Countdown to the Fed Decision 7/29/26

Summary

The Exchange – "Countdown to the Fed Decision 7/29/26"

CNBC | July 29, 2026
Host: Kelly Evans, Brian Sullivan
Main Theme:
This special episode focuses on the Federal Reserve’s highly anticipated rate decision under Chair Kevin Warsh, set against a backdrop of market volatility, surging oil prices, geopolitical firefights, and evolving U.S. fiscal and monetary policy debates. The episode features in-depth panel discussions with economic policy leaders, market strategists, and journalists, offering a comprehensive analysis of what investors, businesses, and policymakers are watching—and what surprises might be in store.

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Table of Contents

• Market Backdrop Before the Fed Decision
• Setting the Fed Scene: What’s at Stake?
• White House Perspective: Interview with Kevin Hassett
• Panel Analysis: Inflation, Productivity, and Market Fallout
• AI Regulation and Policy Updates from Capitol Hill
• Energy Market Watch: Oil, Geopolitics, and Fed Dilemmas
• Business Community View: Josh Bolton, Business Roundtable
• Fed Decision Preview: Market Odds and Political Calculus
• Final Analysis: Inflation, Rate Hikes, and What’s Next

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Market Backdrop Before the Fed Decision [01:09]

• Kelly Evans: Opens by summarizing the day's shaky markets: falling equities, spiking oil prices (+7%), and widespread uncertainty pending the Fed's move. President Trump has signaled military retaliation against Iran following an attack on U.S. troops, adding to the tension.
• Brian Sullivan: "It's not great, and if you don't like red on the screen, maybe you want to look away." Dow down 1.5%, oil and geopolitical news dominating headlines.

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Setting the Fed Scene: What’s at Stake? [02:18]

Guest: Steve Liesman (CNBC Senior Economics Reporter)

• Unprecedented Uncertainty: Markets show rare ambiguity—only a 34% chance of a rate hike versus 66% hold. Historically, it’s usually around 95% certainty.
• Chair Warsh’s Strategy: Warsh is seen as deliberately keeping markets guessing, aiming for Fed independence and tightening up communications.
• Potential Surprises:
  • Some investors hedge for a surprise hike, citing persistent inflation and benefits of asserting the Fed’s independence.
  • Citadel quote: “If the majority is already likely for a September hike…why not do it now?” (02:55)
• Statement Significance:
  • Previous press statements under Warsh have been notably concise.
  • Kelly Evans: "Last time, the big surprise was the statement was so short...Does it inevitably slip into that?"
  • Steve Liesman: Speculates adding a “hawkish bias” to accommodate dissenters without a full hike; markets also watching for this signaling. (03:46, 04:01)
  • On past statements: "It was full of vestigial statements, like a tail left over through evolution...Warsh wants to keep it clean, straightforward." (05:02)
• Market Hedging: Futures and treasury/equity markets are all hedging bets. Big question: Is the new approach leading to more or less volatility vs. the telegraphing days?

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White House Perspective: Interview with Kevin Hassett [07:05]

Guest: Kevin Hassett (National Economic Council Director)

• Confidence in Fed/Warsh: Strong presidential support for Warsh’s data-driven independence.
  • Hassett: "We trust his judgment. That's why he's been appointed...our confidence...could never be higher." (07:20)
• US Debt Downgrade Risks: Dismisses likelihood, points to government employment cuts as a sign of fiscal improvement. (08:31)
• Inflation and Oil Prices:
  • Downplays risk from recent oil spikes, citing futures expecting sharp drops.
  • Enthusiastic on recent CPI readings: "Drug prices are way down...Our policies are having a really big positive effect." (09:50)
• AI and Wage Growth:
  • AI is causing a “capital spending boom...both from AI and from other factors,” fueling real wage gains and productivity, countering inflation. (10:56)
  • Hassett: "Real wage growth is the amount of money you have in your pockets. It's been skyrocketing..." (12:15)
• Stimulus & Inflation: Critiques Biden-era fiscal stimulus as primary cause of inflation—contrasts it with targeted measures during Trump’s COVID response. (12:58)

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Panel Analysis: Inflation, Productivity, and Market Fallout [14:16]

Jason Trennert (Chairman/CEO, Baird Strategic)

• Affordability Crisis: Introduces “common man CPI” (emphasizes food and energy). "People are about 6–7% poorer in terms of purchasing power than six or seven years ago." (14:34)
• Fed Role: Argues the Fed has “had a jersey on, not a referee’s jersey” since QE started, making things regressive—good for the wealthy, bad for savers. (15:42)
• Balance Sheet: Skeptical the Fed is truly at neutral; growth far outstripped GDP since '07. Warns this creates market risk-taking expectations (SVB example). (16:20)

Roger Ferguson (Former Fed Vice Chair)

• Key Question: Rate decision is more important than balance-sheet moves, but expects both will remain relatively slow and methodical. (17:00)
• Hawkish Outlook: Sees two hikes this year as reasonable. "Direction of travel has got to be towards tighter monetary policy." (17:47)
• Dissents: Expects more split votes—a fractious Fed is not a credibility risk. "Good family feud." (20:19)

On AI and Inflation:

• Jason Trennert: Warsh may let inflation run hotter, betting that AI-driven productivity will eventually cool it without central bank overreaction.
• Kelly Evans: Pushes back: “Even if [oil stays high]… it’ll slow the economy or it's a one-time shock. It’s not going to keep accelerating.” (19:35)

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AI Regulation and Policy Updates from Capitol Hill [21:47]

Emily Wilkins (CNBC Capitol Hill Correspondent)

• Sam Altman (OpenAI CEO) meets with lawmakers about the White House’s upcoming AI framework (due August 1). No major legislative movement expected before end of year, but defense/national security bills may see AI components. (21:47)
• On Open Source: Altman says both open and closed models have a role. (21:47)
• Long-term Impact: Trennert sees AI as ultimately “very deflationary” and net positive on employment—“more employment, but in other places we can’t even imagine.” (23:16)

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Energy Market Watch: Oil, Geopolitics, and Fed Dilemmas [25:57]

Eamon Javers (CNBC White House Correspondent)

• Iran attacks, U.S. intercepts all missiles, but Iran appears to want conflict more than the U.S.—increasing market fears.
• President Trump promises harsh retaliation: "We are going to beat the effing s*** out of them." (25:57)
• Iran making new arms deals with China, raising threat level. (27:04)

Bob McNally (President, Rapidan Energy)

