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Fed To Decide On Interest Rate Hike; Trump Indictment Decision Looms; "The Atlantic" States Nobody Likes Mike Pence; Russia's War On Ukraine; U.S. To Speed Up Delivery Of Patriots, Tanks. Aired 11-11:30a ET
Aired March 22, 2023 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATE BOLDUAN, CNN ANCHOR (voice-over): Hello, everyone.
AT THIS HOUR, the Federal Reserve's big day to raise or to hold and what are the ripple effects from all of that.
Plus new moves in separate investigations into former president Trump with eyes on a New York City courthouse and his Palm Beach house.
And Ukraine's president visits the front lines of his country's war against Russia as the Pentagon steps up its timeline for sending new weapons their way.
This is what we're watching AT THIS HOUR.
BOLDUAN: Thanks for being here. I'm Kate Bolduan.
We begin between a rock and a hard place, which is where the Federal Reserve seems to find itself. Right now. A few hours from now we're going to find out if the Fed is going to raise interest rates again in its efforts to fight inflation or if they will hold steady and take a pause, if you will, following the worst banking crisis since 2008.
Some of the smart minds expect the Fed to raise rates by a quarter point. But the collapse of Silicon Valley Bank and the subsequent fallout is clearly weighing heavily on Federal Reserve chairman Jerome Powell.
Adding to the complicated picture that is the U.S. economy today, new data out on the housing market, which has been under pressure for months due to rising mortgage rates. Let's start with Matt Egan on today's big decision from the Fed.
What options does the Fed have?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Unfortunately, they don't really have any good options here. I mean, if they do nothing, they risk looking scared and maybe inflaming inflation. But if they raise interest rates, they could actually add to the pressure in the banking sector.
I do not envy Jerome Powell today. Goldman Sachs and others think the Fed will pause and just survey the damage before doing anything else. But over the last 48 hours or so, consensus has emerged among investors that the Fed is going to go ahead and raise interest rates.
At last check, there's about an 86 percent chance that the Fed is going to raise rates for a ninth straight meeting. Now this would be a way for Powell and the Fed to show that they really mean business when it comes to trying to get inflation under control.
Listen to what former Obama economist Jason Furman told Julia Chatterley earlier today.
(BEGIN VIDEO CLIP)
JASON FURMAN, ECONOMIST: I think the best move is 25 basis points. I think that's what they will do. Had it not been for the banking turmoil, that would have been an open and shut case for 50 basis points.
(END VIDEO CLIP)
EGAN: So if Furman is right here, that means that benchmark interest rates will go up to the highest level since September of 2007 right before the Great Recession. More importantly than the level of rates is how fast they're going up. The Fed hasn't moved this aggressively against inflation since the early '80s under Paul Volcker.
You can see rates are going almost straight up.
So what does this mean for everyone at home?
Well, if the Fed raises rates again, it means higher borrowing costs. Mortgage rates, they've already spiked near 20 year highs. It's never been more expensive to carry a credit card balance. It's gotten more expensive to finance the purchase of a loan or take out student debt.
The other real impact here, of course, is that the Fed is trying to cool this economy off, ideally without breaking something. Of course, Kate, the bank failures in the last 10 days suggest that Fed already has broken something.
BOLDUAN: Matt, it's good to see you. We'll see what comes in the next few hours.
Joining me now for more on this as we wait for the Fed's decision is Diane Swonk. She's the chief economist for the global financial services firm KPMG.
It's good to see you again, Diane.
What do you think the Fed is going to do today?
DIANE SWONK, CHIEF ECONOMIST, KPMG: Well, I'm actually on the side of a pause, even though that's a minority view at this point in time because of the tightening.
We see that consumers, households and companies are facing across the board. We're seeing not only tighter credit conditions but likely to see even tighter credit conditions for small and midsize companies.
I think that's very important because they're the backbone of employment gains in the U.S. economy. Nearly four in five new job openings are from companies with less than 250 employees and as credit in that part of the economy dries up you're going to see a much more rapid contraction in economic growth.
And I think that's something the Fed has to take into account, what's already in the pipeline and how that's going to affect the economy going forward and inflation.
BOLDUAN: Yes, I want to ask you, I'm sure you saw these remarks. Economist Mohamed El-Erian, he thinks a pause would be a mistake and here's his reasoning for this.
In part, he says, "I think the Fed is going to have to decide between two policy mistakes: hit the brakes too hard and risk a recession --
BOLDUAN: -- "or tap the brakes and a stop/go pattern and risk having inflation well into 2023."
He fears the result of a pause now will be stagflation.
What do you think of that risk?
