Hey there everyone thanks for staying With us here on CBS news 24/7 I'm still ARL Bonet apparently we are approaching 2 p.m. here on the East Coast it's 11:00 A.m. for those of you watching from California and on the west and we are Just moments away from the federal Reserve's announcement on us interest Rates now as we've discussed today Policy makers are expected to make their First cut to the Benchmark rate in more Than four years at this moment it's Hanging at its highest point in more Than two decades the Central Bank kept It there in an effort to combat Inflation as you all should know by now Now Federal uh Reserve chair Jerome pal Announced that it was time for a policy Adjustment at last month's meeting in Jackson Hall Wyoming the inflation rate Has steadily declined falling close to The fed's 2% Target that is crucial now While there's some debate as to how big The cut may be experts predict it will Likely likely be around a quarter or a Half of a percentage Point according to The financial services company CME Group There is a 57% % chance that the Federal Reserve announces a half point cut and a 43% chance the cut is a quarter of Percentage point I call that a coin flip Either way the markets took a dive into The red as you see here out of the gate This morning following the opening bell
They've since recovered so essentially It's flat uh the Dow Jones uh now what Gaining 280 points um surely this will All shift CBS News business analyst Jill Slesinger joins me here in studio 57 and So does Al root he's an associated Associate editor at Barons and we're all Kind of looking at our data and our Information it's a pleasure to have you Both at A Moment Like This Jill what do You expect I think we have the news Coming in now that the FED has cut Interest rates by a half a percentage Point your reaction I think that that is Warranted you know what the fed's job is Is to react to data in real time and Data over the last group of months has Shown that the inflation rate has come Down pretty substantially and that the Job market is starting to decelerate and I think waiting for a more confirmation And just doing a quarter of a percentage Point might have given the view that Gosh we're still a little bit worried About inflation so I think from my Perspective and this is just my opinion I think this is the right move I Actually thought that they were going to Lower rates at the last meeting and I Was in the M but just because I thought We were already getting that message but I think this is the right move and it's Going to be interesting to hear what Chair poell says at this press
Conference because what we're really Seeking is some idea about where we're Going to land and we're going to listen Closely to uh the chair's comments Al What do you make of this half a Percentage point cut uh a couple of Things I agree with everything Everything Jill said Bo smart uh very And I think it's a positive I think it's A small positive surprise you said that Coin flip between 25 and 50 basis points So we all knew that a cut was coming and They basically have said you know what It's time to start easing that 4-year Period perod of trying to control Inflation now it's more important to Give people some relief on perhaps Mortgages or car payments so 25 would Have been sort of the milk toast way to Do it they went out and said no 50 basis Points is better at this point and you Make a good point about housing because If people are still looking to purchase Homes this may mean a slight relief on Interest rates in the months ahead but If I'm someone who's been following Jill's advice over the past few months I've been saving my money I've been Putting it in a high yield savings Account this news cuts the other way Yeah absolutely absolutely I mean Obviously a borrower is happy because We'll see a reduction in rates and Hopefully that will trickle down and in
A short order especially if it's a Credit card balance that you're paying Off but if you're looking at savings Already those rates on money markets Shorter term CDs and even savings Accounts the high yield savings accounts Those have been coming down you know but At the end of the day we are still in This really wild period for Savers in Some respects because we had these years Where we had 0% interest rates and People really did feel like oh I don't Get any credit for being a good saver And you are right now so I think that if You actually have a bill to pay in a Year from now or 18 months from now Because you know you have to write a Tuition check or you've got something Big looming now's a good time to Actually make sure you get a CD rate That is matching up with your time Horizon because I think all these Interest rates are going to go lower and Is that kind of the point Al it's not That people will F this in their Pocketbooks immediately today this week But it should alter people's behavior And if so how well there's two sides uh To that equation right I think from a From a personal perspective or or a Consumer perspective it does lower those Uh monthly bill payments that advice to Always match your uh when things are due And when you can access your money is
Perfect but then on the business side of The equation it it lowers the cost of Investment it makes carrying inventory a Little bit cheaper you know this retail Destocking we constantly hear about uh That can end right as come down and it's A little less expensive to restock those Shelves so the whole cycle of the Economy on the business side also Accelerates and you know what's Interesting I've heard so much from Small business owners who weren't able To necessarily you know float bonds and Borrow money and and take advantage of Really low interest rates when they were So low and they've been struggling and If you're a small business owner in Order to actually do something and Expand and do something different you do Need to see interest rates come down Because so many of those small business Loans are predicated on whatever the FED Funds rate is so I think it is a help For smaller businesses you know from an Investor perspective I know that Everybody's like well now what what do We do right and the answer is you know What chill out you know you don't have To worry about what the next move is in By the FED you're a long-term investor You're going to relax but I presume that You have a different uh um view on that Necessarily and in terms of if you're More of a Trader than an investor
There's always the short-term versus the Long-term approach right the long-term Time in the market is better than Timeing the market Traders they want to Know what are the rates going to go and What can I bet on this you know falling Rates tends to benefit uh you know uh Low yielding technology stocks a little More than high yielding stocks right so There'll be lots of uh allocations you Know the market I don't we can't see it Probably ends up today because 50 basis Points was on the positive end of the Surprise spectrum and we're always about Surprises but but Jill's right this is Uh trend of falling rates will play out Over many uh quarters months years and It will tend to be a a Tailwind to the Stock market because it makes financing Business cheaper and on that point this Decision today looks back it's based on Data from the past 3 six months and We're going to listen closely to what The Fed chair says in his remarks Surrounding this uh you know um half a Percentage point cut what does it tell Us about what we might expect in the Next six months well look I think this Was sort of an interesting struggle for Powell I think that he is a man who was Shaped just because of his age and many Of the FED decision makers are shaped by This inflationary surge of the 70s the Inflationary surge where they really did
Start to raise interest rates later than Most economists thought they should I Don't think they wanted to make the same Mistake again on this part of the cycle Meaning if they waited too long and kept Rates too high they were really starting To risk a recession a real slowdown and I I don't think they want to be tagged With that so I think that this half of a Percentage Point what it really does Tell you is that the economy is slowing Down that's what the FED wanted now the Question is will they navigate this soft Landing I just flew in this morning from The west coast and it was a beautiful Gentle Landing into JFK and I thought to Myself maybe this is my metaphor for the FED meeting today Al final thought can You make us laugh any good analogy I'll Avoid Boeing jokes with that analogy um But you're looking for gold Goldilocks It's not easy now hopefully things are So much better from a data Gathering Perspective it's easier to thread the Needle than it was in the 70s and 80s But we're hoping for Goldilocks all Right Al Jill Slinger such a thrill to Have you both here at A Moment Like This Let's take the show on the road what do You say all right absolutely see you Soon
