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Trump has Repeatedly Threatened to Ramp Up Economic Pressure on Russia if it doesn't End War with Ukraine; Young Survivors Recount Frightening Moments During Attack; UK, France, Germany to Reimpose Iran Sanctions; Battle Over Fed Firing Escalates with Court Hearing Today; Emotional Coco Gauff Advances to 3rd Round. Aired 9-9:45a ET

Aired August 29, 2025 - 09:00   ET

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

[09:00:00]

(COMMERCIAL BREAK)

ELENI GIOKOS, CNN HOST, CONNECT THE WORLD: This is the view from the Israel Gaza border, as Israeli forces declare Gaza City a dangerous combat zone

ahead of a major assault. It's 04:00 p.m. there, and it's 05:00 p.m. here in Abu Dhabi. I'm Eleni Giokos. This is "Connect the World".

Also coming up, Russia launches the second biggest air assault of its war on Ukraine, two weeks on from Vladimir Putin, show of diplomacy in Alaska.

The courtroom battle begins in Donald Trump's push to remove Federal Reserve Governor Lisa Cook, I'll be speaking to the Former Vice Chair of

the Federal Reserve, Alan Blinder.

All right, let's take a look at how markets in the U.S. are set to open. These are the futures. You can see the DOW is down around a quarter of a

percent, S&P also in the negative, NASDAQ is down half a percent. We had core inflation numbers for the month of July out a short while ago, showing

that they increased 2.9 percent seasonally adjusted, it is in line with expectations.

This is excluding food and energy, but in line with what markets had priced in and importantly, the Federal Reserve's target is 2 percent. So, we're

far away from that. All right, we'll check in on those markets in about 30 minutes from now.

In the meantime, we will see if Trump's -- with Lisa Cook has any bearing on those markets. Another key story today the tax loophole that led

everyone from Amazon to fast fashion sellers flood the U.S. with cheap goods, has ended what's known as the De Minimis Exemption. More on that at

the half hour when markets open. And this is why, of course, we're seeing the NASDAQ down around half a percent in pre-market trade.

In the meantime, we begin with the intensified effort to end Russia's war on Ukraine. And the coming hours a high stakes meeting between a Ukrainian

Delegation and U.S. officials is set to take place in New York. Ukraine is pushing for security guarantees from its Western allies as part of a peace

deal, but Moscow warned again earlier today that any type of security deal would only increase the risk of conflict between Russia and the West.

The talks in New York come just a day after Moscow launched a massive air assault on Kyiv that killed at least 23 people and destroyed a number of

buildings, according to Ukrainian officials. We've got CNN's Salma Abdelaziz following the story for us. Salma, good to see you. Look, a

source familiar with the talks tell CNN, Ukraine is ready for a presidential level meeting with Russia, but Moscow is the impediment. What

more are you learning this hour?

SALMA ABDELZIZ, CNN CORRESPONDENT: Yes, and that's something that very much President Zelenskyy has echoed time and time again, that he is open to

peace efforts. He is open to a bilateral meeting, but he believes that it is President Putin who is dragging his feet, and we have seen signs from

the Kremlin that simply is the case.

They have said that it is too early for a meeting. That's what the Kremlin has said, that lower-level technical meetings need to take place first.

They've even floated the idea that maybe President Zelenskyy isn't the right person to meet with, because Russia doesn't consider him a legitimate

leader.

Even President Trump himself has cast doubt on the possibility of a bilateral meeting. He said earlier this week that he believes that

President Putin simply doesn't like President Zelenskyy, and therefore he might not meet with him. So even with President Trump leading in pushing on

these initiatives, even with that being the major headline that's come out of the Alaska Summit.

I don't think anyone believes that this is going to take place, and the possibility of it taking place has been reduced ever more, of course, by

the attack. Just yesterday, one of the largest aerial assaults launched by Russia on Kyiv, more than 600 or nearly, rather, nearly 600 drones

overnight fired at the capital, more than 30 missiles, over 20 people killed. President Zelenskyy saying, look, that is President Putin's

response to peace efforts.

GIOKOS: All right. Salma, I mean another thing, and you're talking about this massive air assault on Ukraine. And frankly, every time we see any

move and shift on the diplomatic front, it seems that President Putin comes back with these massive strikes in Ukraine. What kind of pressure can

President Trump exert on Putin, things like economic sanctions? And whether that threat is finally going to come to fruition to push Putin into a

corner?