SWONK: I think that's a lower risk than Mohamed does. And I'm a great friend of Mohamed El-Erian and think very highly of him.
But on this point, I disagree because I do think the tightening that's already in the pipeline is going to be enough to also make it no longer conflict between financial stability and inflation. That what we're talking about is already a tighter credit market that will stem inflation.
I think what the Fed's concerned about is the nonlinearity. That's a big word to say. Basically that, you know, at some point in time there is a straw that breaks the camel's back when it comes to this tightening.
And I think we're starting to see that in broader credit market conditions in the fragilities that we've seen globally more recently.
BOLDUAN: So interesting, Diana. And most or all indicators of recent -- and I guess we needed to define recent these days because things have changed so much in the last two weeks.
But most indicators have suggested that the economy is still strong, meaning the Fed may still have work to do when it comes to kind of tamping down inflation, though we did see home prices fall for the first time in a decade with new data out from February. What do you think this data point is telling us?
SWONK: Well, I think it's one indicator of how unaffordable housing is at the moment and I think that's important. There's still very scarce supply, though, so I do worry about how much housing prices can fall to be more affordable without doing any damage to household balance sheets.
This is not the situation we were facing in 2008 and 2009. And there's long legs before that shows up in terms of inflation. I think with the broader data issue, yes; we do have strong data.
We also had a big revision to data that showed that inflation stayed more resilient than we thought in the fourth quarter, even as consumers were pulling back. And I think the important issue here is how hard it is to measure an economy that moves this rapidly.
And the Fed has to take that into account as well, that some of the data signs that are showing how strong the economy is are likely to give back a little bit of that strength as we move into spring and summer, just because of how hard it is to measure this kind of rapid changes in the economy.
BOLDUAN: It's so interesting. Always great to have you, Diane. Thank you so much.
SWONK: Thank you.
BOLDUAN: So there is also movement today in two separate investigations involving former president Donald Trump.
In New York City, a grand jury is set to reconvene today as they wait -- as the wait continues to see if they decide to criminally charge Trump for his alleged role in a scheme to pay hush money to Stormy Daniels and also falsified business records around those payments.
There is also news on the Justice Department's special counsel investigation into Trump's handling of classified documents. Sources telling CNN a federal judge is now convinced that Trump may have used one of his own defense attorneys to break the law.
There could be real ripple effects from this ruling that just came in. Paula Reid is watching all of this.
Let's start in New York with this investigation into the hush money payments to Stormy Daniels.
Do we know why the grand jury was brought back in today?
PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT: If they're meeting today, it's because it's one of the days that they typically meet. And Kate, I can tell you with full confidence, we don't know what's going to happen today.
We don't know if they're going to hear from additional witnesses. We don't know if they're going to vote on a possible indictment. We've been able to say through our reporting with such certainty over
the past several days, really over the past, maybe 10 days, about what was going to happen in this investigation.
But when it comes to today, it's just not clear if they have wrapped up their work. It's not clear where prosecutors are at, following this somewhat unexpected testimony from Robert Costello Monday, because this is a prosecutor's show.
It's a grand jury. And that was a defense requested witness. What we do know, though, is if they vote to indict the former president this week, any initial appearance, they want to wait until next week for that. And the choreography here would be an indictment would be voted out, will be filed under seal. Defense attorneys would be notified.
You might want to look on Truth Social to see any potential leaks at that point. And then they negotiate this self surrender. But today we're watching. We continue to talk to all of our sources to figure out exactly what could happen today.
BOLDUAN: How is Donald Trump responding to all of this?
REID: What's interesting, because he's really leaning into all of this, he seems to fully embrace the idea of an arrest, of course, speculating that he was going to be arrested yesterday.
While calling for protests and fundraising on Truth Social in between those posts so he clearly believes, his team believes, this can help him politically. Now I think intelligent minds can disagree about the strength of the case here in Manhattan.
And I think it's also fair to say it's certainly not the most consequential case. I won't speculate on the evidence, because we don't know all of it. But compared to the other legal threats he's facing, it's certainly a more minor case.
We've seen as you mentioned with the special counsel, I mean, there you have a special counsel trying to get through attorney-client privilege and an investigation about possibly mishandling classified materials.
REID: So all of this is accumulating. And while he wants to embrace this idea of being a victim of the deep state, of aggressive prosecutors, it's unclear whether voters are going to see it that way or if they'll just kind of see this accumulation of drama.
And we've seen some of his campaign rivals seizing this and saying, look, there's no palace intrigue in my -- in my governance.
REID: For example, Ron DeSantis. So it'll be interesting to see if he's right about fully embracing this. BOLDUAN: And as you have been doing so wonderfully for quite some
time, now everyone can just pump the brakes, on speculation until when the DA decides to move.
