Interest Rates Hold Steady

The Federal Reserve announced it's last interest rate decision under Jerome Powell. NBC News Radio National Correspondent Rory O'Neill joins us to discuss what happens under a new chair. 

Episode Transcript

Speaker 1 (00:00):
So this was the last of the interest rate decisions
by the outgoing chair. Rory O'Neil, NBC News Radio National
correspondent here to explain a good morning, kind sir.

Speaker 2 (00:13):
Hey, they're good morning.

Speaker 1 (00:14):
So Jerome Powell is we all know there's a lot
going on there. Let's start though, with what they decided
to do.

Speaker 2 (00:22):
Okay, So the Fed the Board voted to keep interest
rates right where they are. But we also got a
signal from several members that they earlier had said we're
probably going to be cutting rates more this year, but
now when they look at the inflation numbers and the
job picture, that seems less likely. So things are a
bit more in neutral right now.

Speaker 1 (00:43):
So go back to Jerome Powell, who said that though
he is stepping down, we know who will be taking
his place. He will remain a part of this organization
that a lot of Americans don't quite understand.

Speaker 2 (00:57):
Right. So, the Federal Reserve has a board of governors,
and then if you become the chairman of the board,
you do not necessarily lose your title as a governor.
So what he's doing is he's going to let his
term expire as chair May fifteenth, and then go back
to a job as one of the governors of the FED,

(01:17):
so that which, among other things, sets these interest rates
that are so important to the rest of us here
on the outside world. So he's essentially going to step
back from the center stage. And his reasoning is President
Trump and the Justice Department have been launching some investigations
into Powell, these allegations that he was mismanaging the repairs

(01:38):
and renovations at the FED building to the tune of
billions of dollars. Now, Powell, by the way, who was
appointed by Donald Trump during his first term, longtime Republican,
has strong bipartisan support, a lot of respect on Capitol Hill,
and a lot of people thought that this was just
a political prosecution, even Republicans. So Powell says, I'm going
to stay here as a member of the Board of

(02:01):
Governors until I get assurances that all this criminal nonsense
prosecution is shut down for good, and then he says
he might step down.

Speaker 3 (02:09):
Rory, will there be any outside factors that could change
that decision about changing interest rates? For instance, all the
money will be spending on gas for the next however long.

Speaker 2 (02:21):
Well, look, the FED has to do two things. They
have to minimize inflation, so keep it to two percent.
Right now, it's about three point three percent, and they
have to maximize employment. That number is pretty good. Unemployment
is hovering around four point three percent. Problem with unemployment
right now, though, is that there's no new job creation
numbers are holding steady in fact, because so many immigrants

(02:44):
or migrants are leaving the country and none are being
allowed in. It's so the employment picture is okay, but
they're concerned that with what's happening in Iran, the fuel spike,
the energy spike, that that's going to cause more inflation.
And when you have inflation, you typically raise the interest
rate in order to slow down spending and cool things off.

(03:05):
And that's why they're saying, Okay, we're going to hold
for now, but if these prices really keep inflating, we
might have to raise interest rates to get things under control.
By the way, that's exactly what President Trump doesn't want
them to do.

Speaker 1 (03:18):
There. It is Rory O'Neill, NBC News Radio National Correspondent.
Thank you, Thanks Steve