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Fed Chair Jerome Powell shares why Fed hasn’t yet cut interest rates | 60 Minutes
Jerome Powell, the chair of the Federal Reserve, may have just rescued the economy from inflation without throwing millions out of work. When Americans were suffering through the highest inflation in 40 years, Powell’s Fed raised interest rates 11 times to cool the economy. Economists expected a recession but now inflation is tumbling while employment is near a 50-year high. Thursday, we met Powell for a rare interview to talk about interest rates, remaining dangers and the one question that’s on everyone’s mind.
Scott Pelley: Is inflation dead?
Jerome Powell: I wouldn’t go quite so far as that. What I can say is that inflation has come down really over the past year, and fairly sharply over the past six months. We’re making good progress. The job is not done. And we’re very much committed to making sure that we fully restore price stability for the benefit of the public.
Scott Pelley: But inflation has been falling steadily for 11 months. You’ve avoided a recession. Why not cut the rates now?
Jerome Powell: Well we have a strong economy. Growth is going on at a solid pace. The labor market is strong: 3.7% unemployment. With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully. And we, you know, want to see more evidence that inflation is moving sustainably down to 2%. We have some confidence in that. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.
Inflation has fallen from just over 9% to about 3% —near the Fed’s ultimate goal of 2%.
Scott Pelley: Why is your target rate 2%?
Jerome Powell: Interest rates always include an estimate of future inflation. If that estimate is 2%, that means you’ll have 2% more that you can cut in your interest rates. The central bank will have more ammunition, more power to fight a downturn if rates are a little bit higher.
Scott Pelley: Are you committed to getting all the way to 2.0 before you cut the rates?
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Jerome Powell: No, no. That’s not what we say at all, no. We’re committed to returning inflation to 2% over time. I’ve said that we wouldn’t wait to get to 2% to cut rates.
We met Powell in the Federal Reserve boardroom where this committee meets every six weeks or so to set the so- called federal funds interest rate– which influences most loans. Last week, Powell announced the rate would stay at its 23-year high, about five-and-a-half percent—unchanged for six months.
Scott Pelley: You disappointed a lot of people on Wednesday.
Jerome Powell: I can’t overstate how important it is to restore price stability, by which I mean inflation is low and predictable and people don’t have to think about it in their daily lives. That’s where we were for 20 years. We want to get back to that.
Scott Pelley: Moving too soon would set off inflation again.
Jerome Powell: You could. Or you could just halt the progress. I think more likely if you move too soon, you’d see inflation settling out somewhere well above our 2% target.
Scott Pelley: And what is the danger of moving too late?
Jerome Powell: If you move too late, then you might– you might– policy would be too tight. And that could easily weigh on economic activity and on the labor market.
Scott Pelley: Maybe a recession.
Jerome Powell: Right. And we have to balance those two risks. There is no, you know, easy, simple, obvious path.
Scott Pelley: Was the Fed too slow to recognize inflation in 2021?
Jerome Powell: So in hindsight, it would’ve been better to have tightened policy earlier.
We thought that the economy was so dynamic that it would fix itself fairly quickly and we thought that inflation would go away fairly quickly without an intervention by us. And so in the fourth quarter of ’21, it became clear that inflation was not transitory in the sense that I mentioned. And we pivoted and started tightening. And as I said, it’s essential that we did that. It was critical that we did that. And that’s part of the story why inflation’s coming down now.
We wondered about an interest rate cut in the next committee meeting in March.
Jerome Powell: I think it’s not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks.
The next committee vote, then, would be in May.
Scott Pelley: How would you characterize the consensus around this table for rate cuts? Is everyone onboard?
Jerome Powell: Almost all. Almost all of the 19 participants who sit around this table believe that it will be appropriate in their most likely case for us to cut the federal funds rate this year.
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Cuts in the federal funds rate would likely be a quarter, maybe half a percentage point at a time as long as inflation data remain good.
