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Isa Soares Tonight
New Fed Chair Warsh Speaks Following Rate Decision; New Fed Chair Warsh Speaks as Fed Holds Rates Steady; SpaceX Overtakes Amazon in Market Value. U.S. Fed to Reveal First Rate Decision Under New Chair Kevin Warsh; President Trump Says Iran Deal has "Everything We Set Out to Accomplish"; G7 Leaders "Welcome" U.S. Agreement with Iran. Aired 2:00-3p ET
Aired June 17, 2026 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[14:00:00]
CHRISTINA MACFARLANE, HOST, ISA SOARES TONIGHT: Hello, and welcome, I'm Christina Macfarlane in for ISA SOARES TONIGHT. We are tracking breaking
news. At any moment, we're expecting to get the first U.S. Federal Reserve rate decision under new Fed Chair Kevin Warsh.
And in preparation for this, I want to go straight out to CNN's Paula Newton, who is across things. And Paula, I mean, we're expecting this to
drop, I guess, in the next few seconds. And at this sort of -- well, let's call it unpredictable juncture with inflation as it is. Are we expecting
really a hold here on interest rates as we keep an eye out?
PAULA NEWTON, CNN CORRESPONDENT: I can tell you it certainly wasn't a mystery. But now, we have it confirmed that the Federal Reserve is leaving
rates unchanged. So, the main event, now, we wait for the next half an hour when we will hear from the chairman in his inaugural press conference in
about a half-hour from now.
What is interesting here is, I do believe it was a unanimous decision. All the voting -- again, the voting members of this Federal Reserve saying that
they wanted to leave rates unchanged. What is the mystery here going forward is whether or not their bias going forward will be to increase
rates, which is something that President Trump surely doesn't want, or to decrease rates.
And we are going to see that ahead. I want to give you, though, an indication of some of the things that will be top of mind in the months to
come. And I have to tell you, Christina, that this really is a lay-up in basketball terms. We are in New York. We'll use the basketball term for
Kevin Warsh.
And the reason is that, just in the last couple of hours here, you've seen on CNN, that President Trump made it fairly clear that he is trying to take
the pressure off the global economy, and that is why he has this draft deal with Iran.
Which means it will take some steam out of whatever inflation we had, not just in the United States globally. I do want you to go, though, to the
interest rate chart first, and you will see that interest rates have actually been elevated for quite some time here in the United States.
Again, they remain unchanged. What the President was looking for from this new chairman was a decrease in rates, because of the inflation picture, and
the fact that the American economy, quite frankly, is doing fine. Thank you very much.
We will see in the next half-hour or so, whether or not that bias is towards increasing rates, which some people have been talking about, which
would not make the Trump administration or the President, to say the least, very happy.
I want to remind everyone as well about the dual mandate here of the Fed, though, right? What's their job, Christina? It is, in fact, to keep the
unemployment rate low and to keep also inflation low. You're looking at the consumer price index. That is the preferred measure.
And you see it there elevated now. A lot of that has to do certainly with the price shock of oil. But I do want to indicate that it was on its way up
in terms of inflation even before we had the crisis in Iran. I do want to go now to the unemployment rate, and something that has been such a topic
of debate for so many.
Here is the fact that is A.I. going to take jobs or not? Most people do admit here, and you see unemployment peaking there a little bit from late
last year, but now really being solid. And in fact, the last jobs report from the United States was quite strong.
Christina, we will leave it there for now, waiting to hear more for again, this inaugural press conference from Chairman Warsh. And again, we had
heard the President's fights with Jerome Powell, the previous Fed chair, for so long.
Him indicating that he thought he wasn't decreasing rates at all or fast enough. And now, we will hear from this chairman who President Trump
himself, he brought him on, he said, in order to decrease interest rates, something that the Fed is not doing today.
You see there, not much reaction from the markets, you wouldn't expect there to be at this point. We await that press conference in less than a
half-hour from now.
MACFARLANE: Yes, we will wait to see, and as you rightly point out, Paula, we are now in the Kevin Warsh era, that press conference due in less than
half an hour. But just quickly, Paula, how likely do you think it will be in this press conference that we'll get a signal on where interest rates
might go in the future? And more generally, what are you going to be watching for?
NEWTON: So, not likely A.I., and that is not likely at all, Christina, and that is taking really from the chairman himself. He had said, both in the
Senate Committee and has said since that there's got to be more action and less talking.
[14:05:00]
What does that mean? He almost wanted the market incentives and the data to work on its own. He felt that, in fact, chairman before him spoke too much.
They gave too much indication to the market of where this was going to go.
That doesn't mean that we won't see what they call a bias from him to say, look, are we standing pat? Do we have a bias towards easing, which is what
we had during the last meeting, or do we have a bias towards tightening? We'll see.