• Oil Market Volatility: Oil swings driven not just by Middle East events but also underpriced geopolitical risk. "The market remains overly optimistic about a quick normalization...the geopolitical reality is just the opposite." (28:05)
• Refined Product Squeeze: Gasoline and diesel inventories in "terra incognita"—very tight. "The margins for turning crude into heating oil in Europe, higher than Brent itself." (29:18)
• Iran's Position: Hardliners intent on raising oil prices to put pressure on President Trump; unlikely to relent soon. (30:53)

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Business Community View: Josh Bolton, Business Roundtable [34:30]

Guest: Josh Bolton (CEO, Business Roundtable)

• Business Sentiment: Strong confidence in Warsh Fed’s ability to balance competing economic pressures. "The thing they're unanimous about is that they have confidence in the Warsh Fed to balance things properly." (34:52)
• Warsh's Style: Described as smart, collaborative. Historically hawkish but pragmatic.
• Fed Transparency: Applauds creation of advisory committees; sees willingness to revisit transparency/data usage as a positive. Not particularly worried about less forward guidance, though acknowledges "surprises are always hard for the business world." (37:57)
• Tariffs vs. Rate Hikes: Majority of Business Roundtable CEOs find tariff uncertainty more disruptive than higher rates, though favorable Trump-era tax and regulatory policy has helped. (38:23)

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Fed Decision Preview: Market Odds and Political Calculus [39:39]

Matt Peterson (CNBC Senior Economics Writer)

• Odds of a Hike: Markets putting less than 30% probability of a hike, but Peterson puts the chances at "basically zero."
  • Three reasons:
    1. Warsh doesn’t believe AI-driven investment justifies a hike.
    2. Warsh doesn’t want to rock the boat with the White House (Trump).
    3. Warsh may be angling for say over Powell’s eventual successor, tying to political delicacy. (40:22-41:44)
• Task Forces: Warsh is relying on high-profile external advisers (e.g., Marc Andreessen), wants their input before acting aggressively. (42:12)

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Final Analysis: Inflation, Rate Hikes, and What’s Next [44:34]

Jared Bernstein (Fmr. CEA Chair, Biden) & Jamie Cox (Harris Financial Group)

• Bernstein: Expects a hold with hawkish dissent. "When you're missing your target for five years on end...the excuses get a little old." (45:05)
• Cox: Interest rate hikes alone make little impact; real tightening has already occurred in the bond market, and much current rate pressure stems from AI capital demand.
• On Alternative Tools: Both advocate for more balance sheet/treasury maneuvers rather than relying solely on the policy rate. (47:47)
• Fiscal Pressures: Both sides share blame for deficit problems. The size of government borrowing is putting upward pressure on rates. (48:08)
• Macro Risks: Tariffs, war, and fiscal policy all cited as current inflation drivers; panel cautions against "always fighting the last war." (48:45)

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Notable Quotes & Memorable Moments

• Steve Liesman on Fed Communication:
  "The statement before Warsh took a whack to it was full of vestigial statements...So we're starting anew...He said he liked it to be simple and straightforward." (05:02)
• Kevin Hassett on Inflation:
  “Our policies are having a really big positive effect on reducing inflation.” (09:50)
• Jason Trennert:
  “If you're just a saver, you get kneecapped...if you're just a regular person, you don't even know how to take more risk.” (15:38)
• Bob McNally on Oil Markets:
  “The market remains overly optimistic about a quick normalization...the geopolitical reality is just the opposite.” (28:05)
• Josh Bolton:
  “They [the Fed members] are mostly nerds... They need to be taking in the evidence and making a balanced decision of what's best for the economy.” (36:21)
• Matt Peterson (on Warsh and the White House):
  “President Trump would be up as... I can't say it on a family-friendly show if he raised rates.” (40:41)
• Jared Bernstein:
  “When you're missing your target for five years on end, you can say, oh, this supply side factor and that supply side factor... Eventually the excuses get a little old and your patience starts to fade.” (45:05)

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Episode Flow & Tone

• The tone is brisk and urgent, reflecting real-time decision-making and uncertainty.
• The episode leverages direct market reporting, expert panels, and policy insiders to create a broad, analytical yet accessible discussion.
• Original language is maintained with an engaging, conversational style.
• Frequent references to live market data, political dynamics, and social consequences anchor the conversation in the present moment.

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For listeners:
This episode provides a clear, in-depth guide to the interplay of monetary policy, geopolitics, AI innovation, and business sentiment as the financial world counts down to a potentially momentous Federal Reserve decision. If you want to understand not just what the Fed might do, but why the uncertainty is so high and how every corner of the economy is being impacted, this is essential listening.

Transcript

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[Kelly Evans]

We've got a falling stock market, rising oil prices and could we get a rake a rate hike, I should say. From the Fed today. I am Kelly Evans along with Brian Sullivan for our special two hour Fed coverage live from Washington D.C. all right,

[Brian Sullivan]

so here's how the markets and your money look just minutes away, really an hour plus away from the Fed rate call. It's not great and if you don't like red on the screen, maybe you want to look away. The dow is down 1 1/2%s and P NASDAQ, they are both down. We're also going to get guidance on what may happen in the future and possible hints on if the Fed will shrink its massive balance sheet. Kelly referenced oil. It is up nearly 70%. 7%. 70 would be a lot to 8458. The President saying hours ago the US will be hitting Iran hard his term in response to yesterday's surprise attack on U.S. troops.

[Kelly Evans]

We will go live to the White House in just a moment to hear from NEC Director Kevin Hassett. Plus a raft of special guests coming up after that. But first, let's get you set up for those key words and actions to watch out for this afternoon. Steve Liesman is across town with the final setup. Steve, and what is it exactly that people are most focused on here?

[Steve Liesman]

Well, it's the unusual amount of uncertainty that we have, Kelly, going into this about what the Fed is going to do. It Seems by the way that that is more or less the way Chairman Kevin Warsh has wanted it to be. While mostly the Fed going to be on hold as this meeting, some are making the case the Fed could and should hike today. Here are the probabilities. 34% probability of a hike 66% for holding days before meeting. Markets usually have a 95% probability on whatever that outcome is going to be and the markets end up being right. But among the reasons some investors betting on are probably hedging against a surprise hike are that Warships insisted inflation is the Fed's responsibility and and it will deliver price stability. There are market signals that look that say the Fed should be hiking rates here. Plus there could be benefits of a surprise proving its independence and proving a new regime is in town. Citadel writing if a majority of the FOMC is already likely to support a September hike, and if we are right that Warsh has much to gain by moving in July, it seems unlikely that voting members would oppose the chair over acting six weeks earlier than they otherwise would. But hold on to be sure, a hold is what's priced in the the overwhelming sentiment in the CNBC Fed survey and it's the House view of Goldman, J.P. morgan and Citi among others. But there could be the sense that even a hawkish bias worked in to the statement I'll be watching for that Citi saying it would be hard to explain declining to hike in June but then hiking in July after both inflation and jobs data were softer. Still, many on Wall street have found it prudent to put at least a couple chips on the long shot. Coming in guys.