Jerome Powell: We just want to see more good data along those lines. It doesn’t need to be better than what we’ve seen, or even as good. It just needs to be good. And so, we do expect to see that.
Back in 2021, little seemed good. Inflation ignited after pandemic disruptions and when the federal government spent $5 trillion to keep the economy afloat. Many in Congress questioned Powell’s rapid rate increases and predicted disaster.
Sen. Elizabeth Warren (during June 22, 2022 hearing):And I hope you’ll reconsider that before you drive this economy off a cliff. Thank you, Mr. Chairman.
But strangely, when rates went up, the economy added more than 5 million jobs. Powell told us that’s because of the odd dynamics of the pandemic. Car sales, for example.
Jerome Powell: There was a semiconductor shortage because so many people were buying goods that involve a lot of semiconductors. So, while demand for cars was spiking because people didn’t want to ride public transportation, for example, and they’re moving to the suburbs, while that’s happening you can’t get semiconductors, you can’t make cars. So, there’s a shortage. So, what happened is inflation just spiked. And– but as the semiconductor supply came back, prices– the inflation has moderated a great deal. So it really, these unique features of the pandemic did reverse in a way that brought inflation down.
Jerome Powell turns 71, today. After a career in investment banking, he was appointed to the Fed by Barack Obama, made chairman by Donald Trump and retained by Joe Biden. Powell often travels to listen to the country. And we met him at Spelman College in Atlanta where the talk was of higher prices.
Scott Pelley: Inflation is one thing. Prices are another. And I wonder if there’s any reason to believe that people will see the prices of things decline?
Jerome Powell: So the prices of some things will decline. Others will go up. But we don’t expect to see a decline in the overall price level. That doesn’t tend to happen in economies, except in very negative circumstances. If you think about the basic necessities, things like, you know, bread and milk and eggs prices are substantially higher than they were before the pandemic. And so that’s– we think that’s a big reason why people are– have been relatively dissatisfied with what is otherwise a pretty good economy.
Scott Pelley: But those prices will not soften short of something like a recession.
Jerome Powell: Things that are affected by commodity prices, like, for example, gasoline prices have come way down. Some food prices that– that incorporate the price of commodities, grains and things like that, those can come down. But the overall price level doesn’t come down.
The Federal Reserve was empowered in the Great Depression to regulate the economy by controlling the supply of money and setting interest rates. It also regulates commercial banks for safety –something still challenged by the effects of the pandemic.
Scott Pelley: The value of commercial office buildings all across the country is dropping as people work from home. Those buildings support the balance sheets of banks all across the country. What is the likelihood of another real estate-led banking crisis?
Jerome Powell: I don’t think… I don’t think that’s likely. We’ve looked at the larger banks’ balance sheets, and it appears to be a manageable problem. There’re some smaller and regional banks that have concentrated exposures in these areas that are challenged. And, you know, we’re working with them.
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Scott Pelley: You believe it’s a manageable problem? (Powell: I think it appears to be) We’re not gonna see bank failures across the country as we did in 2008?
Jerome Powell: I don’t think there’s much risk of a repeat of 2008. Certainly, there will be some banks that have to be closed or merged out of existence because of this. That’ll be smaller banks, I suspect, for the most part.
Just last year there was a panic at the 16th largest bank. A Federal Reserve report blamed bank mismanagement but also inadequate supervision by the Fed itself.
Scott Pelley: You seem confident in the banks, and yet the Silicon Valley Bank, second largest failure in U.S. history. Did the Fed miss that?
Jerome Powell: So, yes, we did. and we forthrightly– saw that we needed to do better. So, we’ve spent a lot of time working on ways to make supervision more effective and also to adapt regulation to a more– to a modern context in which a bank run can happen so much faster than it could have even 20 years ago.
Another economic hangover after the pandemic is a sharp increase in the national debt. Thirty years from now, it is projected to be $144 trillion or $1 million per household.
Scott Pelley: How do you assess the national debt?
Jerome Powell: We mostly try very hard not to comment on fiscal policy and, you know, instruct Congress on how to do their job when actually they have oversight over us.
