Latest / The Paul Barron Crypto Show / Rate Hikes Begin?🚨Fed Decision📉

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Rate Hikes Begin?🚨Fed Decision📉 · The Paul Barron Crypto Show

0:00
Speaker 1: Course, as you've probably heard already, the rate hike era
0:04
Speaker 1: has begun and it is taking place right now. One
0:08
Speaker 1: of the things that we'll get into today is what
0:11
Speaker 1: does this look like going forward? Because this is going
0:14
Speaker 1: to be the biggest issue right now. The Federal Reserve
0:16
Speaker 1: is officially hiking interest rates by 25 basis points, making
0:20
Speaker 1: it the first rate hike since July of 2023. This
0:23
Speaker 1: ends the longest Fed interest rate pause since 2008. Many
0:27
Speaker 1: of you guys weren't around in 2008, but that was
0:29
Speaker 1: the economic crisis that essentially started because of the savings
0:33
Speaker 1: loans and real estate cratered. A lot of the market
0:36
Speaker 1: in general took a long time to recover. That's the
0:39
Speaker 1: kind of scenario that we are playing out right now.
0:42
Speaker 1: If you look at the charts, I'm on the five
0:44
Speaker 1: minute just to give you guys.
0:46
Speaker 2: A look at that.
0:47
Speaker 1: And we're going to go to Kevin Warsh here in
0:49
Speaker 1: a minute to understand if he is more of a
0:51
Speaker 1: dovish position, because I have a whole theory on this
0:53
Speaker 1: as to how this may play out. But right now
0:55
Speaker 1: I'm looking at XRP. You can go, of course, to
0:57
Speaker 1: the Bitcoin chart, almost identical. in terms of the spikes
1:02
Speaker 1: that we've seen and, of course, the immediate drop once
1:04
Speaker 1: the news started breaking. This being on the five-minute charts,
1:08
Speaker 1: Bitcoin trading at around 75.8 right now. As we record,
1:12
Speaker 1: ETH holding around the 2400 mark. So market in general
1:16
Speaker 1: is starting to react. And, of course, we will hear
1:19
Speaker 1: from the Fed themselves. And the way this works, if
1:22
Speaker 1: you're brand new to the live stream, which, by the way,
1:25
Speaker 1: if you haven't subscribed yet, Hit.
1:26
Speaker 2: That little bell.
1:27
Speaker 1: It's going to get you in, and you're going to
1:29
Speaker 1: get notifications instead of just discovering this by chance. You're
1:32
Speaker 1: going to get notifications when we do these live streams.
1:34
Speaker 1: These FOMC meetings are very critical because it starts to
1:38
Speaker 1: set the tone for not only the markets, but it
1:41
Speaker 1: also sets the tone, I think, globally of how and
1:45
Speaker 1: where trades will happen in terms of the markets themselves.
1:49
Speaker 1: A few other things that are happening right now. The
1:51
Speaker 1: stock market is, of course, approaching a fear level, which
1:55
Speaker 1: we haven't seen this in a while.
1:56
Speaker 2: We're at 28.
1:56
Speaker 1: And if you look at this one week ago, 38.
2:00
Speaker 1: One month ago, it was at 64. One year ago,
2:04
Speaker 1: also setting in greed mode. So interesting times ahead. The
2:09
Speaker 1: real question, I think, as the chair will go to
2:12
Speaker 1: the podium here in a little bit, And he'll start
2:15
Speaker 1: to address, and I think that is going to be,
2:17
Speaker 1: what is the forward-looking statements? Remember, though, that in this
2:21
Speaker 1: particular case, he doesn't give forward-looking statements. Instead, he gives
2:28
Speaker 1: a result of, here's our new data points, or potentially,
2:32
Speaker 1: let's let the market figure this out. These are the
2:34
Speaker 1: talking points that Kevin Warsh have kind of got into
2:37
Speaker 1: over the last little bit in terms of his tenure
2:40
Speaker 1: as the chair.
2:41
Speaker 2: Of the Federal Reserve.
2:43
Speaker 1: I want to go to this right here. Last time,
2:46
Speaker 1: Fed did a rate hike. And I don't know if
2:48
Speaker 1: we're going to see this, but Bitcoin did drop 18%.
2:51
Speaker 1: So we did get the hike. Do we get a
2:55
Speaker 1: drop on Bitcoin of that kind of magnitude? Let me
2:58
Speaker 1: know in the comments down below. Just simply put Bitcoin
3:03
Speaker 1: down or Bitcoin sideways or Bitcoin up from here, where
3:08
Speaker 1: you guys think this is going to be going.
3:09
Speaker 2: And let's look at it over the next, say, seven days.
3:12
Speaker 1: Because I think this is going to be a significant
3:13
Speaker 1: time between now and the next seven days, because you
3:17
Speaker 1: have an administration who has been 100% anti-hiking rates in
3:23
Speaker 1: this economy, and now you have Kevin Warsh playing ball
3:27
Speaker 1: with the market and going in and doing exactly what
3:30
Speaker 1: Trump did not want him to do, and that was
3:32
Speaker 1: hiking rates. Of course, that is what's playing out right now.
3:36
Speaker 1: Wall Street overwhelmingly expected the Fed rate hike.
3:40
Speaker 2: That is happening.
3:41
Speaker 1: Almost everybody, every major Wall Street bank now expects that
3:45
Speaker 1: they were true on this. Most, though, have been forecasting
3:48
Speaker 1: a 50 basis points of tightening for 2026. What that
3:52
Speaker 1: could potentially mean is we've got another one coming. And
3:56
Speaker 1: some banks, Deutsche Bank and RBC, see 75 basis points.
4:00
Speaker 1: That would put three hikes into the end of the year,
4:03
Speaker 1: which would be substantial for where the markets are heading.
4:08
Speaker 1: And this, of course, looks at one thing, and that
4:10
Speaker 1: is where the S & P 500 is going to
4:12
Speaker 1: be heading from this. Let me go over to the
4:15
Speaker 1: S & P.
4:16
Speaker 2: Real quick just to take a look.
