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Fed Expected To Raise Interest Rates Amid Stubborn Inflation; Congress Heads Home Until November Without Addressing A.I. Risks; NTSB Expected At Site Where News Helicopter Went Down, Killing 3. Aired 1- 1:30p ET

Aired September 16, 2026 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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BORIS SANCHEZ, CNN HOST: Fed fight, President Trump's handpicked Federal Reserve chief could be one hour away from announcing the very thing the White House doesn't want.

Plus, tech CEOs think the A.I. threat is real and needs action. But don't expect Congress to act anytime soon. House Speaker Mike Johnson sending the House home until November.

BRIANNA KEILAR, CNN HOST: And targeted in Texas. Students find themselves at the center of a controversy sparked by a racist social media post. We'll be speaking to two of them this hour. We're following these major developing stories and many more all coming in right here to CNN News Central.

SANCHEZ: Coming just one hour from now, the Fed's fight against inflation runs up against President Trump's relentless push for lower interest rates. The president's handpicked Fed chair, Kevin Warsh, is stuck in the middle. Of course, lower rates can lead to cheaper borrowing by companies, which can then hire more workers. The problem is those things also lead to higher prices and prices are already a problem with inflation well above the Fed's target rate of 2 percent.

Of course, the war in Iran has driven up the cost of oil and gas and made things generally more expensive for Americans. Most economists think this has made the decision easy for the Fed to simply raise rates a quarter point. As we await the announcement, we're joined by Rick Newman. He's a business columnist and founder at the Pinpoint Press. Rick, great to see you as always. Wall Street, of course, widely expecting this first rate hike in three years. Are you expecting a raise as well?

RICK NEWMAN, BUSINESS COLUMNIST & FOUNDER, THE PINPOINT PRESS: I think so. And the surprise at this point would be if the Federal Reserve does not hike interest rates. The big question is, I mean, everybody knows we have inflation that's too high. Everybody sees that at the gas pump and their household energy bills. The question the Fed is working through is whether that is just a temporary thing that is the result of energy prices going up because of the Iran war, or if it's more of a permanent thing that the Fed has to deal with in different ways.

Now, we're now in the seventh month of the war, so, you know, there's a point at which a temporary price hike starts to look pretty permanent, which is what we've had with the Iran war. The big thing that's new since the Fed last met in July is diesel prices hitting new record highs. I mean, I think they're around $6.25 a gallon. That raises the cost of everything you ship by truck, producing food, harvesting food, and that's the kind of inflation that tends to stick around.

So that's the reason the Fed is probably going to hike by, as you said, one quarter point. It's a small hike, but there could be another small hike or maybe two small hikes behind it in the months ahead.

SANCHEZ: Is one or two of those small hikes in your eyes enough to address this persistent inflation well above the Fed's target rate?

NEWMAN: I think the Iran war is a bigger question than where the Fed sets the interest rate. So when the Fed makes an interest rate move, it usually takes six months for that to work its way through the economy and actually have the effect. So if you're raising rates, what you're trying to do is slow down economic activity just a little bit, tamp down demand, which in theory ought to bring prices down.

Where's the Iran war going to be in six months? I mean, you know, Trump has said he thinks that once the U.S. midterm elections are over that Iran will back down. So if that happens, you know, six months from now, we might have gasoline prices back closer to $3 than to $4. So if you're a policymaker at the Fed, these are the very things you've been talking about for the last two days as they've been having this meeting.

SANCHEZ: Right. So the 10-year Treasury yield has reached its highest level since 2007. You pair that with these slight increases in interest rates. I wonder how consumers are going to wind up feeling the impacts.

NEWMAN: So the 10-year Treasury yield is an interest rate, and that is more important than the Federal Reserve's short term interest rates, because that 10-year that determines the cost, the price of mortgages and mortgages as a benchmark are now around 7 percent, also the highest in several years. So these are -- these two things are kind of connected, but they also are separate.

And if you are somebody who needs to borrow money, you are already paying higher rates than you were one month ago, two months ago and so on. The sort of irony of what the Fed might do today is if the Fed does hike short term interest rates, that will tell markets, OK, we get it. We have to deal with inflation. We're now taking action and not just talking about it. And that might actually bring lower term interest rates down a little bit or maybe stabilize them.

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So and the whole reason is markets will say, OK, good. The Fed is on the case. They're actually doing something. So maybe now we don't need to be bidding up the cost of money or the cost of borrowing money in the future because maybe they will get inflation under control. That's what we really want to happen is we do want the Fed to get inflation under control and prices to stabilize.

