Return to Transcripts main page
CNN News Central
Federal Reserve Makes First Interest Rate Decision Of The Year; Mideast Tensions Rising As Region Braces For U.S. Response; Senators Grill Top Execs Over Social Media Impact On Teens; FBI Chief: Chinese Hackers Could "Wreak Havoc" On U.S. Aired 2-2:30p ET
Aired January 31, 2024 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BORIS SANCHEZ, CNN HOST: We begin with breaking news this afternoon. The Federal Reserve making a decision on interest rates. The announcement coming out just seconds ago. CNN business correspondent Rahel Solomon is here.
Rahel, walk us through the takeaways.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Hey, Boris. Yes, so for the fourth consecutive meeting, the Federal Reserve deciding to hold rates steady, that was universally expected. So, the decision just coming out within the last minute or so.
One thing that got my attention about this press release that they released is that the committee saying that it does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. Essentially, I'm sort of pushing back against expectations that a rate cut may come as early as March. I can tell you that Wall Street's been a bit divided about when we can expect to see rate cuts. Remember, the Fed has already indicated that 2024 will be the year when we begin to start seeing some rate cuts after an extraordinary amount of rate hikes.
And so, the question had been well, if not in this meeting in January than when? March, for example, some banks like Goldman and Bank of America had suggested that that could come as early as March. This statement today, however, sort of pushing back against that. And the reason why is, for example, you look at some of the indicators that we close out 2023, we can show you, GDP for example, coming in really strong, twice what we were expecting for the last quarter of 2023. And I think we have some of these for you. Inflation sort of cooling quite substantially, CPI coming in at 3.4 percent.
But guys, if you look at even other inflation indicators, there are some where if you look at on a six-month annualized basis, it's actually a lot closer to the Feds target. So that's coming in quite nicely. And the job is right unemployment has been under 4 percent for the last two years or so.
So, you put it all together, you have an economy that's done better than expected, and you have inflation that is cooling. And so, the thinking among some is, well, what's -- what's the rush? What -- why sort of juice the economy with rate cuts, if things are still looking good? Because remember, the Fed has said that they don't want to reduce rates until they are absolutely certain, absolutely certain that inflation is sort of coming down at their 2 percent target.
And so, the Fed committee, the press conference begins and about 27 minutes, Boris, I can promise you, there will be a lot of questions about when we can expect to see the first rate cut. The expectation is that Chair Powell will -- will try to keep things pretty close to the vest, we'll try to keep his language pretty neutral so as to keep his options open. But that is really going to be the focus in about 20 minutes or so. When do they think that rate cuts will start to be appropriate, at least based on just my really quick look at the report? It seems like the economy is still holding strong, but sort of pushing back on any expectations at a rate cut may be coming sooner rather than later. Guys.
SANCHEZ: We know you'll be watching that press conference closely. Rahel, please keep us updated on what you see there.
Let's discuss now with Mark Zandi. He's the chief economist for Moody's Analytics.
Mark, there was talk of a potential rate cut early in the year as Rahel pointed out. Your reaction to the Fed staying steady.
MARK ZANDI, MOODY'S ANALYTICS, CHIEF ECONOMIST: Well, I think they're indicating that we won't get that rate cut at the March meeting, six weeks from now that's premature and they're being cautious. I get it. You know, they really want to make sure that inflation is getting back to their target and there's no chance that it's going to re accelerate. So, they want to make absolutely sure they put a dagger in the heart of that high inflation.
But I suspect, given all the trend lines, given all the data, and the data we're going to get between now and the March meeting that, you know, by May, the next meeting after March is May, early May have enough evidence at that, at that point to start cutting interest rates. So not March, probably, that's what this statement feels like they're telling us. But I suspect all the data will be overwhelming by May, and we'll get a rate cut that.
SANCHEZ: Mark, I know the Fed doesn't necessarily weigh how the markets do in relation to its decisions. Of course, they can't escape the potential for markets to not respond positively to this news. As we're watching the Dow, the NASDAQ and the S&P, they all look down, even though I just want to point out the Dow went down to a lower of about 75 points, it just bounced back about 20 points. So, they're not exactly responding with great positivity to this news. ZANDI: No, I mean, I think there was hope among investors, stock investors, bond investors at the Fed would actually signal more strongly that the next rate cut would be March. So, a bit of disappointment there. But I think it's just a bit really at the end of the day. Because if you looked at, you know, futures markets as the expectations of investors about what it's going to go, what's going to happen in March, it was kind of a close call anyway.
