Fed Warns of Increased Uncertainty, Holds Rates

Summary

WSJ What’s News: Fed Warns of Increased Uncertainty, Holds Rates
Release Date: May 7, 2025
Host: Victoria Craig

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Federal Reserve Holds Interest Rates Amid Rising Uncertainty

Victoria Craig opens the episode by highlighting the Federal Reserve's unanimous decision to maintain the benchmark interest rate within the 4.25% to 4.5% range for the third consecutive month. This marks the Fed's first rate decision since President Trump's implementation of a comprehensive tariff package in April, much of which has since been rescinded.

Jerome Powell, Fed Chair, addressed the press conference following the decision, stating:

“The administration is entering into negotiations with many countries over tariffs. We'll know more with each week and month that goes by where about where tariffs are going to land and we'll know what the effects will be when we start to see those things. So we think we'll be learning. I can't tell you how long it will take, but for now it does seem like it's a fairly clear decision for us to wait and see and watch.”
[01:43]

Greg Ip, Wall Street Journal's Chief Economics Commentator, joins the discussion to elaborate on the implications of President Trump's tariff policies:

“Well, it's not a very satisfying answer, but the main impact is just raising a lot of uncertainty. I mean, we've said it before on this show in other places is that we have a lot anxiety out there. We know that from confidence surveys. We can see it in the volatility of the stock market, all the so called soft indicators. But when we look at the hard indicators like employment and spending and production, they're not yet showing up much impact of the tariffs. But there's just so much they don't know about what the impact of tariffs will be.”
[02:23]

Ip further explains the Fed's cautious stance:

“They, like the rest of us, are waiting effectively to see the extent to which the tariffs show up in prices or the result in cutback in deliveries or production. You know, whether there are actually empty shelves from certain products don't show up and that could happen in as little as several weeks or it could take longer. But this is kind of a moving target because as you know, the president and his advisors are right now entering into negotiations with a lot of countries. The tariffs on China could end up being lower than we currently expect. That adds further uncertainty because it means that in addition to the lags from the tariffs that are already in place, the tariffs in place may not stay at that level. The feds basically say why rush a decision that they don't have to make now.”
[03:04]

The discussion underscores the Fed's emphasis on waiting for clearer indicators before making further interest rate adjustments, as ongoing tariff negotiations add layers of unpredictability to the economic landscape.

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Disney Expands Global Footprint with Abu Dhabi Theme Park

Transitioning to the entertainment sector, Victoria Craig reports Disney's ambitious plans to establish its seventh global theme park in Abu Dhabi, marking the company's strategic entry into the Middle East market.

Ben Fritz, an entertainment industry reporter for the Wall Street Journal, provides insights into Disney's decision:

“For Disney, Abu Dhabi was in the heart of the Middle east, which is a region where Disney doesn't have nearly as much of a presence as it does in the rest of the world. It's a region where there's a growing number of middle class people and is a huge tourist destination. There's already a bunch of other museums, parks, et cetera there that draw a lot of tourists. And Disney both thinks there's a good theme park business and also is hoping that by establishing a theme park there, it will make people more interested in Disney's brands, which will get them more likely to use Disney, watch Disney movies, buy Disney consumer products and toys, etc.”
[07:53]

Fritz elaborates on the partnership between Disney and Miral, the local company financing and building the park:

“It's unusual. So usually Disney partially or entirely builds the theme parks itself and then owns them, which costs many billions of dollars, but obviously has a huge upside eventually from the ownership. In this case, Disney is partnering with Miral, and Miral is going to entirely pay for the theme park. Disney is licensing its IP to them, and then Disney is going to do the actual design of the rides and attractions and it's going to consult on how to operate the park. Working with a local company in a foreign country where Disney has done very little business, kind of helps it to navigate things there and then also Disney has a big but limited amount of capital and they're making a lot of other investments now.”
[08:35]

Bob Iger, Disney CEO, commented on the timeline and the strategic importance of the Experiences division:

“We could be as many as seven years away from the opening of this new Abu Dhabi theme park. But we did learn today through the company's earnings that the Experience part of its business, which include theme parks and cruises, is a big part of the company's revenue stream.”
[09:16]

Fritz continues by discussing the financial performance of Disney's Experiences division:

“The Experiences division of Disney, which is primarily parks as well as consumer products, has been a growing share of its operating income especially. And Disney said that last quarter, despite some economic uncertainty that we're all familiar with, the domestic parks attracted more guests and higher spending from the visitors who came. So the operating income for the experiences business rose 9% to $2.5 billion was some of the best growth for any business within the company.”
[09:38]

Additionally, the conversation touches on Disney's streaming ambitions, particularly with ESPN:

“The big streaming question for Disney this year is going to be what happens to ESPN? Disney is planning to launch a standalone ESPN streaming service that has everything you can get from ESPN on TV. Currently, ESPN basically just has the sports that don't make the cut for ESPN Cable. You know, Bob Iger said on the earnings call today that Disney is going to announce the official name for and announce the price for it next week.”
[09:38]

This expansion signifies Disney's commitment to diversifying its revenue streams amidst global economic uncertainties.