I don't expect him to say much because he himself feels that the Federal Reserve's actions should speak for themselves, and he wants these markets
to really be out on their own without taking the direction from the Federal Reserve.
It's just the way he sees it. And he does believe that his chairmanship means that this will be a new era, a new way of doing business at the
Federal Reserve.
MACFARLANE: Yes, it's important to note, and no doubt, Donald Trump, President, will be watching on despite leaving the G7 Summit as he is in
the next couple of hours. Paula, we'll keep you close. Thanks very much for now.
And as we were discussing it in 25 minutes, Kevin Warsh is set to take questions for the first time as chair of the Federal Reserve, we'll of
course, bring that to you live when we have it. Now, just two days from now, we could see a big shift in the months-long standoff between the U.S.
and Iran as they get ready to formalize a memorandum on the war.
President Donald Trump just spoke about it in the closing remarks at the G7 Summit, saying the deal has everything we set out to accomplish. The Trump
administration has now released that 14-point plan.
And while the U.S. appears to make significant concessions, Iran doesn't seem to be giving up that much. The deal calls for an end to the war on all
fronts, including Lebanon. Iran pledged to never produce nuclear weapons, a pledge it's been making for years.
While the fate of Iran's highly-enriched uranium stockpile is unclear, Iran could assess -- access a $300 billion fund if it meets the nuclear
commitments and gets significant relief from sanctions. Here's how Mr. Trump justified the financial incentives.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's only if they're doing things right. Remember this also, when you talk about billions of dollars,
they've had much more than a trillion dollars' worth of damage done.
They got a long way. They'll be 15 to 20 years to rebuild what they have right now. So, they have to behave themselves, if they're not behaving,
they get hit again. You know, they'll be hit again.
(END VIDEO CLIP)
MACFARLANE: Well, to underscore that last point, President Trump issued this blunt threat in case Iran backs off its commitments.
(BEGIN VIDEO CLIP)
TRUMP: I let them know. I said, look, if you don't adhere to the agreement, I don't want to do that, but we're going to bomb the hell out of
you, and I don't think that they're going to veer from the agreement. What else am I going to do?
Am I going to say, I'm going to take you to court? Let me take you to court. Let me just -- let me sue you. You know, we're going to bomb the
hell out of them if they violate the agreement.
(END VIDEO CLIP)
MACFARLANE: Well, the Swiss Mountain Resort is preparing to host the signing ceremony Friday, which will kick off 60 days of negotiations.
Israel, conspicuously, is not expected to be at the table, even though it's one of the main combatants in the war.
Well, there's a lot to cover. Let's bring in CNN's international diplomatic editor, Nic Robertson and Politics senior reporter Stephen Collinson. And
Nic, to you first. I mean, given how favorable this deal seems to be for Iran, we had expected perhaps to see President Trump attempt to defend it
in his press conference earlier. But that's not exactly what we got. What new context on the MOU did we actually learn from him?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: And we've got some sort of new context around the MOU. Maybe you could even describe it as
sort of new language over the earlier draft that CNN had received.
And that does give a little bit more indication in terms of the nuclear part of the discussions. And that is that Iran not only -- and President
Trump talked about this, not only agrees not to make a nuclear weapon, but also agrees not to buy one.
And we didn't really have any specificity earlier in the day about what happens to highly-enriched uranium. It's not being called highly-enriched
uranium, but there is an agreement now, it appears in the new language we have in this MOU, that it will be diluted on site.
There will be IAEA inspectors, Iran agrees to talk about its enrichment program, sort of writ-large. This is the toughest part of the deal. Getting
to talk about this comes after the opening of the Strait of Hormuz. Both the U.S. and Iranian commitments, to make sure that, that is open.
And also, some of the economic benefits that Iran can see immediately getting the waivers, so it can get its oil and other energy products to
international markets. That moves forward towards sanctions, lifting all sanctions on Iran's ability to sell its products around the world.
[14:10:00]
That, you know, sort of happens as part of the process of discussing this phase too and implementing the MOU. And then, there's also sort of caveats
in there as well for getting frozen assets. So, these huge sorts of economic benefits there, plus the $300 billion investment portfolio, if you
will, that will be used.
Not quite clear who is going to put the money in yet. No one's is putting their hands up for that certainly. President Trump saying that's not the
United States, but this is an investment for money that can be used for the sort of redevelop Iran that President Trump was referring to it there.
The $300 billion way below the $1 trillion worth of damage he said was there. So, the economic benefits, but these are also structured in, in this
MOU. So, you have to get these economic benefits or get them moving, at least, before you get to talk about the tough nuclear issue.
