Marketplace - A cast of hawkish central bankers

Episode Date: September 14, 2026

At this week’s FOMC meeting, it’s likely Fed governors will hike interest rates. They won’t be alone. The EU raised rates last week and Japan is expected to do the same at its upcoming meeting. These central bankers are all dealing with similar inflationary pressures, and hawkish rate-setters stick together. Also in this episode: The U.S. dollar rises in anticipation of a rate hike, diesel prices break records, the subscription-BNPL-rental economy reduces how much we really own. Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Central bankers around the world are looking more hawkishThe U.S. dollar rises as investors anticipate an interest rate hikeWe don't own anything anymoreDiesel fuel hit a record high. Unlike gas, using less of it is not an optionShe built a tiny home in her aging mother's backyard

Well, ladies and gentlemen, let me just say it is going to be a week. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizzdahl. It is Monday. Today, this one is the 14th day of September. If you can believe it, good as always to have you along, everybody. All right, well, let's see. Shall we where things stand as we roll toward the last quarter of this year?

borrowing costs are up, energy costs are up, and related as we learned last week. Inflation is still up. The stock market is a little bit dyspeptic. Consumers the same. So as we tee up what is going to be a big week in this economy, we've called Wendy Edelberg for some insight. She's a senior fellow at the Brookings Institution. Hey, Wendy. Hey, there, Kai.

So let's get a little ground truth here just as a way to get going. your general thoughts on the state of this economy as we sit here in mid-September? I mean, policy is doing its best to derail it, that's for sure. But it has remained resilient. You say resilient like it's a dirty word. I mean, I think markets have been, you know, and businesses have been assuming that surely President Trump will be disciplined by, what he knows would be the economic effects if he was too irresponsible with a war in Iran, if he was too irresponsible with tariffs.

And I think you're seeing some glitches in market prices as like that theory is being tested. And so resilient, yes, but I think the trade war with Canada, I think the stepped up hostilities with Iran, with no sense of how that. ends. Yeah, I think I think he's testing, he's testing the resilience. I hate to be hung up on your vocabulary here, but your use of the word disciplined is interesting in regards to the president, because you and I have literally had the conversation before about how the bond market was going to discipline the president and keep him sort of within the lines, as it were, of a productive and functioning economy. And clearly that's not the case. We've got the

tenure this morning topping 5%. The 30 year was it like 5.3? or something, so the bond market is having none of it. I mean, I think they are paying, I know they are paying very close attention. The Trump administration is paying very close attention to the level of interest rates. I think that explains why Besson is trying so hard just to get them down. It's a game of basis points that he's playing. Right. Hundreds of a percentage point for lay people out.

Yes, hundreds of a percentage points. Yes, sorry. You know, so they are paying close attention, which suggests that it's affecting their decisions in some way. But I don't think that actions by the Trump administration or by Congress are the sole reason that interest rates are where they are. I think that there's a whole lot of borrowing going on by tech firms. Yeah, yeah. So we're going to get to that a little later in the program. Do me a favor, would you? And with an eye toward the calendar, which is to say that the Federal Reserve meets tomorrow and Wednesday.

channel your inner Kevin Warsh for me. And as he heads into this meeting where he's either going to have to disappoint the market if he doesn't raise rates and he has the choice of disappointing the president who appointed him if he does raise rates, what do you suppose is going through his mind right now? I mean, yes, he's in a tough spot. But his Jackson whole speech was quite hawkish. But my guess is that he would like to avoid a hike. I mean, he talked about my sense before he got the job is that he was talking about how he thought interest rates generally should be lower given structural things happening in the economy. He said he wanted tighter financial conditions and he's gotten them. So I think he could make an argument for markets having done the job that the Fed might have had to do and that they don't need to raise rates.

I think there's an argument to be made there. Keep going. Make it for me because holy cow, it's going to be amazing if that happens. Yeah, I mean, so markets are now putting 90% probability on a rake height. I put it more like a coin flip, which is to say if they hike, I won't be, you know, won't fall off my chair in an amazing. but I won't be shocked if they stand pat. So the inflation story, I think, looks better than some of the headlines suggest. Core CPI is basically at the rate consistent with target inflation. Yeah.

And the FOC is good, you know, all of us in the economy, we're going to get data at the end of September, which I know Kevin Warsh knows about just because he must because the staff is so good. They're going to get data at the end of September where PCE inflation, Core PCE inflation, the measure that the Fed really cares about, it's going to get revised down by a few tents. And my guess is that that's going to be a big discussion at the meeting. They won't have that exact data in hand, but they will know that it's coming. And it could be that what we get for core PCE inflation from May to August is around 2.4. That's within spitting distance of two.

