Episode 5669: Interest Rates Rise As War And Ai Rages On
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Why did the Federal Reserve raise interest rates to 3.75‑4% and what does it mean for the economy?
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 Reserve's dual mandate. Economic activity is expanding at a solid pace. While uncertainty remains elevated, owing 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 timelier return to the committee's two percent goal. So the labor side of the Fed's congressional remit is in good shape.
Yet for more than five years inflation has been running above target. So our predominant focus is on the price stability 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 PCE prices likely was around 3.6% in August. Core PCE and CPI prices running at about 3.2 and 2.4%, respectively. Too many categories are still posting increases above three percent on both a six and twelve month basis.
Yeah, I do. I mean I'm relying on Kevin. But he's got, you know, a very tough board. He's got a board that was put there by a lot of other people and the uh interest rates are too high, they're not appropriate. And I told I talked to Kevin and I said, You might as well vote with the board 'cause it's not gonna matter. Uh the board is very hostile, they're very political, they're doing the wrong thing. They're a bunch of politicians or people put on by politicians and uh it's a shame because it's too high an interest rate. Despite that, the country barrels through everything because we're doing so well, but the interest rates are too high. We should be playing paying the lowest interest rate anywhere in the world because we have the strongest credit.
If we wanted to get rid of deficits, which we could do with a swipe of a pen with every country, we'd make a trillion and a half dollars a year. We'd pay off our debt, we'd do all sorts of things but we haven't ch chosen to do that but at some point we will. In interest rates are too high. No, I smoked no, I didn't convince him. I said do what you want. I said do what you want because it doesn't matter because he doesn't have the votes. No matter how good a job, he's a good man, Kevin Wars, but no matter how good a job he's got a hostile board.
Well, I don't know what he was referring to, but I will tell you interest rates are too high. No, I don't think so. I think I want 'em to be independent, but it's my opinion. I'm very good at this stuff. Interest rates are too high. We should have the lowest interest rate anywhere in the world because we're the best credit. No, they're raising the rates to they're raising the rates to make Trump do as bad as they can possibly do. The problem they have is that we have the greatest economy in history. We have ob over twenty one trillion dollars being invested in this country, which is five times more than we've ever had before. Uh so they're raising that only for political reasons and that's a raise against Trump.
It means things are going to be more expensive, like borrowing money for mortgages, car loans, credit cards, but it is also the first step to bring down inflation, which is impacting every aspect of our daily lives. And all of this, of course, is happening with just seven weeks to go before the midterm elections. We at the very least it it's it's messaging to the American people or to the miz business community. We acknowledge Inflation is a problem and despite what the president's demanding, we're going to take action. Yeah, I wouldn't expect it to do a lot. Uh I think um the issue right now with inflation is uh energy prices in particular, uh still a little bit of tariff stuff.
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Chapters
3 chapters
1
Why did the Federal Reserve raise interest rates to 3.75‑4% and what does it mean for the economy?
0:00–28:26
2
How are current inflation readings (PCE, CPI, core CPI) influencing the Fed’s policy outlook?
28:26–53:05
3
What are the arguments that the recent rate hikes are politically motivated against President Trump?
53:05–54:43
Speakers
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