Federal Reserve Hikes Rates for the First Time in Three Years 9/16/26

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1:04All right, welcome, but welcome back everybody. We have got a crucial hour ahead for the markets and your money. Welcome back everybody to our special Federal Reserve coverage live here in Washington, DC with Kelly Iambrite. And we are just about three minutes away from the Fed's interest rate decision. With markets overwhelmingly pricing in a hike, Fedwatch futures put the odds at 90%. What? Hey, there's a 10% chance. But for investors, the headline move might be only the beginning. The real catalyst could be the chair's comments on inflation growth and how much further policy may need to tighten. That's coming around 2.30 PM Eastern. All right, so let's stop talking. Get right to our all-star panel to kick off this hour. We are joined by Harris Financial Group Manager, partner Jamie Cox, Raymond James, Chief Investment Officer Larry Adam, JP Morgan, Chief Global Strategist David Kelly, and RBC Chief Economist, Francis Donald Francis, I am going to start with you because you probably heard me say moments ago. And I think you have said this in the past, rate hike or not, I just don't know what the Fed can do about inflation related to oil and the straight-of-formos. That's what I want to hear from Fed

2:06Chair Warch today. How is he thinking about these rate hikes actually transmitting to the real economy? Does he think they're really going to bring down inflation if so which kind? And is he aware of the side effects that come around rate hikes, including how they're going to impact consumers at the lower end in particular? David Kelly, what are your expectations? Well, I do think they're going to tighten. I think Chairman Warch has painted himself into the corner here exactly as you've been talking about. If there's now a 90% probability they're going to raise rates. If they don't raise rates, people are going to assume that it's politically motivated. And so I don't like how they get to this decision. I don't think they should be raising rates, but I think at this point they've got no choice. Okay, Larry, I think they're going to check the box and raise rates as well, but as everybody's been saying, I think it's all about the messaging. What does he come out and say because that's by far and away going to be the most important thing that happens at 230? Jamie, what's the real view from Richmond? Richmond, we wish he wouldn't raise rates. I mean, those of us who are main street America is a lot more things to cost more, particularly things that have interest rate

3:08involvement. I mean, it's just going to make housing more complicated. There's lots of lots of knock-on effects, I think, that are going to really, I think it's going to be a mistake for them to hike. I think I agree with you. Talk more about why, though, because what about the idea that it's the only way to kind of bring inflation more meaningfully back down? Well, what is the component of inflation? It's the why, right? I mean, we all know there's this is a plashock. We all know that there are problems with oil. The problem is that the war in Iran has not had, it's not been punctuated. It started, then it stopped, and now it's restarted again. So the conditions have it changed, but now we're going to change the interest rate environment. That's a problem. It's not something that they they're not paying attention to what was the set of conditions just three or four months ago. Yeah, I mean, I agree it's being driven by the supply side, energy prices, what's happening with tariffs, but the reality is when it comes to things that typically the Fed looks at, savings rate is that near historical lows, and when you look at what's happening at wages, they're pretty much being contained. So it's not really being driven by the demand side of the economy right now. David Kelly. Well, that's exactly it. I mean,

4:12if you look at inflation expectations built into the tips market, they haven't spiked, and you're just as you're saying, this is a the lowest year of year wage growth we've seen in five years, and not a centilla of evidence that this whatever demand is in the economy is actually generating more inflation. We think growth will slow next year. We think inflation will come down next year, and the Fed really ought to just be patient here, but it's kind of hard to be patient. I mean, it's really a problem of that's why we need forward guidance. There's a clarity in forward guidance, and there's an awkwardness in forward silence, and that is what's left us in this predicament. Dow's almost unchanged as we get to Steve Leesman for the decision, Steve. Federal Reserve raising interest rates by one quarter point in the unanimous 12 to zero vote. New funds right now in a range of 375 to 4%. The Federal Reserve saying this action is intended to quote, support a timelier return to the fed supercent inflation target. Inflation, the statement says remains elevated. The committee will deliver price stability, a repeat of a line in the last statement. Uncertainty is elevated due to geopolitical

5:16developments. Spending as resilient productivity is strong, and the CAPEX is robust. Job gains are keeping pace with the workforce growth. In the summary of economic projections, it shows one or more hikes, one more hikes, sorry, an additional hike is expected this year by 16 of the 18 members. It appears that Kevin Worsd, the Fed chairman did not submit his forecast again. Four of those 16 dots, by the way, see three hikes, two forecasts, just one hike, eight, that is almost half the committee, see the funds rate rising eventually to 4.4%, or 4.38% next year, 10 see the fed stopping at 4.1%, most do not see the fed funds rate declining until 2028. These are the forecasts, they're not promises, they're just the dots that people have said for where they think the appropriate funds rate will be in the years ahead. There's a lower unemployment rate forecast that was lowered for this year to 4.1 to 4.3, that's the average of the forecast. Slightly higher inflation, 3.4 from 3.3,

6:17the 2% target is not hit now until 2029. I'll leave it there. Wow, so looking at this here again, the market reaction, not, I don't want to say it's muted, Kelly, but the market kind of where it was, beforehand, let's go now to Rick Santelli for reaction in the bond market and Rick again, I don't want to speak for the market, but the market is speaking for itself. Stock markets are up on yields about where they were. I think whether we agree or not, I want to hear of course, Rick, if you agree agree or not, the stock market got what it wanted. Yeah, I'm not sure that the stock market really knows what it wants. I'll give you an example. Today, Atlanta GDP for the third quarter move from 4.4 to 5.1. It obviously is understanding what the rate cycle looks like at the Atlanta Fed and the sea is minus 63 points now in the Dow. Interest rates going up is a mixed blessing.