[Kelly Evans]

And Steve, last time the big surprise was that the statement was so short. I wonder if they try to keep it to that length. Does does it inevitably slip into that? It's getting a little bit longer. People want a little bit more explanation for their moves.

[Steve Liesman]

That's a great question Kelly. And I'll tell you what, it's one of the things I'm watching for because one of the ways that you have classically bought off dissent is by putting something in to the statement that makes it so that the dissenter doesn't have to dissent. So when I said there could be something of a hawkish bias put into the statement and you could get a line here that says if necessary the Fed will act, there were two sentences at the bottom of the statement last time that I was curious about. It said inflation is above target for the following reasons and it said the Fed will deliver price stability. Absent from that was this middle sentence, Kelly, that said, well, how do you get there? How do you get the price stability? We'll see if perhaps that works its way into the statement. So great observation on your part.

[Brian Sullivan]

Yeah. Four sentence statement. Effectively poor paragraphs, if you will. Stephen, that last one to Kelly's point, way shorter than in the past. So there is a ch. Maybe it actually gets a bit longer because that descent, as you say, would go in as like an extra line, kind of a gift to the dissenter. To your point.

[Steve Liesman]

Yeah. Do you know what a vestigial bone is, Brian? I do not like. It's left over through evolution from things we don't need that we had before, like a tail and stuff like that. The statement before Wash took a whack to. It was full of vestigial statements that had been put into the statement before the to buy off this dissent and that this debt. So we're starting anew. I think Warsh wants to keep it clean. He said he liked it to be simple and straightforward. But you're right in the sense that there's going to be a debate around the table. Sometimes you buy off the dissent with a statement and sometimes, by the way, the statement is what the Fed wants. They may want to give us a little hint if they don't hike. Remember, it's really interesting. The market is priced, I'll give you a fresh quote here, an 80% probability, I believe, of a hike in in September. That was the Citadel quote. They're saying, hey, if you're all agreed you're going to do September, you might as well do it now because the market is priced for it. There's also, by the way guys, a second hike built in already into the futures market. And one other thing, if you don't mind that I'm watching today is okay, we know people are putting a few chips and hedging inside the Fed funds market, but how much are they hedging inside the treasury market? And is there a hedging going on in equities? If we don't get a hike, the equities perhaps turn around because they were expecting a hike or the other side if we do get the hike, is the market not price for that? So we're watching not just the futures market but all the markets. And one of the takeaways we'll get from this is is worse running a better railroad or was the way it was run before a better way to do it. In other words, not telling us what's going to happen or telegraphing it. Some of the market volatility we'll get today will give us a clue on that.

[Brian Sullivan]

Yeah, we got about an hour to think about it and then longer than that to react to it. Steve Liesman, thank you very much.

[Steve Liesman]

Pleasure.

[Brian Sullivan]

All right, so let's cut to it and go straight to the White House and your first guest to kick off the special two hour coverage, National Economic Council Director Kevin Assett joining us now in a first on CNBC interview. Kevin, it's great to have you on to kick off the coverage. I learned something today. I learned what a vestigial bone is. So I guess my question to you

[Kevin Hassett]

is the appendix is a vestigial organ

[Brian Sullivan]

as well, or pinky perhaps, or apparently the tail that I possess. Either way, Kevin, thoughts of a rate hike, a vestigial bone in the market, should we put those to rest?

[Kevin Hassett]

You know, I think that President Trump and the entire economic team have a super high regard for the stewardship of Kevin Warsh at the Fed. And we expect him to do the right thing, which is be an independent Fed that looks at the data, looks at the best models and then makes the best judgment that he can, that we, we trust his judgment. That's why he's been appointed to the Fed and we look forward to seeing how he moves forward. I can say there have been so many positive developments that he's brought in all these outside advisers that are going to reevaluate the Fed models and so on. And so I think that his stewardship at the Fed is already a home run. And we'll see this meeting. We'll see, we'll see how it goes. But the fact is that our confidence in Kevin Warren could never be higher.

[Kelly Evans]

Kevin, it's Kelly here. One of the economists I was reading has just suggested of all the task forces that was creating, there's not one to deal with the following possibility, which is a US Debt downgrade. The fiscal deficit situation, not great, worse than last year. Debt to gdp, not great. Historical bads. What would you say about that? Is that something that the Fed has to react to? Is that partly why we're in the situation that we're in?

[Kevin Hassett]

You know, I don't think that any of us think there's any reason at all why US Debt should be downgraded. That if you look at all, for example, the reductions in government employment that we've enacted over the last year and a half, maybe 300,000 jobs down, that means that the long run budget situation is moving in the positive direction, not the negative direction. So I think the Fed, probably, if they were really worried about it, they might, they might have had a task force on that. But the fact is that they look ahead and think about what are the problems that the Fed will face. And I think they've got a heck of a really great set of people there thinking about it, people who I've known throughout my career. And if I were setting up task force, I'd have chosen the same people.

[Brian Sullivan]

You know, the CPI number, Consumer Price Index, the inflation reading, effectively that's been coming down the last few months. But you, you also know Kevin very well that is backdated, not only looks back a month, but it's also at the same time dealing with data and inflationary points that we may have gotten a few months ago. Are you making precautions or anything like that? In the event that oil prices remain higher for longer, how are you and your team thinking about the chance, a very real chance, that those inflationary inputs may be a little more than we think this summer?

[Kevin Hassett]

Well, if you look at the futures markets, they expect oil prices, which have blipped up in the last year, few days, to drop sharply over the next few months. And the thing though, when I look at the cpi, which is one of the better CPI Consumer Price Index reports that I've seen in a long, long time, if you look out outside of energy, if you look at the bones of the CPI report, you can see that our policies are having a really big positive effect on reducing inflation. And so, for example, drug prices are way down and things like that. And so the bones of the last CPI weren't really related to energy at all. And we think that's because of the dereg policies and the drug policies. The drug, you know, the Trump rx, all of those things are showing up in the data and will continue to. And so that's why I think that anyone who looks at the latest CPI would have to say, you got to be really bullish. The Fed's ability to control inflation because basically they're working in tandem with the White House to lower costs for everybody.