And on that, President Trump did have something interesting to say. You know, on the issue of Iran being able to have its own civil nuclear
program, he said -- President Trump said, well, other countries are allowed to have that.
Sort of seeming to imply if other countries can have it, then Iran can. Of course, the nitty-gritty is -- and I heard this from a very senior regional
diplomat who said, yes, why not? You can have a civil nuclear program, but most countries don't enrich their own uranium for the civil nuclear
programs.
They import it. Will that be part of the discussion? Not clear. And another question that had been raised about what wasn't on the discussion
previously and not in the MOU, as we see it, ballistic missiles and Iran's proxies.
President Trump said, yes, they'll talk about ballistic missiles. Maybe he said Iran could have some, because other countries in the region have them.
That was interesting, but nothing. President didn't mention anything that I heard about proxies and nothing about that, that we see in the
specifically-mentioned as such inside this MOU.
MACFARLANE: Yes, Nic, thank you. Stephen, turning to you, I mean, we had more carrot and stick as well from Donald Trump today when he said that the
U.S. will resume bombing if Iran doesn't comply with the agreement.
But that approach, we know is being criticized at home and abroad, because Iran knows now that it has a very powerful leverage tool in the form of the
Strait of Hormuz. So, how is this memorandum being viewed? All of this being viewed really on Capitol Hill?
STEPHEN COLLINSON, CNN POLITICS SENIOR REPORTER: I think the problem for a lot of people on Capitol Hill is, they see a lot of carrot, and the stick
seems fairly theoretical. The criticism against this deal is going to be that Donald Trump gave up almost all of the U.S. leverage in talks just to
get to the talks.
People are going to say that, well, he's effectively with the waving of sanctions to get this process going forward. He has rewarded Iran, and he's
paid Iran to reopen the Strait of Hormuz. There was real concern among Republican senators on Capitol Hill, especially before this draft came out,
about what was in it and why the administration wouldn't release it.
I think that is only going to be compounded the longer that this goes on. Listen to what one Republican senator had to say in his first impressions
of the deal.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It's probably the last one --
SEN. BILL CASSIDY (R-LA): Yes, Iran recognizing that they can use their leverage of the Strait of Hormuz to extract from the other countries of the
world whatever they want. This is JCPOA-plus, and I opposed it then, I oppose it now.
(END VIDEO CLIP)
COLLINSON: So, we should stipulate that, Bill Cassidy; Republican from Louisiana was defeated by a Trump-backed candidate in his primary. So, he's
going to be forced to retire from the Senate after November's elections, so he has an incentive to criticize Trump, and a lot more leeway than some of
his colleagues.
But I think it's also fair to say that he's speaking for some of his colleagues who haven't spoken out. Now, how much of a problem is this going
to be for Trump? There is a split in the Republican Party and even across parts of the MAGA movement about this deal.
Some very prominent Republican and conservative commentators in the media, the conservative media world, are against it. Senators could cause problems
for Trump if the negotiations go well and he wants to permanently lift the sanctions against Iran, that would require more than a waiver.
But ultimately, given the balance on the Capitol Hill, Republicans are unlikely to be able to kill this deal because they just don't have the
numbers to overcome a presidential veto, which requires a two-thirds vote of both houses.
So, Trump, I think ultimately is criticized, but his -- I think incentive here for all the talk of how bad this deal is, and that he perhaps got
taken advantage of by the Iranians. The message is, he wants to get out of this war, and this is the way to do it.
MACFARLANE: Certainly is. It seems to be his MO. Nic and Stephen, appreciate it for now. Thank you both very much.
[14:15:00]
And now, let's go to Melissa Bell, who is at -- been live for us at the G7, Mr. Trump delivered those closing remarks. And Melissa, I mean, as Donald
Trump prepares, I think, to depart the G7 tonight after his trip to the Palace of Versailles, what has been the general response to this Memorandum
of Understanding, and what are European leaders offering to do to support it? Despite the continued lack of clarity on many points.
MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's right. The American President is even now on his flight in Geneva, waiting to take off
towards Villacoublay on the outskirts of Paris. He'll then go, of course, to that Versailles dinner.
I think what he's left behind is certainly for the Europeans that were here, a great deal of satisfaction that they've managed to make such
progress on Ukraine.
And I think hope that somehow this might help solve a problem that had not only caused them so many difficulties, but also so divided the G7 that no
one had come here expecting any kind of friendliness, progress on any of the dossiers at all.
I think the fact that we've come this far certainly has made the conversations a lot friendlier. It's made the progress a lot easier. And on
substantive issues that really matter for Europeans like Ukraine and President Zelenskyy, of course, real progress was made.
We heard this from the French President in his press conference just before President Trump's. He said that they now had an American commitment on
Ukraine, and that, that was very important. So, from the point of view of the organizers here in France, and the point of view of the other European
G7 leaders.