ABDELAZIZ: I mean, economic sanctions really is one of the only tools in the arsenal for the White House, and President Trump has said that he is

willing, just a few days ago, to wage economic war. Those were his words on Russia to push those sanctions.

But here's the thing, President Trump has wavered on this possibility of imposing greater sanctions on Russia. It seemed after that Alaska meeting,

that face-to-face meeting with President Putin, that he had taken it off the table. He said that after President Trump said that after the Alaska

meeting, he did speak again to President Putin over the phone.

[09:05:00]

He described their conversations as good every time. But then, and I'm paraphrasing here, President Trump says my conversations are with him --

with him are good, and then he hits another city, or he strikes another town, and I get angry about it. So, you see that sense of back and forth

with President Trump simply not making a clear assessment on the Russian Leader.

GIOKOS: Yeah, and he's shown his frustration even taking that view to Twitter in the past. So yes. Salma Abdelaziz, thank you so much for that

update. Look, we're also keeping a close eye on developments in the Middle East, where Israel's military has declared Gaza City a, quote, dangerous

combat zone. It comes as the IDF confirmed the initial stages of an attack on Gaza City and said it was operating with great force on the city's

outskirts.

Israel's also said that a tactical pause in military activity for humanitarian reasons that that has been in place since last month, will no

longer apply to the city. As fighting intensifies, Palestinians are preparing to evacuate once again.

(BEGIN VIDEO CLIP)

RIZK ARANDAS, DISPLACED PALESTINIAN: The number of my family members is seven. I was displaced from Gaza City to the South to Khan Yunis. I was

displaced four times at Khan Yunis. I was displaced to Rafah. When the tanks entered Rafah, I moved to Western Rafah, then to Khan Yunis, then to

Nasrat, then to Khan Yunis, then to Gaza City.

I was displaced about 9 or 10 times. Of course, the cost is enormous and the situation is really difficult. What should we do? Do we stay here to

die, to be broken. My two brothers died. My mother was martyred. My cousins were killed before my eyes. What should we do? We keep moving from one

place to another until God above looks upon us.

(END VIDEO CLIP)

GIOKOS: All right, CNN's Nada Bashir is following the story for us. And Nada, we're just hearing these tragic stories of people being displaced

once again. In the meantime, the IDF says and declaring the Gaza City is dangerous combat so and what is the latest?

NADA BASHIR, CNN CORRESPONDENT: Well, look Eleni, we've been hearing those warnings from the Israeli military for some time now, around the

intensification of their planned military operation. We know, of course, that the Israeli Security Cabinet, Prime Minister Netanyahu's Security

Cabinet had approved for a takeover of Gaza City by the Israeli military.

And what we've been seeing over the last few days is the Israeli military encircling Gaza City, moving closer into the city, and then simultaneously,

we've been seeing these evacuation orders intensifying. Now the Israeli military has warned that evacuation for civilians in Gaza City is, in their

words, inevitable.

We've seen, according to civilians on the ground, Israeli drones, quadcopters, dropping leaflets on this part of Gaza, telling civilians they

need to evacuate and move south, that the Israeli military operation will double down on Gaza City. And we've certainly been seeing that over the

last few days, just on the outskirts and in the northern parts of the city.

In particular in parts of Northern Gaza heading towards the city, where we have seen intensified artillery fire and airstrikes being carried out. They

say, focusing on dismantling Hamas infrastructure. But again, as we have seen time and time again, in Gaza, these are areas that are, of course,

filled with civilians.

And while some have taken heed of those warnings and evacuated moves southwards, many are saying that they will stay put. And of course, as you

were hearing from that testimony just now for so many civilians in Gaza, in fact, all civilians in Gaza, they have been forced to evacuate time and

time again.

This is not the first time. There was no guarantee of safety wherever they evacuate to and of course, the conditions are dire. And I think what's

important to note, in addition to Gaza City now being declared a dangerous combat zone by the Israeli military, is that there will no longer,

according to the IDF, be any tactical pauses.

And these pauses were put in place for humanitarian reasons because of the deepening and worsening humanitarian crisis in Gaza and across Gaza City.