SANCHEZ: Yes. So Kevin Warsh, as you know, has been critical of the Fed over communicating or in his eyes, over prognosticating what it intends to do in the future. He's also up against the President who has expectations about lower rates. What are you going to be listening for in the next hour to try to parse how he views the situation in relation to the White House and what markets are calling for?

NEWMAN: Well, it's easy to be a critic when you're on the outside and then when you're on the inside, you have to deal with all the people who are criticizing you. And that's what Kevin Warsh is dealing with right now. So he thinks the Fed has sort of been babying markets too much by telling them exactly what the Fed is going to do one month from now, two months from now. And he wants to reel that back in.

But that that might also just create more instability in markets and damage the credibility of the Federal Reserve. So we're looking for number one, is Kevin Warsh going to be a little more generous in terms of saying what the Fed might do? But what I'm really looking for is how does Trump react if the Fed does actually raise rates? Because he's kind of been going ballistic about rising interest rates and there's nothing he can do about it.

He thinks that if the Fed just his guy, he just appointed Warsh, if he would just lower rates and everything would be fine, it would not be fine. So I'm looking for Trump to start going after Kevin Warsh the same way he went after his predecessor, Jerome Powell, because the situation is kind of the same. The Fed needs to raise interest rates.

SANCHEZ: And we'll see what Warsh says at about 2:30 and then we'll see how President Trump responds. Rick Newman, appreciate the perspective.

NEWMAN: Thanks again.

SANCHEZ: So one week after an A.I. insider warned that technology could cause human extinction, Congress is heading home early for a week's long break. And once they leave later today, lawmakers won't be back until after the midterm elections, meaning that these calls for tech leaders -- from tech leaders for possible government regulation, they're going to go unanswered.

KEILAR: Yes. Open A.I. CEO Sam Altman, who has backed the idea of independent watchdog, says he understands why people are worried, but he thinks the industry can operate safely.

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SAM ALTMAN, CEO, OPENAI: I am very confident in our company's ability, our industry's ability to do this safely, to make sure that we keep alignment and safety and monitoring way ahead of capabilities to slow down or stop if we get to a point where we can't. But I'm disappointed by how it's been framed. (END VIDEO CLIP)

KEILAR: Now, a group of Democratic lawmakers who are urging House Speaker Mike Johnson to cancel the upcoming recess in order to address A.I. risks were asked about the possibility of self-regulation during a press conference this morning. Here's part of that.

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REP. DON BEYER (D-VA), CO-CHAIR, CONGRESSIONAL ARTIFICIAL INTELLIGENCE CAUCUS: We don't be naive enough to think, oh, self-regulation is just going to work. We don't allow that in virtually any other sector of our government. We don't allow it. That's why we have the FCC. That's why we have NHTSA. That's why we have FTC and the FCC.

REP. LORI TRAHAN (D-MA), CONGRESSIONAL ARTIFICIAL INTELLIGENCE CAUCUS: I don't think it's an option to abdicate our responsibility and to come home, nor do I think it's an option to abdicate our responsibility to tech executives to regulate themselves. We've seen that movie before where those of us with children are actually living it with social media. So I think it's completely irresponsible.

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KEILAR: Let's talk about this now with CNN contributor and host of The Rip Current podcast, Jacob Ward. First, Jacob, just the timing of this and Congress not being in town. Is it a problem that the House is going to be gone until after the midterm elections without having addressed A.I. regulation? Do we have that time on our side?

JACOB WARD, CNN CONTRIBUTOR: I mean, certainly it doesn't seem to jive with the urgency that folks in Silicon Valley and around it are articulating here, Brianna, right? I mean, this is if -- it's kind of like if you were -- if space aliens were to land on the planet and say, so wait a minute, you've got people here saying the thing they're building is going to potentially wipe out humanity the next decade. But these the folks who make the rules are going, what, home to relax? I don't understand. And I would be hard pressed to explain that timing.

So, no, I would say we don't have a particularly good piece of time here when it comes to the break that they are taking, especially because we're also at a point when the White House is going to meet with President Xi Jinping next week. And, you know, who knows what kind of national, you know, international agreements might stem from that. The idea that domestic lawmakers are going to have no fingerprint on any of that stuff until after the midterm sounds seems pretty ridiculous to me.

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SANCHEZ: And that national security angle with China's A.I. advancement and the question of whether Trump and Xi can come to some sort of an accord to as a team pump the brakes on innovation. I wonder what you make of these estimates from Representative Nathaniel Moran, who is co-sponsoring this A.I. kill switch bill, suggesting that China is only three to six months behind the U.S. in A.I. development. Is that accurate?

WARD: Well, a Stanford study found that China's top model DeepSeek is really only about 2.7 percent behind Anthropic's top model on some of the top benchmarks. And so they are truly neck and neck. And that's in spite of the export restrictions we put into place. It's in spite of the fact that China's A.I. industry is as heavily regulated as any industry on Earth. They carry incredibly burdensome regulations. And yet that industry has managed to pull out some very, very amazing computational efficiencies that have allowed it to be competitive with a country that has no federal law about this at all.

And absolutely pours money into enormous data centers and enormous amounts of compute. And so it is certainly the case that China is neck and neck with the United States. And it's really astounding considering just how wide open the industry is here in terms of its resources, its regulation and how closed off China is.

KEILAR: Jacob, the U.S. has tried to slow China down, right, restricting certain A.I. chips. Chinese companies, though, they've managed to develop workarounds. Absent a bilateral agreement, them working together on something, can the U.S. really do much more to slow China down?

WARD: You know, this is the tough thing, Brianna, right? Because you have two nations here, two superpowers with absolutely opposite attitudes about what A.I. is even for. You know, in China, the --you know, here we talk, of course, about it's going to make your life easier. It's going to make us a huge amount of money. And it might get out of control. We have to be careful. That is not the conversation happening in China.

In China, the conversation touches a little bit on the existential risk, but it's mostly about social cohesion. What, you know, instability, social instability could deepfakes create? That's why at the beginning, the regulations in China were all about making sure the truth was truth in their words. You know, we would call this censorship and propaganda, but they would call it trying to make sure that this stuff doesn't push false narratives.

You know, now we're in a world in which, you know, you have the Trump administration, which is not exactly showing a great hand in terms of its ability to wring good ideas and good, you know, deals out of foreign adversaries. I mean, the last time we saw any kind of agreement between China and the United States was under the Biden administration. And that was only an agreement that humans should be the ones deciding whether nuclear weapons are used. That's as far as we've gotten.

And so the idea that you're going to come together with a country that considers all of our talk about existential risk and the need to slow down as a gambit to try and be more dominant, because we talk as a matter of national policy about being dominant in a way that China does not. I think we're in a really tough position when it comes to negotiating with them in good faith, much less striking the kind of international accords that the leaders here say they want, Brianna. SANCHEZ: It's notable that you mentioned that skepticism among Chinese leaders about the existential threat or at least an apprehension to the argument when you have President Trump himself also describing this as a hoax. And you had Attorney General Todd Blanche yesterday suggesting that there was something interesting about the timing of these stories coming out. I do wonder when it comes to that kill switch bill, the kill switch isn't just like a button that you press. It would essentially give the Department of Homeland Security reign oversight over these companies to observe them and then issue a command order that then these companies would legally be obliged to comply with. Should people trust DHS with this oversight if the President himself is suggesting that this is a hoax?

WARD: I mean, this is the thing, right? Like anyone in -- who's sort of serious in this field has always pointed to the idea that there are just, you know, hundreds of very brilliant, qualified academics, not just in A.I., but in political science, in the social sciences, who have been thinking about the best ways to regulate A.I. and how to think about its dangerous effects for a long time. The idea that instead, you know, the DHS is going to somehow be the kill switch holder. I mean, that's a pretty Chinese model, I have to tell you.

Like that is the kind of authoritarian attitude that China has taken toward A.I. That's why it, you know, you see it, you know, slap restrictions on Chinese companies. And within a couple of days, Chinese companies are coming, too. So I just think that we're thinking about this the wrong way, right? The threat that we see here is, of course, connected to national security, but it also has to do with jobs. It has to do with our relationship with one another. It has to do with the brains of our kids. And I think DHS is not exactly the agency that's thinking deeply enough about those things.

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KEILAR: It's a really important conversation to have. Jacob, thank you so much for being with us. We've been seeing a lot of you lately --

WARD: Appreciate it guys.

KEILAR: -- and I think that's going to continue.

Still to come, an investigation underway after that deadly news chopper crash in Los Angeles. We have video showing what happened moments before the helicopter went down.

Plus, a desperate search for survivors after a war-damaged residential building in Gaza suddenly collapsed, trapping dozens of people, including children.

SANCHEZ: And a Republican candidate in Texas refusing to back down from a xenophobic online post against a group of students. We'll speak to those students when we come back.

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[13:20:05] KEILAR: A Los Angeles television station is mourning two of their own today after a news helicopter carrying a reporter and their pilot crashed. A third person on the ground was also killed in this. The NTSB is expected to be at the accident site today to try to figure out why this chopper went down last night. Listen to the anchors on KNBC reporting the deaths of their own colleagues.

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COLLEEN WILLIAMS, KNBC ANCHOR: Coming on the air with heavy hearts tonight because we lost valued friends and colleagues just before 7:00 p.m. News chopper 4 crashed in Chatsworth while on assignment tonight.

CAROLYN JOHNSON, KNBC ANCHOR: Both people on board and a third person on the ground were killed. Our crew was there covering a deadly crash involving a bus and an SUV just a couple of blocks away.

WILLIAMS: Here is a photo of our dear colleagues tonight. News chopper 4 reporter Eliana Moreno and her pilot George Marciniw.

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KEILAR: CNN aviation correspondent Pete Muntean is here with the latest. Pete, this is, I mean, this is awful. What are you hearing about this?

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Well, here's what we know right now after what Los Angeles Mayor Karen Bass called a heartbreaking night for Angelenos. This KNBC helicopter was covering a fatal collision involving an SUV and a city bus when it crashed only a few blocks away. Witnesses said something clearly appeared wrong with the helicopter before it began losing altitude.

The aircraft was destroyed so badly that firefighters initially could not even make out its tail number. KNBC identified the two on board as aerial reporter Eliana Moreno and George Marciniw. Both worked for contract helicopter operator Angel City Air. A third person on the ground also killed.

Flight tracking shows the helicopter had been airborne for about an hour and 15 minutes much of that time orbiting the crash scene at a relatively slow airspeed. One of the biggest clues investigators have right now comes from the video shot inside the helicopter. We'll warn you it is difficult to watch but listen closely to what happens in the final moments here.

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UNIDENTIFIED FEMALE: Can you pull up?

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MUNTEAN: That horn that you hear is especially important. That's the warning for low main rotor RPM. And around the same time you can also hear the sound of the helicopter change dramatically. Investigators will now have to determine why the rotor speed was decaying. Was there a loss of engine power? Was there another mechanical problem? In a single engine helicopter like this maintaining rotor RPM is absolutely critical.

If the rotor slows down too much the helicopter can lose lift that it needs to stay airborne and in the event of an engine failure the pilot would typically lower the collective that's on the side of the pilot controls up and down and enter an emergency descent called an autorotation using the airflow of descent to keep the rotor on top turning.

But where this helicopter was operating very low over a densely populated part of Los Angeles very few clear places to land that gives a pilot very little time and very few options. The NTSB will be looking closely at that video, the helicopter's maintenance history of course and especially what caused that rotor RPM warning to sound in the first place. So much for them to dig into here. Not only the physical evidence on the scene there but also this digital footprint left behind of the stream that continued as this helicopter was descending into the ground. So, so sad.

KEILAR: Yes, there are some clues it sounds like at least for them to begin investigating. Pete, thank you so much for taking us through that. We appreciate it.

Still ahead, how could a social media influencer change public health in America? A closer look at President Trump's nominee for Surgeon General.

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And unique alliance, Canada getting a special invitation from the European Union. We'll tell you about -- tell you all about it coming up on CNN News Central.

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SANCHEZ: "The New York Times" and "The Washington Post" say the Trump administration has approved a $2.8 billion sale of heavy bombs to Israel. "The Times" says, "The proposed sale would include 40,000 one- ton bombs, whose use by Israel and Gaza and Lebanon has drawn international anger because of the civilian harm caused by their wide blast radius." The Biden administration halted the delivery of one-ton bombs to Israel two years ago, and President Trump reversed that decision shortly after taking office. Let's go live to Jerusalem and CNN's Jeremy Diamond. Jeremy, what more are you learning about this?

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, Boris, it's certainly not the first time that we have seen the United States deliver these kinds or approve the sale of these kinds of munitions to Israel. Over the course of this war in Gaza, the Biden administration provided these weapons to Israel before ultimately pausing that. The Trump administration has already twice now allowed the sale of these weapons to go through to Israel. And now we're seeing this $2.8 billion package which includes 40,000 2,000 pound bombs, 2,000 of those -- 20,000 of those MK-84 bombs, another 20,000 that are called BLU-117s. And then there are, there's another 20,000 I-2000 bunker busting bombs that can be used to target underground facilities.

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But we have seen Israel use these weapons in multiple battlefields in the Gaza Strip, of course, in Lebanon and elsewhere as well. In Gaza, we have seen the kind of impact that these weapons can have when they are dropped --