Falling shelter costs could offset tariff related inflation, says Charles Schwab's Liz Ann Sonders
Liz Ann Sonders, Schwab Chief Investment Strategist, joins 'Closing Bell Overtime' to talk the day's market action, the May CPI report, and more.
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Powell is likely to delay rate cuts, fmr. Fed official explains
The Federal Reserve will hold its June meeting on Tuesday, where Fed Chair Jerome Powell will announce the central bank's latest interest rate decision. US President Trump has been vocal in his criticism of Powell for not cutting rates, recently calling him a "numbskull." Former Cleveland Fed president Loretta Mester joins Market Domination to discuss why the Fed will likely hold rates steady at its June meeting next week. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Well, investors shifting their focus back on the Federal Reserve ahead of the central bank's policy meeting next week. President Trump once again calling for Fed chair Powell to cut rates for more on the path ahead for the Fed and interest rates. Let's get now to Loretta Mester, University of Pennsylvania adjunct professor and former Cleveland Federal Reserve president. Uh Loretta, always good to see you. So let's start with that inflation report. We got today PPI tame Loretta benign, just like CPI yesterday. I'm very curious to get your take on that and also Loretta, how do you think the Fed views these last two inflation reports? Well, thanks for asking. Um, yeah, the inflation news those were good reports. They were very encouraging. I think what's still true is we don't know really how the second half of the year is going to play out. So if you look at the data on the employment part of the mandate, data on inflation, they look pretty good so far, right? Employment's holding up. We expected moderation this year. We're seeing some of that. Um, and inflation, you know, was pretty elevated at the start of the year, but the last couple of reports have looked pretty good. It's still above the Fed's goal, but at least it's coming down again and that's a good sign. But the real question is, what is going to happen in the second half of the year and will those trends continue? And that's where, um, the high level of uncertainty still is with us. And that I think is why the Fed is on hold, um, until some of that, we get a little more clarity about not only the magnitude of the tariffs and the breadth of the tariffs, but what effect they'll have on inflation and what effect the tariffs and other policies, including the the uh, budget bill will have on growth and employment. And so that's why, you know, when you think about the Fed managing its dual mandate, you know, part of what it wants to do is it wants to minimize the chance of any policy mistake. And that risk management also entails, you know, looking at, well, what would be the cost of a mistake. So right now, holding the Fed funds rate where it is, doesn't seem very costly. Um, and allowing sort of more clarity in the summer about, you know, we'll get perhaps more clarity on the tariffs. And we could end up being in a benign scenario so that by the September meeting or later in the year, right? It does look like inflation is continuing to come down. Perhaps it'll be higher for a time as higher prices from the tariffs, you know, feed through the economy, but it won't necessarily be persistent. And that's kind of what everyone hopes. Everyone hopes it's it's a more benign scenario so that we get some clarity on the level of tariffs, firms raise their prices, but as those prices stabilize, inflation moves back down. And there's not much harm on the growth side of the economy or the employment side of the economy. And that's kind of the hope, but that isn't assured. And that's why it makes sense to sort of be on hold for a while until you get more information.
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Trump calls Powell a 'numbskull' for not cutting rates
-- U.S. President Donald Trump continues to press Jerome Powell and the Federal Reserve to cut interest rates, as inflation data remains subdued despite his aggressive tariff policy. While Trump continues to press for lower rates, he said he won't fire Powell. "We're going to spend $600 billion a year because of one numbskull that sits here," Trump said. "Cut your rates now, there's no inflation." Trump suggested the Fed cut interest rates by two full percentage points, which could save the U.S. up to $900 billion. This is larger than his past ask for a one percentage point cut from the Fed. The current Fed funds rate is at 4.25-4.5%. The comments from the president follow the release of CPI and PPI data this week, which were both lower than economists had expected. 'The fake news is saying, 'Oh, if you fired him, it would be so bad, it would be so bad.' I don't know why it would be so bad, but I'm not going to fire him,' Trump said at a bill signing at the White House on Thursday. 'We call him 'Too Late,' right?' Trump joked, referring to the nickname he has given Powell. Trump added that if inflation were to pick up in the future, he would have no problem with the Fed raising rates. 'Let's say there was inflation. In a year from now, raise your rates. I don't mind, raise your rates. I'm all for it. I'll be the one to be calling you,' Trump said. 'He'll be too late for that too.' Related articles Trump calls Powell a 'numbskull' for not cutting rates Canadian support for U.S. counter-tariffs fades as trade war drags - Bloomberg US Treasury sells $22B 30-Year Treasuries in solid auction as demand improves Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