4:17
Speaker 1: We're on the five-minute right now, a little bit sideways
4:20
Speaker 1: in the market mix, sitting at around 7,600. So you
4:25
Speaker 1: look at all of these scenarios playing out, and then
4:27
Speaker 1: you consider where the potential of this goes from here.
4:32
Speaker 1: I think the next question Big question will be, how
4:34
Speaker 1: does the market respond to this? And of course, you've
4:37
Speaker 1: got Tom Lee hitting on it right here. Markets on
4:39
Speaker 1: hold today. Now they're not on hold. FMC rate decision happens.
4:44
Speaker 1: If the Fed raises, markets expected to future cuts likely
4:48
Speaker 1: get removed. We're going to look at a 10-year likely
4:51
Speaker 1: to drop. I think that's going to be the case.
4:54
Speaker 1: And then we might see stocks rally. That'll be a
4:56
Speaker 1: question mark that I think a lot of people will
4:59
Speaker 1: be looking at. The question is where? and what sectors
5:02
Speaker 1: are going to rally off of this. If the Fed
5:04
Speaker 1: holds and we get a dovish surprise, even if a
5:07
Speaker 1: hawkish talk comes in, the markets will focus on the
5:11
Speaker 1: hold regime underway, and then stocks would rally. So he's
5:13
Speaker 1: simply saying most likely we're going to see market movement
5:18
Speaker 1: on this. I talked to a couple analysts this morning,
5:21
Speaker 1: and Rebecca Walzer, she was on with me earlier, and
5:24
Speaker 1: we talked about this very issue of if a hike
5:27
Speaker 1: is inbound, Is there an opportunity here for the S
5:30
Speaker 1: & P to continue to take a drive up? She
5:33
Speaker 1: seemed to think that, yes, it would be. And that
5:35
Speaker 1: may be the case right now. Remember, though, there's a
5:38
Speaker 1: lot of other things that are brewing within this. And
5:41
Speaker 1: that is price increases that we have seen in terms
5:44
Speaker 1: of inflation.
5:46
Speaker 2: And here's my question.
5:48
Speaker 1: When you think about inflation, and if we'll ever get
5:51
Speaker 1: to the 2% again, and you look at these prices
5:55
Speaker 1: since the start of the Iranian war, you can see
5:58
Speaker 1: almost everything is up in double digits. You've got everything
6:02
Speaker 1: including energy to a certain level, some of the commodities
6:07
Speaker 1: that play in on this, and of course, the biggest
6:10
Speaker 1: issue is being able to try to get back to
6:12
Speaker 1: the 2%. Now, remember, the way inflation works, this is accumulative.
6:17
Speaker 1: So right now, this year, it's 2%. If it's next year,
6:20
Speaker 1: almost 3%. Next year, almost 3%. Do we get into
6:24
Speaker 1: a scenario where hyperinflation could take off here? That is
6:27
Speaker 1: the question mark I think a lot of people are
6:29
Speaker 1: concerned about right now, and it's playing into the hands
6:33
Speaker 1: of Warsh if he continues with hikes, especially on a
6:37
Speaker 1: 3-set into 75 basis points for this year. I want
6:41
Speaker 1: to go to a clip because this is a former
6:44
Speaker 1: BlackRock guy. that has talked about this issue to the
6:50
Speaker 1: very core that we're facing right now.
6:51
Speaker 2: Let me cut to Rick Reeder. Take a look.
6:54
Speaker 1: You don't think that they should?
6:55
Speaker 3: Oh, I mean, I wouldn't. But that being said, I've
6:58
Speaker 3: learned in investing, it doesn't really matter what I think.
7:01
Speaker 3: It matters what they do, and it matters what the
7:03
Speaker 3: markets perceive that they're.
7:05
Speaker 4: Going to go.
7:05
Speaker 3: And so, no, I wouldn't because I think you're not
7:07
Speaker 3: going to really do much. I mean, talk about moving
7:09
Speaker 3: the funds rate 25 basis points. Are you really going
7:12
Speaker 3: to do anything for inflation? What's driving inflation today is
7:15
Speaker 3: interest rate insensitive. Obviously, you've got war, you've got energy price,
7:18
Speaker 3: you've got education, insurance costs, health care. It doesn't really
7:22
Speaker 3: do much.
7:22
Speaker 5: Do you think that a hike would be then more
7:25
Speaker 5: about credibility?
7:27
Speaker 3: So, I mean, I think the narrative in the marketplace,
7:29
Speaker 3: the Fed has to go for credibility. As long as
7:31
Speaker 3: you have, you lay out what the metrics are you
7:34
Speaker 3: utilizing to determine where rates are going to go from here.
7:36
Speaker 3: As long as you're thoughtful about these task forces, what
7:39
Speaker 3: are these complex issues today? Listen, I think people are
7:43
Speaker 3: pretty harsh.
7:44
Speaker 4: You think it's one and done?
7:45
Speaker 3: Part of why it is, in my mind, just hiking
7:48
Speaker 3: 25 bases doesn't do anything. If you're going to hike
7:51
Speaker 3: and you want to make a difference, you've got to
7:52
Speaker 3: go more. The problem is the pressure you'd put on
7:55
Speaker 3: most of the country to do that, in my mind,
7:57
Speaker 3: doesn't make any sense.
7:59
Speaker 1: All right, so some very big statements there by Reeder.
8:02
Speaker 1: And this is a former Black Rock guy. He understands
8:05
Speaker 1: where this is heading. And I think he is right
8:08
Speaker 1: about the 25 basis points is that this is kind
8:11
Speaker 1: of insignificant unless there is a grander plan.
8:14
Speaker 2: If the grander.
8:14
Speaker 1: Plan is to truly try to thwart off what could
8:18
Speaker 1: be coming at us, which is even more inflation, maybe
8:23
Speaker 1: Warsh is.
8:24
Speaker 2: Actually trying to get ahead of this.
8:25
Speaker 1: I don't know that that is the case right now
8:27
Speaker 1: based on what we're seeing other than the inflationary triggers that.
8:31
Speaker 2: We showed to you guys just a little bit ago.