[Kelly Evans]

Where do you come down, Kevin, on this whole thing about how AI companies might be driving up interest rates, interest rates, or affecting demand levels in the economy? What do you make of these levels of real interest rates?

[Kevin Hassett]

Right. Well, well, I think the number one story for AI is it's a big driver of growth right now. And, you know, there's a capital spending boom unlike anything that we've really seen since the mid-1990s, and that that's feeding through to higher wages Real wages are up about $3,000 on average since President Trump took took office after declining by about the same amount under Joe Biden. And the real reason why real wages are up is that we're getting a productivity boom both from AI and from other factors. And so whether it's a productivity boom and real wages are going up, it's very, very positive for the economy. It means that consumptions can stay high along along with investment. And the productivity boom for AI is also a reason why we expect downward pressure on prices. Because when productivity goes up, that that's the kind of growth that doesn't cause Phillips curve effects and make the Fed have to react.

[Brian Sullivan]

Yeah, this is critical. So to go into that a little bit more, inflation, we always define it or tend to define it, always is like a bad word. It's a naughty thing. Inflation itself, things cost more. Everything's inflationary long term. What is the difference, Kevin, right now between wage growth and inflations? As you see it, something costs five bucks more, but you make six bucks an hour more, you actually turn out better. How do you see the economy vis a vis wage inflation right now?

[Kevin Hassett]

Right. Well, well, well, what's going on is that real wage growth is the amount of money you have in your pockets. It's been skyrocketing. It's been skyrocketing on an average and an enormous amount for manufacturing workers, for construction workers and so on. And so the bottom line is that inflation is dropping quick, quickly because of our policies. And then the wage growth that's coming from higher productivity because of AI is making it so that people are much, much better off. And don't forget that they lost ground under Joe Biden year after year after year because the runaway inflation. And so with inflation going down, it's much easier for real wages to go up. And you got to admit, Kevin, Kevin,

[Brian Sullivan]

you know that that's a lot of that inflation was caused by Covid and supply chain disruptions.

[Kevin Hassett]

I think if you go back and look what happened was that there was a massive stimulus passed by the Democrats right after Joe Biden took office, after the COVID emergency was mostly behind us. And you could go back and look at me when I was a private citizen on the record saying this is going to cause inflation. I think may after that bill, I predicted something like about 7% inflation that year. And so when the federal government drops, you know, cash into the economy, helicopter drops cash in the economy, then the inflationary effects are really easy to see. Now instead, when we were there managing Covid under President Trump that we did five, I think very targeted stimulus bills to make it so that the hole that was being dug by the shutdowns was refilled, but just the right amount. And so for the year after a minus 32% quarter, we had flat GDP for the year and inflation was in the ones. And so it's really the big runaway stimulus after Joe Biden took office that caused this inflation.

[Brian Sullivan]

NSC Director Kevin Hassan joining us from the White House. Kevin, it's a real pleasure to have you on CNBC again.

[Kevin Hassett]

Thanks.

[Brian Sullivan]

Thank you.

[Kevin Hassett]

Yep, thank you.

[Kelly Evans]

Let's now bring in our first all star panel. Jason Trennert is chairman and CEO of Baird Strategic. He's here on set with us. And former Federal Reserve vice chair and CNBC contributor Roger Ferguson joins us as well. Jason, I'll just start with you. Anything and what Director Hassett said that you want to respond to. Correct build on.

[Jason Trennert]

Well, the one thing I might correct a little bit is that there's still a significant affordability issue for people. We have something called the common man cpi, which is reverse core because I

[Kelly Evans]

think reverse core, in other words, it takes food and energy as the.

[Jason Trennert]

Well, to us that's pretty core.

[Kelly Evans]

Yeah.

[Jason Trennert]

Right. So we just include the things people have to buy and we exclude the things people don't have to buy. And right now if you look at that, people are about 6 or 7% poorer in terms of their purchasing power than they were six or seven years ago. Now that's not President Trump's fault. I mean there's a variety of reasons why that happened. By the same token, you get the

[Brian Sullivan]

person a couple trillion in stimulus have something to do with it.

[Jason Trennert]

Well, you know, the person in charge gets the blame. And the fact also is that the Fed's balance sheet has gone went to $9.5 trillion during COVID Now it's 6.5 trillion. But I think one of the things WARSH is focusing on is that the Fed should not be an active player in the game. It should not have a jersey on. If it has a jersey on, it should be a referee's jersey. And I think since QE started in 2008, 2009, an enormous amount of negative consequences have accrued to that, not the least of which is it's massively regressive. It's great for rich people that have private equity portfolios and venture capital. If you're just a saver, you get

[Kelly Evans]

kneecapped because you think they're driving up asset prices because of the balance sheet.

[Jason Trennert]

Well, I think that was the plan. You know, that's part of. Certainly, that was Bernanke's plan. And when people said, like Senator Toomey, what do you say to the person in my state that did all the right things, saved money, took the kids to Hershey park instead of Disney World and all the rest of it, he said, well, they just need to take more risk. Now, that's great in the faculty lounge, but if you're just a regular person, you don't even know how to take more risk. You're doing the right thing by saving and start getting zero.

[Kelly Evans]

Do you think he would do something today to shrink the balance sheet or move more aggressive? Because a lot of people will now say, even those who acknowledge it might have had some impact, that is, we're back at about 20% of GDP levels. Meaning it's kind of a neutral.

[Jason Trennert]

Yeah, I don't think it's a neutral because, frankly, if you looked at the growth in the balance sheet, it was about six and a half percent, a little more than nominal GDP growth from, let's say, 1990 through 2007. Since then, it's been 11%. And that's. You're wearing a jersey at that point. And you look at Silicon Valley bank as another example where people are expecting always and everywhere for the Fed to bail them out. And in my opinion, that's not what it was designed for.

[Brian Sullivan]

So, Roger, we have about 44 minutes until we hear from the Fed itself. In your view, what is more important? Is it the rate decision or is it the balance sheet move, or is it something else?

[Roger Ferguson]

I think the rate decision over time is certainly much more important. There's no doubt that they need to shrink the balance sheet, but I think that will end up being a relatively slow and methodical move, nothing very dramatic. On the other hand, I think they're also going to have to confront what they said, the last statement, which is that the Fed has missed the inflation target for roughly five years. New Chair Washes can come in, you know, guns are blazing, so to speak, at least verbally. And I think at some point the question will be, when does the act. I think the markets are expecting two hikes this year. I think that's quite reasonable. So let's see what he says this time around and what the rationale is.

[Brian Sullivan]

Do you think we'll get to interest rate hikes this year?

