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Fed cuts rates for second-straight time to lowest level in three years · DEEP INSIGHT

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  Speaker 1: Breaking news. The Federal Reserve just making its decision on
• 0:03
  Speaker 1: interest rates, and notably, it's a decision that comes without
• 0:06
  Speaker 1: critical economic data used by the central bank to make
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  Speaker 1: monetary policy. Yeah, that would be helpful to have. Let's
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  Speaker 1: get to CNN's Matt Egan, who's at the Fed. Matt,
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  Speaker 1: obviously we're all awaiting this.
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  Speaker 2: What can you tell us, Well, the Fed just delivered
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  Speaker 2: an interest rate cut, and it is the quarter point
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  Speaker 2: cut that was widely expected. So this is the second
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  Speaker 2: straight interest rate cut from the Fed, and it does
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  Speaker 2: lower FED rates to the lowest level in three years.
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  Speaker 2: This shows that Fed officials are clearly more concerned about
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  Speaker 2: weakness in the job market than they are about stubborn inflation.
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  Speaker 2: Fed officials, in the statement that they just put out
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  Speaker 2: moments ago, they reiterated that risk to employment rose in
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  Speaker 2: recent months and that job gains have slowed this year. Now,
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  Speaker 2: what's unusual here with this decision is the fact that
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  Speaker 2: the FED had to make it while flying mostly blind.
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  Speaker 2: Because of the government shut down, many of the indicators
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  Speaker 2: that officials typically rely on were not available. That means
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  Speaker 2: that this was the first time since the Fed's rate
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  Speaker 2: setting Committee was established back in the nineteen thirties that
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  Speaker 2: they have to decide on interest rates without the monthly
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  Speaker 2: jobs report and the FED statement it did allude to
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  Speaker 2: this problem, which is a big problem for FED officials
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  Speaker 2: that consider themselves data dependent. There's just not much data
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  Speaker 2: out right now. But they did insert some new language
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  Speaker 2: that alluded to this. They, for instance, FED officials said
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  Speaker 2: that available indicators suggest that economic activity has been expanding
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  Speaker 2: at a moderate pace. Previously, they said recent indicators. Also,
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  Speaker 2: FED official said that the unemployment rate has edged up
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  Speaker 2: but remained low through August. That's because we don't know
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  Speaker 2: what the unemployment rate was as of September. And in
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  Speaker 2: this statement they also said that more recent indicators are
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  Speaker 2: consistent with these developments. That seems to be a reference
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  Speaker 2: to some of those private alternative economic numbers that get
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  Speaker 2: put out and that we know FED officials look out.
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  Speaker 2: So what does all this mean for viewers at home?
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  Speaker 2: It does mean that borrowing costs are coming down. This
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  Speaker 2: is helpful for people who have credit card debt, home
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  Speaker 2: equity lines of credit as well. And I do think
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  Speaker 2: that this does show that right now, the big focus
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  Speaker 2: for FED officials remains on protecting the job market. They
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  Speaker 2: clearly are not as concerned about stubborn inflation. Borisa and
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  Speaker 2: Brianna and.
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  Speaker 1: Matt, what are you going to be listening for from
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  Speaker 1: j Powell the Fed shair when he speaks moments from now.
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  Speaker 2: Well, first off, everyone wants to know what is Fed
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  Speaker 2: shair Jerome Powell thinking as far as an interest rate
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  Speaker 2: cut at the next meeting in December, and what about
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  Speaker 2: early next year. Also, what is Powell going to say
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  Speaker 2: about what are the economic indicators that he's looking at
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  Speaker 2: during this government shutdown. I'm interested to hear what he
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  Speaker 2: says about some AI driven layoffs such as the mass
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  Speaker 2: layoffs that we heard about from Amazon as well. And
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  Speaker 2: just one last point for you, this was not a
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  Speaker 2: unanimous decision. Ten officials, including Jerome Powell, voted in favor
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  Speaker 2: of this quarter point cut. One official voted for no
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  Speaker 2: change at all. That was Kansas City FED President Jeffrey Schmid.
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  Speaker 2: And one official voter for an even bigger cut. Not
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  Speaker 2: surprisingly that official is FED Governor Stephen Myron.
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  Speaker 1: Becks to you guys, all right, Matt Egan at the Fed,
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  Speaker 1: thank you.
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  Speaker 3: Our business editor at large, which request joins us now
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  Speaker 3: Live as the news of course starting to break a Richard,
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  Speaker 3: as you look through your email, good to see you.
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  Speaker 3: I know that markets were pricing in a twenty five
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  Speaker 3: basis point. Richard, what are you seeing? I'm looking at
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  Speaker 3: my phone as well.