8:33
Speaker 1: But I think the point that Reader's getting at is
8:35
Speaker 1: that 75 basis points may be the target zone through
8:39
Speaker 1: the end of this year. This could put a lot
8:41
Speaker 1: of pressure, I think, on the U.S. economy, but it
8:44
Speaker 1: also could put a lot of pressure globally because you're
8:46
Speaker 1: going to have central banks around the world looking at
8:50
Speaker 1: what happens here in the U.S.
8:52
Speaker 2: And starting to play this out.
8:54
Speaker 1: And many of these countries have been in very dire
8:57
Speaker 1: straits in terms of their economy for quite a while.
9:00
Speaker 2: So this shifts the tables dramatically. a little bit.
9:02
Speaker 1: I want to go to another, actually, before we go
9:04
Speaker 1: to Tom Lee, and we will get to the press
9:08
Speaker 1: conference here in just a second. We'll go back and
9:10
Speaker 1: check on that. But the Fed dot plot, this could
9:12
Speaker 1: signal the other 2026 hike that could be incoming. Right now,
9:17
Speaker 1: the Fed's updated dot plot expected show rates ending 2026
9:19
Speaker 1: near 4.1.
9:21
Speaker 2: So that's the point.
9:22
Speaker 1: When you look at this on the anticipated, which is
9:25
Speaker 1: what happened on the 25 basis points, the bigger question
9:29
Speaker 1: is the 2027 numbers. And projections may still signal an
9:33
Speaker 1: eventual rate cuts even after a near-term tightening. So this
9:37
Speaker 1: is going to be a very, very tight rope to
9:41
Speaker 1: walk for Kevin Warsh and how the Fed plays this
9:44
Speaker 1: out through the end of the year. And remember, this
9:47
Speaker 1: is going in to midterms. So think about that. The
9:51
Speaker 1: impact that this is going to have on Donald Trump
9:54
Speaker 1: and the midterms, I think, is pretty significant as the
9:59
Speaker 1: Fed goes in with a rate hike going in.
10:01
Speaker 2: I want to go to a clip real quick.
10:02
Speaker 1: This is Tom Lee talking about how this could actually
10:05
Speaker 1: spark a rally.
10:06
Speaker 2: Take a look.
10:07
Speaker 6: And part of it is expectations. You know, the market's
10:09
Speaker 6: been anticipating and sitting on the sidelines because of a hike.
10:13
Speaker 6: I think it does take out future hikes, so that's
10:15
Speaker 6: yields falling. There's a lot of pessimism already, and people
10:19
Speaker 6: have to keep in mind 25 basis points really doesn't
10:22
Speaker 6: hurt the stock market, but we have a ton of
10:25
Speaker 6: cash on the sidelines, and we've been down many days
10:28
Speaker 6: in a row, so I think it could be a
10:29
Speaker 6: very big rally that starts.
10:31
Speaker 5: But we haven't had the big pullback that you've told
10:33
Speaker 5: our viewers you still thought was coming and could be Fed-induced.
10:37
Speaker 2: How do you square.
10:38
Speaker 7: All of this?
10:39
Speaker 6: Well, the factors that make us think of big pullbacks
10:42
Speaker 6: coming are still in place. You know, market tests the Fed,
10:45
Speaker 6: margin debt, IPOs, leverage. But there's pessimism today. And I
10:52
Speaker 6: don't think markets peak on pessimism. So I think that
10:54
Speaker 6: we still have a substantial rally into the end of
10:58
Speaker 6: the month.
10:59
Speaker 2: All right.
10:59
Speaker 1: So Tom Lee pushing back on this again to an
11:03
Speaker 1: end of rally or end of month rally playing into this.
11:06
Speaker 1: Market taking another dive here on the five-minute chart As
11:10
Speaker 1: we look at around 7,600, if we dip into the 75,
11:13
Speaker 1: that's going to be similar to yesterday. So I think
11:17
Speaker 1: the point that he gets at is twofold. One, what
11:21
Speaker 1: are some of the catalysts that could come from the
11:23
Speaker 1: presser today? Because there are some things that Warsh will
11:27
Speaker 1: most likely say that will set the market up. And
11:31
Speaker 1: that's the key thing that you need to be listening
11:33
Speaker 1: for today as we will go live when he comes
11:36
Speaker 1: to the podium. And the reason this is so important
11:40
Speaker 1: is because this will play into a very critical part
11:44
Speaker 1: of this economy going up to the next FOMC meeting.
11:49
Speaker 1: The next two steps I think are the most critical.
11:51
Speaker 1: The third one I think would be actually a little
11:53
Speaker 1: bit of a long and an out, probably outside possibility
11:57
Speaker 1: of a third rate hike. But a secondary, now that
12:00
Speaker 1: they've got their teeth into a rate hike and they
12:03
Speaker 1: understand what this may do in terms of looking at inflation,
12:07
Speaker 1: starting to play into the market, this could push them
12:11
Speaker 1: onto more of a strategy that would go in this direction.
12:13
Speaker 1: So that's what I'm watching for today. So I'm going
12:16
Speaker 1: to be very close in terms of the way that
12:19
Speaker 1: he's presenting this hike. That is what you need to
12:22
Speaker 1: listen to closely. The press score is probably going to
12:25
Speaker 1: go nuts on questions because this does begin potentially a
12:29
Speaker 1: rate hike season. JP Morgan right now maps the Fed
12:33
Speaker 1: day out. Stocks could swing 2%. That would be a
12:36
Speaker 1: big deal. Here in a second, Kevin Warsh will be
12:39
Speaker 1: coming on. A standard rate hike with limited guidance could
12:42
Speaker 1: lift the S & P a quarter to 75, while
12:46
Speaker 1: a hike paired with a stronger inflation fighting signal. This
12:49
Speaker 1: is the key, a stronger inflation fighting signal that the
12:53
Speaker 1: Fed is trying to do. Again, I'm in the position
12:57
Speaker 1: that the Fed may not have a chance here. in
13:00
Speaker 1: terms of trying to beat inflation. Listen, they've been trying
13:03
Speaker 1: to beat inflation for five years. If you look back
13:06
Speaker 1: even in the pre-Warsh dominance and go into Chair Powell
13:10
Speaker 1: and the amount of strategies that were implemented by the Fed,
13:15
Speaker 1: it still has not been able to get us to
13:17
Speaker 1: the 2% target. And that may not come this decade,
13:20
Speaker 1: all the way into 2030. So a lot heading into it.