So yes, they're disappointed. They want those lower rates, I get it. But I don't think at this point is going to be overwhelming. And, you know, Boris, the Fed does look at what markets say and do because the impact of their rate hikes translate to the economy through those markets. So, what -- what those markets do or say, really does matter to them. And I think they wanted to, as Rahel was saying earlier, they want to push back a little bit, they want to make sure markets aren't getting ahead of themselves. You know, rate cuts are coming in March. But, you know, again, by May, I think there'll be in full cutting.
But here's the other thing I'd say is Boris, they're really close to hitting their mandate, you know, they have two objectives. One is to put the economy at full employment. And the second is get inflation at target. They've gotten the economy at full employment, we're sub 4 percent unemployment rate, that's full employment, and now we have to get inflation back in and -- and they're pretty darn close, or they're within spitting distance.
So, once you're there, then you got to ask yourself the question, why do these high rates, you know, we don't need them. So, I suspect they'll come to that conclusion in the next couple, three, four months, and we'll see a lot of rate cuts later this year.
SANCHEZ: Yes, as you pointed out, they're getting closer to that desired 2 percent mark. The question is, though, about affordability, prices of certain goods have remained steadily high, especially at the grocery store, for example. Is there a way that you see those costs getting offset? I can't imagine prices are going to drop soon. So, are we waiting for wages to continue trending up to -- to offset that perhaps?
ZANDI: Yes, that's exactly. You know, fortunately, the prices for food have kind of gone flat over the last year. I mean, as you pointed out, they went skyward you know, in the wake of the pandemic and Russian war, and we're paying a lot more today for a lot of different food staples, and we were two, three years ago. So that really stings and it makes people you know, understandably, you know, upset. And that's one of the reasons why people can't see through the good economic data. They're -- you know, they're still being affected by the -- the high inflation that we experienced a couple three years ago.
But the good news is that wage growth is now consistently across all workers, across all parts of the wage distribution, low wage work, high wage workers, wage growth is stronger than inflation. So, I think with each passing month, people will start feeling a little bit better that sting that financial sting from the verge inflation a couple of years ago, will -- will become less painful.
SANCHEZ: Mark Zandi, always appreciate the analysis. Thanks so much, Mark.
ZANDI: Sure thing.
SANCHEZ: Of course.
BRIANNA KEILAR, CNN HOST: The Middle East is bracing for America's response to that deadly drone attack that killed three U.S. soldiers in Jordan. But after President Biden said he has made a decision on how to retaliate Iran's top military leader is not backing down saying threats from the U.S. will not go unanswered. At the same time, the most powerful Iran backed militia in Iraq has an answer -- has announced that it will stop targeting U.S. forces.
CNN's Oren Liebermann is at the Pentagon. And Oren, the administration has just formally identified the group that it says was behind this drone attack. Tell us more about this.
OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: Brianna, what's interesting here is that the White House didn't point to one specific group like Qatar, Hezbollah. Instead, they pointed to an Umbrella group called the Islamic Resistance in Iraq, which covers a number of different militant groups including Kata'ib Hezbollah. The administration had been repeatedly asked, who do you hold responsible for the attack on Sunday with a drone that killed three U.S. soldiers in Jordan. The administration had hinted at Kata'ib Hezbollah, the most powerful Iran backed militia in Iraq. But here now they say it was instead an Umbrella group which includes KH called the Islamic resistance in Iraq.
John Kirby, the Strategic Communications Coordinator for the National Security Council says of what we can expect in the U.S. response that it could be multi phased and might not be a single attack. Here now with this attribution, it gives another indication of what we might be expecting. In other words, the U.S. could go after instead of just one group, multiple groups in what might be a wave of strikes and U.S. attacks against multiple targets belonging to these different groups underneath the Umbrella Islamic Resistance in Iraq.