But I think even beyond that, all the G7 leaders, there's a fair amount of relief that they were able to make such progress on so many different
issues, progress that would have been impossible had President Trump not arrived for this Memorandum of Understanding with him.
Now, of course, all that you've been talking about, the details of how this will work, the difficulties, the pitfalls, the dangers that yet lie ahead,
and whether or not this gets signed, and what then follows in the disagreements.
Of course, Europeans and other G7 leaders are going to be keeping a very close eye. But the fact that they've made this progress, I think, has made
this G7, a really surprising success from their point of view.
And you could feel it really, as you listened to President Macron, he'd gone in this sort of hunkering down, they were expecting the worst as these
G7 meetings have tended to deliver over the course of the last few years.
Acrimony, division, often early departures on the path -- part of the American President, this time, substantive progress was made on a number of
issues that had been entirely blocked for many months. So, I think there is relief, and I think also just genuine satisfaction that they've managed to
re-integrate President Trump into a G7 Summit, and talk to him and have him talk to them and make it work.
This had taken many years to get here, but here we are. I think that is the sense for many of the G7 delegations heading back from Evian this week,
surprised and satisfied that things have gone as well as they have. All of the bilateral meetings that you saw, all of the pressures that followed or
preceded them, there were remarkably warm relations.
Whether it was with the Qatari Emir or the President of Egypt or indeed the Indian Prime Minister earlier today. Much smoother bilateral relations than
I think many of them had seen in a long time.
MACFARLANE: Yes, it did certainly appear that there was a lot of re- establishing of bilateral relations going on throughout the summit. Melissa, appreciate it, thank you so much. All right, still to come
tonight, there is Mbappe, there's Haaland, and then there's Messi.
Now, the World Cup, Argentina superstar makes an emphatic case for the title of the greatest footballer on the planet.
(COMMERCIAL BREAK)
[14:20:00]
MACFARLANE: Extraordinary, remarkable, exceptional. We're running out of superlatives to describe Lionel Messi. He kicked off Argentina's World Cup
title defense with a hat-trick in a 3-0 win over Algeria.
The man who turned 39 this month continues to outshine opponents, many of whom are nearly two decades his junior. Tuesday's incredible performance
since Messi-mania soaring to unprecedented levels with celebrations from Kansas City to Buenos Aires and beyond.
Well, the legendary Ronaldo in action right now as Portugal opens up against the Democratic Republic of Congo. And the other matches today,
highly-anticipated Harry Kane leading the Three Lions against Croatia, Ghana takes on Panama and Uzbekistan makes its World Cup debut as it faces
Colombia.
So, here to help us dissect it all is "WORLD SPORTS" Don Riddell. Don, great to see you. I think it's fair to say Messi really set the bar on
Tuesday night, didn't he? But in the past hour, it's been the turn of Cristiano Ronaldo.
And we know, you know, the World Cup hasn't typically been a happy hunting ground for him in the past. So, we are -- are we still in the first half?
How is it -- how is it going so far, Don?
DON RIDDELL, CNN WORLD SPORTS: Hey there, yes, early in the second half, yes, Ronaldo's best World Cup was actually his first when Portugal made it
to the semifinals in 2006. Not so happy since then, he has scored in every World Cup tournament he's played in.
Lionel Messi can't say that, but it's not been a particularly great day for Ronaldo or Portugal. As I say, we're into the second half, it's 1-1 against
the Democratic Republic of Congo. The African side equalizing very late in the first half, and it was no less than they deserved.
They haven't had anything like as much of the ball as Portugal have, but they've made many more chances, and they absolutely are deservedly in this
game. And Ronaldo, as I say, he's barely seen the ball. So, Portugal are finding it very difficult.
MACFARLANE: Yes, well, let's turn then to that talk of Messi and the Messi magic last night. I believe he broke something like seven records in one
game, which is pretty extraordinary, isn't it for a player, I think is turning 39 next week.
RIDDELL: It is amazing, isn't it? He is now playing in his sixth World Cup, which is a record Ronaldo has tied that with his performance or his
appearance today. But yes, I mean, just everything about it was incredible. We assumed that when he led Argentina to the title four years ago in Qatar,
that, that would be his swan song and he was done.
But actually, he's back, and the performance he put in last night, you'd look at that and think, he could easily still be playing with the European
clubs, because he has still got it. Last night, we saw him do something he'd never done before, which is to score a World Cup hat-trick.
Amazing, he hasn't done that before. He equaled the all-time World Cup- scoring record of Miroslav Klose with 16 goals. If he carries on like this, obviously, he's going to have that record all for himself. And there was
just this wonderful symmetry about it all.
