WSJ What’s News - Fed Kicks Off Most Important Meeting of the Year

Episode Date: September 16, 2025

A.M. Edition for Sept. 16. The Federal Reserve is meeting amid unprecedented pressure from President Trump to cut interest rates more than expected. The WSJ’s Matt Grossman explains how the Fed is facing an almost impossible balancing act, amid a weakening jobs market and rising inflation. Plus, the U.S. strikes another boat in its push against drug trafficking, killing 3 people. And, Israel launches a long-anticipated ground offensive into Gaza City. Caitlin McCabe hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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We're telling the cartels right now, we're going to be stopping them, too. When they come by land, we're going to be stopping them the same way we stop the boats. And Israel launches a long-anticipated ground offensive into Gaza City. It's Tuesday, September 16th. I'm Caitlin McCabe for the Wall Street Journal, and here is the AM edition of What's News? The top headlines and business stories moving your world today. The Federal Reserve's two-day policy meeting kicks off today, and investors are on pins and needles. Overnight, an appeals court rejected President Trump's request to immediately remove Governor Lisa Cook from the board,

while the Senate confirmed Trump's appointee, Stephen Myron. At the same time, it's been roughly nine months since the Fed last cut interest rates. That's before President Trump took office, and traders are worried. widely expecting that the central bank will lower rates by a quarter point. But Trump himself wants a larger cut as part of what has become an unprecedented pressure campaign. Economics reporter Matt Grossman is here to unpack it all. Matt, I think it's safe to say that this is the most pivotal Fed meeting so far this year. So the Fed is always trying to balance inflation and unemployment. And lately, they've been in a tough corner because those have been

both moving in the wrong direction. The job market is weakened. In the last few months, we've seen an average of fewer than 30,000 new jobs a month, which is a much slower pace than earlier in the year. So that's been a growing concern for them. And on the inflation side, most estimates think that their preferred inflation gauge, which is called PCE inflation, is going to come in at about 2.9% through August, which is quite a bit higher than the 2% target. Most of the Fed officials think that their rate setting is still on the restrictive side. So the forecast that they will probably cut rates reflects that they want to get a little bit closer to neutral while probably still leaning a bit on the restrictive side. Yeah, that's really interesting. It's been kind of a delicate balancing act for them. Looking at futures markets, they show that traders are expecting a quarter percentage point cut.

But what are folks out there saying about the likelihood that the central bank could go bigger? A lot of that thinking goes back a year ago when the fifth. did its first interest rate cut of 2024 in September, and they opted for a half-point cut at that meeting. The labor market last year looked pretty strong through the first several months of the year, then weakened dramatically, and the Fed felt that it had to catch up a bit when it actually came time to cut. This year, it's actually followed quite a similar pattern where it's just in the last few months that the labor market has slowed down pretty significantly. As you mentioned, most bets are that they're going to stick with the more normal

quarter point cut. And I think that's especially true given that inflation is still a concern and in fact moving in the wrong direction in the past couple months. Matt, if the Fed does cut rates by a quarter point rather than that larger half point cut, where does that leave the institution and especially chair Jerome Powell in terms of his standing with President Trump? Yeah, there's still a lot of pressure on the Fed coming from the White House on multiple fronts. We have the litigation around Lisa Cook and whether she'll be allowed to stay on the Fed's board after the president tried to fire her, accusing her of mortgage fraud. It feels like an eternity ago, but it was really just a few weeks ago that the president was making the

expensive renovation of the Fed's headquarters a pertinent issue as he tried to argue that Jerome Powell hadn't been doing his job well. Perhaps a cut will assuage Trump a little bit this week. On the other hand, Trump posted on social media just on Monday morning that Powell must cut interest rates now and bigger than he had in mind, which suggests that Trump wants to see more than just that quarter point cut this week. Another interesting wrinkle to all of this is Trump appointee Stephen Myron. He was confirmed to join the Fed Board last night. How might this affect this week's decision? Well, he's just one vote out of a 12-person committee that votes, so his ability to change the direction of the decision is probably limited. On the other hand, he could be one of the

voters, or perhaps the only voter who dissents against the majority opinion, if the Fed does go ahead with a quarter point cut, Myron could raise his hand and say, actually, I think we should have cut by half a point. He might be alone in making a vote like that. He could be joined by one of the other Trump appointees on the committee, most especially Governor Michelle Bowman, but also perhaps Governor Christopher Waller, who at times have both argued that the Fed should be moving faster to cut rates. So some uncertainty around this week's decision and, I guess, even more so for the rest of the year? Yeah, so this is one of the meetings where the Fed doesn't just make an interest rate decision, but they also outline their projections for the rest of the year in what

people call the dot plot, where they post their guesses for where interest rates are going to move next in this chart. And we'll see a new version of that chart on Wednesday. And that's especially important because the Wednesday interest rate cut is widely expected, but there's a lot less consensus around is what the central bank's going to do over the rest of the year. So people will really be looking at that dot plot to see, does the Fed think we're going to get another interest rate cut later this year, two more cuts, and what's next year going to look like? Matt, super interesting. Thank you so much for joining us. Thanks for having me. Israel has kicked off its long-anticipated ground offensive into Gaza City this morning,

with a heavy bombardment of the populous area. Hundreds of thousands of Palestinians are believed to still be sheltering in the city, which Israeli Prime Minister Benjamin Netanyahu has called, quote, the last important stronghold of Hamas. The ground operation began shortly after Netanyahu met with Secretary of State Marco Rubio, who is pushing for a ceasefire to end the war and release the remaining hostages. Rubio left Israel yesterday with a pessimistic outlook as Netanyahu now moves to end the war against Hamas with military force instead of diplomacy. The U.S. military attacked a boat in international waters yesterday that was allegedly transporting illegal narcotics to the U.S., killing three people.