13:24
Speaker 1: Looks like here he comes right now. So we'll cut
13:26
Speaker 1: to Kevin Warsh live.
13:31
Speaker 4: Good day. In the meeting just concluded, the FOMC decided
13:36
Speaker 4: to raise the range for the federal funds rate by
13:40
Speaker 4: a quarter of a percentage point to policy of maintaining
13:50
Speaker 4: ample reserves in the banking system. As noted in the
13:55
Speaker 4: statement released just a short while ago, it is expanding
13:59
Speaker 4: at a While uncertainty remains elevated. Art to geopolitical developments. Productivity, growth,
14:12
Speaker 4: strength and capital investment is. Ob gains have kept pace
14:18
Speaker 4: with the workforce and the unemployment rate has changed. Lation
14:24
Speaker 4: remains elevated. This committee will deliver price stability. Now, when
14:42
Speaker 4: the American economy is to be strengthening, private sector, business
14:49
Speaker 4: capital investment. And is pointing in a good direction. Credit
14:57
Speaker 4: flows have been robust, particularly for businesses. symposium in Jackson Hole.
15:23
Speaker 4: And you begin to appreciate the resilience of the U.S.
15:27
Speaker 8: Economy.
15:28
Speaker 4: Given that resilience and the potential for even greater performance,
15:34
Speaker 4: an attitude of optimism is exactly what I heard inside
15:37
Speaker 4: the FOMC these last two days. One basic sign of
15:42
Speaker 4: strength is the state of America's labor markets. on a
15:58
Speaker 4: four-week moving average, are running at levels consistent with full employment.
16:05
Speaker 4: Congressional shape. Yet for more than five years, inflation has
16:11
Speaker 4: been running above target. So our predominant focus is on
16:16
Speaker 4: the side of our mandate. The plain fact is that
16:20
Speaker 4: inflation is too high and has been for too long.
16:27
Speaker 4: This summer's inflation readings do not tell me that underlying trends.
16:31
Speaker 4: Based on the most recent CPI and PPI data, the
16:37
Speaker 4: 12-month change in total PCE prices likely was around 3.6%
16:42
Speaker 4: in August. Core PCE and CPI prices running.
16:54
Speaker 8: Increase.
17:02
Speaker 4: That overall commodity prices also bear watching. And over the
17:06
Speaker 4: inter-meeting period, the prices of many of these key inputs
17:10
Speaker 4: have risen. Since my first FOMC meeting as chairman in June,
17:16
Speaker 4: my colleagues and I have been unequivocal in our commitment
17:19
Speaker 4: to price stability and to our 2% PCE inflation objective.
17:26
Speaker 4: At our July meeting, we all agreed that I expressed
17:31
Speaker 4: our joint readiness to act as circumstances might require. And
17:36
Speaker 4: a good majority of my last month in Wyoming, I
17:47
Speaker 4: expressed my commitment to a monetary policy discipline, not to
17:52
Speaker 4: a decision. I defined the standard for action. We must
17:56
Speaker 4: be confident that underlying inflation is moving to our objective,
18:02
Speaker 4: clearly and at sufficient.
18:17
Speaker 9: Speed.
18:18
Speaker 4: We aim to ensure that credit and financial conditions are
18:22
Speaker 4: consistent over time with our mandate. that relative price changes
18:27
Speaker 4: in some sectors of the economy do not broaden, that
18:32
Speaker 4: inflation compensation in market prices stays low, and that inflation
18:37
Speaker 4: expectations remain well anchored. This afternoon, you also received the
18:42
Speaker 4: summary of economic projections. It reflects the views projection of
18:50
Speaker 4: my own. But like in June, I would faithfully discharge
18:54
Speaker 4: the summary of their projections. So here it is. In
18:58
Speaker 4: the summary's median projections, real GDP rises at 2.3% this year, 2.4%
19:01
Speaker 4: next year. Total PCE inflation runs at 3.7% this year
19:04
Speaker 4: and falls to 2.3% next year. The unemployment rate holds
19:06
Speaker 4: steady at about 4.1%. The median participant judges that the
19:19
Speaker 4: appropriate federal funds rate to be 0.1%. While labor risks
19:32
Speaker 4: are roughly balanced. In my meetings these last few weeks,
19:37
Speaker 4: in Jackson Hole, in Asheville at the G20 meeting, which
19:41
Speaker 4: the U.S. did, and at a central bank conference in Basel,
19:45
Speaker 4: It was evident that most advanced economies are facing price pressures.
19:51
Speaker 4: Their central banks are making their own judgments consistent with
19:55
Speaker 4: their own remits. Our decision today reflects our best judgment
19:59
Speaker 4: in service to our remit. The Fed has a role
20:07
Speaker 4: in America right now. well-off have the most to gain
20:16
Speaker 4: from a durable expansion.
20:18
Speaker 10: And a vital.
20:21
Speaker 4: Instrument for sustainability?
20:26
Speaker 8: What is the.
20:29
Speaker 4: Most thriving American economy that sets the standard for the world?
20:35
Speaker 4: And with that, I'll take a few of your questions.
20:43
Speaker 11: Thank you for doing this. I'm Richard Escobedo with CBS.
20:46
Speaker 11: Let me navigate over my questions. You can't necessarily address
21:01
Speaker 11: the energy supply side of inflationary pressures.
21:04
Speaker 4: It's a good question, Richard. We cannot affect any individual price,
21:10
Speaker 4: whether it be oil prices, whether it be at.
21:12
Speaker 8: The grocery store.
21:14
Speaker 4: But what we can do and will do is ensure
21:17
Speaker 4: that any change in relative prices don't broaden out, don't
21:21
Speaker 4: have second and third order effects on the economy. That's
21:24
Speaker 4: what we're tasked to do, and that's what we will do.
21:34
Speaker 9: When the Fed starts raising rates, it generally... Is there
21:38
Speaker 9: anything different in today's assessment of the economic conditions that
21:43
Speaker 9: would suggest that the typical pattern does not apply? And
21:47
Speaker 9: I guess second to that, what impact do you expect
21:49
Speaker 9: higher rates to have at this juncture if the bulk
21:51
Speaker 9: of what is keeping inflation elevated is stemming from supply shocks?