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U.S. Intelligence Agencies Intensify Efforts in Greenland

Victoria Craig shifts focus to national security, revealing that U.S. intelligence agencies are ramping up their activities in Greenland. This move aligns with President Trump's longstanding interest in acquiring Greenland, a topic that has garnered significant attention.

Katherine Long, a reporter from the Wall Street Journal's investigations team, provides detailed insights:

“What we know is that several high ranking officials in the Office of the Director of National Intelligence asked intelligence agency heads to collect information relating to Greenland's independence movement, attitudes on American resource extraction in the island, and also to identify people in Greenland and Denmark who support US Objectives for the island. Greenlanders overwhelmingly reject the idea that the island should become part of the US that being said, there is a small but vocal independence movement on the island that has expressed some interest in the.”
[05:05]

When questioned about the framing of this intelligence activity, Tulsi Gabbard, head of the National Intelligence Agency, responded critically:

“DNI Gabbard recommended that we should be ashamed of aiding deep state actors who seek to undermine the President. That's a direct quote.”
[05:52]

This development highlights the geopolitical maneuvers and the sensitive nature of U.S. intentions in Greenland, amidst internal and international scrutiny.

---

Judicial Ruling on Detention of Graduate Student Ramesa Oosturk

A significant court decision is reported involving Ramesa Oosturk, a graduate student from Tufts University, who has been ordered to be relocated from a Louisiana detention center to Vermont. Oosturk's legal team alleges that her March arrest was retaliatory, following her co-authorship of a pro-Palestinian opinion piece.

Key points include:

• Oosturk has not been formally charged with any crimes.
• The Trump administration has previously detained multiple foreign-born students in Louisiana, a state known for its stringent immigration court precedents.
• The appellate court's ruling may set a precedent for the relocation of other detained students to jurisdictions with more favorable conditions.

This case underscores the ongoing tensions surrounding immigration policies and the judicial system's role in addressing potential abuses.

---

Corporate Headlines

1. CrowdStrike Implements Workforce Reduction

Victoria Craig reports that cybersecurity firm CrowdStrike is eliminating approximately 500 jobs, representing 5% of its global workforce. This move aims to enhance operational efficiency amidst financial challenges. The company anticipates a charge of up to $56 million due to this restructuring, following a recent swing to a loss last quarter and underwhelming full-year earnings projections.

2. FAA Enhances Air Traffic Operations Post-NY Newark Disruptions

In response to recent technological failures that disrupted operations at Newark Liberty International Airport, the Federal Aviation Administration (FAA) is undertaking measures to bolster and modernize its air traffic control systems. Initiatives include:

• Increasing staffing for controllers overseeing Newark traffic.
• Installing new high-bandwidth connections between the Philadelphia facility and New York to ensure greater reliability and redundancy.

These steps aim to mitigate future disruptions and improve overall air traffic management.

3. Darkness Over the Sistine Chapel During Papal Conclave

The papal conclave commenced in Vatican City amidst an unusual occurrence of black smoke emanating from the Sistine Chapel, signaling that no new pope was elected in the initial vote. The conclave will intensify its efforts with four votes scheduled daily until one of the 133 cardinals selects a new leader for the Catholic Church. This development adds a layer of intrigue to the ongoing religious proceedings.

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Additional Highlights

Before concluding, Victoria Craig mentions a bonus podcast episode focusing on the latest quarterly reports from the automotive sector. Topics include:

• Reactions of car companies to President Trump's tariff policies.
• The potential timing and impact of consumer price increases on vehicles.

Listeners are encouraged to tune in for an in-depth analysis of these developments.

---

Final Notes

Today's episode of What’s News was produced by Anthony Bancy, with Pierre Biennime as the supervising producer. Victoria Craig signaled the show's return the following morning, ensuring listeners stay informed with the latest headlines and business stories shaping the global landscape.

Transcript

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[Victoria Craig]

Despite President Trump's demands, the Fed keeps rates steady and warns of increased economic uncertainty. Plus, Mickey Mouse heads to the Middle east as Disney plans a new theme park in the capital of the United Arab Emirates.

[Ben Fritz]

Abu Dhabi is in the heart of the Middle east, which is a region where Disney doesn't have nearly as much of a presence as it does in the rest of the world. It's a region where there's a growing number of middle class people and is.