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  Speaker 4: Yeah, yeah, it's gone. The FED has lowered rates by
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  Speaker 4: a quarter of a percentage point. They did the same
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  Speaker 4: thing at the last meeting, and so they've now read
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  Speaker 4: they fed so called federal funds rate is three point
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  Speaker 4: seventy five to four percent. It says once again that
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  Speaker 4: the worrying part from the Fed's point of view is jobs.
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  Speaker 4: Job gains have been have slowed, and the unemployment rate
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  Speaker 4: has edged up. Says the FED. Inflation has also moved
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  Speaker 4: up and remains elevated. Now what's interesting is we are
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  Speaker 4: heading into the scenario that really J. Powell, the chair
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  Speaker 4: doesn't want, which of course is higher inflation stubborn unemployment.
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  Speaker 4: And he has to cut rates because he has to
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  Speaker 4: choose between unemployment and inflation, which is the most pressing problem.
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  Speaker 4: It's a very rare scenario that the FED finds itself in,
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  Speaker 4: but now it's clearly made its choices. The core issue
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  Speaker 4: is that of unemployment, and so the FED has cut
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  Speaker 4: rates to bolster the employment or the unemployment situation. And
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  Speaker 4: let me just read you the one bit. Here we go,
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  Speaker 4: as I've just proven myself right, if you will, the
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  Speaker 4: committee is attentive to the written Yeah, because the committee
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  Speaker 4: is attentive to the risks of both sides and judges.
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  Speaker 4: The downside risks to employment rose in recent months. Voting
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  Speaker 4: against was our mister Mirran, Stephen Miron, who wanted to
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  Speaker 4: rate to lower rates by half a percentage point, and
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  Speaker 4: Jeffrey Schmid, who preferred no change at all. What a
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  Speaker 4: fascinating fed We've got a majority for lowering. One wants
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  Speaker 4: to go faster, one wants to go slower.
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  Speaker 3: So, Richard, you know, you and I have spoken about
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  Speaker 3: this because because of the US government shutdown, there are
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  Speaker 3: lots of readings we haven't had, right, and I've asked
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  Speaker 3: my producers protographic up to just the viewers again at
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  Speaker 3: real sense, we haven't had jobs report, jobless claims, jobs report,
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  Speaker 3: PC prices. All of these have been delayed, of course,
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  Speaker 3: because of the government's shutdown. So how do they make
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  Speaker 3: these policy decisions while in the dark, Richard.
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  Speaker 4: Well, they have other numbers. They have a lot of
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  Speaker 4: private economy numbers, those from banks, economic forecasters, so they've
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  Speaker 4: got a vague idea, and also they knew the trajectory.
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  Speaker 4: There are other numbers from those parts of the economy
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  Speaker 4: that are still functioning they can extrapolate. It is a
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  Speaker 4: poor best by no means satisfactory. The quality of the
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  Speaker 4: data that you just showed is really essential, particularly the jobs,
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  Speaker 4: particularly when jobs is the number. But we do have
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  Speaker 4: private surveys that show the number of new jobs being created.
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  Speaker 4: The employment scenarios, they're just not as robust, they're not
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  Speaker 4: as big, they're not as they don't have the same integrity.
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  Speaker 4: There is a clear I wouldn't say they're flying blind,
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  Speaker 4: but they've certainly got an eye patch on. And it's
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  Speaker 4: foggy weather outside. Right.
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  Speaker 3: So when we listen to j Power in less than
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  Speaker 3: thirty minutes or so, Richard, what will be looking for
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  Speaker 3: Because last time you and I spoke was concerns over inflation.
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  Speaker 3: Now it seems concerns over employment, right, Yeah, and.
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  Speaker 4: That's been the concern for the last few couple of meetings.
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  Speaker 4: What I'm listening for, Number one, the very point you
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  Speaker 4: just said, how far off is he? How worried is he? He
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  Speaker 4: doesn't have the tightness of data he requires. Number two,
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  Speaker 4: is he done? Do the comparing a man? Look at
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  Speaker 4: that split once more, one months less? The majority? Are
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  Speaker 4: the Fed done for now? While they wait for quality
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  Speaker 4: data that really shows what happening. My guess is they
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  Speaker 4: are done. Maybe one more cut, but they're not on
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  Speaker 4: a tear to cut much more than this. They need
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  Speaker 4: to wait. They need to find out. They need to
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  Speaker 4: be more data dependent. And for that to be data dependent,
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  Speaker 4: de sir, you need to have data.
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  Speaker 3: It would help, wouldn't it. At the moment, they're in
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  Speaker 3: the dark. Like you said, Richard, good to see your
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  Speaker 3: life for us. From Riad