It's the second time this month that the U.S. has struck a vessel, marking an escalation of Trump's campaign to crack down on what he has described as, quote, violent drug trafficking cartels and narco-terrorists, unquote. When asked yesterday if he would provide proof that those killed were transporting drugs to the U.S., Trump had this to say. Well, we have proof. What you have to do is look at the cargo that was like it spattered all over the ocean, big bags of cocaine and fented all over the place. And it was, plus we have recorded evidence that they were leaving. We've recorded them. Trump posted a video of the attack on social media yesterday. There were no drugs visible in the ocean in the footage that was released. Venezuelan drug gangs don't produce or smuggle fentanyl, experts say. Venezuelan leader Nicholas Maduro has condemned the administration's first attack, casting doubt on any intelligence that the targeted boat was carrying drugs.

Meanwhile, the White House is moving quickly to turn support for conservative activist Charlie Kirk into political momentum, with President Trump's advisors weighing a range of executive actions that would target liberal organizations. This includes reviewing the tax-exempt status of left-leaning nonprofit groups and targeting them with anti-corruption laws, as well as identifying groups suspected of targeting conservatives or their causes. With God is my witness, we are going to use every resource we have at the Department of Justice, Homeland Security, and throughout this government to identify, disrupt, dismantle, and destroy these networks and make America safe again for the American people. It will happen, and we will do it in Charlie's name. That's White House Deputy Chief of Staff Stephen Miller

speaking with Vice President J.D. Vance yesterday about what he described as left-wing groups promoting violence, while Vance hosted an episode of Kirk's podcast, The Charlie Kirk Show. Kirk shooting last week has sown deeper political divisions into an already divided nation. Workers across the country who have derided or gloated about Kirk's death online have quickly learned their words can get them fired, with companies and organizations ranging from American Airlines to the Carolina Panthers ousting or suspending staff in recent days. Online activists and some prominent conservatives are among those that have flagged the post to employers. Here's Vice President Vance. So when you see someone celebrating Charlie's murder,

call them out in hell, call their employer. Charges against Charlie Kirk's suspected shooter Tyler Robinson are expected to be announced at a press conference at 2 p.m. Eastern today. Coming up, the rest of the day's news, including how Google is investing billions into the UK, and how new tech is giving mom-and-pop businesses the ability to break up your favorite TV shows with targeted ads. Those stories after the break. With Amex Platinum, access to exclusive Amex presale tickets can score you a spot trackside. So being a fan for life turns into the trip of a lifetime. That's the powerful backing of Amex.

Pre-sale tickets for future events subject to availability and vary by race. Terms and conditions apply. Learn more at MX.ca.com. Tech giant Google is invested. over $6 billion in the U.K. over the next two years. The investment covers AI, energy capacity, training, and research and development, and would add more than 8,000 jobs a year at businesses across the UK. Google is the latest American giant to announce a large-scale investment in Europe, joining others like Oracle, Microsoft, and Amazon. It comes as President Trump is set

to land in the UK later today, kicking off his second state visit. And the Bureau of Labor Statistics is likely breathing a sigh of relief after the agency obtained an exemption to a federal hiring freeze. The BLS has posted job openings for more than two dozen part-time workers spread across the country, who will collect data for the U.S. A shortage of such workers over the past several months has forced the BLS to cut back on collecting the price data that backs inflation stats. The news comes as former BLS head Erica McIntyre is expected to give her first public remarks since President Trump fired her in August.

And finally, with fall TV season kicking off this week, you might be relishing your ad-free streaming service. But media giants, Comcast, and Roku are looking to upend that by making TV commercials look a lot like the ads in your Instagram and TikTok feeds, and crucially, affordable for mom-and-pop businesses. Journal reporter Patrick Coffey says the companies are rolling out AI tools and self-service platforms to reshape the ad market, and hopefully, ad dollars back from big tech. The thesis and the hope is that thousands, if not millions, of businesses that would never have run ads on traditional broadcast or cable TV, will now be producing an airing campaigns

on streaming TV with the help of AI. Comcast next week will release a platform where a small company can say, here's a picture of the shirt that we want to sell. And the AI will create a 15-second video ad for them in a couple of minutes, free of charge. Research firm e-marketer says traditional cable. ad spending in the U.S. will fall 15.5% this year, whereas spending for these types of ads will grow 13.2% and are expected to surpass traditional TV ad spending by 2028. And that's it for what's news for this Tuesday morning. Today's show is produced by Kate Bullivant and Rema McKenna. Our supervising producer

is Sandra Kilhoff. And I'm Caitlin McCabe for the Wall Street Journal. We'll be back tonight with the new show. Until then, thanks for listening. Thank you.