPEX that would come with them at a time where they generally would not be accretive by any stretch. And now it's just become a bigger issue because now you have to think about the interest costs that come along with it. So now that we have done Splunk, we had another deal that one of my team members wanted us to look at recently. And we said, well, that comes with about $50 million of interest expense. Can you absorb that into the business model when you pull this thing in? And the answer was no. I can't cover their OPEX and another $50 million of interest expense. So we walked. Right. So and I think that it has had an effect on M&A for sure because for all the all the years we've been doing it, you never had to really consider interest expense. You just have it as like it's free. It's zero. And so it's certainly coming into play there. And I think to Adina's point when you get into Gen AI and some of these other things, we are seeing some of the private valuations are going nuts again. And it is ironic to me that we're so quickly doing this after what we experienced you know, 48 months ago. I mean, it's just incredible. But I can value Steve Sedgwick-Hink at $20 billion when actually everyone else really knows it's worth about a billion. There they're abouts. So when I'm in private sector and I've got a valuation, it means nothing until the deal is done as well. So are a lot of the private sector valuations which are owned by our dear friends in VC or PE or what have you, is it just pie in the sky and they're just kind of floating kites so to speak, or actually are the deals getting done at these high valuations? Can I just say, I think in the VC world, you have to realize the VC community, they're not, they don't just take one bet, right? They're going to be spreading their bets and they're not, they're also going in very early stage. And they've never been known to not inflate the valuations of all of those bets. And the challenge to them is now they have a real cost of capital and the companies that they're investing in have a real cost of capital. That's a very different investment thesis to begin with. And so, I mean, the amount of VC money that went to work over the last year and a half is much, much, much, much lower than it has been in the prior years. I think at the same time, they are going to get wrapped up in what's the next wave, what's the next potential, they don't want to be left behind, they want to be early, they want to put their, you know, place their bets across several different opportunities because at the end of the day they're making a lot of small bets and then they become bigger over time, right? Some fail, some don't, but that is the nature of VC and when it comes to AI, you know, they're just, they're just going to be afraid to be left behind again. So, it is, it's a cycle and at the same time, if they win three out of eight, you know, three out of nine and they have really big winners, that's going to that's going to make their money. Well, that's a hell of a, if they win three out of nine then the power level is going crazy. Exactly. That's exponential. Exactly. And some of the firms have done that. These companies could, will never come public on NASDAQ at the valuations that they have right now. Well, that may be true. I mean, six and a half billion valuations for a company that has 14 million in revenue. That would be true. Once you get your numbers right the wrong way, they're six and a half billion valuation for a company that's got 14 million in revenue. Yeah. Anyone else want to think about that for a moment? That makes Steve Cedric Inc. look really cheap. At a time where everybody believes these foundational large language models are going to be commoditized, but that's a different, that's a different form. That's the big question. So. François? No, may I state the obvious for us as central banks about our compass, but I think it's important in this discussion. Our compass is inflation, obviously. Price stability. It's not corporate valuation or the level of the stock exchange market. And when we had low interest rates, it was not to foster equity valuation or it's not today. If I may add one, one point, Steve, I think the symmetric is true also on the investor side. Obviously the interest rates play a role. But I guess that for, I hope that for your investment decision, it's not the most important factor. It's about the state of technology, the business perspectives, etc. If you take the big tax Apple and others, they were all founded and founded 20 years ago when the level of interest rate was much higher. So interest rates level is one factor. It shouldn't be the key factor. I think for investors, it's about the change in interest rates. If we're dealing with an interest rate environment that's, let's say, 3-4.5% in the United States for some extended period of time, I think that the world can get very comfortable with that. It's really the change factor. Markets just don't like surprises. So to go from 0-5.5% in a very short period of time, that's a surprise. That's something that makes it difficult for investors to adjust. But it's a surprise, Dina, that has led to record levels on the market. I'm very concentrated though. I think we should keep in mind that a challenge for central bank is, Francois, even though you've mentioned that you're focusing on inflation and the financial conditions is an intermediate target for you. But in the last few months, we have seen financial conditions ease everywhere in the U.S. We've had the forced rate cuts, haven't we? It's been tighter on average but it's still eased. So I think the challenge for central banks in trying to make sure that you have the soft landing and that you stick the landing is certainly more of a challenge now because of these last few months of exuberance. That's the point, isn't it? I'll bring Chuck in on this and everyone just jump in. But, OK, we're waiting. Francois won't tell us what season is. What we'll be wearing when the rate cut happens. The fact is, we have had an amazing cut in the cost of money, whether it's boons, whether it's OATs, whether it's guilds, whether it's the Fed curve as well. Across the curve, the treasurers have gone from 5% out of all to 4%. We've