July 31, 2025 • 7 mins
Ron talks to Mendte In The Morning about how the fed is divided on holding key interest rates steady. The Rates are unchanged and will that spark more drama with President Trump and Jerome Powell.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Well, despite a jump in the GDP, despite low unemployment,
despite inflation in the two's Jerome Powell and the Federal
Reserve decided not to do anything about interest rates to
keep them exactly where they are. Doesn't make sense to me,
But I'm not an expert like Ron and Sana, so
(00:21):
let's talk to him. Ron and Sana, CNBC contributor and
host of wor's Market Scorecard Report. Ron explained this to me.
First of all, good morning to you, thanks for being
with us this morning, and thanks for having me and
explain this to me.
Speaker 2 (00:36):
To us, Well, I think there's a couple of things
going on. Number One, inflation hasn't come down quite as
much as the feder Reserve would like, or more specifically
Japowell or there are a couple of dissenting votes yesterday
in the decision lead rates unchanged. This morning, we just
got the Fed's preferred inflation gauge, which is a little
bit above expectations, running at about a two point eight
(00:56):
percent annual rate. And we don't know yet the full
pact of the tariffs on consumer prices, so he's willing
to wait to see whether or not tariffs are going
to cause inflation to re accelerate and push prices up
for consumers, particularly before lowering interest rates, because he said,
with an unemployment rate, as you noted, at four point
(01:17):
one percent, there's no real urgency to lower interest rates.
The stock market's sitting at all time highs. It's not
typically the environment in which you make any dramatic moves
to lower rates. But we'll see, I mean, the effects
of the tariffs and I hate to use this word,
could prove transitory and give this head an opportunity to
lower rates later in the year. But he didn't even
(01:37):
commit to September yesterday.
Speaker 1 (01:39):
Right, except there was all of this talk that they
were going to keep interest rates the same, so some
people must have known, and now there's a lot of
talk that he's going to lower interest rates in September.
Even the presidents say being that, where is that, where
is that coming from?
Speaker 2 (01:55):
Well, you know, it's a hope, not a reality. I mean,
in the news conference of Jpower had yesterday, he didn't
signal a rate cut in September. He said, we still
have two months more of inflation data, and we have
two months more of jobs data to determine whether or
not it would be appropriate to lower rates then, and
the President, as you indicated, it has been hounding him
to lower rates in some instances by as much as
(02:17):
three full percentage points. That you would, first of all,
if Fed's never done that. Secondly, if it were to
do it, it would mean we were having a financial crisis
of some magnitude that was like the Great Financial Crisis
of two thousand and eight or the pandemic. So that's
definitely off the table. A quarter point cut is more
what we'd be talking about, and I would agree with
the Fed. They need to see more data. There's been
(02:37):
some underlying deterioration in the labor market that the unemployment
rate masks a bit, and we'll get some jobs numbers
tomorrow to see whether or not that's going to show
up soon. But you know, there's no urgency to lower rates.
I mean, it's the housing crisis, for instance, or unaffordability
of houses has less to do with interest rates than
(02:57):
a complete lack of supply relative to demand. So it's
not as if the FED lowered rates by a quarter
point you'd suddenly see a surge and people buying homes.
They've reached the level in terms of price that's become
somewhat unaffordable, particularly for new home buyers.
Speaker 1 (03:12):
Well, that's very fascinating. So if he did lower it to
a quarter point, let's say he does in September, since
he did in this time. When they do lower it,
Donald Trump says, it saves the country a lot of money.
Does it save us individually some money? Do our credit
card rates come down? Mortgage rates come down?
Speaker 2 (03:30):
No, your credit credit card rate don't go down at all,
because they're not they're not egged to anything the Federal
Reserve does. I mean, if you look at the average
credit card rate, it's around twenty percent, which is you know,
the ten year note yield is at four point three
something percent, So there's there's sixteen percentage points of difference
between you're paying on a credit card and what we
what the government pays to borrow for ten years worth
(03:51):
of you know, money. So the credit cards aren't link.
Mortgages are linked. But we don't know is whether or
not long term rates, which mortgages are pegged, will go
up or down. When the Fed started cutting last year,
instead of coming down, long term rates actually went up.
And so that's another concern that the Fed could cut
rates at a time that's somewhat inopportune, and long rates
(04:12):
would go up and rather than go down, and so
you wouldn't necessarily get the benefit that everybody was hoping for.
Speaker 1 (04:18):
Yeah, you started to say something about Donald Trump until
I said credit cards, and then you jumped onto that instead.
What do you remember what you were going to say?
Speaker 2 (04:30):
Well, he was talking about, you know, lower lowering rates
by you know, three full percentage points, and that that's
just again that only happens and one one that's never happened,
but to it only when the Fed gets really aggressive
and lowering interest rates, it's usually because of a crisis.
And so the President again may want lower rates, but
it could you know, this pressure that he's putting on
the FED, you know, may backfire on him because the
(04:50):
more he presses the Fed to do it, the more
the FED doesn't want to look like a political arm
of the government and lower rates for political rather than
economical reac And so the President did fire off another
item on truth Social this morning criticizing Powell, which again
I think is counterproductive. I mean, the FED has proven
its metal you know, since the late nineteen seventies early
(05:12):
nineteen eighties as a pretty solid steward of economic stability,
and I think playing with that becomes a dangerous game.
And the more you do it, the less credible the
FED becomes, and the more risk there is to the
value of the dollar or the long term level of
interest rates, because if people get nervous that the FED
is a political wrap body rather than economic body, they'll
(05:33):
demand a higher interest rate to lend money to the
US government. So he should be somewhat more careful and
deliberate in his comments about the Federal Reserve than he
has been over the last several months.
Speaker 1 (05:44):
Let's look at the other side of the aisle for
a moment, because more and more Democrats are now saying
that these numbers showing a great economy are made up.
He's using bogus numbers to promote an economy.
Speaker 2 (05:54):
Is that even possible, Well, I mean it depends, it's not.
It hadn't been possible since the Nixon you know, tried
to affect the job's numbers, and they separated the Bureau
of Labor Statistics from even being close to the White
House influence. So we've had reasonably reliable data, you know,
for quite some time. It's true that the pace of
economic growth has slowed relative to last year and the
(06:17):
year before. We're adding about one hundred and twenty thousand jobs,
and we'll get more details on that tomorrow on a
monthly basis. That compares to one hundred and eighty thousand
plus last year and over two hundred and forty thousand
jobs the year before. And the pace of economic growth
when you measured if you combine the first and second
quarter GDP reports in the letter of which we got yesterday,
(06:37):
we're growing at about a one point two percent annual rate,
which is less than half the growth we saw in
the prior to years. So the economy is in some
ways slowing down, but inflation is also picking up at
the same time. So we have this kind of early stage,
very many stagflationary environment that I think that's one of
the reasons why the Fed is being extremely careful and
deliberate and not doing anything on interest rates. But the
(07:00):
pace of growth and the pace of job growth has
slowed considerably for me from last year.
Speaker 1 (07:04):
Sure Ron and soon SCNBC contributor and host of War's
Market Scoreboard Report. Thanks a lot, Ron, Thank you, Thank
er
Well, despite a jump in the GDP, despite low unemployment,
despite inflation in the two's Jerome Powell and the Federal
Reserve decided not to do anything about interest rates to
keep them exactly where they are. Doesn't make sense to me,
But I'm not an expert like Ron and Sana, so
(00:21):
let's talk to him. Ron and Sana, CNBC contributor and
host of wor's Market Scorecard Report. Ron explained this to me.
First of all, good morning to you, thanks for being
with us this morning, and thanks for having me and
explain this to me.
Speaker 2 (00:36):
To us, Well, I think there's a couple of things
going on. Number One, inflation hasn't come down quite as
much as the feder Reserve would like, or more specifically
Japowell or there are a couple of dissenting votes yesterday
in the decision lead rates unchanged. This morning, we just
got the Fed's preferred inflation gauge, which is a little
bit above expectations, running at about a two point eight
(00:56):
percent annual rate. And we don't know yet the full
pact of the tariffs on consumer prices, so he's willing
to wait to see whether or not tariffs are going
to cause inflation to re accelerate and push prices up
for consumers, particularly before lowering interest rates, because he said,
with an unemployment rate, as you noted, at four point
(01:17):
one percent, there's no real urgency to lower interest rates.
The stock market's sitting at all time highs. It's not
typically the environment in which you make any dramatic moves
to lower rates. But we'll see, I mean, the effects
of the tariffs and I hate to use this word,
could prove transitory and give this head an opportunity to
lower rates later in the year. But he didn't even
(01:37):
commit to September yesterday.
Speaker 1 (01:39):
Right, except there was all of this talk that they
were going to keep interest rates the same, so some
people must have known, and now there's a lot of
talk that he's going to lower interest rates in September.
Even the presidents say being that, where is that, where
is that coming from?
Speaker 2 (01:55):
Well, you know, it's a hope, not a reality. I mean,
in the news conference of Jpower had yesterday, he didn't
signal a rate cut in September. He said, we still
have two months more of inflation data, and we have
two months more of jobs data to determine whether or
not it would be appropriate to lower rates then, and
the President, as you indicated, it has been hounding him
to lower rates in some instances by as much as
(02:17):
three full percentage points. That you would, first of all,
if Fed's never done that. Secondly, if it were to
do it, it would mean we were having a financial crisis
of some magnitude that was like the Great Financial Crisis
of two thousand and eight or the pandemic. So that's
definitely off the table. A quarter point cut is more
what we'd be talking about, and I would agree with
the Fed. They need to see more data. There's been
(02:37):
some underlying deterioration in the labor market that the unemployment
rate masks a bit, and we'll get some jobs numbers
tomorrow to see whether or not that's going to show
up soon. But you know, there's no urgency to lower rates.
I mean, it's the housing crisis, for instance, or unaffordability
of houses has less to do with interest rates than
(02:57):
a complete lack of supply relative to demand. So it's
not as if the FED lowered rates by a quarter
point you'd suddenly see a surge and people buying homes.
They've reached the level in terms of price that's become
somewhat unaffordable, particularly for new home buyers.
Speaker 1 (03:12):
Well, that's very fascinating. So if he did lower it to
a quarter point, let's say he does in September, since
he did in this time. When they do lower it,
Donald Trump says, it saves the country a lot of money.
Does it save us individually some money? Do our credit
card rates come down? Mortgage rates come down?
Speaker 2 (03:30):
No, your credit credit card rate don't go down at all,
because they're not they're not egged to anything the Federal
Reserve does. I mean, if you look at the average
credit card rate, it's around twenty percent, which is you know,
the ten year note yield is at four point three
something percent, So there's there's sixteen percentage points of difference
between you're paying on a credit card and what we
what the government pays to borrow for ten years worth
(03:51):
of you know, money. So the credit cards aren't link.
Mortgages are linked. But we don't know is whether or
not long term rates, which mortgages are pegged, will go
up or down. When the Fed started cutting last year,
instead of coming down, long term rates actually went up.
And so that's another concern that the Fed could cut
rates at a time that's somewhat inopportune, and long rates
(04:12):
would go up and rather than go down, and so
you wouldn't necessarily get the benefit that everybody was hoping for.
Speaker 1 (04:18):
Yeah, you started to say something about Donald Trump until
I said credit cards, and then you jumped onto that instead.
What do you remember what you were going to say?
Speaker 2 (04:30):
Well, he was talking about, you know, lower lowering rates
by you know, three full percentage points, and that that's
just again that only happens and one one that's never happened,
but to it only when the Fed gets really aggressive
and lowering interest rates, it's usually because of a crisis.
And so the President again may want lower rates, but
it could you know, this pressure that he's putting on
the FED, you know, may backfire on him because the
(04:50):
more he presses the Fed to do it, the more
the FED doesn't want to look like a political arm
of the government and lower rates for political rather than
economical reac And so the President did fire off another
item on truth Social this morning criticizing Powell, which again
I think is counterproductive. I mean, the FED has proven
its metal you know, since the late nineteen seventies early
(05:12):
nineteen eighties as a pretty solid steward of economic stability,
and I think playing with that becomes a dangerous game.
And the more you do it, the less credible the
FED becomes, and the more risk there is to the
value of the dollar or the long term level of
interest rates, because if people get nervous that the FED
is a political wrap body rather than economic body, they'll
(05:33):
demand a higher interest rate to lend money to the
US government. So he should be somewhat more careful and
deliberate in his comments about the Federal Reserve than he
has been over the last several months.
Speaker 1 (05:44):
Let's look at the other side of the aisle for
a moment, because more and more Democrats are now saying
that these numbers showing a great economy are made up.
He's using bogus numbers to promote an economy.
Speaker 2 (05:54):
Is that even possible, Well, I mean it depends, it's not.
It hadn't been possible since the Nixon you know, tried
to affect the job's numbers, and they separated the Bureau
of Labor Statistics from even being close to the White
House influence. So we've had reasonably reliable data, you know,
for quite some time. It's true that the pace of
economic growth has slowed relative to last year and the
(06:17):
year before. We're adding about one hundred and twenty thousand jobs,
and we'll get more details on that tomorrow on a
monthly basis. That compares to one hundred and eighty thousand
plus last year and over two hundred and forty thousand
jobs the year before. And the pace of economic growth
when you measured if you combine the first and second
quarter GDP reports in the letter of which we got yesterday,
(06:37):
we're growing at about a one point two percent annual rate,
which is less than half the growth we saw in
the prior to years. So the economy is in some
ways slowing down, but inflation is also picking up at
the same time. So we have this kind of early stage,
very many stagflationary environment that I think that's one of
the reasons why the Fed is being extremely careful and
deliberate and not doing anything on interest rates. But the
(07:00):
pace of growth and the pace of job growth has
slowed considerably for me from last year.
Speaker 1 (07:04):
Sure Ron and soon SCNBC contributor and host of War's
Market Scoreboard Report. Thanks a lot, Ron, Thank you, Thank
er
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