[Victoria Craig]

A huge tourist destination and what U.S. spy agencies are up to in Greenland. It's Wednesday, May 7th. I'm Victoria Craig for the Wall Street Journal, filling in for Alex Osila. This is the PM edition of what's news, the top headlines and business stories that move the world today. The Federal Reserve has voted unanimously to keep its benchmark interest rate in the four and a quarter to four and a half percent range for the third straight month. It's the Fed's first rate decision since President Trump imposed a sweeping tariff package in April, much of which was later reversed at At a press conference following today's decision, Fed Chair Jerome Powell responded to a question from the Wall Street Journal saying tariffs presented continuing uncertainty.

[Jerome Powell]

The administration is entering into negotiations with many countries over tariffs. We'll know more with each week and month that goes by where about where tariffs are going to land and we'll know what the effects will be when we start to see those things. So we think we'll be learning. I can't tell you how long it will take, but for now it does seem like it's a fairly clear decision for us to wait and see and watch.

[Victoria Craig]

For more, I'm joined by the Wall Street Journal's chief economics commentator, Greg ip. Greg, we talk a lot about the impact of President Trump's tariff policy. How are these new levies affecting the economy and the Fed's reaction to it?

[Greg Ip]

Well, it's not a very satisfying answer, but the main impact is just raising a lot of uncertainty. I mean, we've said it before on this show in other places is that we have a lot anxiety out there. We know that from confidence surveys. We can see it in the volatility of the stock market, all the so called soft indicators. But when we look at the hard indicators like employment and spending and production, they're not yet showing up much impact of the tariffs. But there's just so much they don't know about what the impact of tariffs will be.

[Victoria Craig]

And the Fed has been extremely cautious with its language about tariffs. But what information does it need for the next interest rate decisions over the next couple of months? And when might we see rates move?

[Greg Ip]

Well, they, like the rest of us, are waiting effectively to see the extent to which the tariffs show up in prices or the result in cutback in deliveries or production. You know, whether there are actually empty shelves from certain products don't show up and that could happen in as little as several weeks or it could take longer. But this is kind of a moving target because as you know, the president and his advisors are right now entering into negotiations with a lot of countries. The tariffs on China could end up being lower than we currently expect. That adds further uncertainty because it means that in addition to the lags from the tariffs that are already in place, the tariffs in place may not stay at that level. The feds basically say why rush a decision that they don't have to make now.

[Victoria Craig]

Wall Street Journal chief economics commentator Greg ip, thank you so much.

[Greg Ip]

Thanks a lot.

[Victoria Craig]

Tariffs aren't just making the Fed's job more complicated. According to new modeling from the Consumer Technology association, they could also push prices for video game consoles up nearly 70. That's if they aren't covered by an exemption to the tariffs. The industry group sees prices for smartphones, laptops and other widely used devices rising 30% with the assumption that the administration lands on a 25% tariff for those products. U.S. stocks closed higher today after the Fed's decision to hold steady. The Dow ended the session up 7.10of a percent, boosted by Disney, the index's best performer. Shares soared nearly 11% on its earnings results. More on that later. The S&P 500 rose 0.4%, while the Nasdaq gained 0.4%. We exclusively report that US intelligence agencies are stepping up their activity in Greenland. That's according to people familiar with the effort. The directive is one of the first concrete steps the Trump administration has taken toward fulfilling the president's often stated desire to acquire Greenland. Katherine Long is a reporter on the Journal's investigations team and she joins me now. Katherine, what kind of information are these eight agencies looking together.

[Katherine Long]

What we know is that several high ranking officials in the Office of the Director of National Intelligence asked intelligence agency heads to collect information relating to Greenland's independence movement, attitudes on American resource extraction in the island, and also to identify people in Greenland and Denmark who support US Objectives for the island. Greenlanders overwhelmingly reject the idea that the island should become part of the US that being said, there is a small but vocal independence movement on the island that has expressed some interest in the.

[Victoria Craig]

Idea and the White House has framed this around security concerns in Greenland and in the Arctic. Tulsi Gabbard, who heads up the National Intelligence Agency, she had some choice words for the Journal about this story. Tell us about that.

[Katherine Long]

Yes, DNI Gabbard recommended that we should be ashamed of aiding deep state actors who seek to undermine the President. That's a direct quote.

[Victoria Craig]

Catherine Long, a reporter on the Journal's investigations team, thanks so much.

[Katherine Long]

Thanks for having me.