seen a 20% cut in the cost of finance. Look at high yield. We never got anywhere near to the level that high yield debt got to at the peak of the 08-11, which had a double-digit handle. It's a fraction of what it could have been and what, perhaps, arguably the right price is. Chuck, do you want to come back on this? I just think the other thing. I think the policymakers also are considering, I think, some longer-term trends and I hope that we're cautious about how rapidly we do bring rates down. And that's probably counter to what most people would want to say because if you think about what's happening right now, there are these long-term major efforts that are underway on a global basis that are going to fundamentally be inflationary for a very long time. So all the work that every company in the world is doing around supply chain redundancy and diversification and geographic diversification all ensuring, for ensuring, call it whatever you like, all of that's more expensive. If you bring supply chains back and you put some of them in the United States, it's more expensive. It just is. So as the U.S. tries to push for that as an example, it's more expensive for companies and those costs that's true. You've got nationalism that's happening all around the world where everybody's asking companies to invest locally. In India, you'll hear, you manufacture here or you don't sell your products here. In Europe, every country is saying you need to build a cloud instance here. You can't run a global instance anymore. That's going to cost tech companies more. That's going to cost, that's going to, those costs are going to flow through. We talked about it before, the sustainability, this move towards sustainability is going to have a period of time and there's more of these things that are happening out there. So I think we just have to be careful. I think this is right. I think the pressure is in terms of what's coming through because of fragmentation, protectionism, climate shocks, conflicts. I think they're all moving in the direction of having more upside risks to inflation. Now, we've been focused quite a bit on the policy rate. Obviously, for funding cost purposes, what matters is the overall long-term rate which includes term premium and so on. I think we should focus a little bit on that because if you look at the long-term rates that we have, and you said there was a time when it was shot up, US 10-year eels went up to over 5%, which is something we hadn't seen in a long time. It has come back down. You've seen that compression happen, but I think we have to recognize we're living in a world where governments are running on average much higher fiscal deficits that they did before the pandemic. It's not just 6-8% of US at the moment, is it? Yes, and it's not just 8% where they are now, but if we look at our forecasts for the next several years, that's where the number stays. So the US puts a lot of its debt on the market. That obviously raises the cost of borrowing, not just for the US government, but also importantly for the rest of the world. So in fact, when we look at the IMF, of course, we look a lot at emerging and developing markets as a whole and given what we're seeing in terms of the cost of borrowing going up and the fact that you're getting high rates on US produced assets has kind of squeezes them out. There's crowding out that you're seeing in other emerging markets. So the higher interest rate costs that governments are having to pay at the same time as running greater fiscal deficits as well, that has to have a ramification on growth and also the ability of governments to react to the next crisis because they're already fiscally maxed out. That is certainly true. I think, of course it varies by the country or the US has is the biggest safe asset issuer in the world is a huge appetite for US treasuries. But it is the case that we've gone through three years where the government is viewed as the insurer of first resort, which is that in every shock, be it the pandemic, be it the energy crisis that the government comes in and quite liberally sends money to households and to firms and that expectation is set in and you can see that it's much harder to actually roll off the subsidies that were provided during the pandemic. Now on top of that, if you add all the structural spending needs that are there in terms of climate, in terms of defense, in terms of now the new industrial policy push and of course for emerging developing countries, whole sustainable development goals, that number, that additional spending is about 7% of GDP more relative to what we're doing now. And there's been a huge temptation to finance everything to debt issuance as opposed to raising taxes and raising revenues. So I think there is this big question of how do you pay for it all and to do it without issuing large amounts of debt. And frankly if you look at the political economy and with this election period that we're in right now, it's hard to think that anybody's sitting down and thinking about this question hard enough. François, why don't you come in and I'll ask you a question. No, two quick comments on financial conditions. Two caveats perhaps about this decrease you mentioned. First, and Gita just stressed it, it's partly a reversal of a strong increase we live through between September and October. And second, on the European side, never forget that the bank channel is predominant so market, long term interest rate have less of a role. That said on fiscal policy I couldn't agree more with Gita. We have at present a policy mix between monetary and fiscal which is not fully consistent. Let me say it this way. And I think it's important for our governments on both sides of the Atlantic to be fiscally more conservative and to use this soft lending in order to really tighten a bit fiscal policy. The good news on the European side is that we have now a fiscal policy framework since December 20th. The question mark is will it be implemented? I strongly hope so, including for my own country. Your own country was the first to break the rules of the original. No, not the first one. Germany and the second then. Germany and France were the first to break the growth and stability pact. If I recall