Now, as you pointed out, Kata'ib Hezbollah put out a statement yesterday, saying they were telling their organization not to continue attacking U.S. forces in Iraq, when the Pentagon was asked yesterday about that. The Pentagon pointed to -- pointed out and said look, actions speak louder than words. And there have been more than 160 attacks on U.S. forces in Iraq and Syria, including at least three after that Sunday drone attack that killed three U.S. service members, Brianna.
KEILAR: Yes, very good to point out there. Oren Liebermann live for us from the Pentagon. Thank you.
And we're joined now by Republican Congressman Dan Crenshaw of Texas. He is a former Navy SEAL, who served in Iraq and Afghanistan. Sir, thank you so much for taking the time to be with us.
You have mentioned the possibility of striking another general. You're referring to Soleimani, of course, the head of the Quds Force that the Trump administration took out in January 2020. Why do you think that would work? Considering that it prompted proxy attacks that killed U.S. service members last time?
REP. DAN CRENSHAW (R-TX): Yes, well, first of all, it didn't start the World War III that everybody on CNN and MSNBC and many on the right, we're also claiming it what right. The World War III doomsday airs are pretty much always wrong. Maybe one day in the next 500 years, there'll be right. But for the most part, if we stand up for ourselves and against our enemies, we will be OK. Because we're dealing with a halfway power like Iran. And of course, they did a retaliatory strike. OK.
Now, hey, hey, we also had four warning of it through the Iraqi government. OK, so it was it was almost like a gentlemanly agreement on their part. Let's be clear about that.
KEILAR: Which strike are you talking about?
CRENSHAW: I'm talking about their retaliation for the (INAUDIBLE) --
KEILAR: The al-Asad -- the al-Asad one?
CRENSHAW: Right, right, look, but it was --
KEILAR: Sir, I'm taking your -- I take your point. It didn't unleash this incredible wave. But there were other strikes, including one that did kill U.S. service members. But -- but please finish your thought.
CRENSHAW: Of course. I mean, that's, that's, that's the back and forth that we continue to see in the region. And so, if you want to end that back and forth, if you will -- if you want to tell the other side, that your costs are going to be simply too high, if you keep screwing with us, well, then you have to establish that deterrence. And you establish that deterrence, by -- by always beating them on the escalation ladder. So far, we have failed to do that. We've had 165 attacks since October, and we have failed to establish the tariffs because they keep doing it. They keep trying to kill Americans, and they finally succeeded.
Now luckily, that finally, that finally got a response from our president, from multiple senators from myself, were saying, we're holding Iran responsible. Maybe we should look at the mutual look at targeting leadership, we should look at targeting infrastructure. I don't have that exact list of targets, right, you can ask me what exactly I would target, because I'm not in the Situation Room. The Department of Defense gives the President a list of targets. These good targets could be people, they could be infrastructure, they could be inside Iran, it could be outside Iran, it could be part of any one of those groups that you just mentioned. And there's going to be a risk assessment associated with each one of those options. My advice would be to choose the option that makes you just a little uncomfortable. Because if you're choosing that option, you're choosing a disproportionate response that will reestablish deterrence and make them think twice about ever doing this again. I think that Hezbollah's statement was -- was interesting, because it seems clear to me, this is my guess, that Iran -- the Ayatollah gives them a call and says, hey, you better take full responsibility for -- for this because now they're calling -- now they're calling for retaliation against us, Iran, even though they probably, of course, have a man's and equipped and funded those groups. They are directly or indirectly responsible. But they're trying to get out of it now because they're scared. And that's a good sign.
Now, that doesn't mean we don't respond, you still need a disproportionate response. And I look forward to seeing what the President has in mind. And I hope that it's -- that it's -- that it's something much stronger than what's been getting done in the last few months.
KEILAR: It is an interesting response, certainly from Kata'ib Hezbollah and was very surprising that they did that. So, what you're talking about is something that could result in further U.S. service member casualties. And I mean, listen, you certainly know, service members sign up, right? They take on this risk so that the vast majority of Americans do not have to do that.
But if we're just being honest about what this could prompt, that is worth the risk it sounds like in your estimation, in your evaluation of the situation, how should Congress, Republicans and Democrats then communicate about that? Because so often what you hear is the politicization of these deaths?
