AI Safety Fears, Fed Rate Hikes, & Airbnb's $250M Housing Fund
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What is the main topic discussed in this episode?
You are tuning in to the Rich Habits Radar, our Friday episode of the Rich Habits Podcast, where every Friday morning we're coming at you with the biggest headlines impacting you and your money. My name is Austin Hankowitz. As always, I'm joined by my incredible co host, Robert Croak. And the three things sitting at the top of our Rich Habits Radar this week include the Federal Reserve hiking interest rates for the first time in three years. the AI safety concerns that were raised over the weekend in Airbnb fronting $250 million to help make housing more affordable for everyday Americans. That'll be a fun one to dig into. So Robert, let's jump to our first story.
So the Federal Reserve just raised interest rates for the first time in more than three years, and the most revealing part of the week wasn't the vote itself, it was everything that happened around it. On Wednesday, the Federal Open Market Committee, the FOMC, voted unanimously 12 to zero to lift the federal funds rate at a quarter point to a target range of 3.75% to 4%. That's the first rate hike in three years. Wars described it in his own language as removing a dose of accommodation. Fed speak for stimulus, which is a telling phrase because it suggests officials don't even think current rates are restraining the economy, even after just raising them.
Now, as we kind of think about the scale of what's really taking place underneath the hood, sixteen of eighteen FOMC officials penciled in at least one more rate hike later this year in 2026, with four of them seeing two more rate hikes between now and the end of the year. Compare that back to July when three officials actually dissented in favor of hiking while the committee held steady. Or back in June, Kevin Walsh had his first meeting as chair when the dot plot showed a committee clearly split on whether hikes were even needed. This time, Robert, it was a unanimous decision twelve to zero.
Michael Gapin, chief US economist at Morgan Stanley, revised his forecast up to three total hikes for the cycle. And put it bluntly, if you don't even think you're restrictive and oil isn't going anywhere, you've got some work to do.
We definitely have some work to do, Robert. Kevin Walsh on stage named the actual driver of this being geopolitics, his word for the Iran war and the energy shock that it has caused. He's quoted saying there's no hiding from hotspots around the world. Earlier this year, several officials figured that the energy shock would fade just like the tariff shock did last year, but it hasn't. Crude oil climbed back above $100. A barrel, diesel and refined products are up even further than that. I think I saw jet fuel robber is up ninety percent year over year. And James Eagle Hoff, the chief US economist at BNP Parabus, said officials have, and I quote, reached the acceptance stage of grief on there being a bit of a moderate but persistent inflation problem.
Yeah, President Trump picked Warsh after spending months attacking his predecessor, Jerome Powell, for not cutting rates fast enough. And Trump openly said Wednesday night he'd spoken to Walsh right before the vote. I talked to Kevin and I said, You might as well vote with the board because it's not going to matter. Do what you want. On Truth Social, after the decision, Trump wrote that interest rates should be one percent.
That'd be great if we had one percent interest rates. But Walsh for his part used his press conference to draw a line in public between him and the president. He went on stage and said, Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street. That's about as close as a sitting Fed chair gets to publicly pushing back on the president, who just called him the night before of a rate vote. So Robert The Fed just raised interest rates for the first time in over three years. What does this mean for our listeners and their money?
It means a Fed chair willing to hike rates the same week the president publicly tells him it won't matter is a Fed that just bought itself real credibility, and credible feds get more room to keep hiking without spooking the markets, which is exactly what happened here as yields fell.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00β4:22
2
What did the Federal Reserveβs first rate hike in three years mean for investors?
4:22β8:17
3
How are Fed officials signaling future rate hikes and why does geopolitics matter?
8:17β28:52
4
What are the implications of the AI safety concerns raised by Anthropic, OpenAI and Elon Musk?
28:52β37:35
Speakers
2 identifiedMore from Rich Habits Podcast
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