from my early part of this century. So I think it was George Osborne who said we need to fix the roof while the sun shines as well. But this amazing period of low rates that we had and this softish landing that we hope we're going to have as well. Do you really believe and adding to the fact that Gita is just saying about this stunning amount of tens of billions of people going to the hundreds of millions of people going to the polls this year as well? Do we really think in election year we're going to see fiscal responsibility from governments? I don't say it's easy and I cannot answer on behalf of government. But the only thing is that the change of interest rate makes this problem more pressing. When the cost of debt was about zero in nominal terms and negative in real terms fiscal policy was not an issue for in the short run. But now if you look at the cost of debt in the yearly budget of each government it increased significantly. So it means it's not only a long term issue which is obvious. It's a question of solidarity with the next generation which we missed for decades, let us be honest. It's also a short term issue. If you are a government and you have to close your yearly budget for next year you now feel the pressure of your level of debt on your interest rate expenditures. I should remind everyone that this panel is going out live on CNBC by the way this morning. So it's not just you but you are the only ones who get to ask questions as well. So in the next couple of minutes does anyone have any questions already that this gentleman here, anyone else? Okay, there's plenty as well. I'll give you a chance in a few moments time, all four of you and if anyone else wants to as well. Great piece, I was reading how Marx did an editorial in the Financial Times recently and he's going to give you an example of this as well. The late great Charlie Munger wrote to me in 2001, maybe we have a new version of the 19th century British historian adage from Lord Acton. You'll all understand this one. Easy money corrupts but really easy money corrupts absolutely as well. I think we all know examples of this as well. Chuck, I'm going to start off with you on this one. Are you worried that if we get an easier money period as well already? I mean some good reasons for those levels there's some questionable reasons as well. Do you fear that we're actually going to forget about fiscal financial responsibility if we go back down on rates too quickly? A quick funny Charlie story. He and I are on a panel talking about strategic M&A a few years ago and they were talking about multiples of EBITDA. You'd be willing to pay and they got to me and I said well most companies we buy don't have any EBITDA and Charlie said you silicon valley guys are crazy. Anyway, yeah I do worry about it. That's my point about it. I'm not in the camp that we should just start immediately lowering rates. I think we have to be much smarter about it and I do think the point earlier people cost new normal order. This is the normal we just got away from it for a very long time and so I think we joke backstage about it. If you're 40 years old or younger you thought that you thought 0% was just how it worked and that's not the case I think it's making companies think more responsibly. Yeah I mean personally I think that if we are getting back down to a very low interest rate environment it means that we're not growing and that's not good for anyone. So let's just like hope that we can get to a rate environment in the 3 to 4.5% range. I always like use that kind of that range because I think that means that we're having we have hopefully you know modest inflation and real growth within the economy which then allows us to grow but also have a cost of capital that we have to then make we have to make priority decisions. So one of the good things about having a cost of capital is it forces prioritization. I think during this period of free money we had kind of let every flower bloom well I think that it's really important to figure out which of those is going to actually grow into a tree and really become meaningful to the company to the government whatever you're trying to achieve. So I actually think that that is a good decision. I think that we should be looking forward to having a rating environment that might be a little bit moderated from where we are but also recognizing that that's a good discipline and frankly as you've pointed out we've gone extremely well in the economy with real rates and so I think it's just a matter of getting the everyone kind of more used to that environment over time. I will just add that WEF has put out a great economists report in advance of this meeting in the last 24 hours as well. There is a QR code. I don't know if it's going to show on the screen but I mean it's it's worth having a look at the economists report and again they like the rest of us are in the dark a little bit about a whole host of these issues now. But I do want to go back to Gita on this one. I can't see any scenario and no one has talked about in this panel and I haven't read anything recently that says we are going back down to the easy money of that period 2015 to 2022. You don't paint in a scenario at the moment where we are going back down to those unbelievably low levels, are you? No, we don't expect that to be the case. Like I said, that was also a period when the fight was one-sided. It was about not having enough inflation and for all the reasons we already discussed about the inflationary pressures that are in the system and the fact that I think of your central banker and what you experienced over the last two or three years you understand that inflation can come back pretty quickly. So you have to be a little careful about it. So we are going to move to an environment where I expect again our stars may not be very different from what it was before, but central bankers in terms of their policy framework are going to be much more wary about hitting the pedal to the floor. Also, I do hope, and this is the whole quantitative easing that happened during that period post GFC is something that will be treated much more warily at this time. I think it was used probably a little too liberally. Still distorting? And