We know, of course, that the U.N. backed report had identified famine, confirmed famine in this particular part of Gaza. So, there is certainly

fear and concern that the humanitarian situation will only continue to grow more catastrophic.

GIOKOS: Yeah, absolutely. And the consequences of this. I want to go to an important story as well, where Israel's operations have led to the recovery

of two deceased hostages. What more do we know on that?

BASHIR: That's right, this was confirmed earlier today by the Israeli Prime Minister's Office, the recovery of one body of a deceased hostage and the

remains of an unidentified hostage at this stage. The identified hostage has been named as Ilan Weiss (ph), 56-year-old hostage who was taken

captive from Kibbutz Beeri on October 7th, along with his wife and with his daughter.

Now his wife and daughter were actually released from captivity during that initial ceasefire in November 2023.

[09:10:00]

At the time, it was believed that Ilan Weiss was still alive, however, his community in Kibbutz Beeri had confirmed just a few months later that he

had in fact been killed on October 7th, and his body then taken captive and held in Gaza by Hamas there.

So that has been confirmed now by the Israeli Prime Minister's office. It's unclear at this stage where exactly the two bodies were recovered by the

IDF. That information hasn't been provided, but it's understood that they were both recovered in the same IDF operation.

And we have heard from the hostages and missing Families Forum, they have said that alongside the grief and pain that of course, this will bring two

family members. It's also providing some comfort in their words to the family after 692 days of waiting in the nightmare of uncertainty.

And of course, this will raise questions around the conditions of those hostages remaining in Gaza, now said to be 48 hostages remaining in Gaza,

20 of whom are believed to still be alive.

GIOKOS: All right, Nada Bashir, thank you so much for that update. A Deputy to U.S. Health Secretary, Robert F Kennedy Jr., is expected to serve as

Acting Head of the Centers for Disease Control and Prevention after the firing of its director. President Trump fired Susan Monarez when she

refused Kennedy's demand to resign after the two reportedly clashed over Kennedy's vaccine policies.

Three other top CDC officials resigned in solidarity with Monarez as they left Thursday, they received cheers from CDC employees who have been left

reeling from Kennedy's changes within the agency and the recent shooting at the CDC main campus in Atlanta. CNN's Health Reporter Jacqueline Howard has

more on the departure of Monarez and other top CDC officials and the fallout at the agency.

JACQUELINE HOWARD, CNN HEALTH REPORTER: There are drastic changes happening among CDC leadership right now and the atmosphere at the agency, it's one

of confusion, turmoil and a lot of emotion. At a ceremony on Thursday to salute departing CDC officials. I spoke with current CDC employees.

I asked them about how CDC Director Dr. Susan Monarez was ousted? They told me it was because she clashed with HHS Secretary Robert F Kennedy Jr., on

vaccine policies and priorities. And they told me she refused to fire several veteran CDC officials, they said they admired her strength and her

commitment to science.

Now they say there is some worry around whether science may be suppressed under new leadership. And I asked one retired CDC employee whether he has

seen this type of chaos at CDC before. Dr. Daniel Pollack retired in 2021 after a 37-year tenure. Here is how he answered my question.

(BEGIN VIDEO CLIP)

DR. DANIEL POLLOCK, RETIRED CDC EMPLOYEE: I was at CDC for 37 years through COVID. Left in November of 2021. I started in 1984 during the Reagan

Administration. I have never seen anything like what's happened in the last 24 hours. It's unprecedented.

(END VIDEO CLIP)

HOWARD: And now we expect HHS Deputy Secretary Jim O'Neill to step in to serve as Acting CDC Director. He has some history at the Department of

Health and Human Services. He worked for HHS during the George W. Bush Administration. At that time, he led changes to food regulation and

emergency response.

More recently, he had spent years as a technology and biotech investor in Silicon Valley. This was before joining HHS under the Trump Administration

in June. Now we expect to see him to be named as the CDC Acting Director moving forward.

GIOKOS: Well, we're learning more about the two children killed in this week's school shooting in Minnesota. Their families releasing statements

painting a heart wrenching picture of their loss. Her parents describe 10- year-old Harper Myoski as bright and joyful and a loving big sister whose laughter touched everyone she knew.

And 8-year-old Fletcher Merkel's father says he loved family, friends, fishing, cooking and any sport he was allowed to play. We're also hearing

directly from the kids who survived the attack, about those frightening moments inside the church.