That hat-trick came on the 20th anniversary to the day of his very first World Cup game, and his first World Cup goal. And he also just so happened
to be making his 200th appearance for Argentina. Just everything about it was amazing.
MACFARLANE: Yes, and so fitting. I mean, you never count him out, do you? Especially in the run-up. There were so many question marks over him. But
listen, meanwhile, we have a potentially challenging opener for England tonight.
[14:25:00]
I think it's fair to say against their old foes Croatia, that match kicking off, I think at 9:00 p.m. local here. So, in about two hours from now --
RIDDELL: Yes --
MACFARLANE: These two sides have a lot of history, Don. So, how likely do you think it is that England can get a fast start tonight?
RIDDELL: I think it would be good if they could get a fast start. But you're right. Croatia are not going to be an easy opponent. This is a
repeat of the semifinal match in 2018, which England lost. I think there will be an awful lot expected of Harry Kane.
He's had an incredible season with Bayern Munich in Germany. Thomas Tuchel has really sort of molded this team and this squad around Harry Kane. So,
yes, all the pressure is on him. It's remarkable to think that this is day seven of the tournament.
And there are still teams like England who haven't played yet. That's because this is an expanded competition. There's now 48 teams instead of
32. But in previous years, some teams would have already been knocked out at this stage.
And yet, there are some teams and some megastars who haven't even taken the field yet. So, England fashionably late to the party. They will be hoping
their game is going to be in Dallas, as you say, in just over an hour-and- a-half's time.
It's not crucial that teams make a fast start now, that 8 of the 12 third place teams will go through to the knockout stage. But this potentially is
a tricky game for England to start off with.
MACFARLANE: Yes, and it's interesting seeing Jude Bellingham on our screens there. It will be interesting to see if he starts and how he
performs tonight certainly for the England fans. Don, appreciate it, thank you --
RIDDELL: Right --
MACFARLANE: We'll check back with you in a little bit. Now, security will be tight for Thursday's NBA Championship parade for the New York Knicks. A
law enforcement official says every spectator will be screened before entering viewing areas.
All floats and vehicles will also be inspected, and a sanitation official says about two-dozen garbage trucks will be used to block side streets.
We're told the plan mirrors other large-scale events, like the Israel Day parade.
But with far bigger crowds expected for the Knicks celebration. Well, the gigantic structure built for the UFC event on the White House South Lawn is
coming down. Crews started dismantling the so-called claw-lighting rig and the Octagon soon after the fight night ended.
The tear-down is expected to take more than a week. Well, Scotts Miracle- Gro; one of the event's sponsors, has committed $1 million to the National Park Service to support restoration efforts for the grass that was
destroyed in the event.
Glad someone is thinking about it now. Just ahead, the new chair of the U.S. Federal Reserve speaks after leaving interest rates unchanged. We'll
take you to that, live.
(COMMERCIAL BREAK)
[14:30:00]
CHRISTINA MACFARLANE, CNN ANCHOR: Welcome back. Any moment now we expect to hear from the Fed Chairman, Kevin Warsh. Actually, he is speaking right
now. Let's go to him in his first public appearance.
KEVIN WARSH, FEDERAL RESERVE CHAIR: I've been especially heartened by the warm welcome of old friends and new colleagues both. And I've listened
closely to my fellow FOMC members. Heard a lot of new ideas, new thinking, and genuine interest in moving the Fed forward.
This week's FOMC meeting exemplified the very best of the Fed's traditions. Rigorous debate. Open-mindedness. Commitment to mission. Responsibility and
accountability for performance. In this business, they all add up to one thing, getting monetary policy right, or as near to it as we can do. That
is our North Star.
My colleagues and I are here to serve our legislative remit. Which you've heard us say before, price stability and maximum employment. And these
objectives guided our business in the meeting just concluded. As you saw a few moments ago, the committee decided to maintain the target range for the
Fed funds rate at 3.5 percent to 3.75 percent. In support of the Fed's dual mandate.
The committee also reaffirmed its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace. Despite
elevated uncertainty that owes in part to the conflict in the Middle East. Productivity growth and capital investment both strong. Job gains have kept
pace with the workforce. And the unemployment rate has changed little.
We recognize that inflation has been running well ahead of the Fed's long- stated inflation goal of 2 percent. That's been going on for more than five years. Persistently high prices are a burden for the American people. But
the recent past need not be prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous. This committee will deliver
price stability.
At any institution, a change in leadership is a natural and timely opportunity. To reaffirm its mission. To review current practices. And to
consider whether those practices best meet our objectives. My Fed colleagues and I will be working in close collaboration to ask what changes
might improve the conduct of monetary policy.