[Roger Ferguson]

I think it certainly should be discussed. I think the market is expecting. Steve Lisbon, I think, indicated that that's the way he's also reading the market. So Yes. I don't think we should be very surprised if we end up having two hikes this year at some point and if not, you know, to this year one this year, maybe one very, very early next year. But it seems to me the direction of travel has got to be towards tighter monetary policy in order to back up the statements that the FOMC has made about getting back to the 2% target.

[Kelly Evans]

Jason, what's your point of view on the hike versus cut versus hold?

[Jason Trennert]

We're, I mean we're of the view a little bit that the market is misinterpreting perhaps Warsh's statements or perhaps too hawkishly or they're interpreting them too hawkishly. But, and that's partly because at our shop we know Chairman Walsh a bit, I'm sure, as Mr. Ferguson does. But it's important to remember he's a dyed in the wool supply sider which means that they don't.

[Matt Peterson]

He does.

[Jason Trennert]

He's not a Phillips Curve person that sees there as a strong relationship necessarily between growth and inflation that you can. There is no such thing as overheating if the spending is happening from productive sources. So our view is that he's going to let inflation run a little hotter with the expectation that productivity is really going to come through from all of these capex investments in this capex cycle. Now he also knows that it's not particularly wise for a central bank to tighten into a supply shock like energy. But at a certain point, as Brian will remind us, you know, at a certain point the supply shock becomes a permanent state of affairs and I don't think you have a lot more time on that. If oil prices are this high in a couple of months, it's going to be hard for the Fed in my

[Kelly Evans]

opinion, but that doesn't make any sense to me. Even if they were to stay at those high levels, either it will slow the economy or people will, it's a one time shock. It's not going to keep accelerating.

[Jason Trennert]

Yeah, I just think the political pressure within the Fed will be such that it will be hard for him not to, not to do something. I think we have to get ready and I would love to ask Mr. Ferguson.

[Brian Sullivan]

We're on live TV. Jason, you can do whatever you want, we can't stop you.

[Jason Trennert]

I'll do it. But I would like to ask him whether we should get ready for more, perhaps split votes from like bank of England. To my knowledge they have split votes all the time and it doesn't seem to cause that much consternation here. We're used to kind of just complete consensus or close to complete complete consensus. Is that possible, you think, or.

[Roger Ferguson]

Oh, no, no. So look, I think if we look at the last several meetings under, under Jay Powell, I think there are three dissents at the height. So we've gotten used to a much more fractious thread. For sure. It has not undercut their credibility. You heard incoming Chair Warren talk about good Family Feud or something of that sort of. So I think the market should expect more dissents going forward. It's not the end of the world. And I think as, as both Powell and warship pointed out, these are very thoughtful people, range of issues at the table. So absolutely going to expect dissents. I think the bigger question is, you know, when the productivity improvements do come into play, yes, that should put a damper on inflation. But we're starting at a place where inflation is well above the target and we're starting with the chair and a committee that I think really want to hold on to credibility and they're going to have to move in order to do that. It's just not going to be, you know, jawboarding inflation down is not the reality of the day.

[Kelly Evans]

This is exactly why we still have such this sizable bet, you know, that we that we get a hike maybe today, maybe soon. Gentlemen, for now, thanks. Roger Ferguson, Jason Trenor, let's get over to Capitol Hill where we have Emily Altman. Emily Wilkins, I should say. OpenAI Sam Altman has been meeting with lawmakers. Emily, what can you tell us about that?

[Emily Wilkins]

Hey, Kelly. Well, yeah, Sam Altman was on the Hill meeting with both Democrats and Republicans about Open AI's new model. He also said that he would be meeting with White House Chief of Staff Susie Wiles. This, of course, coming as the White House is finalizing a framework on how to deal with these big AI frontier models. They've got an August 1st deadline to put it all together. Now, Altman did tell me that he has seen the framework on it. He didn't want to classify it. He was rushing off to another meeting, but I asked him if he had any changes he wanted to make. He said nothing specific. I also got to ask him a little bit about any kind of legislation that he wants to see. We are expecting a markup of a number of AI and big tech bills on the Hill next week. Now, Altman didn't have any specific policies, but we also asked him a little bit about his thoughts on open source. He said it's part of the ecosystem and that there is a spot for both open and closed models. Certainly a lot of senators have an interest in meeting with him. Nvidia CEO Jensen Huang up here at the other day, it's not really clear that Congress is going to have time before the end of the year to pass any major laws on a I but there is a major defense bill coming up. You could see some stuff in there on national security. And obviously this is a bipartisan issue, so we fully expect no matter what the results are, come November for this to be an issue when Congress gets back in the new year.

[Brian Sullivan]

Kelly Emily, I'll pick it up. Emily Wilkins, thank you very much. Before we go, very quickly, I inflationary, deflationary?

[Jason Trennert]

Neither, I would say longer term, it's, it's very deflationary, I think it should be, or disinflation, even though the wage increases, materials cost increases, productivity gains I think will offset that. And then and in terms of employment, I'm largely of the view it will create more employment, but in other places that we can't even imagine. So that's my very hopeful view.

[Brian Sullivan]

We like hope.

[Jason Trennert]

We like hope.

[Brian Sullivan]

It's a good thing.

[Jason Trennert]

Good thing.

[Brian Sullivan]

Coming up next on our Countdown to the Fed Decision special, where oil may be heading next, depending on what the president and Iran do. Bob McNally is here and stocks are

[Kelly Evans]

still under pressure, but we are off of session lows. Dow's down about 700 right now. We've got about. What is this? Less than 40 minutes until the Fed's decision on interest rates. And our special live coverage from Washington continues after this.

[Brian Sullivan]

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see [e-mail] credit card this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.

[Roger Ferguson]

All right.

[Brian Sullivan]

Welcome back. Rising oil prices have been a key driver of higher yields this year. It's a pattern we could see today as crude prices and yields are both rising. And President Trump now vowing retaliation after that surprise attack by Iran's Revolutionary Guard on American forces. Eamon Jabers at the White House with more on what we know. Eamonn?

[Eamon Javers]

Yeah, Brian, Centcom says that all of the Iranian ballistic missiles that were launched at American forces last last night were intercepted. But the fact that Tehran chose to escalate the war at a moment when President Trump is trying to pause, it shows that an important dynamic here may have changed. It may be that Iran now wants the war to continue more than President Trump does. The flare up of war puts pressure on oil and stock markets and pressure on the president to agree to more favorable terms for Iranian control of the Strait of Hormuz whenever negotiations do resume. So President Trump responded with some angry rhetoric in a phone call with Fox News this morning saying we are going to beat the effing s out of them. We will be hitting them hard. They are going to get a beating. So it appears as if US Military strikes on Iran will resume now after a multi day pause. Separately, guys, Reuters reporting that Iran is scheduled to buy as many as 400 shoulder fired anti aircraft missiles from China, an indication that Tehran still has supply line support to continue the fighting. Guys, back over to you.

[Brian Sullivan]

All right, Eamon, thank you very much. All right. The Fed and energy markets not just watching the Middle east as well, you also have to keep an eye on Russia, Ukraine launching more long range overnight strikes, hitting two of Russia's biggest oil refineries. The attacks likely exacerbating already bad shortages of gasoline and diesel fuel. Russia. But it also begs the question of if energy markets are underpricing the risk and complicating the Fed's inflation fight right now. Joining us, Rapidan founder and President Bob McNally. Bob, always a pleasure to get you on. Listen, oil's higher now, but I want to be clear, it's lower than it was about a week and a half ago. In that July peak, we've had a 40% move from the lows to the highs and where we are today, truly stunning for a barrel of crude. Any way to really know with confidence what's going to happen ahead or is it pretty much entirely rely on what happens between the US And Iran or the Iranian Republican Guard?

[Bob McNally]

RYAN the only thing we know with confidence is that the oil market has been trapped in this wild spasmod, spasmodic oscillation between its entrenched optimism that collapsed prices in late June. Going to the penance holiday, we'd unwound the risk premium in Brent and help the Fed with some good numbers there in June as we saw. And then, you know, ABC gets attacked a couple days ago. Jazan, Saudi refineries, they're not only they're broadening and deepening the conflict and we roof back up but the President says something nice about a phone call coming in and talks and we sell off again. It's hard to explain, Brian. All I know for sure is the market remains overly optimistic about a quick normalization of hormuz flows and end of this conflict. The geopolitical reality, reality is just the opposite. The hardliners are in charge, as you just noted. They're spoiling for a fight. They want to get the oil price up to pressure President Trump and they have the means to do it. At some point the market's got to wake up and kind of smell that coffee.

[Kelly Evans]

Well and look, he's responding. There's also this, these kind of their trading fire in Iraq, there's attacks on Saudi. So as we think again about the price of not just oil but all these processed refined fuels like gasoline and diesel, Bob, what's going to happen there?

[Bob McNally]

You know, you're absolutely right. So unlike crude oil which has been very susceptible to offsets, redirects, Chinese crash diet, etcetera, etcetera. And optimism, refined products are not, I mean you have heating oil cracks, margins for turning crude into heating oil in Europe, higher than Brent itself. I mean we're into terror incognito here. Oil markets, gasoline inventories, very, very tight. And you know what? The harder we run these refineries, which we are, we just reported today, very high refinery rates. United States, that's helping. But we get into the fall, we have a storm. You got to repair these things. It's creating latent dangers. So refining refined products, Kelly, really tell the story, which is we have a tight market here.

[Brian Sullivan]

You know, it's funny you say that, Bob, I know you're not an equity analyst, but I want to give our viewers a little bit of an idea what we're talking about. Earnings are out on Friday from Chevron, Exxon, next week, Marathon at ConocoPhillips. Marathon Petroleum made A$65 a share in the last quarter. The estimates for this quarter, $13.95.

[Kelly Evans]

That's like what the semiconductors used to put a micron that was Micron a year bigger.

[Brian Sullivan]

It's 734% expected growth. We will see. But I want to get back, Bob, to what you said, which I think is so critical. Iran knows, I think they must or whoever's in charge of Iran that the only real leverage they've got is the Strait of Hormuz and the price of oil. It sounds like you're saying there are people in Iran that you do not think are going to stop trying to raise the price of oil until it's enough to cause political pain.

[Bob McNally]

No question. My CEO and colleague Scott Modell is a former CIA field officer, Iran specialist. They say his Farsi is Tehrani accented. I was in D.C. all last week talking with folks. If one common picture emerges from the doves, from the hawks, from Scott, it's that the hardliners are in control. The folks who did the MoU are on the back foot and the hardliners are determined to raise the price of oil on President Trump. No question.

[Kelly Evans]

Well, they're getting a six and a half percent pop today. But as mentioned, we've never gone back towards the highs yet of when this first broke out. Bob, thanks for now. We appreciate it. Bob McNally still ahead, we often think of CEOs as wanting or expecting or pushing for lower interest rates. But would higher rates make more sense here? And are tech companies spoiling the fun for everyone? We'll ask the head of the Business Roundtable about that.

[Brian Sullivan]

Less than 30 minutes until that Federal Reserve decision. We are down across the board. The nasdaq off about 3/4 of 1%. The Dow over 1%. Interest rates though they're kind of doing the work of the Fed for at the 10 years of at 4.64%. Our special coverage live from right here in Washington, D.C. continue right up. I love my phone, but not my carrier. What do I do?

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[Brian Sullivan]

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[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update wherever you get your podcasts.

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[Kelly Evans]

in full focus all hour long as we ramp up to a little bit murkier than usual 2pm decision. Usually by now we have 99% certainty of what might happen because the Fed has telegraphed it. But the times are changing. Right now, Kalshee has a 73% chance. The Fed holds steady at 2:00 Eastern, but a 27% chance of a quarter point hike still. And so far CEO Anthony Noto telling Squawk on the street earlier. He's also in that hawkish expectations camp. But it wasn't always.

[Steve Liesman]

We're now assuming there are two rate hikes. I know you're just talking about that. When we started the year we assumed two rate decreases.

[Kelly Evans]

That's a big delta. For more on what the business community expects from today's decision, Josh Bolton is here. Business Roundtable CEO, it's great to see you just kind of catch up in general on so many different things. But is there is there a take from the business community about the Fed right now?

[Josh Bolton]

The important take is that they've got confidence in the worst Fed. I mean, we'll have members, our CEO, we've got 255 CEOs in the organization. They'll all have different views on what's going to happen, what should happen. The thing they're unanimous about is that they have confidence in the warsh Fed to balance things properly.

[Brian Sullivan]

Do they?

[Josh Bolton]

They do, they do. Look, I had the opportunity of working with Kevin Warsh in the bush White House 20 years ago when he was a young but influential staffer on the White House Economic Policy Council, as was your previous guest, Bob McNally.

[Kelly Evans]

Oh, funny.

[Josh Bolton]

Great crew. And Warsh is a guy who is very smart, very committed, very confident, and has a good sense was.

[Kelly Evans]

He was hawkish or dovish back then. What are his real stripes? Josh, you can now give us insight into this man.