(BEGIN VIDEO CLIP)

CHLOE FRANCOUAL, SHOOTING SURVIVOR: I felt scared, and I still feel scared, and it's just like I feel kind of like paranoid now. Since now I really

like every time, every time I see, like a window open, I want to close it because just I don't want it happening again.

[09:15:00]

And what's scary to think about is that, what if another person comes and I know it's not going to happen, but just there's a fear.

(END VIDEO CLIP)

GIOKOS: Well, authorities, meanwhile, continue to search for a motive as they pour through hundreds of pages of writings from the shooter, who they

say had a deranged fascination with prior mass shootings. Go to our website to learn more about Robin Westman's Journal Entries and the latest on the

investigation.

Coming up on CNN, the European Union is moving forward to put sanctions back on Tehran over its nuclear program. But is there an off ramp? My next

guest believes we may be past that point.

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GIOKOS: Iran says the move by the UK, France and Germany to reimpose U.N. sanctions is illegal and unjustified and will complicate any diplomatic

efforts to reach an agreement over its nuclear program. The European countries known as the E3 in nuclear negotiations with Iran triggered the

so-called Snap back mechanism that would lead to reinstatement of sanctions that were in place prior to the 2015 nuclear deal.

The process takes 30 days, giving Tehran a window for further talks with the Europeans. Now yesterday, my colleague Becky Anderson spoke to the

Chief of the International Atomic Energy Agency, who told her, there is still a path forward.

(BEGIN VIDEO CLIP)

RAFAEL MARIANO GROSSI, DIRECTOR GENERAL, INTERNATIONAL ATOMIC ENERGY AGENCY: I think there will be elements, positive elements on the table that

perhaps could help avert this possibility of this wide, you know, range in sanctions.

(END VIDEO CLIP)

GIOKOS: Well, joining me now live is Trita Parsi the Executive Vice President of The Quincy Institute for Responsible Statecraft. Trita, great

to have you with us. Thanks so much. I mean, I want to ask you if you share that optimism that we just heard from Grossi and whether you believe that

there is still light at the end of the tunnel.

TRITA PARSI, EXECUTIVE VP, THE QUINCY INSTITUTE FOR RESPONSIBLE STATECRAFT: I wish I did, and I would definitely favor a diplomatic solution. I just

don't believe that this move is actually going to bring us closer to that order, frankly, that the intent was to do so. I think we have to recognize

that for diplomacy to work, there has to be at least a level of commonality between the two sides.

And right now, on the issue of enrichment, the two sides are extremely far apart. That's the key issue. And if you force negotiations under these

circumstances, combined with the rather lack of patience that Trump appears to have, and the pressure that he's on there from the Israelis to engage in

new warfare.

[09:20:00]

I fear that if you force negotiations when the circumstances are wrong, you will actually ensure that we move faster towards a confrontation rather

than actually towards a solution.

GIOKOS: Yeah. So, Trita, you were recently on Steve Bannon's Podcast, and you said there didn't necessarily have to be something to put the wheels of

war in motion. And I want to play a short clip for our audience. Take a listen.

(BEGIN VIDEO CLIP)

PARSI: I don't think it necessarily will be a trigger. It will be whether the Israelis reach readiness to do this, meaning that they have replenished

their stockpile of interceptors. There's a political opening in Washington for them to push this through.

(END VIDEO CLIP)

GIOKOS: So, it's interesting because, you know, I listened to part of that interview, and you were talking about there was a push, ultimately, for

regime change, and that didn't happen. So, you know what is -- what is the ultimate goal here? Is it to try and figure out what to do on the nuclear

program? Is it going to be about regime change and so forth? How much of these sanctions really matter at the end of the day in your view?

PARSI: They do matter because, essentially, they securitize the entire Iranian issue, but also because of some practical implications. One, for

instance, they will put back into place the arms embargo that used to exist on Iran that was lifted in 2022 that could potentially make it much more

difficult for the Iranians to rebuild their deterrence capabilities.

Which is exactly what the Israelis were trying to destroy and part of their objective of turning Iran into another Syria or another Lebanon, a country

that Israel can bomb at will with impunity, without American involvement, requires that Israel degrades their deterrence capabilities to the point

that they really do not pose much of a challenge to Israel.