CRENSHAW: Yes, it's a good question. It's one that many ask, and I always scratch my head when it's asked, because, because I guess my response is, what choice do you think we have? Right? So there seems to be this, this, this the sense of false choices that many people believe in, which is we can just have peace if we choose peace. But here's the thing about peace. The other side, always, always, always gets a -- always gets a say, and whether you have peace or not.
And so, we didn't do anything to instigate this particular attack that killed three service members. So, by the logic of doing nothing, and maybe, you know, asking for peace, or maybe sending them nice, nice letters or something, you know, we're going to assume that they're just not going to keep killing Americans. Why would we assume that? I mean, it's within their doctrine to keep killing Americans and expel us from the territory. That's that -- that's their whole point of existence. It has been for 20, 30 plus years, it's how we ended up in the global war on terror in the first place.
So, it's just too naive to believe that we can never stand up for ourselves. And that standing up for ourselves only hurts us more. That's how you keep getting bullied, right? International relations, foreign policy, it's not that different from your typical schoolyard bullying tactics. If you want to keep getting bullied, keep, keep signaling to the bully that it's OK when they push you down. And then you'll keep getting bullied and your friends will keep getting.
KEILAR: I don't think anyone's suggesting --
CRENSHAW: Eventually you have to stand up for yourself.
KEILAR: I don't think anyone's suggesting not doing anything. Right. It's the range of options at this point and how aggressively you respond, which is being debated at this point in time.
I do want to ask you about something pretty important though, which is Barak Praveen of Axios, who is an analyst here at CNN as well, has reported that Secretary of State Blinken has asked the State Department to review policy options for possible U.S. and international recognition of Palestine as a state. And this is coming a day after the UK Foreign Minister said that the UK will consider doing that in an effort to help end the war. How do you react to that possibility?
CRENSHAW: It's a much longer conversation. First of all, what are they considering to be Palestine? Are they considering Gaza to be Palestine? Are they referring to the West Bank? I'd love to hear their reasoning as to how they assess it might improve the situation.
Look, we as Americans, Democrat and Republicans have been trying to figure out whether it's a one state or a two-state solution for 30 years at this point. It doesn't work because we're not the ones who live there. And we don't understand the history that literally lives within each and every one of those Israelis and Palestinians. So, at first, it strikes me as a bit naive given the current situation. But you're -- me, this is the first I've heard about it. So, I'll wait more details.
KEILAR: Yes, that is certainly fair as you seek more details on that. Congressman, we certainly appreciate you being on with us. Thank you so much.
KEILAR: And still ahead, Met's Mark Zuckerberg and other big tech CEOs on Capitol Hill being grilled by lawmakers for failing to protect kids. We have a live report from the Hill.
Plus, FBI Director Chris Wray also on Capitol Hill today with the dire warning that Chinese hackers are preparing to quote wreak havoc on U.S. infrastructure.
KEILAR: Today a emotional sometimes testy hearing on Capitol Hill that brought really some extraordinary moments. Members of the Senate Judiciary Committee taking turns grilling social media executives about what they're doing, or not doing to keep kids safe on their platforms. The CEOs of Meta, Instagram, TikTok, X of course, formerly known as Twitter and Discord all testified as family members of children who died after engaging on social media sat right behind them in the hearing room, some of them even holding signs with pictures of their loved ones.
At one point, Met's Mark Zuckerberg, at the prompting of Senator Josh Hawley stood face to face with those families and apologized.
(BEGIN VIDEO CLIP)
SEN. JOSH HAWLEY (R-MO): There's families of victims here today. Have you apologized to the victims? Would you like to do so now?
MARK ZUCKERBERG, CEO, META: Well --
HAWLEY: They're here, you're on national television. Would you like now to apologize to the victims who have been harmed (INAUDIBLE) you're not showing the pictures? Would you like to apologize for what you've done to these good people?
ZUCKERBERG: I'm sorry (INAUDIBLE) it's terrible in knowing that to go through that your families have suffered. And this is why we invested so much, and are going to continue (INAUDIBLE) to make sure that no one has to go through the types of things that your families have had to suffer.
(END VIDEO CLIP)
KEILAR: Want to go live now to CNN's Clare Duffy, who has been watching this hearing. And what a hearing, it has been Clare. What moments stood out to you?