So their targets. So, you know, I can see an inflation argument for standing Pat. And I think, and I, we're also probably going to get some revisions to show weaker employment data than what we have in hand. The data from the states is suggesting that. And so there are going to be some folks at the FMC who are worried about the weakness in the labor market. That's, you know, I'm not, but shock of all shocks, not everyone agrees with me. And so I think that there might be a labor market. argument for standing Pat as well.

I learned something every single time we have you on this program. And you just made that meeting. You are so nice, Tyristoll. That's why we have you back. Wendy Edelberg at Brookings. Thanks, Wendy. You're so welcome. Wall Street today, as I said, some mild indigestion.

AI-related technology? Not so great. Details numbers when we get there. All right. So Wendy and I talked about the Fed a bit, but the fact is that despite what you might hear here and elsewhere, Kevin Worsh and the gang are not the only central bank game in town. The European Central Bank raised its benchmark rate last week.

The Bank of Japan is expected to follow suit with a rate hike this week Friday, I think. The Bank of England might be the outlier. Best guesses are it'll hold rates steady when it meets later this week. But this is, broadly speaking, a hawkish moment. Inflation fighting through higher interest rates globally. Marketplace is Mitchell Hartman. Explains what's going on. large group of hawks, all flying together, is called a kettle or a cast. That could also describe a

whole bunch of central bankers right now. Here's economist Jennifer Lee at BMO Capital Markets. Almost everyone leaning towards some kind of hawkishness. It amounts to a kind of regime change for the international economy, says Joe Bursuela at consulting firm RSM. That means that long period of low inflation and low interest rates has come to an end, and that central banks are going to have to address the risks around inflation with higher interest rates. Luis Alvarado at the Wells Fargo Investment Institute says central bankers in the Americas, Europe, and Asia. They're broadly being exposed to the same risks, the Middle East War, the prices of energy, and then you have the threat of inflation just being more sticky.

Inflation pressures also differ from one economy to another. Europe and Asia are more dependent than the U.S. on imported oil and natural gas from the Middle East, so energy-driven inflation can be a more potent threat to consumers and businesses there. Europe also has major elections next year. In France, Italy, Spain, Poland, and Germany, Jacob Kierkegaard at the Peterson Institute for International Economics, says central bankers face political pressure because voters... Do not like inflation. So the ECB looking at this calendar is... is very focused on avoiding an upside risk to inflation. In the U.S., with midterm elections in November,

the Fed may pause rate hiking until its December meeting. But it can't delay too long, says RSM's Joe Bursuelles. We've been above the inflation target of 2% for over five years now. We're well into our sixth year. The longer we wait to rip off the bandaid. The more painful, he says, the adjustment to higher rates for the long term is going to be. I'm Mitchell Hartman for Marketplace.

For definitely not the first time, I will point out here that nothing in this economy of hours happens in isolation, not with prices, not with supply chains, and not with foreign exchange. The U.S. dollar has been on the rise the past couple of days as currency traders look forward to an interest rate hike from the Fed following that report on August inflation. And while, yes, there has been a lot of ink and audio tape spilled, spilled, if you will, over the future of the Greenback. As Marketplace's Stephanie Hughes reports, the dollar is still pretty attractive. If the Fed hikes interest rates this week, like everybody seems to think it's going to do, that will drive up the yields on certain assets, including short-term government treasury bills. That means that investors can earn more by investing in those assets, and so they are more interested in holding them. But, says Brandeis Professor Carol Osler, in order to invest in those assets, you need to have American currency. You got to get the dollars.

which means they're going to go into the very active market for dollars. They're going to be selling euros, selling yen, selling Brazilian real. And when there's more people trying to buy our currency, the value goes up. Still, if you think of currencies as competing against each other, Cornell's Ishwar Prasad points out, it's not like the dollar is looking the fittest it's ever been. It's just the least worth of all the teams playing in a tournament. Prasad says despite the blows the U.S. economy has been hit with recently,

tariffs, the war in the Middle East, it still looks less beat up than many other economies, including the EU, which hiked its own interest rate last week. The Eurozone, Japan, the United Kingdom are all in a pretty deep economic and institutional funk. But the effects of a Fed interest rate hike on the dollar could be short-lived. Jonas Golderman is chief markets economist at capital economics. The hawkish Fed is good for the dollar. The problem the dollar has with the Fed is, even if they're a hocusish-lawful, in the short term, are they going to be hawkish six or 12 months from now?