21:54
Speaker 4: So we're trying to get to more people, so I
21:56
Speaker 4: now get to cherry-pick my preferred question from you, Colby.
22:00
Speaker 4: This one is for you, Colby. One that we have
22:10
Speaker 4: been preparing for and thinking about in my 110 or
22:13
Speaker 4: 20 days here. You heard from other people.
22:25
Speaker 11: I may.
22:28
Speaker 4: Discipline set of principles. I committed to look outside the
22:31
Speaker 4: window and see what I can observe. That's what.
22:37
Speaker 8: Edward.
22:42
Speaker 12: Chairman, the chance of a rate hike today, you don't
22:50
Speaker 12: the markets. Was this a market led rate hike? And
22:54
Speaker 12: then with that, the bond yields are going up. That's
22:55
Speaker 12: one of the indicators. Is debt part of that issue?
22:59
Speaker 4: So I've said this before. I'll repeat it. The Fed
23:04
Speaker 4: has an enormous amount. between financial markets and the Fed
23:14
Speaker 4: is a balance that I've long thought could be better struck.
23:17
Speaker 4: We made this decision today based on our assessment of
23:20
Speaker 4: the situation, based on our assessment of the trajectory for employment,
23:25
Speaker 4: based on our judgment on the economy. Sometimes the market
23:32
Speaker 4: tries to prejudge our outcomes. I'll observe market prices and
23:37
Speaker 4: see what they have to say, but today was our decision.
23:53
Speaker 5: Thanks so much.
23:54
Speaker 13: Elizabeth Schulze with ABC News.
23:56
Speaker 4: Big picture.
23:56
Speaker 13: I wonder if you could tell us just what will
23:58
Speaker 13: this move today actually do for American consumers? And I
24:01
Speaker 13: have to ask, what is your message here to President Trump,
24:04
Speaker 13: who has repeatedly called to cut interest rates, not raise them?
24:08
Speaker 4: Before you go on a discussion with the president. The
24:20
Speaker 4: least well-off are the ones who have the most to
24:23
Speaker 4: gain from stable prices. The decision we made today was
24:27
Speaker 4: the right decision to deliver on the remit that Congress
24:30
Speaker 4: gave us to ensure stable prices. Moreover, I would say,
24:34
Speaker 4: because of the underlying strength of the economy, because we are,
24:39
Speaker 4: as I mentioned, largely consistent with full employment, some stable
24:48
Speaker 4: prices to Chris Rugeber.
24:56
Speaker 5: Hi.
24:56
Speaker 14: How are you?
24:57
Speaker 10: Thank you.
24:58
Speaker 14: Can you tell us a little more about what changed
25:01
Speaker 14: from the July meeting when, as you noted, the Fed
25:04
Speaker 14: did stand pat until today? And as part of that,
25:07
Speaker 14: could you give us a sense of whether or not
25:10
Speaker 14: things like the retail sales report today suggested.
25:16
Speaker 7: Higher prices as well?
25:19
Speaker 2: Yeah.
25:21
Speaker 4: Dependent guy, so I won't react one way or another
25:25
Speaker 4: to data that shows up on our doorstep. But on
25:29
Speaker 4: your first question, I think the more important one, what
25:32
Speaker 4: transpired in the seven weeks since we last met? First,
25:35
Speaker 4: I would say a good majority of my colleagues seven
25:37
Speaker 4: weeks ago thought seven weeks is a good investment. It's
25:41
Speaker 4: a way to buy time so we can make a
25:43
Speaker 4: wise decision. I'll highlight three things that have happened in
25:46
Speaker 4: the last.
25:48
Speaker 14: Meeting.
25:52
Speaker 4: The economy has strengthened. You might have heard that in
26:00
Speaker 4: Jackson Hole a few years ago. It's a judgment that
26:10
Speaker 4: trends matter. I said in Jackson Hole, we need to
26:13
Speaker 4: look outside the window and interrogate reality. Passing the test.
26:23
Speaker 15: I've seen.
26:25
Speaker 4: And since that would make me. Third thing that's changed.
26:34
Speaker 4: Hot spots around the world and our judgment about what
26:38
Speaker 4: is the most likely or least likely of the geopolitical.
26:45
Speaker 4: To a firm unanimous decision today.
26:53
Speaker 14: Claire Jones, Financial Times.
26:56
Speaker 16: You said today's decision removes a dose of accommodation.
27:00
Speaker 3: Your view and.
27:03
Speaker 16: Views around the table, too, are a level that.
27:10
Speaker 4: Or not. Thank you. I've described previously, I found it
27:16
Speaker 4: difficult to describe financial conditions as restrictive.
27:19
Speaker 11: I think I said.
27:22
Speaker 4: What I heard around the table in the last couple
27:25
Speaker 4: of days is my colleagues were hard to drive it
27:28
Speaker 4: that way, too. We removed a dose of accommodation so
27:34
Speaker 4: that financial. That was our.
27:50
Speaker 7: Thank you, Mr. Chairman, Steve Leisman, CNBC. I want to
27:52
Speaker 7: follow up on that question. Previously, most Fed officials have
27:57
Speaker 7: described the rate as modestly restrictive. And if you removed accommodation,
28:02
Speaker 7: could you give us your sense of where the Fed
28:06
Speaker 7: funds rate is relative to neutral? And some detail, if
28:09
Speaker 7: you wouldn't mind, on your sense of, is there a
28:12
Speaker 7: short-term neutral rate you're aiming for and a longer-term neutral rate?
28:15
Speaker 7: Do you think in terms of those?
28:16
Speaker 4: CHAIRMAN BERNANKE.
28:17
Speaker 8: In a word, no.
28:19
Speaker 4: In a few words, I'd say this. I've always been
28:23
Speaker 4: interested in a neutral rate as an academic matter. Back
28:27
Speaker 4: when I learned economics, we used to think of it
28:29
Speaker 4: as a Wicksellian rate. It's a real equilibrium rate. It's
28:35
Speaker 4: useful academically. It's a discussion to help us think about policy.
28:39
Speaker 4: Do I think it has any operational effect on decisions
28:43
Speaker 4: that we make today?
28:44
Speaker 7: No, I don't.
28:49
Speaker 6: Victoria.
28:52
Speaker 17: Hi, Victoria Guido with Politico. I wanted to ask, you've
28:55
Speaker 17: talked about how you don't like data dependence, including today.
28:58
Speaker 17: But heading into this meeting, there was a ton of
29:01
Speaker 17: focus on the August CPI. And I'm wondering if you
29:05
Speaker 17: think that that was appropriate on the part of markets,
29:07
Speaker 17: or if you've learned anything about how you might approach
29:10
Speaker 17: communications going forward.
29:13
Speaker 4: So market participants and reporters, I think generally over the
29:18
Speaker 4: course of the last decade or so, have grown accustomed
29:23
Speaker 4: to waiting somewhat breathlessly on a data point. That isn't
29:28
Speaker 4: my view. I was not waiting breathlessly on what any
29:32
Speaker 4: particular data was, whether it was retail sales this morning
29:35
Speaker 4: or a CPI print last week. I'll just reiterate. trends matter.
29:41
Speaker 4: Data points are noisy. Data point dependence is a dangerous preoccupation.
29:48
Speaker 4: It's not something that concerns me. Markets over time will
29:52
Speaker 4: come to understand how this Fed makes its decisions, what's
29:56
Speaker 4: relevant and not, and I wouldn't want to editorialize that
29:59
Speaker 4: for them beyond it.
30:01
Speaker 17: Zach Kalashak.
30:03
Speaker 18: Thanks for doing this, Mr.
30:04
Speaker 6: Chairman.
30:05
Speaker 18: Zach Kalashak, The Washington Examiner. I'm just curious. A couple
30:07
Speaker 18: weeks ago, the president sent out a message essentially threatening
30:11
Speaker 18: to cut off trade to certain countries unless rates were lowered. Obviously,
30:14
Speaker 18: an unanimous decision to do the opposite. What would you
30:16
Speaker 18: say to investors who sort of believe this is another
30:19
Speaker 18: test of the Fed's independence? And then kind of when
30:22
Speaker 18: was the last time you spoke with the president? Do
30:23
Speaker 18: you anticipate a post-decision meeting or?
30:27
Speaker 4: You gave me a long menu from which to choose.
30:30
Speaker 4: They're all very tempting. I don't have anything for you
30:33
Speaker 4: on discussions with the president, and I'm not a Wall
30:38
Speaker 4: Street newsletter. Part of the independence of the Federal Reserve
30:43
Speaker 4: is we stay in our lane. Independence is a two-way street.
30:47
Speaker 4: We'll let people that do trade policy and fiscal policy
30:50
Speaker 4: stay in their lane, too. That's how we can stand
30:52
Speaker 4: up here and call them the way we see them.
30:54
Speaker 13: Brian, John.
31:00
Speaker 5: Hi there, Brian Chung with NBC News. Just wondering if
31:02
Speaker 5: you could explain who is the least well-off and what
31:05
Speaker 5: does a rate hike do when those people might be
31:06
Speaker 5: pinched by higher mortgage rates, higher gas, higher grocery prices,
31:10
Speaker 5: and now broad higher rates?
31:12
Speaker 10: Yeah.
31:13
Speaker 4: It's a fair question. In the macroeconomics, we tend to
31:17
Speaker 4: look at aggregates around here, aggregate GDP, overall labor market trends,
31:23
Speaker 4: the state of inflation. A lot of people in Washington
31:26
Speaker 4: spend a lot of time on distributional consequences, and that's
31:29
Speaker 4: their job and their business. What I was referring to
31:32
Speaker 4: in the least well-off tend to be people that don't
31:34
Speaker 4: own financial assets. Call that a bit less than 50%
31:37
Speaker 4: of the country. They don't have equity in their home.
31:41
Speaker 4: They don't have equity in a 401k plan. So they're
31:44
Speaker 4: living off their paycheck that comes every couple of weeks.
31:49
Speaker 4: The thing that we can do consistent with our mandate
31:51
Speaker 4: is two things. Ask ourselves, is the country running more
31:55
Speaker 4: or less at full employment? And we've done that. That
31:59
Speaker 4: doesn't mean that individuals aren't searching for a job, but
32:01
Speaker 4: in aggregate, we're running more or less at full employment.
32:04
Speaker 4: If so, We can then look at the other side
32:06
Speaker 4: of our mandate and let that be our focus. In
32:09
Speaker 4: stable prices, an environment where inflation is running consistent with
32:14
Speaker 4: our 2% objective offers good news, because that way when
32:18
Speaker 4: they get their wages, they can put their head above
32:21
Speaker 4: water and deliver real take-home pay increases. We don't have
32:25
Speaker 4: total responsibility for it, but we do have responsibility for
32:28
Speaker 4: stable prices. As I've said before, inflation is a choice,
32:33
Speaker 4: and today we took a step in delivering it.
32:36
Speaker 6: Miriam.
32:40
Speaker 16: Yes, this is Miriam Lemaitre from Agence France-Presse AFP. Are
32:44
Speaker 16: you looking at the other central banks, and what do
32:47
Speaker 16: you think about the European Central Bank's move? They hiked
32:50
Speaker 16: twice this year, but not in a row. Thank you.
32:55
Speaker 4: Well, I don't ask them to prejudge decisions that we're
32:59
Speaker 4: going to make, so I won't prejudge decisions that they make.
33:03
Speaker 4: But I will say this. I've spent some time with
33:06
Speaker 4: foreign central bank counterparts, not just in the last 20 years,
33:10
Speaker 4: but over the course of the last several weeks, as
33:11
Speaker 4: I mentioned, in Jackson Hole, at the G20 meeting we
33:16
Speaker 4: hosted in North Carolina, and at a central bank meeting
33:19
Speaker 4: in Basel. What I heard around the table from most
33:23
Speaker 4: of the advanced economies is they're suffering from price pressures, too.
