Federal Reserve expected to hike interest rates for 10th time in a row
– CORTEZ. THE BILL THEY INTRODUCE YESTERDAY WOULD ALSO EXTEND TO SPOUSES AND DEPENDENTS OF MEMBERS OF CONGRESS, SIMILAR LEGISLATION GAINED POPULARITY LAST YEAR BUT IT NEVER MADE IT TO THE FLOOR FOR A VOTE. >>> THE FEDERAL RESERVE IS MEETING ODAY AND IS INSPECTED TO ANNOUNCE ANOTHER INTEREST RATE HIKE. IF THE CHOOSE TO DO SO, IT WILL MARK THE 10th CONSECUTIVE HIKE SINCE MARK — MARCH 2020. WE HAVE MORE ON THE POTENTIAL RATE HIKE WITH THE FEDERAL RESERVE AND ECONOMY REPORTER WITH THE “NEW YORK TIMES”. THANK YOU FOR JOINING US. THE EXPECTATION IS IT WILL BE
ANOTHER SMALL HIKE, I THINK A QUARTER OF A PERCENTAGE POINT. WE SAW INFLATION COOLING. IT IS NOT CLOSE TO THAT 10% THE FED LIKES TO SEE. MY QUESTION TO YOU, IT IS SORT OF 101 HERE, BUT HOW DOES RISING INTEREST RATES, HOW DOES THAT HELP TO COOL THE ECONOMY? >> YEAH, GREAT QUESTION. A LOT OF PEOPLE LOOK AROUND AND SEE, YOU KNOW, MONEY BE MORE EXPENSIVE TO BORROW. THAT CAN MAKE INFLATION WORSE. THE WAY THIS WORKS IS BASICALLY, WHEN YOU HAVE MORE EXPENSIVE MORTGAGES, MORE EXPENSIVE CAR LOANS AND MORE EXPENSIVE BUSINESS LOANS, THAT SLOWS DOWN
ACTIVITY ALL ACROSS THE ECONOMY. YOU SELL FEWER HOUSES, FEWER NEWER HOUSES AND CARS AND LESS BUSINESS EXPANSION. YOU SAW DEMAND START TO PULL BACK. WITH
BE DONE TO SORT OF OR MAYBE IT IS BEING DONE, IT IS JUST HAPPENING SLOWER THAN IT HAS HAPPENED IN THE PAST. >> IT IS SUCH A WACKY ECONOMY. I WILL SAY YOU ARE SEEING SOME SIGNS OF THE FED’S CAMPAIGN TO RISE INTEREST RATES IS WORKING. YOU SEE THAT IN CONSUMER SPENDING, THE HOUSING MARKET AND WE SEE MODERATION IN WAGE GROWTH. IT STILL REMAINS RELATIVELY RAPID AND THE JOB MARKET LOOKS REALLY STRONG. WE ARE IN THE EARLY BEGINNINGS OF THIS. IT IS TAKING TIME TO PLAY OUT. THE CHALLENGE FOR THE FED IS THAT AT THE
SAME TIME THIS IS SLOWLY TRICKLING OUT, WHICH IS HOW MONETARY POLICIES OFTEN WORK, WE HAVE SOME REAL RUPTURES IN THE BANKING SECTOR. WE HAVE SOME REAL UNCERTAINTY COMING FROM THE BANK BLOWUPS WE HAVE SEEN OF THE LAST COUPLE OF MONTHS. WE HAVE A LOT OF UNCERTAINTY COMING FROM WASHINGTON WITH THE DEBT LIMIT DEBATE. THEY ARE DEALING WITH HIGH INFLATION ON ONE HAND AND AN ICONIC ECONOMIC CRISIS ON THE OTHER. >> OVER THE DEFAULT, CAN THE FEDERAL RESERVE OR DOES THE FEDERAL RESERVE PLAY A ROLE IN THE EVENT OF A U.S. DEBT DEFAULT? >> THE ABSOLUTELY
COULD. I THINK THE QUESTION IS, TO úWH TAKE OVER? THE FED WE KNOW IN PREVIOUS EXAMPLES, WHERE THE GOVERNMENT HAS COME CLOSE TO THIS HAS DEBATED, REALLY, IN A GREAT DEAL OF DETAIL WHAT THEY COULD DO TO MAKE IT LESS PAINFUL IN TH EVENT THE GOVERNMENT CAN’T REPAY SOME OF ITS BILLS, ESPECIALLY IN THE UNITED STATES, BEING ABLE TO PAY BACK ALL OF ITS FINANCIAL DEBTS. SO THERE ARE THINGS THEY COULD DO, THEY CAN BUY BONDS, THEY CAN TRADE OUT OR SWAP OUT THE BAD BONDS THAT ARE NOT BEING PAID BACK ANYMORE BUT NONE OF
THOSE ARE GOOD OPTIONS. IT WOULD BE VERY UNPLEASANT AND UNPRECEDENTE