The DA will decide to move and we will find that out here as the same thing with the special counsel as we're getting reporting there. It's good to see you. Thank you so much, Paula.
So joining me now for more on this is Marc Short. He is a former chief of staff to vice president. Mike Pence, also former legislative affairs director for president Trump.
It's good to see you, Marc. "The New York Times" on when it comes to the possible indictment, possible criminal charges against Donald Trump in New York City, "The New York Times" is reporting that he's telling folks that he likes the idea of having to do a perp walk, potentially.
And if he -- if he's arrested, here's some of their reporting, it's he's even mused openly about whether he should smile for the assembled media. And he has pondered how the public would react and is said to have described the potential spectacle as a fun experience.
It was your coming on today, I was wondering your take on.
Would you want a candidate that you're working with doing a perp walk?
MARC SHORT, FORMER PENCE CHIEF OF STAFF: Well, it's a great question, Kate. I think obviously the answer is no. And I do think that the former president Trump has always been a great counterpuncher.
And I think there's part of him that did -- does view this as a political asset because he can use it to paint the other, more serious legal jeopardy he faces, either in Georgia or the Department of Justice, as they're all politically motivated.
See? Look at what the DA in Manhattan is doing.
Having said that I've seen some people like Lindsey Graham and others say this will certainly guarantee Donald Trump's renomination.
I don't know, Kate; it's hard for me to think that, after seven years of the ups and downs around president Trump, that there's going to be your primary voters somewhere that's going to wake up tomorrow and say, you know what, now that he's been indicted for giving hush money to a porn star, now I'm all in.
I'm going to vote for him. I think that's a far stretch. And so yes, I kind of, to your answer original question, I certainly think it's not beneficial to any candidate to be indicted, much less for something like paying hush money to a porn star.
BOLDUAN: You've said, you know, it could help him and maybe benefit -- he could benefit from it in the short term.
But in the long term, does it hurt him or, said maybe a different way, does this work to benefit another candidate in the long term?
SHORT: Well, I think that there's a sense that, at some point, that the drama of this becomes a burden. It gets too much. So, in instance, if they're going to also face indictments in Georgia, also at Department of Justice.
I think that you look back to the 2020 election -- and there are a lot of voters candidly who were really excited about the record of the Trump-Pence years and all four years of what we accomplished on tax reform, what was done at the border, was done and taken on China.
And I think they're excited about the many of the judges that were confirmed. But in many cases you look at focus groups. And voters said, I was just exhausted from the drama. And so I think there is a sense that this begins to build up over time.
And I think it's counterproductive to the former president's ambitions to try to reclaim the nomination again.
BOLDUAN: Let me ask you, since you mentioned focus groups. I wanted to ask you about focus groups as it relates to Mike Pence.
McKay Coppins with "The Atlantic," he just put out a new piece on Republican focus groups over a period of time that he was able to observe. And they -- his take is they had a blistering take on Mike Pence.
The headline of McKay's piece is, "Nobody Likes Mike Pence."
And let me play for you. McKay was on "THIS MORNING" on CNN. Let me play how he explains what he heard from Republicans.
(BEGIN VIDEO CLIP)
MCKAY COPPINS, STAFF WRITER, "THE ATLANTIC": Strong Trump supporters were alienated by Pence because of his refusal to obstruct the certification of the electoral votes on January 6th.
Less Trump-inclined Republicans said that they felt Pence was tarnished by his time in the administration.
All of the Republicans suggested in one way or another that they felt Pence was weak or lacked conviction.
(END VIDEO CLIP)
BOLDUAN: Does that worry you ?
SHORT: Not in the least. I think the evidence belies what McKay's talking about. I mean, just last week, the vice president had sold-out events, in Iowa sold-out events in New Hampshire. He has several more scheduled there continue to be sold out. He's in demand from all the state parties. And in fact made, many of the state parties asked him to continue to write fundraising letters with his name signed to them, so the evidence that we see is entirely contrary. And I think it's important to note those focus groups that he was talking about were commissioned by a group that was a Never Trump supporter.
And they were constantly pushing narratives against the Trump-Pence administration over the last four years. So I think it's an incredibly biased report. And I'm sorry that CNN decided to give him time on the air.
But I appreciate you giving me a chance to respond because all the evidence we get is entirely contrary to that, as the vice president continues to travel the country, Kate.
BOLDUAN: And still to see when the vice president, if the vice president will decide to jump in the race.
It's good to see you, Marc. Thank you so much for coming on.
SHORT: Thanks for having me.
BOLDUAN: Appreciate it.