[Josh Bolton]

His real stripes at the time were hawkish, but, but he's, he's a guy who understands the broad situation and he, I think he will do a really good job of balancing the dual mandate, which is the Fed today has a, has one of the harder jobs in the modern history of the Fed. But I think, I think they will do a good job.

[Brian Sullivan]

There were, Josh, some, some anecdotes from a recent Wall Street Journal article. I think it was Nick Timorous talking about a dinner that they had and people were leaking. He got, you know, he got some insight. It didn't sound very nice. It sounded like the members of the Fed were sniping at each other in a way that might lead you to think it's worse than a, quote, good family fight, knowing some of the players. What is your inside DC The Beltway take on this Fed makeup?

[Josh Bolton]

I've got no take on that dinner, other than what I've read along with you. But, yeah, I think Borscht has it right. They have a good family dispute. Those are, those are mostly nerds. You don't get to be on the Fed if you're a policy nerd. If you're an economic policy nerd. And they're having a good, a good fight about it. And for one, I'm glad they are, because they need to, to be taking in the evidence and making a balanced decision of what's best for the economy.

[Kelly Evans]

Do you have an opinion on what that. It sounds like you're saying they do need to clean up a little bit of what's happened in recent years. So one thing we hear a lot is that people aren't sure if less transparency is a good thing. I mean, I remember back to the Greenspan. The idea is it'll introduce more volatility, make it harder for the business world to kind of plan and anticipate, anticipate what the Fed might do. What's your response to that?

[Josh Bolton]

I think Warsh is doing a smart thing with those five committees he's appointed because he's showing that he wants to be collaborative. He wants to have a lot of input on what the right path forward for the Fed is. I think they're going to take a really serious look at transparency, at what the data they use, how they use it. I think all of those things that he's doing are right on target. And he's, he's picked really good people of divergent views to give the Fed advice.

[Kelly Evans]

You're not worried about surprises? It's not going to be jarring for the business world. It's not going to make it harder to do business.

[Josh Bolton]

Surprises are always hard for the business world and they, they prefer to avoid it. But they, they want a good functioning Fed. And there's lots of other policy areas where surprises come at us, as they have, for example, over the past year or so on trade that have been bad for the business world. But there's also been a lot of good stuff, policy tailwinds that we've had to deal with over the last tariffs

[Brian Sullivan]

are worse for some than rate hikes, are they not? Is that a fair statement?

[Josh Bolton]

I don't know. How do you balance that? But the answer is yes.

[Brian Sullivan]

Tariffs, obviously, obviously not for all, but for a lot. Some of your members, I'm sure, are like, Josh, man, you got to help us out with these tariffs.

[Josh Bolton]

Yes, it's been really disruptive for probably a majority of our membership. The uncertainty of the tariff hikes, that's been well balanced by really good tailwinds on tax and regulatory policy in the Trump administration. But our membership very broadly would like to see stability in tariffs and a minimization of the tariffs to what's necessary to combat unfair trade practices.

[Kelly Evans]

Josh, it's been great to have you here and check in, hope to do it again.

[Josh Bolton]

Thank you.

[Kelly Evans]

Appreciate it. Josh Bolton of the Business Roundtable.

[Brian Sullivan]

All right, we are not done yet. And on deck, interest rate cuts. How about an interest rate hike? Futures pricing in a 32% chance of a rate increase today. But Matt Petersen is up next with three reasons why Chairman Walsh will not raise rates.

[Kelly Evans]

16 minutes to go until the Fed decision. While there's still a decent chance of a rate hike today and inflation is still above target, a new piece on CNBC.com is questioning some of those hawkish expectations, saying raising rates could undermine the worst of the task forces and cause friction with the White House or so says CNBC senior economics writer Matt Peterson, who joins us here. It's good to see you. So you're putting the right now the market and it's changing by the moment. As 2pm approaches, odds are coming down 29% chance or so of a hike right now, but you'd put that at basically zero.

[Matt Peterson]

Yeah. I don't think Kevin Wash wants to hike rates. I mean, look, there's a chance that he gets overwhelmed by this committee, but that would be a pretty tough thing to happen to a guy on just his second meeting. So I think he's going to win the day.

[Brian Sullivan]

Three reasons why Warsh is not going to raise rates today. What are they?

[Matt Peterson]

Okay. Number one, I don't think he wants to. I don't think he buys the argument about AI AI spending. I don't think he's, he doesn't want

[Brian Sullivan]

the phone call from 1600 Pennsylvania.

[Matt Peterson]

Yeah. That's reason number three, because you might be like this.

[Keith Lansford]

Whoa. Right.

[Brian Sullivan]

I mean, it's. President Trump would be up as. You know what, I can't say it on a family friendly show if he raised rates.

[Matt Peterson]

Yeah. Look, and there's a kind of practical reason to worry about this. It's not just that the President will yell at him. It's that Kevin Warsh wants something from the President soon, which is a good replacement for Jerome Powell, should he step down soon. Which I think Kevin Warsh is probably hoping he will. Right. Powell has until January 2028, but he could leave sooner if, if the Trump administration gets off of his back. And so if Warsh can keep things calm between the administration and the Fed, you might see Jay Powell leave sooner, and then you might see Kevin Warsh getting a little bit of a say in who comes in afterwards.

[Kelly Evans]

But if you're Powell, do you want that?

[Matt Peterson]

You only want it if things are really calm. Right. I mean, we don't know what's in Jerome Powell's head. He might just hang on until the last minute. But there's a lot of people around him who think that he is ready to go if it seems like the administration is backing off its legal threats,

[Brian Sullivan]

unless he wants to stay there specifically so the President doesn't get to fill that spot.

[Matt Peterson]

It's true. But if you are Kevin Warsh, how do you manage this situation? Right. You keep the White House out of your business. You don't give them a reason to fight, and you do the thing that's already what you want to do anyway, which is keep interest rates steady. I don't think this is like consideration number one, but I think it's in the back.

[Kelly Evans]

Well, let's, well, let's, let's state it this way, too. But there's the he should hike, but he won't. And then there's the reasoned case not to hike. The markets will freak out about the former but not the latter.

[Brian Sullivan]

So we're going to get a little

[Kelly Evans]

bit of a test case on that.

[Matt Peterson]

Yes, that's right. Look, I think Kevin Wash sincerely does not believe that this is time to hike interest rates. I think he thinks that AI is going to supercharge productivity. He's a real true believer in this. Right? I mean he was essentially a VC. See, for 15 years you work for Stan Druckenmiller. He ran this private tech fund, you know, that invested in Palantir and all these other companies. He's seen it up close. He really believes that. There's a reason he put Mark Andreessen on this task force, by the way, that's the other reason is that he's got all these task forces coming in that are going to tell him exactly what he thinks the Fed should do. And if he goes out and hikes interest rates now, he basically makes those task force.