Scott Pelley: But is the national debt a danger to the economy in your view?
Jerome Powell: In the long run, the U.S. is on an unsustainable fiscal path. The U.S. federal government’s on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy.
Scott Pelley: I have the sense this worries you very much.
Jerome Powell: Over the long run, of course it does. You know, we’re– effectively we’re borrowing from future generations. It’s time for us to get back to putting a priority on fiscal sustainability. And sooner’s better than later.
Scott Pelley: What would you say is the single most important factor for the future of American prosperity?
Jerome Powell: With your permission, I’ll name two things. One is I think we need to just remember that we have this dynamic, innovative, flexible, adaptable economy. More so than other countries. And this is the big reason why our economy has come through so well. The other thing I’ll point to, for the United States, is really, since World War II, the United States has been the indispensable nation supporting and defending democracy, security arrangements, economic arrangements. We’ve been the leading voice on that. And it is clear that the world wants that. And I would want the United States to know, people in the United States to know that this has benefited our country enormously. It’s– benefits our economy– so much to have this role. And I just– I hope we– I hope that continues.
Jerome Powell has about two years in his current term as chairman. He suggested to us the likely time for the first interest rate cut would be the middle of the year– a few months before the election.
Scott Pelley: Your decisions inevitably are going to have a bearing on this year’s election. And I wonder, to what degree does politics determine your timing?
Jerome Powell: We do not consider politics in our decisions. We never do. And we never will. it’s not easy to get the economics of this right in the first place. These are complicated, you know, risk-balancing decisions. If we tried to incorporate a whole ‘nother set of factors in politics into those decisions, it could only lead to worse economic outcomes. So, we simply don’t do that, and we’re not going to do it. We haven’t done it in the past, and we’re not going to do it now.
Scott Pelley: There are people watching this interview who are skeptical about that.
Jerome Powell: You know, I would just say this. Integrity is priceless. And at the end, that’s all you have. And we plan on keeping ours.
Produced by Henry Schuster. Associate producer, Sarah Turcotte. Broadcast associate, Michelle Karim. Edited by Warren Lustig.
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2 shot dead, 4 wounded by Mexico’s National Guard on migrant smuggling route near U.S. border
Mexico’s National Guard fatally shot two Colombians and wounded four others in what the Defense Department claimed was a confrontation near the U.S. border.
Colombia’s foreign ministry said in a statement Sunday that all of the victims were migrants who had been “caught in the crossfire.” It identified the dead as a 20-year-old man and a 37-year-old woman, and gave the number of Colombians wounded as five, not four. There was no immediate explanation for the discrepancy. The victims were identified by the foreign ministry as Yuli Vanessa Herrera Marulanda and Ronaldo Andrés Quintero Peñuelas.
Mexico’s Defense Department, which controls the National Guard, did not respond to requests for comment Monday on whether the victims were migrants, but it said one Colombian who was not injured in the shootings was turned over to immigration officials, suggesting they were.
If they were migrants, it would mark the second time in just over a month that military forces in Mexico have opened fire on and killed migrants.
On Oct. 1, the day President Claudia Sheinbaum took office, soldiers opened fire on a truck, killing six migrants in the southern state of Chiapas. An 11-year-old girl from Egypt, her 18-year-old sister and a 17-year-old boy from El Salvador died in that shooting, along with people from Peru and Honduras.
The most recent shootings happened Saturday on a dirt road near Tecate, east of Otay Mesa on the California border, that is frequently used by Mexican migrant smugglers, the department said in a statement late Sunday.
The Defense Department said a militarized National Guard patrol came under fire after spotting two vehicles — a gray pickup and a white SUV — in the area, which is near an informal border crossing and wind power generation plant known as La Rumorosa.
One truck sped off and escaped. The National Guard opened fire on the other truck, killing two Colombians and wounding four others. There was no immediate information on their conditions, and there were no reported casualties among the guardsmen involved.