the worries in terms of the financial risks that can build up because of that kind of quantitative easing I think we have to be more wary about it and really it's an instrument to be used if you are in a deep recession or you have market dysfunction so it kind of has to be used less frequently than it was done before. So I could be more positive about the past but bygones are bygones. Let me say for the future stress it again the new normal will not be the subnormal of 2015 to 2022 or to put it in a nutshell it will be an era of fair money probably rather than easy money or free money. But again our compass will be inflation it will not be the idea to help governments or cooperate or to penalise them we have one compass and it's very important. Let's get to a few quick questions if we can start off with this gentleman here I have been asked by our hosts if you could stand up and they'll give you a microphone and a quick question and then we'll get a quick answer from one or two of our panellists. Thank you Brad Olson one of the global shapers and a New Zealand economist. Are policymakers policymakers are already of the view that interest rates are going to come down but they're sort of later than what the markets are seeing is that a worry or and probably if so does that mean what do you do about that do you try and jaw bone the market or are you comfortable sort of sitting there and going interest rates are going to come down you're a little bit wrong on the timing market but it's not going to affect inflation too much. Did you want to pick up on that one question but can I add as I said we are not calendar driven we are not market driven either we look at financial conditions but instead they are quite volatile we will be data driven. Let me be slightly more precise we look at actual data we look also at future data including our own forecast and inflation expectations Can I also say I think that while the market might try to predict the timing it's really it is up to the policy makers to make the right long term decision for the economy and I think a worse outcome would be that they lower rates too early inflation spikes back up and they have to bring them back up that honestly would be the markets would find that would react very poorly to that so it's much better if they take it they're more patient on the front end and then try to bring it down I think in a way that's very sustainable I do think it does pose a somewhat of a challenge bringing inflation down durably if you're going to get a lot of easing in financial conditions but that said last year was a year when the market started out by expecting 4 rate cuts for different reasons because they thought the economy would be in a recession that didn't happen there was a worry that the big adjustments back up in expectations would create a lot of turbulence that didn't really happen so I think we're I worry a little less about it now than I did a year ago Chuck, do you want to come on this one quickly? Let's get this lady's question in here I may get a sneak in a third one if this lady's very quick Hi, Danai Kyakapulu from the Bank of England and also a young global leader of the forum a question to you Governor and to your third D on decarbonisation there are worries that high rates are also hurting investment at a time when we really need to deliver on the green transition but of course as central bankers our compass is inflation and unstable inflation environment also hurts investment but your president Macron hinted that there may be a best of both worlds with his comments at COP suggesting potentially dual rates so what is your thoughts on that, thank you I guess my president will come tomorrow in Davos so you should put the question to him but that said as I said we have one primary objective which is price stability but we should incorporate the economic effect of climate change to achieve price stability and this is for me the right answer I don't oppose price stability and let's say climate change if we ignore including the short term effects of climate change on output and yes on prices we make a significant mistake this is why we have a green agenda on the ECB side and we are with Chrétien Lagarde who lead pioneers in this field if you're very quick I can just gather it in officially we've got 50 seconds I might squeeze an extra minute for my lovely hosts I'm also part of the global shapers team here but I'm also an economist at the World Bank and my question would be to you Geeta IMF has recently launched their multi-thematic fund for public finance partnership the GPFP fund and climate change being one of the starting priorities in that capacity development initiative so how do you think IMF can equip countries to make their supply chains more green and push towards a green trade agenda the first thing that we're helping countries with is in terms of what we call domestic resource mobilization which is the countries we have in mind are emerging and developing economies who seem to in terms of the amount of tax revenues that they raise so in the interest of time I'm going to stop with that point which is that's what we're focused on quite a bit which is how to be able to raise more resources internally and that's also going to be relevant given all the discussion we have had in terms of the external higher interest rate environment we have covered a lot of ground I'm going to wrap it up there and be very well behaved at the start of my Davos experience this year I don't want to get in trouble with Weft this early on I know me save it to at least the Wednesday but I just want to wrap up a couple of points I'm already off to the races which is just extraordinary and so private sector but for Medina as well with the VCs she's rewritten the power loss they must be so pleased three out of nine they would take three out of nine they really would as well of course the economists last year stunningly pessimistic we're more optimistic this year I hope we're not wrong as well and from Francois Villoy de Gallo absolutely zero clues on that first rate cut as well don't even tell us what we're supposed to be wearing Gita Gopinaffa, Dean of Freeman Chuck Robbins, it's been an absolute pleasure thank you very much indeed