33:28
Speaker 4: They're making their own choices consistent with their remit. It
33:32
Speaker 4: tells me a couple things. One is, when the Federal
33:35
Speaker 4: Reserve makes a policy choice, it matters not just to
33:39
Speaker 4: the U.S. economy, but it spills over to the rest
33:41
Speaker 4: of the world. To a lesser extent, that's true for them, too.
33:44
Speaker 4: When foreign central banks make decisions where they're confronted with
33:48
Speaker 4: higher prices and they choose, consistent with their remit, to
33:53
Speaker 4: raise rates— then they're helping to quash inflation in their countries,
33:57
Speaker 4: and there's spillovers and spillbacks in both directions. Beyond that,
34:00
Speaker 4: I won't opine on what other central banks may choose
34:03
Speaker 4: to do this week or beyond.
34:04
Speaker 13: NICK TIMIRAOS.
34:09
Speaker 10: Thank you, Nick Timiraos of The Wall Street Journal. Chairman Warsh,
34:12
Speaker 10: last fall you expressed concern that the Fed was about
34:15
Speaker 10: to make its, quote, sixth or seventh big mistake by
34:18
Speaker 10: deciding the economy was too strong to justify lower rates. Now,
34:22
Speaker 10: today you raised rates. Can you give some sense as
34:25
Speaker 10: to what changed your own assessment of the U.S. economy
34:29
Speaker 10: between then and now?
34:31
Speaker 4: So I don't remember the full context, but I can
34:34
Speaker 4: tell you, Nick, about the state of growth now. My
34:38
Speaker 4: suspicion 110 or 20 days ago when I showed up
34:42
Speaker 4: was that the U.S. economy was strengthening. Even over the
34:46
Speaker 4: last several weeks, I think we now have data broadly
34:50
Speaker 4: defined that says the economy has indeed strengthened. Underlying growth
34:56
Speaker 4: is higher. Inflation is the problem. Stable prices have been
35:02
Speaker 4: the problem for now more than five and a half years.
35:05
Speaker 4: So what the committee decided to do today was take
35:07
Speaker 4: an action to ensure a timelier return to our price
35:11
Speaker 4: stability objectives. Price stability is foundational to economic growth, and
35:16
Speaker 4: I think we took an important step today to deliver it.
35:19
Speaker 4: And we did it in part by removing the dose
35:21
Speaker 4: of accommodation that I mentioned before.
35:26
Speaker 1: Neil Irwin.
35:29
Speaker 19: Thank you, Mr.
35:30
Speaker 12: Chairman.
35:30
Speaker 2: Neil Irwin with Axios.
35:32
Speaker 4: Longer-term bond yields are up quite a bit over the
35:34
Speaker 4: last few months, especially the last few weeks. What do
35:36
Speaker 4: you believe the bond market is telling you, especially about
35:38
Speaker 4: the growth outlook, the neutral.
35:39
Speaker 11: Rate, and what are the implications for monetary policy?
35:42
Speaker 16: Yeah.
35:44
Speaker 4: Let me speak to the history. What bond market prices
35:47
Speaker 4: do prospectively, I want to let them tell me any
35:53
Speaker 4: story they wish to. I want to try to interrogate that.
35:56
Speaker 4: But why did yields rise, let's say, since the last
35:59
Speaker 4: FOMC meeting till this? I'll give you three reasons, but
36:04
Speaker 4: I would say these things tend to be overdetermined. This
36:06
Speaker 4: is a complicated set of things. that are affecting the
36:10
Speaker 4: most important asset anywhere in the world, the 10-year treasury.
36:13
Speaker 4: It's the risk-free asset upon which every price of virtually
36:17
Speaker 4: every asset in the world is related to. So I'll
36:21
Speaker 4: say three things. First is economic strength. I think part
36:23
Speaker 4: of the reason why we've seen over the course of
36:26
Speaker 4: 2026 long-term yields go up is the economy is strengthened.
36:32
Speaker 4: Second reason, competition for capital. The surge in capital expenditures,
36:38
Speaker 4: which I referenced in my remarks, is real. And the
36:42
Speaker 4: so-called hyperscalers are out in the market raising funding. And
36:46
Speaker 4: so the competition for capital is real. And I think
36:48
Speaker 4: it partly explains the increase in yields. The third is geopolitics.
36:54
Speaker 4: The situation hotspots around the world are driving long-term yields.
37:00
Speaker 4: It's not simply spot prices of energy or spot prices
37:04
Speaker 4: for corn or soybeans or wheat, but it's the difference
37:09
Speaker 4: between those spot prices and so-called crack spreads, what that
37:12
Speaker 4: means for products that find their way into stores across
37:17
Speaker 4: the country. I think those are the three leading explanations,
37:20
Speaker 4: but certainly not an exclusive list.
37:25
Speaker 8: MICHAEL MCKEE.
37:26
Speaker 15: Michael McKee from Bloomberg Radio and Television. You said in
37:29
Speaker 15: Jackson Hole that you want to see inflation come down
37:32
Speaker 15: clearly and at sufficient speed, which is a standard without
37:37
Speaker 15: necessarily a measurable threshold. And the reason I ask is
37:40
Speaker 15: because today you say today's policy action will support a
37:44
Speaker 15: timelier return to the Committee's 2 percent target. And yet
37:48
Speaker 15: in the summary of economic projections, the median pushes the
37:51
Speaker 15: 2% target achievement out to 2029, another two years. And
37:56
Speaker 15: I'm wondering how you can square those two things.
37:59
Speaker 4: One easy way to square that, Mike, is those aren't
38:02
Speaker 4: my forecasts. Those are the forecasts of my 18 colleagues,
38:07
Speaker 4: and I tried to represent them dutifully to you. My
38:12
Speaker 4: business is to not give forward guidance, but my commitment
38:15
Speaker 4: in June... was to reaffirm to the American people, to
38:20
Speaker 4: anyone listening, that we will deliver price stability. My commitment
38:24
Speaker 4: in July was to say we want to buy a
38:27
Speaker 4: little bit of time. We want to evaluate what's happening
38:30
Speaker 4: across a range of dimensions. And what I said in
38:33
Speaker 4: Jackson Hole in August is we're committed to a discipline,
38:36
Speaker 4: not to a decision. Today's action starts to show we're
38:41
Speaker 4: serious about this, and we will deliver on the price
38:45
Speaker 4: stability objective. And as the statement said, we'll do it
38:49
Speaker 4: on a timelier basis. That's our decision. And when we
38:56
Speaker 4: continue our discussions over the course of the next several
38:58
Speaker 4: weeks and months, we'll have more to say about it.
39:01
Speaker 4: But I'm ill-prepared to prejudge those future actions.
39:05
Speaker 6: Matt from CNN.
39:09
Speaker 10: Thanks, Chairman Warsh.
39:10
Speaker 2: Matt Egan with CNN.
39:12
Speaker 19: You've spoken in the past about the positives of That
39:15
Speaker 19: could come from widespread adoption of artificial intelligence. How concerned
39:20
Speaker 19: are you, if at all, about these increasingly alarming warnings
39:24
Speaker 19: we've heard from AI leaders about losing control of this
39:27
Speaker 19: powerful technology and doing real damage, damage that would presumably
39:32
Speaker 19: impact the real economy?
39:34
Speaker 4: So I've spent a lot of time thinking about AI,
39:37
Speaker 4: and before I found my way to this post, I
39:39
Speaker 4: spent a lot of time talking about it publicly. Independence
39:44
Speaker 4: of the Federal Reserve is about staying in our lane
39:46
Speaker 4: and We care very much about what's happening in artificial intelligence.
39:51
Speaker 4: We care much about the implications on the demand side
39:54
Speaker 4: of the economy and ultimately on the supply side of
39:57
Speaker 4: the economy. I care so much, I think it's so
39:59
Speaker 4: important that we establish a task force that should report
40:03
Speaker 4: by the end of the year to help us think
40:05
Speaker 4: about the implications for our future policy conjuncture. But the
40:09
Speaker 4: policy decisions that are made about the risks and rewards,
40:14
Speaker 4: the challenges and opportunities Those are decisions made by other
40:17
Speaker 4: parts of the government. I'm going to leave it to
40:19
Speaker 4: them to make those political decisions, those policy decisions. The
40:23
Speaker 4: implications of those decisions obviously have some bearing on our
40:26
Speaker 4: day job, and that's where we'll be focused.
40:29
Speaker 1: For the last question, we'll go to Jennifer Schonberger.
40:37
Speaker 8: Thank you, Mr. Chairman.
40:38
Speaker 17: Jennifer Schonberger with Yahoo!
40:39
Speaker 18: Financed.
40:40
Speaker 8: Inflation has run up mostly from higher energy prices and tariffs,
40:44
Speaker 8: which some say are supply shocks that rate hikes cannot
40:47
Speaker 8: fix and should feign on their own, so long as
40:50
Speaker 8: inflation expectations stay anchored.
40:52
Speaker 2: And now that you have hiked rates.
40:54
Speaker 8: Do you need to push growth below potential, unintentionally pushing
40:59
Speaker 8: weakness on the job market to bring inflation down? And
41:02
Speaker 8: how do those dynamics play out, given the forcefulness with
41:05
Speaker 8: which AI is driving the economy right now?
41:09
Speaker 4: So there's a lot there, Jennifer. Let me see if
41:11
Speaker 4: I can't do just a little bit of it. First,
41:16
Speaker 4: we believe that the unemployment rate is basically running consistent
41:20
Speaker 4: with full employment. I don't believe that we need to
41:24
Speaker 4: do harm to the labor markets to achieve our objective.
41:28
Speaker 4: I don't believe that the two parts of our mandate,
41:31
Speaker 4: price stability and full employment, are working at cross purposes
41:35
Speaker 4: over the medium term. So Economic growth, that is ensuring continuous, sustainable,
41:44
Speaker 4: durable economic growth, that's the business we're in. And the
41:48
Speaker 4: job we did today, the job we'll continue to do,
41:51
Speaker 4: is to ensure price stability, which can mean that sustainable,
41:54
Speaker 4: durable economic growth can go on for longer, the economy
41:58
Speaker 4: can be stronger, and as I mentioned before, the least
42:01
Speaker 4: well-off can get the benefits of it.
42:15
Speaker 2: All right, guys, so a lot happening there.
42:17
Speaker 1: Mostly what he was getting into was really, I think,
42:21
Speaker 1: trying to set up the next two meetings for the FOMC.
42:24
Speaker 1: And that, of course, I think will be in more
42:26
Speaker 1: of a dovish. If you look back at the market
42:28
Speaker 1: right now, I'm just going to show you the ETH
42:30
Speaker 1: chart here. This is the five-minute chart. Market seems a
42:33
Speaker 1: little bit untouched on this. Bitcoin still trading at around 75.
42:37
Speaker 1: So my thinking is that the market is seeing this
42:40
Speaker 1: as a bit of a dovish position and looking at growth.
42:44
Speaker 1: what will be the next couple of FOMC meetings. When
42:47
Speaker 1: you look at the Fed rate right now, I'll go
42:49
Speaker 1: to the October 28th meeting, which is the one that's coming.
42:53
Speaker 1: It's starting to dip right now on the no change,
42:56
Speaker 1: and the change is starting to lift up slightly. However,
42:59
Speaker 1: these kind of go back and forth during the period
43:02
Speaker 1: of time. If you go all the way to the December,
43:04
Speaker 1: that looks like a potential rate increase right now, spiking.
43:08
Speaker 1: So The point is he's trying to get to a
43:11
Speaker 1: path forward. And he even pointed to 2027 as a possibility. Obviously,
43:17
Speaker 1: the biggest issues right now are inflationary measures that are
43:20
Speaker 1: hitting the market, most of which are coming from energy.
43:23
Speaker 1: And that could dictate to what the Fed is going
43:25
Speaker 1: to be doing. So we've got another video that we're
43:28
Speaker 1: going to be dropping today.
43:28
Speaker 2: So watch it.
43:30
Speaker 1: It's actually a video with Coinbase talking about clarity. So
43:34
Speaker 1: check it out. And we'll be bringing you guys a
43:37
Speaker 1: little bit more on this tomorrow. If you like this video,
43:47
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43:50
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43:53
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