CLARE DUFFY, CNN BUSINESS WRITER: Brianna, what stands out to me as a whole from this hearing is just that it seems that lawmakers are ready to do more than just talk about this issue, which is essentially all that they've done for the past two plus years. Senator Amy Klobuchar had some comments about this that I think really captured the feeling of lawmakers and families in the room today. Let's take a listen to that.
(BEGIN VIDEO CLIP)
SEN. AMY KLOBUCHAR (D-MN): There's been so much talk at these hearings and popcorn throwing in the lake and I just want to get this stuff done. I'm so tired of this. It's been 28 years what since the internet, we haven't passed any of these bills because everyone's doubled talk, double talk. It's time to actually pass them.
(END VIDEO CLIP)
DUFFY: You hear her talking about it's time to actually pass something. And lawmakers pressed these big tech CEOs today to endorse some proposed legislation that could hold them accountable. You hear them talking about the Kids Online Safety Act, the Stop CSAM Child Sexual Assault Material Act and even potentially repealing Section 230 which is a very important shield law that protects these big tech companies from being held accountable for the content that users post on their platforms.
The CEOs, of course touted some of their existing use safety measures. These are things that allow parents to observe their teens behavior on these platforms. But critics and the lawmakers today said that that doesn't go far enough. We also saw some interesting and rare apologies from these tech CEOs. We heard Mark Zuckerberg there, Snapchat CEO, Evan Spiegel also apologized to families whose children had died after buying drugs on that platform.
For me, the big question coming out of this hearing today is will these lawmakers actually take action here? This is an area of rare bipartisan support on Capitol Hill. But there were so many proposals today that it makes me wonder whether they'll be able to coalesce around a single plan of action, Brianna
KEILAR: Yes. That is a very big question, but they certainly need to. Clare Duffy, following all of this for us, thank you so much.
SANCHEZ: Just one day after we reported that Xi Jinping promised President Biden that China would not interfere in the 2024 election. FBI Director Christopher Wray is revealing that much more could be under attack by Beijing. During a hearing on Capitol Hill, one cybersecurity leader warned that China's hacks on infrastructure are quote, truly an everything everywhere, all at one scenario.
Listen to this.
(BEGIN VIDEO CLIP)
CHRISTOPHER WRAY, FBI DIRECTOR: China's hackers are positioning on American infrastructure in preparation to wreak havoc and cause real world harm to American citizens and communities if and when China decides the time has come to strike.
(END VIDEO CLIP)
SANCHEZ: CNN cybersecurity reporter Sean Lyngaas tracked the hearing. Sean, this is by far the most direct and public admission from Director Wray that China's a serious threat.
SEAN LYNGAAS, CNN CYBERSECURITY REPORTER: That's right, Boris. I mean, we've known about this hacking campaign, and we've been reporting on it for several months. The difference now is the direct blunt warning to Americans about this. Chinese hackers have, according to U.S. officials position themselves in the most sensitive of infrastructure, ports, maritime ports, transportation networks, all of that, in the event of a crisis with Taiwan, they might use that access to disrupt U.S. military operations.
So, it's very much a high-level national security issue that the average American is probably saying, well, what can I do about this? Actually, there is something that that you can do that's update your software -- software more often and protect yourself. Some of the ways that the Chinese hackers are getting in are quite basic. And they're using kind of internet routers that we use at home to cover their tracks. So, if I'm not able to get in there, downstream is where they're targeting, you know, more critical infrastructure. So, it's actually a case where this seems like a very, you know, remote issue for some people like what can I do, but there are things that you can do today. And this issue is coming to the fore, like you said, at a time when we're reporting that President Xi Jinping gave President Biden assurance that he wouldn't interfere in the U.S. election in 2024.
Now, U.S. officials, we're watching closely to see how that pans out. They're not taking them out as word. And so, it's several months now until the election and that's undercurrent to all of this, Boris.
SANCHEZ: Yes, honesty toward the United States, perhaps not exactly a forte of Xi Jinping. Sean Lyngaas, thanks so much for the update.
Still ahead, former President Trump making a big play for working class voters, meeting with members of the Teamsters today hoping to cut into President Biden's union support.
And the CEO of Boeing says his company has quote, much to prove in the wake of that scary midflight blowout. More on his message to employees in just a few minutes.