One Colombian and one Mexican man were found and detained unharmed at the scene, and the departments said officers found a pistol and several magazines commonly used for assault rifles at the scene.
Colombians have sometimes been recruited as gunmen for Mexican drug cartels, which are also heavily involved in migrant smuggling. But the fact the survivor was turned over to immigration officials and that the Foreign Relations Department contacted the Colombian consulate suggests they were migrants.
Cartel gunmen sometimes escort or kidnap migrants as they travel to the U.S. border. One possible scenario was that armed migrant smugglers may have been in one or both of the trucks, but that the migrants were basically unarmed bystanders.
The defense department said the three National Guard officers who opened fire have been taken off duty while the incident is being investigated.
Former president Andrés Manuel López Obrador, who left office Sept. 30, gave the military an unprecedentedly wide role in public life and law enforcement; he created the militarized Guard and used the combined military forces as the country’s main law enforcement agencies, supplanting police. The Guard has since been placed under the control of the army.
But critics say the military is not trained to do civilian law enforcement work. Moreover, lopsided death tolls in such confrontations – in which all the deaths and injuries occur on one side – raise suspicions among activists whether there really was a confrontation.
For example, the soldiers who opened fire in Chiapas – who have been detained pending charges – claimed they heard “detonations” prior to opening fire. There was no indication any weapons were found at the scene.
A Kenyan man was convicted Monday of plotting a 9/11-style attack on a U.S. building on behalf of the terrorist organization al-Shabab.
A federal jury in Manhattan found Cholo Abdi Abdullah guilty on all six counts he faced for conspiring to hijack an aircraft and slam it into a building, according to court records.
He’s due to be sentenced next March and faces a mandatory minimum of 20 years in prison.
Handout / Criminal Investigation and Detection Group
Abdullah represented himself during the trial, which opened last week. He declined to give an opening statement and did not actively participate in questioning witnesses.
In court papers filed ahead of the trial, prosecutors said Abdullah intended to “merely sit passively during the trial, not oppose the prosecution and whatever the outcome, he would accept the outcome because he does not believe that this is a legitimate system.”
Lawyers appointed to assist Abdullah in his self-defense didn’t respond to an email seeking comment Monday.
Federal prosecutors, who rested their case Thursday, said Abdullah plotted the attack for four years, undergoing extensive training in explosives and how to operate in secret and avoid detection.
He then moved to the Philippines in 2017 and began training as a commercial pilot.
Abdullah was almost finished with his two-year pilot training when he was arrested in 2019 on local charges.
He was transferred the following year to U.S. law enforcement authorities, who charged him with terrorism-related crimes.
Prosecutors said Abdullah also researched how to breach a cockpit door and information “about the tallest building in a major U.S. city” before he was caught.
The State Department in 2008 designated al-Shabab, which means “the youth” in Arabic, as a foreign terrorist organization. The militant group is an al Qaeda affiliate that has fought to establish an Islamic state in Somalia based on Shariah law.
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The remains of 28 Civil War soldiers were found in a funeral home’s storage. They’ve now been laid to rest.
For several decades, the cremated remains of more than two dozen American Civil War veterans languished in storage facilities at a funeral home and cemetery in Seattle.
The simple copper and cardboard urns gathering dust on shelves only had the name of each of the 28 soldiers – but nothing linking them to the Civil War. Still, that was enough for an organization dedicated to locating, identifying and interring the remains of unclaimed veterans to conclude over several years that they were all Union soldiers deserving of a burial service with military honors.
“It’s amazing that they were still there and we found them,” said Tom Keating, the Washington state coordinator for the Missing In America Project, which turned to a team of volunteers to confirm their war service through genealogical research. “It’s something long overdue. These people have been waiting a long time for a burial.”
Most of the veterans were buried in August at Washington’s Tahoma National Cemetery.
In a traditional service offered to Civil War veterans, the historical 4th U.S. Infantry Regiment dressed in Union uniforms fired musket volleys and the crowd sang “The Battle Hymn of the Republic.” Names were called out for each veteran and their unit before their remains were brought forward and stories were shared about their exploits. Then, they were buried.