On that score, you might have already noticed something. A difference in today's policy statement. It's a bit shorter, a bit simpler, and it
dispenses with some older language. That statement just gives you the facts as best we can judge it.
Absent also is so-called forward guidance, which we agreed was not well suited to the current policy conjuncture. This afternoon, you also received
the usual summary of economic projections. It's been the practice of this committee for participants to submit these projections. And I have
encouraged my colleagues to continue to do so. I, however, have refrained from offering any projections of my own. Consistent with my long-held views
on the SEP, at least as currently structured.
In the median projections, real GDP rises at 2.2 percent this year. 2.3 percent next year. And total PC inflation runs at 3.6 percent this year.
2.3 percent next year. The unemployment rate stands at about 4.3 percent. The median participant judges that the appropriate federal funds rate to be
at 3.8 percent at the end of this year. And 3.6 percent at the end of next.
[14:35:00]
Let me turn now to a few words on a key initiative that we're announcing today. I'm appointing a task force in each of five areas that are central
to the broad conduct of monetary policy. First, Fed communications. Second, the Fed's balance sheet. Third, our use and reliance on existing data
sources. Fourth, productivity and jobs in an era of transformation. And last, the Fed's inflation frameworks.
These subjects are timely, consequential, and in my view worthy of a fresh look. My colleagues and I discussed them with energy and purpose over the
last couple of days. For each of these independent task forces, I'm enlisting some of the very best minds, both inside and outside the
economics profession. They will be supported by subject matter specialists from our superb Fed staff.
And they'll have a straightforward charge. Start with first principles. Ask hard questions. Examine current practice. Consider alternatives. And
ultimately, propose next steps for policymaker consideration. Since last summer, my colleagues discussed possible improvements in the form and
function of Fed communications. This new task force will build on that effort. And I expect to propose some well-considered changes, including to
the SEP I mentioned a few moments ago.
The second task force, the one on balance sheet policy, will review the benefits and risks of the current ample reserves regime and the composition
of the Fed's balance sheet. They will assess alternative frameworks for the conduct and operation of monetary policy.
The third task force, the one on data, will evaluate new information sources and consider methodological changes to improve data gathering, with
the aim of giving policymakers more accurate, relevant, contemporaneous, and perhaps most important, actionable information on the state of our
economy.
Fourth, the task force on productivity and jobs. It will survey the pace, the reach, the economic impact of new general-purpose technologies,
including A.I., and explore the implications for the Fed in pursuit of our employment and inflation mandates.
The last task force, the one on inflation frameworks, that will examine the drivers of inflation, first principles, and weigh the full range of ideas
for delivering price stability in a changing economy. You'll hear quite a bit more about these task forces and this overall initiative in the coming
weeks.
Enough for now to make a simple statement. Each task force will serve an objective shared by everyone in the system, shared by everyone around that
table that I sat with over the last couple of days. A federal reserve that is clear-eyed about its mission, fit for purpose, and focused on the
future.
And with that, I appreciate your attention. I'm happy to take your questions.
UNIDENTIFIED FEMALE: Howard Schneider.
HOWARD SCHNEIDER, REUTERS: Hi, Chairman. Howard Schneider with Reuters. Good to see you again, and welcome back. This is a lot to be putting in
motion so fast. What is the timeline you have in mind for each of these?
WARSH: So, I think it will depend on the task force. It also depends on the urgency in which we need clear answers. My expectation, I'm still in
the business of recruiting and finalizing them, my expectation is the task forces will begin work in the next couple of weeks, and we'll start to get
some more information from them, some more framing of how they see things starting in the fall, and hopefully most, if not all, of them concluding by
year end.
SCHNEIDER: And just specifically on the inflation framework, you talk about first principles. Does this include a review of the 2 percent target
itself? You've mentioned that things to the rate of the decimal point don't matter. Should this be starting from a premise that 2 percent as a point
estimate is too strict?
WARSH: Let me break that into two pieces. First on the inflation framework review, their remit is what are the drivers of inflation? What's the Fed's
responsibility for inflation? In part, how do we measure inflation? But that will overlap with my data group. On the 2 percent inflation objective,
that is the Federal Reserve's long-held objective of 2 percent.
You've heard me say before I tend to focus on the left of the decimal point. Well, the 2 is the left of the decimal point for now. Zero is to the
right.
[14:40:00]
I see no reason until we have re-established our commitment and ability to deliver on the 2 percent inflation objective to revisit that. So, that will
be outside the scope of what we're taking on.
UNIDENTIFIED FEMALE: Colby.
COLBY SWIFT, NEW YORK TIMES: Thank you so much. Colby Swift from the New York Times. You've in the past said that inflation is a choice. And in the
policy statement, it includes this pledge to deliver price stability, as you've reiterated today. But looking at the SEP, the bulk of your
colleagues expect core PCE to run around 3.3 percent by year end and for the 2 percent inflation target not to be reached until 2028.