Israel failed to do so in its 12-day war, but the arms embargo -- will make it much more difficult for the Iranians to rebuild their capabilities.

GIOKOS: All right, just very quickly you are -- and I mentioned you're in Steve Bannon show on his podcast. What audience were you hoping to reach,

just very quickly on that so we can get to the other important topics.

PARSI: Well, when it comes to Steve Bannon's show you reach a lot of the people in the MAGA base that are very much against the U.S. getting more

involved in additional wars. I think this is one of the big things that have changed in the United States, that obviously there's a lot of anti-war

sentiments on the left as well, but there is a very fast-growing anti-war constituency on the right as well.

And it's not because they necessarily are in agreement with folks on the left on other issues, but they do recognize that all of these different

wars that the U.S. has gotten dragged in or dragged itself into have ultimately destabilized the world, made the United States less safe and

made the domestic political situation, economic situation worse off as well.

GIOKOS: So let me ask you this, because EU Leaders were just in DC, and we saw these remarkable pictures of them around President Trump. The question

is, how much buy in do they need from President Trump?

And of course, the audience needs to remember that EU Leaders need the United States to stay in the game and the fight against Russia in Ukraine,

and that is also an important, important balancing act. I mean, with superseding President Trump on the issue of Iran ultimately hurt the

Europeans?

PARSI: I think this is a very, very important point, because there's a significant shift in how the Europeans are looking at this issue. Back in

2003 when the Europeans actually created this constellation of the E3 it was aimed to prevent the United States from going into war with Iran after

having started the disastrous war with Iraq.

Now I think the calculations are very different. Years of sanctions have completely eliminated any trade between Iran and Europe. So, Iran is not

that important any longer. Iran's support for Russia against Ukraine has also turned Iran into a direct threat in the perception of the Europeans.

And if, by taking this escalatory step that I think was deliberately escalatory, I think part of the calculation is that this is a way to endear

themselves to the more hawkish wing in the Trump Administration, in order to be able to smooth some of the tensions that now exists between the

United States and Europe on other issues, including, of course, Russia and Ukraine.

Europe has become much, much more dependent on the United States in the last couple of years, and that makes it more important for them to set

aside other issues in which they stood up for their own interest in the past, such as preventing war with Iran, and now are aligning themselves

with the hawkish elements in order to make sure that they get what they want on the more important issues to them, which is Russia and Ukraine,

GIOKOS: Yeah. And I mean, as we said, there's this sort of a 30-day window for Iran to respond. And you're not as optimistic. Rafeal Grossi believes

there might be a window of opportunity. But could you describe what you believe the Iran relationship, sanctions will look like in 30 days?

[09:25:00]

PARSI: I fear that the sanctions will go forward at this window is far too short in order to be able to produce anything again, because the two sides

are so far away from each other on some core issues. And that then potentially would lead to the Iranians walking out of the NPT altogether

the Non-Proliferation Treaty, and that would be a major, major escalatory step, and it would put us even further down the path of a very negative

trajectory towards war.

And we have to remember, there were negotiations taking place. There were new negotiations scheduled on a Sunday, on Friday, Israel blew up the

negotiating table. So, I think we have to be quite clear who was at the table and who destroyed diplomacy.

GIOKOS: All right, Trita Parsi, always great to have you on. Great to hear your insights. Much appreciate it.

PARSI: Thank you so much.

GIOKOS: Well, I want to get you up to speed now and some other stories that are on our radar right now. The Trump Administration has a new plan to

restrict foreign students in the United States, it is proposing a rule that would change some student visas to only allow them to be in the country for

four years to the day, meaning they must leave immediately after that period.

Previously, those visas allowed the students to stay in the U.S. for 60 days after finishing their studies. One person is dead and dozens injured

in Indonesia's capital after violent clashes between students and police. Students demand changes to educational funding, school meal programs and

lawmakers' salaries and against police violence. Local media reports that riot police fired tear gas and water cannons into the crowd.

A court in Thailand has removed suspended Prime Minister Paetongtarn Shinawatra from office. She's been accused of a serious breach of ethics

over a June phone call she had with Cambodia's Former Leader. She appeared to criticize her own military and border clashes that killed a Cambodian

soldier.