Golderman says he gets real ambivalent vibes from this Fed around interest rates. And he says, like with anything in life, if you do something half-heartedly, it tends not to work out as well as when you're all in. I'm Stephanie Hughes from our place. We have historically high levels of debt in this economy. I'm not talking to federal debt here. Historically high, though, it is. Household debt is ballooning auto loans and credit cards, buy now, pay later bills.

debt is increasingly the tool people are using to live their lives. Another tool that is debt adjacent to the subscription economy. People are renting everything from the navigation system of their cars to their homes. So Marketplace's Kristen Schwab looks at what it means when people don't outright own much anymore. Sonia Joseph grew up on a tree-lined street in Brooklyn. Around the block, we had like nice small mom and pop stores that I would frequent. I knew my neighbors, and we all pretty much went to school together, so it was pretty communal. Joseph's parents owned their home, so she figured one day she'd own a home too.

Being a homeowner can provide me with a sense of peace of mind and security and a sense of community that I feel like I deeply desire. That's kind of like the dream that was sold to us. Joseph is 34, lives in Washington, D.C., and works as a community organizer. and she was this close to purchasing a home through a first-time homebuyer program until the organization looked through her bank statements. I was unable to move forward in that program because of afterpay, Karna, as well as student loans. Joseph keeps a balance of around 600 bucks on those buy now pay later apps, which she's used to buy furniture, groceries, and toiletries. She says it's starting to feel like everything in her life. life is on a payment plan. Even her phone. It's $26 a month.

Not only I don't fully own the phone, but by the time I do own the phone, I probably need to get a new phone. I'm in a lifetime subscription for the phone ownership, if that makes sense. A lifetime subscription for ownership is becoming a hallmark of middle class life. You go into debt to buy a $60,000 car, only to learn you have to pay to use its remote start feature. Turn on your PlayStation to play a game you don't own, just purchased a license to access. The idea of financing life this way seems kind of newfangled, but it's kind of not. Louis Heiman is a history professor at Johns Hopkins University. Picture it, the roaring 20s. It's a great moment of cars and photographs and vacuum cleaners and refrigerators and all the wonders of the electrical age,

and it's all very expensive. AKA all very much reserved for the rich until installment credit comes along, a sort of precursor to the credit card. Suddenly, your average Joe could afford a washing machine or even a car. Certainly in the 1920s and 30s, installment credit was seen as a great leveler, so that ordinary folks had access to expensive things. Access is good, right? So maybe a debt-driven, don't own anything, subscription economy is good. Kate Lamberton is a marketing professor at Wharton. She says you can rent maternity clothes, use a bike share, borrow a drill from a tool library for that random home repair. This is reducing waste. This is offering access. This is democratizing the opportunity to take part in something.

Thing is, accessing life via subscriptions and debt can quickly tornado into a habit, which is honestly what a lot of these companies are looking for, a member for life. It can offer access to things that are necessary. It can also create a hamster wheel that leads us to more spending and less actual wealth. Less wealth means less equity. And when we talk about equity, we usually focus on the biggest version of this, renting versus owning a home. But the small things matter, too. Here's historian Lewis Heimann again. So a video game can't be passed around like the Nintendo cartridge of my youth.

I can't give Legend of Zelda to my friend down the street. that is a quite different economy. It sort of makes sure that we pay full price for everything. These subscriptions and leases and buy now pay later apps, instead of being tools for people's economies to grow, like they were 100 years ago, they've become tools people use to get by. If incomes are stagnating or falling,

then it's not quite a leveler. Then it's just a tax. It's a tax on your future. Exhibit A. Sonia Joseph, the woman in D.C., who's making monthly payments for her phone. She says by the time it's paid off, she'll have spent more than if she'd paid for it in cash.

I'm Kristen Schwab for Marketplace. Coming up. I need to just be by myself. I'll see you tomorrow. Well, all right then. First, though, let's do the numbers. The industrial's down 152 today. Three-tenths and one percent, 52,421.

The NASDAQ dropped 146 points. about 6 tenths percent, 26,186. The S&P 500 down 37 points, about a half percent, 76 and 19. Today's slide was, in part, the result of a sell-off of a whole lot of heavyweight AI stocks. You've seen the news, yes. Invidia sank three and three-tenths percent. Micron Technology gave up five and a quarter percent. Intel cratered about 5.6 percent.

Kristen was talking about the subscription economy. Here's one. Netflix, the subscription model giant, climbed three and eight-tenths of one, on the day. Bonds down, yield on the 10-year T-note. 4.98% is where it closed. You're listening to Marketplace. This is Marketplace. I'm Kai Rizzdahl. The macroeconomic concept owed today is price elasticity of demand. And it comes to us, courtesy of American agriculture. It's getting on to be fall harvest time out there. Corn and soybeans and all the rest are going to have to be picked and transported in trucks and in combines that run on a

a whole lot of diesel fuel. Diesel that hit its highest ever, average price today, $6.23 a gallon, AAA says, for reasons with which I hope we are all very familiar. So, price elasticity of demand. Is there a point at which people just stop buying diesel? Marketplace's Elizabeth Trowball reports. Once gas prices hit a certain high number, consumers respond. Ed Hers is with University of Houston. We can consolidate our trips to the grocery.

We can carpool. We can purchase more economical vehicles. But diesel is different. With diesel, there's less flexibility on the demand side to respond to higher prices. And so typically the higher price of diesel is passed along to the consumer very quickly. Crops still need to be harvested and widgets still need to be shipped. Will O'Neill is with S&P Global Energy. 70% of that diesel is consumed in transportation, and there really aren't any significant,

scalable substitutes outside of rail, which has its limitations. He says even in other segments, like agriculture and heating oil. It's difficult to get a snap ability to shift those to non-deasel consumption. Because diesel doesn't have great alternatives, Susan Bell with Ristad Energy says we'll all be paying for it. You'll be paying in everything. Bananas, oranges, strawberries. She says diesel acts as an inflationary factor for consumers. They reduce consumption because their household budgets don't go as far.

And, you know, if you have to buy your groceries, you may reduce consumption elsewhere. That could mean cutting demand for any number of things. Gulf oil analyst Tom Closa calls the diesel situation an inflation problem that can't be cured by higher interest rates, though there is something that could bring down diesel demand. The one thing that will alter the demand considerably is a recession. Which is something we probably don't want to be rooting for. I'm Elizabeth Troval for Marketplace. There are a lot of reasons that people choose to downsize their home.

Maybe the kids are all grown and those extra bedrooms are just collecting dust or finances have changed maybe and monthly payments are too much. Maybe though it's to be closer to family as you and they enter a new stage of life. Here's today's installment of our series Adventures in Housing. My name is Drea Parker and I live in a tiny home on the property I grew up on in Kernersville, North Carolina. So before I came into this tiny home, I was living as a caretaker of an old country 1920s farmhouse. At that time, my mother was 71, and she had had total knee surgery. Essentially, while I was there with mom for those two months, still working full time and taking care of her, I realized that she had some mild dementia.

The farmhouse was 15 minutes away from my mom. mom, right? But I wanted to be like five minutes driving or even walking distance. I started doing research and I spent about six months researching and all of this while I'm staying at mom so that I could build a plan of action as to what I was going to do more permanently. So I started scouting shed companies and this one company had a cottage model that I fell in love with. My father would take me hunting with him when I was a kid, and I remember this bare-bones cabin that we stayed in one time, right? And so this, for me, I'm a minimalist, and so for me, this cabin, this cottage kind of emulates that cabin. All in all, I spent a total of about $27,000 for the entire process to get my tiny home seven-sum.

up in the backyard. The fact that my tiny home is paying off is amazing. It has meant a lot that I could be here to help mom. There was one year where we had a deep freeze through the winter. She had forgotten to turn off the water pipes in the greenhouse and they burst. So, you know, the little things like that over the years, it's definitely helped me to feel better that I'm able to be so accessible while also, you know, telling her, you know, tonight, I need to have me time tonight. You know, I need to just be by myself. I'll see you tomorrow. At one point, I sat down with mom and had a conversation with her about all the work that I am doing myself to keep up the maintenance on the property, the yard, caretaking her,

and requested to see if we could have me added as co-owner to the title of the process. and she was all for it, so we are now co-owners. Trea Parker, living in a tiny home on the property that she grew up on in Kernersville, North Carolina. Whether you are making a big move or staying put, write to us, would you, about your housing journey at marketplace.org slash adventures in housing. This final note on the way out today in which we try to inject a note of business model reality into the current artificial intelligence news cycle.

According to Goldman Sachs, there has been just this year so far nearly $500 billion worth of AI-related debt issued by the big AI companies. Debt, of course, is another word for borrowing. The Wall Street Journal reports the nine biggest technology companies have nearly $3 trillion in debt, most of it AI-related, that does not appear on their balance sheet. all of which is to say that while coherent regulation and AI companies perhaps taking a second or two to think things over, that might be prudence, maybe. Market forces are powerful, powerful things.

Amir Bibawai, Caitlin Ash, John Gordon, Oya Carr, Steve Mullis, and Stephanie Seek are the Marketplace editing staff. Kelly Silvera is the news director. And I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM.