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Chapter 1: What did the Federal Reserve decide in their latest meeting?
The Fed holds rates steady, but officials' hawkish tone sends stocks sliding. Plus, Tim Cook tells the Journal that price increases on Apple products are, quote, unavoidable. And U.S. officials spell out the terms of the Iran peace deal.
Iran is walking away, basically being paid to reopen the Strait of Hormuz with no significant hard commitments that it will make on the nuclear program and ballistic missiles.
It's Wednesday, June 17th. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. The Federal Reserve today held its benchmark rate steady, between 3.5 and 3.75 percent, as was widely expected.
Officials were unanimous in that decision, but they hinted more strongly that their next move will be a rate hike. It was the first meeting led by new Fed Chairman Kevin Warsh, and the central bank under him might look different.
Change isn't easy. Change is filled with risk. But our number one goal is to get monetary policy right. The way to get monetary policy right is to deliver on the remit that Congress gave us, to deliver on price stability.
We'll get into those changes with WSJ economics reporter Matt Grossman, who joins us now. But first, Matt, the policy. The big news from today's meeting is that Fed officials seem to be leaning more towards a rate hike because of the worsening outlook on inflation. Would that be a big shift for Warsh, who Trump put in the role to cut rates?
Yeah, this was a very hawkish Fed meeting, which we saw especially in the dot plot, which is where the Fed officials lay out their forward-looking interest rate expectations. About half the committee wrote down that they expect the Fed might need to raise rates this year, which is a big shift from March when no one on the Fed's committee – saw rate hikes as the right move this year.
We didn't hear too much from Warsh personally about what he thinks the Fed needs to do. The policy statement was very terse. Warsh did not say much about his own views of the Fed's next move in the press conference, and he did not participate in the dot plot. So he is not one of the Fed officials who submitted a forecast for what the central bank's going to do next.
He was pretty candid about some of the ways that he plans to move the Fed forward, laying out a lot of plans to convene experts to review different ways that the Fed operates, including how it communicates with the public, how it handles economic data, a whole host of things that seem to be at the top of Warsh's list of priorities.
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Chapter 2: How are interest rate expectations changing under Fed Chairman Kevin Warsh?
More on that, the Iran peace deal, and the next U.S. intelligence chief after the break. Senior U.S. officials today read the text of the U.S.-Iran peace agreement to reporters. It's expected to be signed later this week in Switzerland. As we discussed earlier this week, it would lift the blockades around the Strait of Hormuz and lift U.S.
sanctions on Iran's oil sales, letting Iran start selling oil widely. WSJ reporter Lawrence Norman says that could be a huge boost to Iran's economy.
The draft included not only waivers on sanctions on Iranian oil, which means that Iranians can export their oil legally again, but it also included a promise basically to allow the Iranians to repatriate the revenues that they'd earned. Iran has sold oil, for example, to China, but it's not been able to get its hands on the revenue because of U.S. financial sanctions.
And Washington offered to change that, and that is what the critics are focusing on.
Critics say the money could help empower the regime and rebuild its military. The Trump administration was under pressure to get a deal done. President Trump today defended the agreement, saying he wants to avoid a, quote, economic catastrophe that could have resulted if the conflict continued.
The administration came into negotiations with Iran a year ago, promising to eliminate their nuclear program, their ballistic missile program, and have them behave differently in the region. Iran is walking away, basically being paid to reopen the Strait of Hormuz with no significant hard commitments that it will make on the nuclear program and ballistic missiles and
That's pretty tough for an administration that spent years bashing President Obama's 2015 nuclear deal.
If Iran does comply with U.S. demands to rein in its nuclear program, it could benefit even more financially, with full sanctions relief and access to a $300 billion fund to finance reconstruction after the war. Officials stress that the reconstruction plan wouldn't require U.S. funding. To see the full draft of the agreement, along with WSJ analysis, check out the story on WSJ.com.
We'll leave a link in the show notes. In other news from the Trump administration, President Trump said on social media that he was delaying the nomination of Jay Clayton to be the next director of national intelligence. His confirmation hearing was scheduled for today. Trump said he was stopping the nomination until Clayton's successor for his current job, U.S.
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