CNN's Mike Valerio takes a closer look at the Thai Prime Minister's rise and fall and the circumstances that led to all of it, as well as the

fallout.

MIKE VALERIO, CNN CORRESPONDENT: Well, Paetongtarn Shinawatra, who was Thailand's youngest ever serving Prime Minister, is now removed from

office, effective immediately. So, what exactly is behind this move?

Well, a court in Thailand ruled that the now Former Prime Minister violated Thailand's ethics rules in a controversial phone call. The context this

goes back to tense border clashes over the summer between Thailand and Cambodia. Paetongtarn got on the phone with Cambodia's Former Prime

Minister, Hun Sen, and could be heard calling him, quote, uncle and appearing to criticize her own army's actions.

Paetongtarn added in that phone call that if Hun Sen, quote, wants anything, just tell me, and I will take care of it. End, quote, contentious

remarks that became the center of the court case against her. The phone call was recorded and leaked, confirmed as authentic by both sides, and

here is Paetongtarn after Friday's verdict.

(BEGIN VIDEO CLIP)

PAETONGTARN SHINAWATRA, FORMER THAI PRIME MINISTER: First and foremost, with respect for the justice process, I accept the verdict of the

Constitutional Court. However, as a Thai person, I would like to affirm my sincerity and my genuine intention to always work for the country. In the

leaked audio clip, I didn't ask for anything for my personal gain.

(END VIDEO CLIP)

VALERIO: So, this leaked phone call struck a nerve in Thailand, where nationalist fervor was already running high over the border dispute and

opponents accused Paetongtarn of compromising the country's national interests. The five-day conflict eventually resulted in at least 38 people

dead, mostly civilians, and forced hundreds of thousands to flee their homes.

Paetongtarn is now the latest. The fourth member of her family to be dismissed as Premier. Her father, aunt and uncle have all been forced out

of office. So as for what happens now, Parliament will have to approve a new prime minister. If they can't, it raises the prospects of new

elections, and Thai voters may have to decide who becomes prime minister next, Mike Valerio, CNN Seoul.

GIOKOS: All right, we know President Trump is a real estate man with very specific ideas about how things should look. And now he's spelling out his

vision for government buildings. One of his latest executive orders mandates most federal structures, quote, embrace classical architecture and

avoid something like this.

The FBI building in Washington, DC is a well-known example of the brutalist style, which the president noted should not be replicated. Normally, the

White House does not wade into architecture decisions, but with his empire built on luxury properties, perhaps President Trump couldn't help himself.

All right, up next, the Fed Governor, fired by the president, is heading to court to square off with the Trump Administration that is happening in

Washington, but could have an impact on global markets.

[09:30:00]

That as we await the start of trading on Wall Street this Friday, we're a few seconds away, and there it is the opening bell in New York -- at the

New York Stock Exchange. I will be back right after the short break with more news today with CNN.

(COMMERCIAL BREAK)

GIOKOS: Welcome back. I'm Eleni Giokos in Abu Dhabi, and you're watching "Connect the World". This week, we've been watching Donald Trump exert

pressure on America's Central Bank like no U.S. President has before, and today, a battle of wills comes to a head in court.

A judge is holding a hearing next hour on a lawsuit filed by Federal Reserve Governor Lisa Cook. She is challenging her dismissal from the Fed's

board ordered directly by President Trump. He justified her dismissal by accusing Cook of lying on her personal mortgage paperwork.

The Trump Administration is digging in on the narrative that she's unfit to serve on the Fed late Thursday, leaving new mortgage fraud allegations and

recommending a criminal investigation. But President Trump rarely hides his true motivations. Listen to what he has to say.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: We'll have a majority very shortly. So that'll be great. Once we have a majority,

housing is going to swing, and it's going to be great. People are paying too high an interest rate. That's the only problem with housing.

(END VIDEO CLIP)

GIOKOS: Well, he wants to install a friendly majority at the Federal Reserve that is willing to do what the bank has so far resisted lower

interest rates. We'll see how this plays out in the courts. It could be a decisive moment in the Fed's fight to maintain its independence.

I want to get more of an insider's view on what's going on at the Federal Reserve. Alan Blinder was on the Fed's Board of Governors and served as a

Vice Chairman during Bill Clinton's Presidency. He's also a Longtime Professor at Princeton joining us now from New Jersey. So great to have you

with us. Thank you so much for taking the time.