So, I'm curious how patient you think the Fed can afford to be at this juncture in terms of waiting for one-time inflation waves to wash through
and for underlying inflation to step down after so many years of inflation running above target. And under what circumstances you would support the
Fed taking some action and raising rates?
WARSH: Sure. So, quite a bit there. Let me try to break that into pieces. First, we have the capability and commitment to deliver on our price
stability objective of 2 percent. That's exactly what we're going to do. In the Fed's review of its strategy over the last any number of years in
January, the Fed, including the strategy that we're still bound by, the Fed statement says that inflation is primarily determined by monetary policy.
You bet it is. I've said for years inflation is a choice. You bet it is. And today I'm announcing that this committee unambiguously and unanimously
have decided we are going to deliver on that.
The rest of your questions sounded like an encouragement for me to give forward guidance. We've dropped forward guidance. Some along the committee
I think dropped it, I suspect, from our discussion the last couple of days because they said at this moment in time it doesn't feel as though
providing forward guidance is right. Others have, I'd say, different views and think as a general proposition, forward guidance isn't the business we
should be in.
But that will be taken up by the task force on communications and my policymaker colleagues. We're going to listen hard to what the experts say
and make our own decision, but I can't give any forward guidance about what we're going to do next. The good news is we'll be meeting in six weeks.
COLBY: So, just following up, I guess, on the current policy settings then, I am curious how restrictive you think things are at the current
moment given the flow of data that we've seen and, you know, forecasts that are coming down the pipeline.
MACFARLANE: You have been listening to Kevin Warsh, the new Fed chair, speaking publicly there for the first time. I just want to bring in Ryan
Patel who's been listening in on this to give me his perspective. He's a senior fellow for the Drucker School of Management at Claremont Graduate
University. Ryan, good to see you.
We're certainly in the new Kevin Warsh era, aren't we? I mean, that speech seemed to me to be succinct, intentional, and really kind of laying down a
marker with the introduction of this new task force. What did you make of it?
RYAN PATEL, SENIOR FELLOW, DRUCKER SCHOOL OF MANAGEMENT, CLAREMONT GRADUATE UNIVERSITY: You're absolutely right. For me, today's decision wasn't
really about what they were going to make a decision on the interest rate. It was about the framework. And I mean, you couldn't have gotten -- I mean,
for the chair's first, you know, kind of appearance here to make this, you couldn't have gone any better for himself.
What I mean by that, every word was planned. He was really efficient in what he wanted to do. He was clear about the framework that he wanted to
place it in. And he was, you know, at least transparent. Again, when you -- when there's a change of leadership, it's always great to lay out the
framework. Now, you've got to go do it.
But he mentioned about some things he didn't like in there as well, and one of them being that forward looking of what the interest rate's going to be.
You know, he's trying to give himself flexibility that they haven't had in the past.
MACFARLANE: And, Ryan, it sounded to me that right out of the gates, he was attempting here or talking about trying to hold the Fed accountable. I
mean, just think about some of the language that he used, that members of the Fed will deliver price stability, that Fed colleagues and I will be
working in close collaboration. Do you think that was sending a not-so- subtle message there?
PATEL: It was. I mean, there's some -- I think it was nine out of the 18, you know, Fed officials think that interest rates were going to increase
later this year. That came out of this as well, which shows that you're not on the same page just yet. And -- you know, and he warned in that statement
too, like he doesn't really agree with giving those kind of statements out there, and they're still not on the same page.
So, yes, I think accountability, you know, it's interesting because you say that as a group, but now you have to -- actually, they've got another
meeting in six weeks.
[14:45:00]
What is the progress he's going to make? It seems like he's going to hold that accountable and wants everyone else to come along the ride, otherwise
you're going to have to stand out by yourself and not be a part of that statement.
MACFARLANE: Yes, absolutely. And you mentioned there already that he'd said that, you know, there's going to be an absence of forward guidance.
That's something we expected, of course, because he'd been sort of signaling that before, you know, coming into this role, that he wasn't
going to be giving any projections or any forward guidance.
But I guess the question with that is, would less communication, is less communication going to be a good thing for the markets? And I wonder,
actually, if we can take a look at the markets as you answer this question, see what the Dow's doing at this point.
PATEL: Yes. I mean, I hope it's not less communication. It's the right communication. I think that's what's important. You know, it's less about
you telling me that it's going to be -- you know, interest rates are going to drop and then you don't do it. I prefer you to tell me what you're
seeing and where you think it may go and not lead me to a path that is unclear.
And so, for him, and I think for the Fed, I think it's more, I mean, you're going to laugh when I tell you, it's more proper communication with the
right data. And that's what he's stating, that he's going to build these task force, that it's going to be more appropriate for us to make
decisions.
I mean, the market and businesses are standing by a status quo, right? You see the numbers, inflation. I mean, he even mentioned, you know, he's
focused on the two percent of two something. You know, I think if there was a goal to get to something that has a two in front of it is kind of what I
interpreted from that.
So, you know, I think for the average consumer and for the average person looking at this for prices, you know, as of right now, there is no change.
You know, it is up to what is the next step for, you know, pricing of, you know, not just interest rates, but your credit card rates, loan debt,
housing, all that is all tied to this. So, this is a good step for him. But now you've got to make some progress.
MACFARLANE: Yes. And hanging over all of this, of course, is the specter of Donald Trump, who, of course, we know hired and made no secret of the
fact that he was hiring in order for him to slash the borrowing rates. So, we'll wait to see how much this cautious approach endures. Ryan, always
great to have you on. Appreciate you hopping on for the update. Thank you.
And we will be right back after this short break.
(COMMERCIAL BREAK)
MACFARLANE: Elon Musk's SpaceX has overtaken Amazon market value. This follows the company's record-breaking IPO last week.
[14:50:00]
Well, Jeff Bezos has been speaking at VivaTech in Paris. He explained his plans to catch up on the space race and all things A.I. CNN's Anna Stewart
was there.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN CORRESPONDENT: The battle of the billionaires or trillionaires is getting hotter. Elon Musk, SpaceX has eclipsed Amazon and
SpaceX. Has the market cap and that is just days after the IPO.
Plus, Musk has leapfrogged Bezos personally. He is now the richest man in the world. And add to that a recent rocket explosion at Bezos' space
company, Blue Origin. It's fair to say that Bezos took to the stage here at Vivotech rather on the back foot. But Bezos is doubling down on the
competition. Firstly, in space.
(BEGIN VIDEO CLIP)
JEFF BEZOS, BLUE ORIGIN FOUNDER AND AMAZON EXECUTIVE CHAIR: But moon first.
UNIDENTIFIED MALE: Moon first.
BEZOS: Moon first.
UNIDENTIFIED MALE: And then Mars.
BEZOS: And then Mars and everywhere else, too. Our long-term vision, our dream is that all the polluting industry can be done off Earth. If space
travel gets reliable enough and inexpensive enough and we can get materials from asteroids and near-Earth objects and the moon, then this garden planet
can be returned to its pre-industrial revolution state.
(END VIDEO CLIP)
STEWART: He's also going to compete in A.I. And last year, he launched a new A.I. engineering company called Prometheus, but he says it won't
replace humans.
(BEGIN VIDEO CLIP)
BEZOS: There's a lot of concern that many people have, including many smart people, that A.I. is going to make humans redundant and so on. I
totally disagree with this point of view. And I think, in fact, A.I. is going to create a labor shortage because it's going to make it possible for
people to identify more problems. We have an endless set of things to invent.
(END VIDEO CLIP)
STEWART: The issue of A.I. and jobs is always a thorny one at tech conferences like this, with many companies currently shedding thousands of
jobs often to free up capital so it can be invested into A.I. And actually, Amazon is one of them.
Anna Stewart, CNN at VivaTech in Paris.
(END VIDEOTAPE)
MACFARLANE: Great to see Anna back with us after her maternity leave. We will be right back after this short break. Stay with us.
(COMMERCIAL BREAK)
MACFARLANE: And finally, tonight, as the World Cup gets underway, fans across the globe have been putting on a creative display in Mexico City.
Merlin the duck has been sporting an El Tri jersey and his stylish shirt has turned him into an unlikely star in Mexican capital. Oh, love it.
[14:55:00]
And in Libya, a barber has bought his passion for drawing into his trade. He's used the hair clippings from his customers to carefully create the
World Cup logo on the floor of his shop in Tocra. I mean, it strikes me as being a little bit disgusting, but we'll let it fly. And only World Cup
fever could connect a well-dressed duck to a pile of hair clippings, let's be honest.
And we have a World Cup update for you. Heavily favored Portugal getting all it can handle from the Democratic Republic of Congo right now. We are
just into the last two minutes. I can see to the screen on the right here, the Congolese making their first tournament appearance in 52 years. And
here you can see very nervous Lisbon fans on the edge of their seats waiting for Cristiano Ronaldo or someone to step up. And please put it in
the back of the net to put them ahead in their opening game of this World Cup. We will have more World Cup coverage, more on this in the next hour.
Do stay with us for that.
Thanks for watching. And I will be back with "What We Know" after the break. Stay with us.
(COMMERCIAL BREAK)
[15:00:00]
END