[Kelly Evans]

All right, Matt, thank you. If you'd like to read more, more of the full pieces on cnbc.com and we'll find out more in about 13 minutes. Thanks.

[Brian Sullivan]

All right, so 13 minutes to that Fed decision. Let's get a check on where the markets and your money are right now. Again, we are down across the board. The dow down about 1.5%. The Russell 2000 small caps, very interest rate sensitive group. By the way, the domestic American economy is down 1.2% right now. Ten year yields, they are slightly higher at 4.6%. Oil prices, they are up about 6%. But again, just a little context, they're still below where they were on Friday. We touched $93.50. We're at 8,444, so up six and a half percent. But we are below where we were just a couple of days ago. And also do not forget, not that I need to remind you because you're the smartest audience on TV and in the radio. This is the busiest week of earnings season. Microsoft, Metta, they report, yeah. Today on Fed Day after the bell. Amazon and Apple, they report their numbers tomorrow. Metta trying to avoid extending its record losing streak to 10 straight days. Metta, by the way, if you're counting at home, down more than 13% in that time. It's only down to 100ths of 1% today. So today Metta could end that losing streak or continue it. I guess you'll have to stay tuned for like the next two hours and change to find out. You're probably also interested in Space X, one of the biggest IPOs ever. Space X up fractionally right now hit 107 yesterday, 116, 44. But Kelly, obviously it touched 200 bucks right at the Open on that IPO.

[Kelly Evans]

All right, we're moments away from Kevin Warsh's second rate decision as Fed chair. Markets are still expecting steadiness, but investors are watching for any kind of increased hawkish commentary in this statement. Any sign there's more animosity between Fed members and the new chair? Here to discuss, Jared Bernstein is former chairman of the Council of Economic Advisers for Biden. And Jamie Cox is managing partner at the Harris Financial Group. Welcome to both of you. Sir, the floor is yours. How do you come down on do you want them then to hike if we, if Trump wants them to cut or.

[Jared Bernstein]

I don't want them to hike, I think they will hold. I think they should hold. But the fact that inflation has been above target for so long is not immaterial to this group. And I have an understanding of where some of the hawks are coming from. I expect we get a couple of dissents today and continued hawkish bias. Look, when you're missing your target for five years on end, you can say, oh, this supply is factor and that supply side factor in tariffs and wars etc. Eventually the excuses get a little old and your patience starts to fade. And so I certainly understand the hawkish bias, but given the fact that the economy is pretty good, it's not overheating, certainly wouldn't hike into it.

[Brian Sullivan]

It does matter, Jamie. There was a Fed paper out recently where they basically proved, using a lot of equations that I'm not going to show on TV because I don't understand them, that Fed moves do move stocks, that ultimately even though in the last year or two it hasn't mattered quite as much, maybe because of AI, whatever else it might be, wars, etc. But the Fed does matter. So somebody's running money for a living. How do you look at the Fed vis a vis your client investments?

[T-Mobile Representative]

I think it's less about the Fed and more about interest rates. I mean we have to.

[Brian Sullivan]

Okay, to be fair to your point, the bond market, we could bring up a one year or two year chart of the ten year has done the work of a tightening Fed already has it not?

[T-Mobile Representative]

Yeah, it has, but it has largely been stressed by the AI companies going to the market constantly looking for debt service. So I think a lot of what's going on in interest rates right now is actually related to that. Not so much in other Factors like, you know, whether the price of groceries is higher or whatever. So I think that that's where the for that. So I want to talk about the Fed just for a second. I don't think that moving the interest rate 25 basis points is going to do a thing. They have to go on a, on a multi rate hike path before it actually has any moving parts at all. So think about it. There's only the BOJ and the ECB that have raised rates in 2026. I don't think a dual mandate Fed is going to raise rates until a supply shock. I don't think it's going to happen.

[Jared Bernstein]

So can I respond? So I'm very sympathetic to that view, Jamie and I think the impact of a rate hike would probably do more harm than good in the perspective you're suggesting from the macro economy's view. The only way I think it could be helpful is from the perspective of showing that you really are serious about anchoring inflationary expectations. I mean at some point there the dissenters are going to say. The view of the dissenters, which I think we'll probably hear at some point today, is that the reason we're leaning towards a hike is because we just don't think the Fed looks serious enough about maintaining the anchor if we don't do something. Now I've heard officials say that's no reason to raise rates and I happen to agree with that. But it is a rationale that I do think makes some sense.

[T-Mobile Representative]

Can I add something to that? So I think that there are other levers the Fed could pull. You know, they have to be careful on the balance sheet because it could affect mortgage rates and that would affect the average person. So that's to be careful there. But there's other things the treasury can do in tandem with the Fed pay more attention to the way they issue extend duration things of that nature. That would really help I think to tamp down inflation, inflation overall. So there's, there's a lot of debate

[Jared Bernstein]

on there is that the US treasury is doing nothing but putting upward pressure on rates by the just excessive amount of borrowing. And we have deficits now that are 6% of GDP with the economy doing what it's doing. That should be something more in the

[Kelly Evans]

three to four to laugh given what happened during the previous administration. With all due respect, I mean some of these problems, the deficit, you're not wrong, the stimulus, you know, they're inheriting a situation. What I worry about, let me just put it this way, is that we're always fighting the last fight. So what they should have done what about 2020. What about is is now if they overreact now, well that ship has sailed. Now they got to anticipate where this one is going.

[Jared Bernstein]

Yeah, I don't disagree. Look on the fiscal policy, neither side has a great record. So you're absolutely right about that. When it comes to today's decision, I do think that the macro concerns that we've both suggested and that it's 25 bip hike probably doesn't really do much at all on the inflation. By the way though, three factors pushing up inflation right now, tariffs, war and the now that latter one is a demand side issue. But I think some of the leverage issues you were talking about are probably already pushing back on some you got

[Kelly Evans]

to go because you know why we have oh yeah. We have a Fed decision coming gentlemen. Really appreciate it. Jared Bernstein, Jamie Cox, thanks.

[Brian Sullivan]

Yeah. And that rate decision coming and what about six and a half, give or take. The longer I talk, the less time it'll be. We should have like a countdown clock. Stocks are down, bond yields and oil slightly up. We will come back right after a short break, get the decision, the analysis and then at 2:30 Eastern the press conference from Kevin Warsh. A lot to do. Don't go anywhere.

[Keith Lansford]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts.