As expected the Federal Reserve is Keeping interest rates steady the move Comes as the FED continues to deal with Inflation the current range of 5.25% to 5.5% has now been in place Since July 2023 it's the highest level In more than 20 years for more on the Fed's decision we're we're joined by Gina smik she's Federal Reserve and Economy reporter for the New York Times It's good to be with you again what did You make of what chairman pal said Today yeah you know it was largely as Expected but I do think one thing stood Out which is that chair pal made very Clear that the FED is not considering Additional rate increases at this point He was very clear that it is unlikely That the FED is going to raise rates Further um and really sort of put all of The eggs in the either the FED is going To cut soon or the FED might you know Hold R steady basket you know where Where the conversation we're having is Clearly one about our rates going to Come down and how quickly is that going To happen and do we think if they're Going to come down it's there was talk At one point of three r Cuts in a year That that can't be possible anymore are We thinking two could that still be Possible or is it really just Realistically possibly only one yeah so He really avoided answering that
Question which he got asked very Specifically um but I think if you look At where investors are pricing things at The moment it seems like the most likely Outcome is one or two rate cuts by the End of the year most Wall Street Economist firms will tell you that That's kind of where they are they're Mostly predicting one to two um and it Does it does seem like the FED is just Running into the calendar at this point You know they they do not really have Time to make those three rate Cuts Anymore and especially given that it's Pretty clear they're not going to cut Rates in June so I I think that it's It's timing issue at this stage you Reported this week that some lower Income earners are feeling the effect of Rate hikes more than middle and upper Income households why is that yeah so Low-income households always feel the Effects of rate hikes and they usually Feel them three ways they feel them Through credit card rates because They're much more likely to borrow on Credit cards they feel them through auto Loan rates because they're much less Likely to buy their cars out rate and They Al feel them in the sense that it Usually is the case that when you have Higher fed interest rates people lose Their jobs and low-income earners tend To be the first people to lose their
Jobs so that final leg of the stool they Are not feeling this time the job market Is still very strong but the other two Are really acute this time you know We've seen delinquencies Rising on auto Loans we've seen credit card rates in Excess of 30% and obviously mortgage Rates to the extent that people are Trying to buy houses mortgage rates are Also very high at the same time richer Households usually feel the effects of Rate Cuts in a rate hikes in a couple of Ways they fail them through lower stock Prices and they fail them through lower Housing prices but that channel that's The one that's really not playing out This time you know we've seen we stocks Came off in April but in general they've Been very strong and we've SE actually Seen home prices continue to rise so It's been it's been a different time I Also speaking of different times you Wrote Wednesday about former president Trump's plans for the Federal Reserve if He wins in November um tell us about What the thoughts are about how he would Treat the Fed so the Trump campaign itself has Been very quiet about this particular Topic um what we have seen from President Trump former president Trump Out on the campaign Trail is that he's Clearly very willing to criticize the FED in public just as he was when he was
President um that's something Joe Biden Has avoided doing out of respect for the Fed's independence but president Trump Has already said that if the FED Cuts Rates before the election they're going To be making a political act to help Joe Biden so he's clearly willing to sort of Beat up on them just verbally um I think The real question and what you're seeing Percolate among some Republicans and What my colleagues have reported on is This idea that you know he could go Further than that that he could try and Have some sort of oversight of fed Regulation and that he could do things To sort of infringe upon fed Independence in a more sort of serious And and uh maybe effective way than just Yelling at them from the bully puppet And so that's the big question and we Will be looking to see if his campaign Starts to embrace that language because As I said up to this point this is Really outside people and uh the Question is is he going to adopt it as Well more effective politically which is Which is to say Let me give me the General principles as the last question What's the general principle of why the FED needs Independence and what might be In danger if uh the former president's Reelected and is more effective in his Jawboning of the FED yeah so the FED has historically
Been insulated particularly on the Monetary policy side of things because The idea is you don't want a sitting President to have any real say in where Interest rates are sitting presidents Always want interest rates to be very Low because they're great for that's Great for growth you know it's good for Their real election chances but if you Have interest rates too low all the time And if you never raise them you're not Willing to sort of take the threat of a Slower economy you're really risking Letting inflation jump out of control And so for the health of the country in The longer term to make sure inflation Stays under wraps you want to have an Independent Central Bank and a lot of Research suggests this is best practice Not just in America but sort of around The country places that don't have Independent central banks you can think Turkey you can think Argentina tend to See problems with inflation and so I Think that's the really the Crux of the Issue fed independ is important for Keeping that inflation rate under Control Jus smik Federal Reserve and Economy reporter for the New York Times Thanks so much