Among them was a veteran held at a Confederate prison known as Andersonville. Several were wounded in combat and others fought in critical battles including Gettysburg, Stones River and the Atlanta campaign. One man survived being shot thanks to his pocket watch – which he kept until his death – and another deserted the Confederate Army and joined the Union forces.
“It was something, just the finality of it all,” Keating said, adding they were unable to find any living descendants of the veterans.
While some remains are hidden away in funeral homes, others were found where they fell in battle or by Civil War re-enactors combing old graveyards.
Charles Lawrence / AP
Communities often turn reburials into major events, allowing residents to celebrate veterans and remember a long-forgotten war. In 2016, a volunteer motorcycle group escorted the remains of one veteran cross country from Oregon to the final resting place in Maine. In South Carolina, the remains of 21 Confederate soldiers recovered from forgotten graves beneath the stands of a military college’s football stadium were reburied in 2005.
Sometimes reburials spark controversy. The discovery of the remains of two soldiers from the Manassas National Battlefield in Virginia prompted an unsuccessful attempt in 2018 by several families to have DNA tests done on them. The Army rejected that request and reburied them as unknown soldiers at Arlington National Cemetery.
Along with those buried at Tahoma, Keating said, several others will be buried at Washington State Veterans Cemetery and a Navy veteran will be buried at sea. The remains of several more Civil War veterans were sent to Maine, Rhode Island and other places where family connections were found.
“Would have been lost to history”
Among them was Byron Johnson. Born in Pawtucket in 1844, he enlisted at 18 and served as a hospital steward with the Union Army. He moved out West after the war and died in Seattle in 1913. After his remains were delivered to Pawtucket City Hall, he was buried with military honors at his family’s plot in Oak Grove Cemetery.
Pawtucket Mayor Donald R. Grebien said Johnson’s burial service was the right thing to do.
“When you have somebody who served in a war but especially this war, we want to honor them,” he said. “It became more intriguing when you think this individual was left out there and not buried in his own community.”
Grebien said the burials recall important lessons about the 1861-1865 war to preserve the Union, fought between the North’s Union Army and the Confederate States of America at a cost of hundreds of thousands of lives.
“It was important to remind people not only in Pawtucket but the state of Rhode Island and nationwide that we have people who sacrificed their lives for us and for a lot of the freedoms we have,” he said.
Bruce Frail and his son Ben – both long active in the Sons of Union Veterans of the Civil War – were on hand for service. Ben Frail was also a re-enactor at Johnson’s service, portraying a Union Army captain.
Charles Lawrence / AP
“It’s the best thing we can do for a veteran,” said Bruce Frail, a former commander-in-chief with the Sons of Union Veterans and state coordinator for Missing In America Project.
“The feeling that you get when you honor somebody in that way, it’s indescribable,” he said.
The Missing in America Project says it has identified the remains of over 7,000 veterans and has buried over 6,800 soldiers.
The task of piecing together Johnson’s life story was left to Amelia Boivin, the constituent liaison in the Pawtucket mayor’s office. A history buff, she recalled getting the call requesting the city take possession of his remains and bury them with his family. She got to work and Johnson’s story became the talk of City Hall.
She determined Johnson grew up in Pawtucket, had two sisters and a brother and worked as a druggist after the war. He left to make his fortune out West, first in San Francisco and eventually in Seattle, where he worked nearly up until his death. It doesn’t appear Johnson ever married or had children, and no living relatives were found.
“I felt like it was resolution of sorts,” Boivin said. “It felt like we were doing right for someone who otherwise would have been lost to history.”
Earlier this year, two Union soldiers were posthumously honored by President Biden with the Medal of Honor for their courage in the “Great Locomotive Chase,” in which they went deep behind Confederate lines and stole a train in Marietta, Georgia. They ran the train north, tearing up tracks and cutting telegraph wires as they went.