So Ukraine's president surprised troops on the front lines with Russia, as a fresh wave of attacks hit the country, including strikes that killed several in the capital, Kyiv. We're going to take you to Ukraine next.
BOLDUAN: Ukrainian president Volodymyr Zelenskyy made a surprise visit to troops in the long-fought battle line in the Donetsk region today. Zelenskyy's visit is quite a split screen against Russian president Vladimir Putin's visit to Mariupol in Ukraine over the weekend. And more than photo ops.
There was a fresh wave of attacks on Ukraine showing the brutality of this conflict. Now Zelenskyy himself tweeted this video we will show you today, showing a Russian missile strike on a residential building in Zaporizhzhya. At least one person was killed in this attack.
And then in the country's capital, Kyiv, seven more people were killed in a wave of drone strikes. David McKenzie is in Odessa for us AT THIS HOUR.
David, what are you learning?
What more are you learning about these attacks?
DAVID MCKENZIE, CNN SENIOR INTERNATIONAL CORRESPONDENT: We look at this awful video, Kate, of this missile striking a residential nine- story building in Zaporizhzhya, where the authorities say at least six missiles were struck in that area. Several were taken down by air defenses.
But this horrifying moment of hitting the corner of that building; at least one killed, multiple injured. And this is just the ongoing terror that Ukrainians have to face from Russian bombardments on a daily basis.
The Ukrainians saying that this was purely a residential area. No military assets there. We can't verify that, of course. President Zelenskyy calling it savagery.
And you had those overnight strikes of drones in the Kyiv region in the capital. I have to say, just in the last couple of days, we've been in and out of Kherson and that's a city right on the dividing line between Russian and Ukrainian forces.
And even while we are there, you hear the incoming and outgoing artillery, rocket fire. People have left that city in fear for their lives. This is just every single day here in Ukraine.
You had the president making the surprise visit to Bakhmut or -- that's the regions of the Bakhmut front lines, according to the Ukrainians -- speaking to soldiers, meeting with injured soldiers, showing his leadership right there on the front lines.
And certainly the strikes of the last few days, again Zelenskyy is calling for more support from the outside world. A example of that, Kate, is that the U.S. government saying they can deliver those older generation Abrams tanks to Ukraine by the fall, more than 30 of them.
That will be a significant boost for Ukrainian soldiers and their mechanized units. Since I've been here, you do get a sense that there is this need for these weapons and ammunition, from the Ukrainian point of view, to get in as quickly as possible as they gear up for possible counter offenses, to push Russians away from those lines and possibly limit the impact of these civilian (INAUDIBLE) strikes.
BOLDUAN: David, thank you for that.
Joining me now for much more on this from the White House is the Coordinator for Strategic Communications and the president's National Security Council, John Kirby.
John, thank you for being here. Let me ask you about this missile strike that we now see video of in Zaporizhzhya. I mean, Ukraine says that it was a deliberate attack on a residential building.
Do you believe that it was targeted to kill civilians, as Ukraine believes?
ADM. JOHN KIRBY (RET.), COORDINATOR FOR STRATEGIC COMMUNICATIONS, WHITE HOUSE NATIONAL SECURITY COUNCIL: It certainly could be. I mean, we don't have, you know, tactile information specifically about that strike.
But it's obviously right out of the Russian playbook to target civilian infrastructure and to show no regard for avoiding the targeting of civilians. So it absolutely could be.
And how ironic, that the day after President Xi and President Putin in Moscow, talk about peace and talk about trying to find a way for a negotiated settlement and the cessation of hostilities. And the day after that, Mr. Putin launches drones and missiles at at least two different cities inside Ukraine, hitting civilian targets.
It just shows you how insincere Mr. Putin is about any effort to try to end this war.
BOLDUAN: And one thing -- one way that Ukraine says it needs to end this war is more firepower from the United States. We've learned that you all will be sending Patriot missile systems and the Abrams tanks to Ukraine faster than originally planned.
Is it because, John, they are needed more urgently than originally thought or are the Ukrainians proving quicker studies on these systems than initially thought?
KIRBY: That's really a combination of things. I mean, first of all, we have always had a sense of urgency of getting weapons in the Ukrainian hands as fast as possible since the beginning of the war; actually, since before the war started.
But, yes, I mean, as you train the Ukrainians and you see how well they are reacting in that, it does -- it does give the system a little bit more confidence that you can move a little bit faster.
And, of course, we wouldn't be doing our jobs if, with every package was, with every capability, we weren't looking at ways to tailor it to try to get it into their hands a little bit sooner. So that's a good thing.