[Victoria Craig]

A federal appeals court has ruled that Tufts University graduate student Ramesa Oosturk must be moved from a Louisiana detention center to a Vermont one where her case is unfolding. Ozturk's lawyers say her arrest in March was in retaliation for co writing a pro Palestinian opinion piece for a student newspaper. She has not been charged with any crimes. The Trump administration has detained multiple foreign born students in Louisiana, where experts say courts have precedent that is less friendly to immigrants. The appeals court's decision today could set a precedent for other detained students to be moved out of Louisiana. Coming up, why Disney chose Abu Dhabi as the home of its next theme park. That's after the break.

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[Victoria Craig]

Disney is setting up shop in Abu Dhabi. The House of Mouse announced plans today for its seventh global theme park, which will give it an anchor in the Middle East. The Disneyland project will be designed by the company's Imagine, built and financed by a local company, Miral, which has constructed other theme parks on the same island Disney has set its sights on. Ben Fritz covers the entertainment industry for the Wall Street Journal. Ben why Abu Dhabi and why now?

[Ben Fritz]

For Disney, Abu Dhabi was in the heart of the Middle east, which is a region where Disney doesn't have nearly as much of a presence as it does in the rest of the world. It's a region where there's a growing number of middle class people and is a huge tourist destination. There's already a bunch of other museums, parks, et cetera there that draw a lot of tourists. And Disney both thinks there's a good theme park business and also is hoping that by establishing a theme park there, it will make people more interested in Disney's brands, which will get them more likely to use Disney, watch Disney movies, buy Disney consumer products and toys, etc.

[Victoria Craig]

What does the partnership between these two companies, Disney and Miral, look like?

[Ben Fritz]

Sure, so it's unusual. So usually Disney partially or entirely builds the theme parks itself and then owns them, which costs many billions of dollars, but obviously has a huge upside eventually from the ownership. In this case, Disney is partnering with Morale, and Morale is going to entirely pay for the theme park. Disney is licensing its IP to them, and then Disney is going to do the actual design of the rides and attractions and it's going to consult on how to operate the park. Working with a local company in a foreign country where Disney has done very little business, kind of helps it to navigate things there and then also Disney has a big but limited amount of capital and they're making a lot of other investments now.

[Victoria Craig]

Disney CEO Bob Iger says we could be as many as seven years away from the opening of this new Abu Dhabi theme park. But we did learn today through the company's earnings that the Experience part of its business, which include theme parks and cruises, is a big part of the company's revenue stream. Walk us through how those did last quarter, given all of the global uncertainty for consumers.

[Ben Fritz]

So the Experiences division of Disney, which is primarily parks as well as consumer products, has been a growing share of its operating income especially. And Disney said that last quarter, despite some economic uncertainty that we're all familiar with, the domestic parks attracted more guests and higher spending from the visitors who came. So the operating income for the experiences business rose 9% to $2.5 billion was some of the best growth for any business within the company. The entertainment streaming business outside of sports reported a profit. It was $336 million last quarter, compared to 47 million a year ago. But the big streaming question for Disney this year is going to be what happens to espn? Disney is planning to launch a standalone ESPN streaming service that has everything you can get from ESPN on tv. Currently, ESPN basically just has the sports that don't make the cut for ESPN Cable. You know, Bob Iger said on the earnings call today that Disney is going to announce the official name for and announce the price for it next week.

[Victoria Craig]

Entertainment industry reporter Ben Fritz. Thanks so much, Ben.

[Ben Fritz]

Sure. My pleasure.

[Victoria Craig]

Some other corporate news to tell you about. Cybersecurity firm CrowdStrike says it's slashing about 500 jobs, or 5% of its global workforce. That's as the company tries to make its business more efficient. CrowdStrike said it expects as much as a $56 million charge from the decision, which comes after it swung to a loss last quarter and shared full year earnings guidance that fel short of expectations. The Federal Aviation Administration is scrambling to update and improve its air traffic operations after technology breakdowns disrupted operations at Newark Liberty International Airport in recent days. The FAA said it's working to increase staffing of controllers who oversee Newark traffic and adding new high bandwidth connections between the Philadelphia facility and New York to improve reliability and redundancy. Finally, it's black smoke at the Sistine Chapel. The papal conclave began in the Vatican today, but cardinals did not elect a new pope in their first vote. Beginning tomorrow, There will be four votes a day until the 133 cardinals select a new leader for the Catholic Church. Before we go, heads up, we ran a bonus episode of the podcast earlier today. You can listen to what's news in earnings for the latest quarterly reports from the automotive sector, including how car companies are reacting to President Trump's tariff plans and whether and when consumers might see higher prices passed along to them. And that's what's news for this Wednesday afternoon. Today's show was produced by Anthony Bancy. Our supervising producer was Pierre Biennime. I'm Victoria Craig for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.