7:19Some of it's for good reasons like retail sales today. Some of it's for not so good reasons, like what's going on in the mid-east. I like to look at the 210 curve here because everybody thought they were going to see this major drop in yields in the tenure if they raised rates. Well, we're not. We see that we went from 4.94 down a little bit. Now we're at 4.95. On the two years it was at 4.60. It went basically down a little bit. Now let's back up. Actually, the two years have been the most aggressive. So we are seeing a little bit of flattening. We're at 35 on the 210. Now we're at 32. What does that mean in English? It doesn't mean that the 10 years driving that, 10 year rates, not going down. But the two year rate reflecting some of the sentiments by some of the Fed officials looking for more hikes. Well, that's at least for the moment propelling slightly higher yields in the short end. If you look at all the intraday charts, you could see that we shot up close to 4.65 in that two year. You could see what's going on in the 10 year. It continues to

8:22hover below that 5 percent. One close above 5 percent. And the dollar index might be the most interesting of all because it really is getting a nice little bid here. And that makes sense. It had been kind of counterintuitive to many of the interest rate moves of late. And finally, the last point I'd like to make is that we need to continue to monitor corporate and sovereign issuance. I think at this point, that's one of the real time dynamics to really understand some of the nervousness regarding interest rates. It was 12 to nothing, Rick Sandteli, which means Kevin Worsh voted for the rate hike. Do you think that Worsh and or the Fed was bullied by the bond market? I don't think bullied. I think symbiotic or reflective is probably the words I would use. So, Rick, stand by. It was like, bat this around a little bit. In fact, let's bring in another market voice who just lowered his price target earlier. I think today, Ed Yardeni, president, your research, Ed, does this act? Can you raise it again now that they're raising by a quarter

9:25and saying they're going to try to do more to fight inflation this way? Well, I think all the signals, especially from the summary of economic projections, is that this is the beginning of a rate-hiking cycle. They're talking about another rate hike before the end of the year and another one next year. I mean, what they're doing is, let's sing to the markets. That's what the two-year treasury has been saying for the past few weeks. And in addition, the futures market has been indicating that it's not going to be just one and done. Is there, so, Ed, normally, you might argue, okay, the Fed beginning another tightening cycle could slow, kind of the stock market rallyer, be a headwind there. But you had just lowered your price target because you were worried about the backup in Bonyield, sitting lower than multiple where we were trading. So again, does this action in a weird way actually make you more bullish than you would have been otherwise? No, not really. I expected the 25-basis point hike. I think everybody expected it. So it was kind of a lot of excitement

10:29about something that turned out to be very much predicted. So nothing really changes. My concern is really the whole geopolitical situation. We're becoming very calm about what's going on in the Middle East with the price of oil, with the hoodies possibly challenging another important straight for transportation and for navigation. And so I'm watching the price of oil as a big concern. Higher for longer oil prices mean higher for longer interest rates than in Fed tightening. But look, I think the economy is amazing and resilient. We just saw that in retail sales. I mean, I think these interest rates to a larger extent reflect the resilience of the economy. Francis, Donald, you're probably familiar with the band Who? Meet the new boss, same as the old boss. And I'm just wondering if we learned today that the old boss and the new boss and the same boss and that is the bond market because it appears that Kevin Warsh, whatever his internal feelings,

11:33he moved with what the bond market and the stock market wanted to do. Well, whoever the boss is, Brian, they were very successful because this is a full-on consensus hike today and at least one more full consensus. And that's critical because it tells us that this Federal Reserve is more in the, let's undo those insurance cuts from last year. But not indicating yet this is going to be an old fashion traditional tightening cycle. That would have been more problematic for market. Second thing I love in this statement is the word timeliness. This is a Fed that wants to get back to 2% in a more timely matter they say. But look at those forecasts. Still don't expect PCE to get back to 2% till 2029. Reminder, we've been above target for five years. We're going to add on another two and a half years to that. Not sure that fits my definition of timeliness, but some interesting details in this projections today. All right, we're going to bring it back to our panel here in a second, but Steve Leesman has more over at the Fed building, Steve. Yeah, I want to talk about this notion that Brian has about the bond market bullying the Fed Chairman. And I would

12:37point out, Brian, if Kevin Warsh called you, called me, called Kelly, we would take his call and report anything that he would say to us on the record. And the reason I bring this up is because Kevin Warsh created the preconditions for the market to price it to price the Fed the way it did. He had multiple opportunities. If he was unsatisfied or unhappy with the way the market was priced to change that he did not, no other Fed official really did. So I think Kevin Warsh got the reaction. He wanted and he had the market set up the way he wanted it. If he did not, I'm just pointing out, Brian, he had multiple opportunities. Many outlets would take his call to change that outlook. Well, okay, so let me let me let me flip it then because let me let me get rid of the word bully. Okay, how about this? Did he? Did he show? I think to Rick's point, Steve, the appropriate flexibility and even if it wasn't what he wanted to do, maybe in his gut of guts, he didn't want to raise rates. But if the other 11 members, one of the raised rates that Warsh showed a flexibility

13:42that maybe the market likes to they said, okay, he's a guy with his opinions, he's the chair of the Fed. He's the boss of the Fed, but he's willing to be flexible based on group consensus. Better? I don't think I don't think Kevin Warsh was drag kicking and screaming into this rate hike. I think what we're seeing and I like what you were saying just a minute earlier, which is I think we're seeing the true Kevin Warsh who's a hawk and this word timeliness, you could turn that around and look at the other side of the coin of timeliness means he is not satisfied with this pace and he would like to get inflation under control, wants to show inflation under control. There are people who believe that the Fed chair showed a certain dubbishness in the campaigning to become Fed chair, but deep down this is who he is, a guy who is serious about bringing down inflation and the guy who is frustrated and criticized by the way, the Fed under chair, J. Powell, for not being strong

14:42enough and bringing down inflation or quick enough. This word timeliness speaks a lot to me from the an institution that is known to be super patient. And the fascinating thing about Fed moves is sometimes you get a big reaction on the day of and sometimes it takes a few weeks to set in and establish these new trading patterns. Let's get back to our panel on that Larry, what do you expect now that they've begun this and how much is riding on the press conference and the way he chooses to cast the path there? Yeah, I would say the statement was pretty much the facts and now we're going to wait for the color commentary because you know, he said he doesn't want to do guidance, but you can do guidance by just reflecting what's happened, right? By stating some other facts. If he talks about the fact that the consumer has had a lot of stimulus because of the tax cuts that they received, that's starting to run out, right? So what happens there? If energy prices were to start to come down because we got some resolution, right? What's the decision tree that we're going to have to look at going forward? I think the market would love to see that. Jamie Cox, jump in here. You know, I think it just leaves more questions and answers. I mean, you raise interest rates. How many now you've got, how many more times are

15:43you going to raise interest rates? Two, three, four, whatever. Zero. Why does that have to be more? Right. Well, the market still raising it? One and mom. That's right. There's only been one time in history that they've raised interest rates once. I mean, they've always raised it more than that. So it's just when it's what's called a hiking cycle, not just a hike. Yeah, but we also, sorry to jump in, but we also the greatest energy supply shock in the history of the world. Oh, you're talking, you're just preaching to the choir. I know. That's on the way. I know what the raise rates are. They're just trying to sort of kneecap that a little bit in the way they can, but it doesn't have to imply that it's a start of some longer term cycle, because inflation may be only related to what's happening across the news. I agree 100% with what you're saying. The question is perfect. I like it. I knew I liked you. The one part about this, it's interesting is that, you know, we had both the supply shock and a brand new Fed chair all at the same time. And the market is trying to test them. Is he is he is he in control or someone else on the outside controlling the Fed? I think Kevin Worse actually answered that question today. He's in control of the Fed. And I think that for the market may have been the most important thing that happened so far today. Matt Peterson. Yeah. President Donald Trump is also not in control

16:47of the Fed. That's another not very subtle message that Kevin Worse is sending. I mean, you know, in that eight minutes that I was off air, I shot an email over the White House. They, what do you guys think about this? They got to answer this. It's going to be an interesting moment for them. You know, the the the President they write back. They did not write back. But what do you mean? I will tell you the minute that they do, but they have the equivalent of a loaded gun pointed at the Fed here. They have gone through the process of saying Lisa Cook, Fed governor, you are on notice. We could fire you at any moment. They could reopen the criminal investigation into Jerome Powell at any moment. You know, they could do a lot to make Kevin Worse's life pretty difficult here. He has invited that. He said, I don't care what you think. I don't care what you do. You know, the one thing getting back to Eddie or Denny, I think it's important to recognize that I don't think these interest rates do anything to the equity market. If you look at the percentage of profits that's used to pay interest payments, it's its 5%. Back in 2000, it was a 35% of the money. It's minus two. It's minuscule. I don't think it's really going to impact the equity market going for them with profits remaining strong and corporate balance. He's remaining pretty healthy. I don't think this is what you name check Ed Yardeni who to Kelly's point this morning

17:50cut his forecast on the S&P 500. And by the way, why am I speaking for Eddie Yardeni? We still have him here, I believe. So I had you can I don't need to speak for you. Jump in and tell us more about the decision to lower your target for this year, but actually have a 10,000 target by the end of the decade on the S&P 500. I went from 8400 to 7900. I mean, 7900, which still be a record high and by the end of the year, the 8400, I'm not just pushing out to the middle of next year. I just think that with the all the ambiguity and concerns about AI, I think some of the AI momentum is going to continue to kind of fizzle out here. I think I've been thinking that the bond yields should be between 4 and 5%. If it kind of hangs around 5%, I think that's going to erode the valuation multiple somewhat. Earnings, I think, are going to be fantastic. I haven't changed my earnings outlook. I think the economy's doing absolutely just fine. And oh, by the way, I don't

18:51think it's one one and down. I think we are going to see a couple more rate hikes along the way here. So I just thought that it just made more sense to kind of stretch things out a little bit in terms of what do we get to 8400, but the basic message is this is the roaring 2020s. The earnings are certainly confirming that. And the only question is the valuation multiple along the way. And I just shaved the valuation multiple a little bit here, recognizing that we've got higher for longer oil prices that could lead to a tightening cycle by the Fed. But again, I think the economy is bulletproof. I mean, it's been phenomenally strong all since the beginning of the decade. I think it's going to remain strong. Yeah. David Kelly jumped in here. Yeah, I'm not sure the economy is quite as strong as we did get a benefit in the third quarter out of bouncing inventories after inventories fell for 5 quarters. And also, we still have the income tax refunds, which actually fed into consumer spending. But what I think is really

19:54interesting here is this 120 vote. That may give people the impression the Fed is really hawkish. I don't think it is though. I think what happened here is that the committee rallied around Kevin Worsh. Kevin Worsh knew that his rhetoric meant that they had to hike, but he didn't want to do is 8493102. He wanted that unanimity. So the Fed can maintain its independence. So the administration can't just pick on him and say, why did you vote for this? They can, you know, well, look, it's a whole committee where united. And I think that says to me as a number of things they've done recent months say to me that they're still very determined to maintain Fed independence. I think that that 120 votes says Fed independence much more than unanimity in terms of what they should do right now. Rick Santelli, what's it called with the yield curve flattens, which I'm seeing by like eight basis points, but it's the short ends going up and the long ends coming out. What does that call them? What is that telling us? Well, right now with yields being down, that means prices are up so they call that a bullish flattening. I'm not sure though that I want to touch that and give you the kind of answer history would dictate.

20:57History would dictate that that is telling us a cycle of tightening might be out there. And the long end not driving that might tell us that it might in some ways benefit the economy. But it's hard to say because of the war. Once again, I will say without a doubt in my mind two things. When you're at 93% and you're a new Fed chief and guidance isn't your cup of tea, there is no way you're not going to use that signal. I don't think it's an antagonistic relationship. As a matter of fact, I think that it is so far from the patent place everybody wants to make this group and this chairman. I think it's quite calculating in terms of what he did. And I think when I look at the economy and I listen to Ed, Ed is downgrading his outlook for a reason. And once again, I think all reasons lead to the Middle East. The stock market doesn't like it. And the longer it goes on, the equity markets are going to pay a price and the interest rate complex is going to be stuck

21:57at yields that are higher than normal. And I think all of this of course will turn green. And anybody lucky enough out there to be viewing that gets long 24 hours before the war ends. They will be the champions and win all the accolades of trading for 2026. This is what I would do if it happens then. We love having you on Rick. And I know it's our last Fed meeting together. We're not going tomorrow, but it's our last Fed meetings. We love having you on Steve Lee. So we know you got to jump into lockups very quickly. Politics are part of this. You'd like it or not. We're here in DC for a reason did Kevin Wars prove he maybe is the more independent Fed chair than many people thought he might be a couple of months ago. I think that's an added benefit, but I really do not think that Kevin Wars or the other 11 members of the FOMC raised rates for the political reasons. What I do think it's fascinating is this bit of a debate between David Kelly and Ed Yardini about how strong the economy is and what makes me think about if I could translate it into the less

23:01understandable Fed speak, it raises the question about where the neutral rate may be. And that's the question which is the Fed may have fallen behind the curve here with all of the AI investment. And I was shocked that I have to say by the retail sales number this morning, showing the resilient consumer in the face of the high oil prices just kind of ignoring it. It may be the Fed has more work to do here to slow this economy than it had to do before because some of the policies of the administration have turned around to run this economy a little hotter than it had been running. And so in order to get in front of this situation, that's why that 437 funds rate in the forecast among some members of the committee strikes me as something to be thinking strongly about. Everyone rap that's a rap yeah what do you think? Not for the whole show. No of course not we saw it. Of course not. We have every what we have a huge amount to still get to but Rick, Steve and Matt thank you for now maybe we almost hit that. I think the CBC octobox did we hit a

24:04you put Alice in the middle and be waters and we're just a few minutes away from chairman wars press conference. We'll take you there live as soon as it happens but first we will take a quick break stay with us and be. We believe in starting with your financial goals not a formula. At Oppenheimer we put the full strength of our longstanding expertise to work understanding your life and your ambitions and designing the precise strategies that build and protect your wealth with confidence across this generation and the next. Put the power of Oppenheimer thinking to work for you. Wealth management capital markets investment banking. That is the sound of your kid just be in a kid just pure fun nothing standing in their way. When allergy symptoms hit they need relief. Claretton juniors max strength two ables provide powerful 24 hour relief from allergies so your child symptoms don't slow them down on

25:05the field or in the classroom. It is the only non-draucing max strength twoable for kids among OTC oral allergy brands and features a kid approved great taste help them miss fewer moments. Use as directed for children six plus Claretton clears. One did work become so much work the meeting about the meeting the hundreds of files to find one insight setting aside the things you want to do for the things that pop up your work days gone but what if the insight surfaced itself or you could ship the deck without the distractions Gemini Enterprise helps you get that done. It's AI that knows your business with agents that take stuff off your plate. Make work less work with Gemini Enterprise from Google Cloud. Welcome back for just moments away from Fed Chair Kevin Worsh's press conference on today's rate decision and if you think it's been kind of interesting up until now just wait let's welcome back our panel still with us on set Harris Financial Group managing partner Jamie Cox I almost

26:08want to go around and say if you liked or didn't like we're not going to get into it. Ray Jay Chief Investment Officer Larry Adam former Philly Fed President Patrick Harker and with us remotely JPMorgan asset management chief global strategist David Kelly RBC's chief economist Francis Donald and Yardeni research president Ed Yardeni so and the moments that we have in the press conference as you guys know more than we is often the moment where you could see complete countertrend rallies all the hawkishness we're talking about now could be erased with it if he talks about maybe this is going to be a one and done so mr. Harker first to you what are your expectations what are the risks here? Yeah it's not going to be a one and done I think to this years you can pretty much bake in and that's what you saw in the SEP so yeah he's not going to talk much about that because he doesn't fill out the dot so but I just think we have to be prepared for two rate cuts for this year. Two rate heights one more one more one more yeah one right heights yeah we'll go around the table here quickly first Larry. I'm hoping it's only a one and done because I agree with David Kelly and our own economist that this economy is starting to show some signs of softness so we're only looking for one but I think in during this press conference

27:12he's going to do everything he can to keep the flexibility of the Fed open and say that their data dependent. Is that a risk in some ways or is that an opportunity if he doesn't commit to more rate hikes? So I think as long as he leaves puts out the decision tree of what they're actually looking at that's what he needs to do whether it's one or two like we talked about I don't think that has a big impact on the on the economy because it's the higher end consumer driving this economy it's the big companies driving they're not really as interest rate sensitive but as you've brought up before what is going to be an impact that the rest of America middle America lower income America and I think the Fed has always looked out they've been talking about trying to broaden. Yeah that's that's where I live I live in the in the real world with all the all the middle Americans and raising interest rates just hurts us and there's a lot more of us than there are rich people and so if we're going to vote coming up. Yeah the Fed has been talking about borrowing costs may come down Jamie that's the point they did the short run they're not. The market got what it wanted and I know it sounds weird but a rate hike may result in lower borrowing costs over time notice I said over time so I can hedge my back over time

28:16not yet. But the Fed thinks it's helping the people you're describing. Oh no I mean if you want to buy a house good luck you know it's already expensive it's going to be more expensive. If you have a credit card your interest rate just went up I mean you know it has real impacts and that's the point because it's tried to it's going to lower demand. Francis Donald do you think that higher rates could lead to lower borrowing costs I know I have not been drinking. That's a bit of a stretch here Brian but I just want to emphasize something you're you talked a lot about energy energy is one issue it's not the whole issue with inflation 55% of the CPI items are up above 3% and they are weighing on consumers there's a line today that says domestic spending has been resilient yes supported by the upper end but look under the surface of consumer activity Americans are borrowing more delinquencies are already up and real wages have been negative since April so now now we have the hike in the system we're watching those channels really closely because this was a medicine but it's going to come aside. Francis are it's been here's my question maybe we can't answer it are Americans borrowing more because they want to or they borrowing more because they have to because if they want

29:18to that's a good thing because they have to savings have come down in response food costs energy costs this is the lower and middle income consumer facing a very different economy than what we see on the aggregate it is I know we're tired of talking but it's still very real it is the k-shape and play this is going to be the biggest challenge for the Fed not necessarily disaggregating between supply and demand but being aware of the distributional impacts of Fed hikes we saw this in 2023 we're going to see it again now David Kelly I think there's going to have to be some dovishness in his tone here because I think one of his goals here is going to be taking an October rate hike off the table because it really doesn't make sense to raise rates one week for the midterm elections the midterm elections themselves actually have a significant impact on the inflation outlook if you get a divided congress or divided government then there's less chance of fiscal stimulus and the president may well be right that the Iran would be more willing to do a deal after the midterm elections are over so I think it makes all the sense in the world for the Fed to pause now and wait at least until December so I think we may

30:19you know after after a hawkish statement and a hawkish action I think we might see a little bit more dovishness out of this press conference that's what you're going to jump in they're not going to raise an October I think just take that off the table my view just because of the optics of it if nothing mean they're not going to raise October yeah they're not going to but you think they will raise again so you raise now take October off to kind of assess the data yeah right and then in December raise again because is there a part of it maybe you don't want to say that's the story but the reality is that is the story why is that the story why is that the story oh because the election yeah exactly but there were there were some rate cuts ahead of the 2024 yeah you're not going to see that this time around I don't think okay and so who we still have at your denny standing by Ed if you could kind of in here I know it's not you know you're aware with all to necessarily focus on every tick during the press conference but what are the risks or opportunities around the discussion we're about to hear from the Fed chair himself well I think he really locked

31:20himself in from the get go by stressing that he wants price stability and that he wants to get there sooner rather than later so I think he's going to have to kind of stay with his hawkish bent because quarter point isn't going to do anything here I think he kind of locked himself into kind of following the markets and the markets have been taking him down the road of raising rates but the market said if I'm not mistaken this was Deutsche Bank this morning have a point of tightening baked in across the curve now so if he thinks that's too much won't he have to push against it well I think he's told us that he respects what the markets opinion is he he himself said he didn't want to talk too much he didn't want to influence the markets he wanted to see how the markets interpret the data and I think a lot of this has to do with the middle east for sure I mean well prices are back over a hundred dollars that's a big deal maybe they'll come right back down after the mid-Jerz but I'm not so sure well it might come back down after the

32:22mid-terms because we do something different with Iran but that's a different show on a different time Larry Adam 50 seconds left is a stock market higher or lower one year from now I think it's higher I think even with today stock market time you may get a couple of months of volatility which typically happens when you get a new industry cycle started but the bottom line is 12 months later you still hear your positive this time around earnings power we're looking for 30% earnings growth this year 15 next year and as everybody's been talking about the Pee multiples come down from 22 down to 19 it's pretty attractive area to get into the market right now the fed raise rates in 94 and the Dow sword in 95 Jamie yeah after the rate cycle ended it that's the point we once we find the end point then you can start to forecast out what the it's not going to be very long I think they well they kind of told us that two to three times max max after that the market moves that's why 12 months from now you can safely say the markets are going to be higher but what you said it we should just dwell on that for one extra second and when they stopped the tightening cycle in 94 that was when people could kind of exhale they okay now we we're at the beginning right now but the

33:26the market's already want to know where the end what happened in the in the latest hiking cycle to the market was terrible during the 22 episode or whatever afterwards it propelled forward it's sort of the template and so that's why it would probably find for 27 I mean it's not like it's going to kill off the AI infrastructure but there there is a risk that because if you go back to 22 and here comes the Fed chair but you know it was lower rates that did help propel a lot of this so with no further ado Fed chair Kevin Warsh. Pandora makes it easy for you to find your favorite music discover new artists and genres by selecting any song or album and will make you a personalized station for free download on the Apple App Store or Google Play and enjoy the soundtrack to your life. One did work becomes so much work the meeting about the meeting the hundreds of files to find one insight setting aside the things you want to do for the things that pop up here work days gone but what if the insight surfaced itself or you could ship the deck without the distractions

34:27Gemini Enterprise helps you get that done it's AI that knows your business with agents that take stuff off your plate make work less work with Gemini Enterprise from Google Cloud. Summer still going strong make a stop it total wine and more for white wines beer and ready to drink cocktails just know you're getting the lowest prices keep the summer celebrations going at total wine and more spirits are not sold in Virginia and North Carolina drink responsibly B-21. Good day in the meeting just concluded the FOMC decided to raise the target range for the federal funds rate by a quarter of a percentage point to three and three quarters to four percent in support of the federal reserves dual mandate the committee is continuing its policy of maintaining ample reserves in the bank existence as noted in the policy statement released just a short while ago economic activity is expanding at a solid pace while uncertainty remains elevated

35:32owing in part to geopolitical developments domestic spending has been resilient productivity growth strong and capital investment is robust job gains have kept pace with the workforce and the unemployment rate has changed little but inflation remains elevated today's policy action will support a timely return to the committee's 2 percent goal this committee will deliver price stability now getting to some further detail our decision comes at a time when the American economy appears to be strengthening new hiring private sector earnings business capital investment each of these markers has improved in recent months and is pointing in a good direction credit flows have been robust particularly for businesses and as I said at the policy symposium in Jackson Hole I would be hard pressed to describe broad

36:35financial conditions as restrictive this view was widely shared by the committee so we removed a dose of accommodation consider the geopolitical landscape of shocks and uncertainty and you begin to appreciate the resilience of the US economy given that resilience and the potential for even greater performance and attitude of optimism is exactly what I heard inside the FOMC these last two days one basic sign of strength is the state of America's labor markets the jobless the jobless rate remains low at around 4.1 percent and both job openings and weekly hours have been increasing unemployment claims on a four week moving average are running at levels consistent with full employment so the labor side of the Fed's congressional remit is in good shape yet for more than

37:37five years inflation has been running above target so our predominant focus is on the price the ability side of our mandate the plain fact is that inflation is too high and has been for too long this summer's inflation readings do not tell me that underlying trends have meaningfully improved based on the most recent CPI and PPI data the 12-month change in total PC prices likely was around 3.6 percent in August core PCE and CPI prices running at about 3.2 and 2.4 percent respectively too many categories are still posting increases above 3 percent on both a six and 12-month basis I noted in Jackson Hole that overall commodity prices also bear watching and over the intermeeting period the prices of many of these key inputs have risen since my first FOMC

38:42meeting as chairman in June my colleagues and I have been unequivocal in our commitment to price stability and to our 2 percent PCE inflation objective at our July meeting we all agreed that inflation remained too high and we expressed our joint readiness to act as circumstances might require and a good majority of my colleagues and I thought the wiser course then would be to await new information in the intermeeting period last month in Wyoming I express my commitment to a monetary policy discipline not to a decision I define the standard for action we must be confident that underlying inflation is moving to our objective clearly and at sufficient speed today the FOMC decided that this standard has not been satisfied the committee's unanimous vote shows our resolve to achieve price stability on a timely or basis we aim to ensure that credit

39:48and financial conditions are consistent over time with our mandate that relative price changes in some sectors of the economy do not broaden that inflation compensation in market prices stays low and that inflation expectations remain well anchored this afternoon you also received the summary of economic projections it reflects the views of my colleagues on the committee but as in June I have not offered a projection of my own but like in June I said I would faithfully discharge the summary of their projection so here goes in the summaries median projections real GDP rises at 2.3 percent this year 2.4 percent next year total PC inflation runs at 3.7 percent this year and falls to 2.3 percent next year the unemployment rate holds steady at about 4.1 percent the median participant judges that the appropriate federal funds rate to be 4.1 percent

40:51at the end of this year and to remain there next year inflation risks are to the upside while labor risks are roughly balanced in my meetings these last few weeks in Jackson Hole in Asheville at the G20 meeting which the US hosted at a central bank conference in Basel it was evident that most advanced economies are facing price pressures their central banks are making their own judgments consistent with their own remits our decision today reflects our best judgment in service to our remit the Fed has a role in sustaining the economic progress happening in America right now and the rising opportunities that come with it those who are least well off have the most to gain from a durable expansion a solid labor market and stable prices we at the Fed are on wavering in our vital and straightforward purpose full employment and

41:56price stability and a thriving American economy that sets the standard for the world and with that I'll take a few of your questions thank you chairwurst thank you for doing this I'm Richard Esquibito with CVS let me navigate over my questions you know quarter point rate hike does not reopen the straight of poor moves and so I wonder how you think these smaller rate hikes will be effective when it can't necessarily address the energy supply side of inflationary pressures it's a good question Richard we cannot affect any individual price whether it be oil prices whether it be food stuffs at the grocery store but what we can do and we'll do is ensure that any change in relative prices don't broaden out don't have second and third order effects in the economy that's what we're tasked to do and that's what we will do

42:56thank you colby swith and the new york times when the Fed starts raising rates it generally follows with a sequence of hikes is there anything different in today's assessment of the economic conditions that would suggest that the typical pattern does not apply and I guess second to that what impact do you expect higher rates to have at this juncture if the bulk of what is keeping inflation elevated is sending from supply shocks so we're trying to get to more people so now I get to cherry pick my preferred question from you colby um this won't surprise you I'm not the forward guidance business the decision we made today was a sober decision series decision responsible decision one that we have been preparing for and thinking about in my 110 or 20 days here you heard from other people in the dots effectively what their forecasts are I'm not going to prejudge any future decisions we make you might have heard me saying Jackson Hole I committed to a discipline set of principles I committed to look outside the window and see what I can observe

44:03that's what I did in Jackson that's what we did today thank you mr. chairman editor-to-learns firm fox business um so the market priced in a 90% chance of a rate hike today you don't want the Fed to lead the markets was this a market led rate hike and then with that the bond yields are going up that's one of the indicators is that part of that issue so I've said this before I'll repeat it the Fed has an enormous amount of power these are decisions we make but getting the understanding right between financial markets and the Fed is a balance that I've long thought could be better struck we made this decision today based on our assessment of the situation based on our assessment of the trajectory for employment based on our judgment on the strength of the economy sometimes the market tries to prejudge our outcomes I'll observe market prices and and see what they have to say but

45:06today was our decision steep Thompson the watch your post you Elizabeth thanks so much Elizabeth Shalsy with ABC News big picture I wonder if you could tell us just what will this move today actually do for American consumers and have to ask what is your message here to president trump who has repeatedly called to cut interest rates not raise them I've got nothing for you on a discussion with the president so but I won't make that count as your question on the American people as I said in my prepared remarks the least well off are the ones have the most to gain from stable prices decision we made today was the right decision to deliver on the remit that congress gave us to ensure stable prices moreover I would say because of the underlying strength of the economy because we are as I mentioned largely acting consistent with

46:10full employment we can be focused on stable prices some months ago I said we will deliver stable prices today's action is consistent with that Chris hi how are you thank you can you tell us a little more about what changed from the July meeting when as you noted the Fed did stand pat until today and as part of that could you give us a sense of whether or not things like the retail sales report today suggested that demand is heating up and possibly threatening higher prices as well thank you yeah so as you might know I'm not a data point dependent guy so I won't I won't react one way or another to data that that shows up on our doorstep but on your first question I think the more important one what transpired in the seven weeks since we last met first I would say good majority my colleagues seven weeks ago thought seven weeks is a good investment it's a way to buy time so we can make a wise decision I'll

47:12highlight three things that have happened in that intermeeting period one is I made had a judgment seven weeks ago about the strength of the economy there's been a pretty wide ranging set of data including the labor markets that the economy has strengthened you might have heard me say that Jackson hole a few weeks ago it's a judgment that I have and the committee has second inflation trends I said in Jackson Hole trends matter I said in Jackson Hole we need to look outside the window and interrogate reality my judgment some weeks ago was the inflation summer trends weren't passing the test I've seen very little information since that would make me reverse that decision so I've stuck with it and the third thing that's changed in seven weeks are geopolitics and there's no hiding from hot spots around the world and our judgment about what is the most likely or at least likely of the geopolitical situation has changed all three of those things led led themselves to

48:14affirm unanimous decision today Jones financial times um you said today's decision removes a dose of accommodation in your view and perhaps if you could share views around the table two or interest rates now at a level that you would describe as restrictive or not thank you uh I've described previously I found it difficult to describe financial conditions as restrictive I think I said I was hard pressed what I heard around the table in the last couple of days is my colleagues were hard pressed to describe it that way too um we removed a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives that was the decision that was our judgment and we'll continue to evaluate that prospectively

49:17thank you mr. Chairman Steve Leesman CNBC I want to follow up on that question um previously most fed officials had described the rate as modestly restrictive and if you remove the accommodation could you give us your sense of where the fed funds rate is relative to neutral and some detail if you wouldn't mind on your sense of is there a short term neutral rate you're aiming for and a longer term neutral rate do you think in terms of those uh in a word no um in a few words I'd say this I've always been interested in uh neutral rate as an academic matter pack when I learned economics we used to think of it as a wixellian rate it's a real equilibrium rate um it's useful academically it's uh it's a discussion help us think about policy do I think it has any operational effect on decisions that we make today no I don't um hi Victoria Guido with Policio what is

50:21asked you've talked about how you don't like data dependence including today um but heading into this meeting there was a ton of focus on the august cpi and I'm wondering if you think that um that was appropriate on the part of markets or if you I've learned anything about how you might approach communications going forward um so market participants and reporters I think generally over the course of the last decade or so have grown accustomed uh waiting somewhat breathlessly on a data point um that isn't my view um I was not waiting breathlessly on what any particular data was whether it was retail sales this morning or a cpi print last week um I'll just reiterate trends matter data points are noisy data point uh dependence is a dangerous preoccupation it's not something uh that concerns me markets over time will come to understand how this fed makes its decisions what's

51:23relevant and not and I wouldn't want to editorialize that for them beyond it. Thanks for doing this Mr. Chairman is that college act the washing examiner um I'm just curious a couple weeks ago the president sent out a message essentially threatening to cut off trade to certain countries unless rates were lowered obviously an anonymous decision to do the opposite what would you say to investors who sort of believe this is another test of the feds independence and then kind of when was the last time you spoke with the president do you anticipate a post decision meeting or you gave me a long menu from which to choose they're all very tempting um I don't have anything for you on on discussions with the president um and I'm not a wall street newsletter um part of the independence of the federal reserve is we stay in our lane independence is a two way street we'll let people that do trade policy and fiscal policy stay in their lane too that's how we can stand up here and call them the way we see them. Brian Chung. Hi there Brian Chung with NBC

52:29just wondering if you could explain who is the least walloff and what does a rate hike do when those people might be pinched by higher mortgage rates higher gas higher grocery prices and now broad higher rates. Yeah um it's a fair question in the macro economics we tend to look at aggregates around here. Aggregate GDP overall labor market trends the state of inflation. A lot of people in Washington spend a lot of time on distributional consequences and that's their job in their business what I was referring to in the least well off tend to be people that don't own financial assets call that a bit less than 50% of the country they don't have equity in their home they don't have equity in a 401k plan so they're living off their uh paycheck that comes every couple of weeks the thing that we can do consistent with our mandate is two things ask ourselves is the country running more or less at full employment and we've done that um that doesn't mean that individuals aren't searching for a job but in aggregate we're running more or less at full employment if so

53:33we can then look at the other side of the our mandate and let that be our focus and stable prices an environment where inflation is running consistent with our 2% objective offers good news because that way when they get their wages they can put their head above water and deliver real take home pay increases we don't have total responsibility for it but we do have responsibility for stable prices as I've said before inflation is a choice and today we took a step in delivering it sorry my name is from agents from spris AFP are you looking at the also central banks and what do you think about the european central banks move the hike twice this year but not in a row thank you um well uh i don't ask them to pre-judge decisions that we're going to make so i won't pre-judge decisions that they make but i will say this i've spent some time with uh foreign central bank counterparts not just in the last 20 years but over the course the

54:38last several weeks as i mentioned in jackson hole uh at the g20 meeting we hosted in north carolina and uh at a central bank meeting in bozzle what i heard around the table from most of the advanced economies is they're suffering from price pressures too they're making their own choices consistent with their remit um it tells me a couple things one is when the federal reserve makes a policy choice it matters not just to the u.s. economy but it spills over to the rest of the world to a lesser extent that's true for them too when foreign central banks make decisions where they're confronted with higher prices and they choose consistent with their remit to uh raise rates then they're helping to quash inflation in their countries and their spill overs and spill backs in both directions beyond that i won't open on what other central banks may choose to do this week or beyond thank you nick timorous of the wall street journal at chrimin wash last fall you expressed concern

55:41that the fed was about to make its quote six th or seventh big mistake by deciding the economy was too strong to justify lower rates now today you raised rates can you give some sense as to what changed your own assessment of the u.s. economy between then and now so i don't i don't remember the full context but i can tell you uh nick about the state of growth now my suspicion 110 or 20 days ago when i showed up was that the u.s. economy was strengthening even over the last several weeks i think we now have date up broadly defined that says the economy has indeed strengthened um underlying growth is higher uh inflation is the problem stable prices have been the problem for now more than five and a half years so what the committee decided to do today was take an action to ensure a timely return to our price stability objective price stability is foundational to

56:42economic growth and i think we took an important step today to deliver it and we did it in part by removing uh the dose of accommodation that i that i mentioned before uh niel erwin thank you mr. chairman uh niel erwin with axios uh longer term bond yields are up quite a bit over the last few months especially the last few weeks what do you believe the bond market is telling you especially about the growth outlook the neutral rate uh and what are the implications for monetary policy yeah um let me speak to the history but bond market prices do prospectively i want to let them do that i want to let them uh tell me any story they wish to i want to try to interrogate that but why did yields rise let's say since the last fulmc meeting till this i'll give you three three reasons but i would say these things tend to be over determined this is a complicated set of things that are affecting the most important asset anywhere in the world the ten year treasury so the riskary asset upon which every price of virtually every asset in the

57:45world um is related to so i'll say three things first is economic strength i think part of the reason why we've seen over the course of 2026 long term yields go up is the economy is strengthened second reason competition for capital um the surge in capital expenditures which i referenced in my remarks is real and the so-called hyper scalars are out of the market raising funding and so the competition for capital is real and i think it partly explains the increase in yields the third is geopolitics um the situation hot spots around the world are driving long term yields it's not simply spot prices of energy or spot prices for corn or soybeans or wheat but it's the difference between those spot prices and so-called crack spreads what that means for products that find their way into a stores across the country i think those are the three leading

58:47explanations but certainly not exclusive list michael michee from bloomberg radio and television you said in jackson hole that you want to see inflation come down clearly and at sufficient speed which is a standard without necessarily a measurable threshold and the reason i ask is because today you say today's policy action will support a timely return to the committee's 2% target and yet in the summary of economic projections the median pushes the 2% target achievement out to 2029 in other two years and i'm wondering how you can square those two things one easy way to square that micha's those aren't my forecasts um those are the forecasts of my 18 colleagues and i tried to represent them due to flee to you um my business is to not give forward guidance but my commitment in june was to reaffirm to the american people to anyone listening

59:49that we will deliver price stability my commitment in july was to say we want to buy a little bit of time we want to evaluate what's happening across a range of dimensions and what i said in jackson hole in august is we're committed to a discipline not to a decision today's action starts to show we're serious about this and we will deliver on the price stability objective and as the statement said we'll do it on a on a timely or basis that's our decision and uh uh uh when we continue our discussions over the course of the next several weeks and months we'll have more to say about it but um it'll prepare to prejudge those future actions max from CNN thanks chairman wash metty human seen and you've spoken in the past about the positives that could come from widespread adoption of artificial intelligence how concerned are you if at all about

1:00:49these increasingly alarming warnings we've heard from a i leaders about losing control of this powerful technology and doing real world damage damage that would presumably impact the real economy so i've spent a lot of time uh thinking about a i and before i found my way to this post i spent a lot of time talking about it publicly um independence of the federal reserve is about staying in our lane we care very much about what's happening in artificial intelligence we care much about the implications on the demand side of the economy and ultimately on the supply side of the i care so much i think it's so important that we establish a task force that should report by the end of the year to help us think about the implications for our future policy conjuncture but the policy decisions that are made about the risks and rewards the challenges and opportunities those are decisions made by other parts of the government i'm going to leave it to them to make those those political decisions those policy decisions the implications those decisions obviously have

1:01:52some bearing on our day job and that's where we'll be focused thank you mr. chairman Jennifer Sean burger with the ibu finance inflation has run out mostly from higher energy prices in tariffs which some say are supply shocks that rate hikes cannot fix and should fain on their own so long as inflation expectations stay anchored and now that you have hyped rates do you need to push growth below potential unintentionally pushing weakness on the job market to bring inflation down and how do those dynamics play out given the forcefulness with which AI is driving the economy right now so there's there's a there's a lot there Jennifer let me see if I can't do just a little bit of it um first we believe that the unemployment rate is basically running consistent with full employment uh i don't believe that we need to do harm to the labor markets to

1:02:54achieve our objective i don't believe that the two parts of our mandate price stability and full employment are working at cross purposes over the medium term so economic growth that is uh ensuring continuous sustainable durable economic growth that's the business we're in and the job we did today the job will continue to do is to ensure price stability which can mean that sustainable durable economic growth can go on for longer the economy can be stronger and as i mentioned before the least well off can get the benefits of it hey what's going on Steven A Smith here to tell you about my podcast straight shooter with Steven A every week i go beyond the headlines to talk about what's really happening in politics culture and society i bring in voices that matter take your calls and have the conversations a lot of people are thinking about but not everybody is having if you're looking for insight perspective in honest dialogue this is the place for you

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