It's a good thing if you can accelerate the delivery of, say, tanks or other missile systems. We want to make sure -- these weeks and months ahead are going to be critical, Kate.
KIRBY: We want to make sure that the Ukrainians have everything they need in order to be successful.
BOLDUAN: The fact that they are proving quick studies -- and we have our own reporting on the ground and support still from my colleagues, seeing this and hearing this from commanders on the ground -- saying that they are proving very quick studies, the Ukrainians.
Does that indicate any change in position on the request for sending over F-16 jets?
Is the president more inclined to start moving in that direction?
KIRBY: There's no change to our policy on F-16s at this time. You heard the president talked about this very, very plainly. That's just not going to be our focus for right now. What we're focused on, Kate, again, in these weeks and months ahead, it's going to be sort of what we call the four As: armor, artillery, air defense and ammunition.
And if you just look at the packages we've sent in just recent days and weeks, in fact, just a couple of days ago, you'll see that we're making good on those commitments because that's the kind of fighting we expect that they're going to be doing here in -- and again -- when, in the spring, when the weather gets better.
It's going to be more open terrain, combined arms warfare and so we're really kind of front loading those kinds of capabilities for them.
BOLDUAN: The NATO secretary general said yesterday he hasn't seen any proof that China is delivering lethal weapons to Russia yet though Xi Jinping left these meetings with Putin also without any public promise that he will be supplying them weapons despite the request.
Do you think that China is closer to that after this -- these three days, this three-day visit to Russia?
KIRBY: Really hard to know for certain, Kate. We again see no indication that they're moving in that direction or made a decision in that regard. We don't think it's in China's best interest. It certainly would not be consistent with what President Xi has said himself about what the results he wants to see coming out of this war in Ukraine.
So we obviously don't want that to happen. Just haven't seen any indication of it.
BOLDUAN: The ICC took the major step of putting out an arrest warrant for President Putin for war crimes. In December, John -- and you know you well know this -- Congress changed longstanding legal restrictions to now allow the United States to better help the ICC with its investigations and prosecutions as it relates to the war in Ukraine.
"The New York Times" is reporting, though -- and I've had many conversations with folks about this now -- that the Pentagon is still blocking the administration from sharing evidence with the ICC over their own concerns.
Is President Biden planning to direct the Pentagon to change that position and provide that evidence?
KIRBY: We've been clear from almost the beginning that we're going to assist in international investigations into war crimes and atrocities. And that includes the one being done by the ICC. President Biden has been consistent on that and we're going to continue to do that.
We're going to work with Ukrainian authorities, including their attorney general, to document this evidence, to analyze that and to preserve it for these international tribunals going forward. We have stayed committed to that. That's not going to change.
BOLDUAN: But do you dispute the reporting?
And what I've heard is that the Pentagon is hesitant and is blocking handing over some evidence over to the ICC.
KIRBY: Well, I'm not going to get into the press reporting on this or internal interagency discussions and deliberations. What I can tell you is this administration and this president is committed to making sure that we hold Russia accountable for these war crimes and these atrocities.
In fact, we've labeled them as crimes against humanity. And we take that seriously. So we're going to make sure that that evidence is preserved and analyzed. It's made ready for a range of international bodies that are and might likely will be looking into this going forward.
BOLDUAN: Real quick back to Russia and China, because I know you said this yesterday, I believe on CNN, saying that what China should be doing is talking to President Zelenskyy if they want to be if they want to be a peace broker.
Do you have any indication that China is -- that there's any -- they're any closer to setting up a call, setting up a visit?
You know, I know obviously, the United States is using that understandably as a marker of, if you mean it, show it.
Do you see any movement there after he's now left Moscow?
KIRBY: Not aware of any decisions made by the Chinese to do that. No statements that they've made that can point us to that, in the note, to a degree of confidence in that.
But you're right. We think if you're going to take the time to go to Moscow and you're going to take the time to sit down President Putin and get his views on this war of aggression he started, you ought to also talk to President Zelenskyy.
You ought to get the Ukrainian view because no effort to end this war, if it does come down to a diplomatic process, no effort is going to be credible or sustainable without Ukrainian input, without Ukrainian acquiescence to it, without Ukrainian support.
So if President Xi is serious about wanting to see a negotiated end to this war, he's got to have that conversation with President Zelenskyy. We've been encouraging them to do that for quite some time. And we hope that that will happen.
BOLDUAN: Yes, words and actions, they do matter in this. It's good to see you, John. Thank you for your time.
KIRBY: You bet.
BOLDUAN: A massive strike that's closed more than 1,000 Los Angeles schools has now entered a second day. What these school staffers are demanding and what the school district is saying in return. That's next.