And you know the Federal Reserve very well inside out. And I'm anxious for your thoughts on this and the enormity of this fight between President

Trump and Lisa Cook and the way that it's playing out. How worried are you about what you're seeing? I mean, many people are just asking the question

whether it's legal for the President of the United States to fire a Federal Reserve official.

ALAN BLINDER, ECONOMICS PROFESSOR, PRINCETON UNIVERSITY: I'm quite worried about. It looks to be illegal. I read a few things that a number of lawyers

have written that said, say that it's illegal.

[09:35:00]

When you go to court, it's a bit of a crap shoot always, and you don't quite know what's going to happen. The other respect in which I'm quite

worried about this is the precedent that it sets. I mean, look what he did. You look back at somebody's past history for almost anyone, you're going to

find something that doesn't look exactly right.

And is that going to be a reason to take people off of important posts, in particular, the Federal Reserve, which the law says governor can only be

removed for cause. My under -- my meager understanding of the law is that phrase for cause has never been sharply defined.

Maybe it cannot be sharply defined, I don't know. But this doesn't look like much of a cause, and it's clearly in President Trump's mind, just the

first step to take over the whole Federal Reserve.

GIOKOS: Yeah, I mean, and we were talking about whether he wants to install this friendly majority? I'm going to ask you this point blank, and I think

it's important to get your perspective. The Federal Reserve's independence is obviously revealed, like all central banks around the world. Do you

believe that President Trump wants to control can I use the word capture the Federal Reserve? What's your sense?

BLINDER: Oh, yeah, I certainly believe that. He's more or less said that. He's spoken a number of times about the importance of getting a majority on

the Federal Reserve Board of Governors, which is 4 out of the 7. And he's spoken many, many times about the interest rate needing to be lower, and I

don't mean just a little bit lower.

There's a serious debate coming up in the Fed or whether it's time to start lowering interest rates. You can make a case to go down a bit, but

President Trump is talking about a 1 percent interest rate. Think about that. A 1 percent interest rate would give the economy so much more juice

than it needs that you're off into the inflationary overshoot.

GIOKOS: So, there are some people on the short list in terms of who could lead the Federal Reserve going forward. Christopher Waller said this on

Thursday that the Fed should lower interest rate multiple times by the end of the year to support the labor market.

We've just had inflation for July, core inflation came in at 2.9 percent without food and energy included, in line with expectations, but far away

from the sort of target of 2 percent. When you hear a prospective Federal Chairman, the Federal Reserve Chairman, saying, we're going to -- we're

going to drop interest rates. Do you believe that's based that states are driven? Are you worried that this is politically driven?

BLINDER: I think, frankly, coming back, forget about 1 percent interest rate, which is ridiculous. The case for cutting interest rates at the next

Fed meeting. And I'm sure Waller is talking at least for one meeting at 25 basis points at a time, is plausible, and so is the case against.

I think this is one of those fed meetings in the run up to the meeting and in the meeting itself, where there will be a genuine debate. You will

remember at the last meeting, two members, including Waller as one of them, dissented against the decision to stay put, in favor of going down 25 basis

points. That's not a crazy thought.

I don't think it's quite appropriate yet. Wasn't appropriate yet at the last meeting, neither the Jay Powell or the majority of the committee, but

it was a debatable proposition, and it's -- and it will be at the next meeting. I think -- I don't want to say there'll be a Donnybrook thing at

the Fed are very polite almost always, but there'll be a serious debate over whether it's time to start cutting.

GIOKOS: All right. Alan Blinder, great to have you on sir. Thank you so much for your thoughts. Well, still to come on CNN, why American Tennis

Star Coco Gauff was in tears despite opening at the U.S. Open, we'll tell you why right after this.

(COMMERCIAL BREAK)

[09:40:00]

GIOKOS: The American Tennis Star Coco Gauff advanced to the third round of the U.S. Open in straight sets, but the match wasn't as easy as the score

line suggests. The world number three had to wipe away tears during the contest with unseated Croatian Donna Vecek, and as she struggled with her

serve Amanda Davies will have the story for us in "World Sports" that is up next.

(COMMERCIAL BREAK)

[09:45:00]

(WORLD SPORT)

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