Furious Fed Chair Schools Trump with Devastating Message
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What is the main topic discussed in this episode?
Mr. Prime Minister, shall we start now? Let's start, and let's start properly. What do you mean? Let's start everything. Can you be more specific? Let's start clothes, let's start equipment, let's start equipment. I mean, all outdoor sports and free time. Now I understand. Maybe you understand numbers better. Budgesport is now even below 60%. So... Exactly. Budgesport.fi.
Fortum presents. Olavi Vaari playing his favorite instrument. Hmm, beautiful. But let's add a little energy.
Donald Trump just got schooled by the chairman of the Federal Reserve, Jerome Powell.
And while Jerome Powell cut the benchmark interest rate a quarter of a percentage point earlier today jerome powell said that based on how donald trump is harming our economy it is far from a foregone conclusion that there will be further rate cuts i want you to watch what jerome powell just said hide that ketchup bottle from donald trump play this clip look in the balance of risks we continue to face two-sided risks
In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December.
further reduction in the policy rate at the december meeting is not a foregone conclusion far from it now the chairman of the federal reserve jerome powell who has access to the actual financial data out there he explains how in the near term the risks to inflation are up and the risks to employment are down meaning employment not going in the right direction inflation not going in the right direction. There's a name for this, especially with a slowing GDP. It's called stagflation. Here, play this clip.
In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.
Next up, Jerome Powell, chairman of the Federal Reserve, talks about how Trump's tariffs are pushing up prices. Play this clip.
Higher tariffs are pushing up prices in some categories of goods, resulting in higher overall inflation. A reasonable base case is that the effects on inflation will be relatively short-lived, a one-time shift in the price level. but it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.
He also talks about how job gains have slowed significantly as a result of Trump attacking labor forces and labor markets. Here, play this clip.
Job gains have slowed significantly since earlier in the year.
How did Jerome Powell's rate cut and remarks directly contradict Trump's Asia trip claims?
A good part of the slowing likely reflects a decline in the growth of the labor force due to lower immigration and labor force participation, though labor demand has clearly softened as well. Although official employment data for September are delayed, available evidence suggests that both layoffs and hiring remain low, and that both households' perceptions of job availability and firms' perceptions of hiring difficulty continue to decline. In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen in recent months.
Jerome Powell talks about what we're seeing here as well. He describes it as two things affecting the job market, dramatic reduction in new workers. Here, play this clip.
What is your explanation for why the job market is weakening right now? And what will this rate cut do to improve the job market?
So I think there are two things affecting the job market. And one of them is just a dramatic reduction in the supply of new workers. And that's two things. That's declining labor force participation, which is a cyclical thing. And then there's declining immigration, which is just a big policy change that actually began in the last administration and it has been accelerated now. So a big part of the whole story is that supply side story. In addition, labor demand has declined. So the labor, the unemployment rate has gone down, meaning that demand for workers is going down a little more.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–3:18
2
How did Jerome Powell's rate cut and remarks directly contradict Trump's Asia trip claims?
3:18–5:13
3
What did Powell mean by 'two-sided risks' to inflation and employment?
5:13–11:16
4
Why is stagflation a concern given slowing GDP and Powell's warning?
11:16–13:09
5
How are Trump's tariffs linked to higher inflation according to Powell?
13:09–15:20