WSJ What’s News - Powell Says Fed in No Rush to Cut Interest Rates

Episode Date: February 11, 2025

P.M. Edition for Feb. 11. Federal Reserve Chair Jerome Powell was in front of Congress today outlining a path for 2025, the day before the release of important inflation data. WSJ economics reporter Matt Grossman explains what the data could mean for the Fed. Plus, Israeli Prime Minister Benjamin Netanyahu warns that Hamas must release hostages by noon Saturday, or face a return to war. And, experts want more people to know about the risk between alcohol and cancer. WSJ Your Health columnist Sumathi Reddy tells us what to know. Alex Ossola 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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Wealthsimple.com slash match. What Jerome Powell is weighing leading up to the Fed's next meeting. The consensus expectation from the survey that the Wall Street Journal runs, we survey economists, mostly work at Wall Street banks. They're expecting to see that inflation basically held steady in January compared with December. Plus, tensions rise in Gaza after Netanyahu demands that Hamas free Israeli hostages by Saturday. And doctors want more people to know that drinking alcohol can increase their cancer risk. It's Tuesday, February 11th. I'm Alex Osala for The Wall Street Journal.

This is the PM edition of What's News, the top headlines and business stories that move the world today. We're starting off this evening with international news. In Gaza, the ceasefire is seeming more fragile. Israeli Prime Minister Benjamin Netanyahu is demanding that Hamas release three Israeli hostages at the originally scheduled time, by noon Saturday, or face a return to war. Hamas set off a rupture in the talks yesterday by saying it would postpone the release of the hostages

to protest delays in deliveries of humanitarian goods. In Israel, demonstrators in support of continuing the deal blocked a main thoroughfare from Jerusalem to Tel Aviv. People are dying slowly but surely. They are desperate to get out of the underworld that Hamas built and we have to save them while we can. President Trump said he didn't think Hamas would meet the deadline and warned the militant group that he would quote, let hell break out and quote, if the hostages weren't returned Saturday.

The Israeli military issued a directive today to deploy more troops to the Gaza border area. For more on this visit WSJ.com. U.S. officials say Mark Fogel, an American teacher detained in Russia, has been released from custody. In a statement, the White House said that Fogel was leaving Russian airspace with President Trump's special envoy, Steve Witkoff. Fogel was arrested in 2021 at a Moscow airport after Russian officials found less than an ounce of medical marijuana in his luggage.

The White House hailed Fogel's release as a sign of improving relations with Russia. In Washington, we're exclusively reporting that congressional Republicans are trying to restore a program run by the U.S. Agency for International Development, or USAID. The agency had been running the $1.8 billion Food for Peace program, which purchases U.S.-grown food. Now, with the agency largely closed by the Trump administration in recent weeks, Republican

lawmakers from farm states are introducing legislation that would put the program under the jurisdiction of the U.S. Department of Agriculture. And a federal judge has ordered the Trump administration to restore government health websites and data sets that had been altered or taken down in an effort to scrub references to gender ideology. A Wall Street Journal analysis showed that federal agencies including the Centers for Disease Control and Prevention, the Food and Drug Administration, and Department of Health and Human Services took down more than 1,000 pages of information on January 31st on instructions

from the Trump administration. The nonprofit Doctors for America sued to block the order. Today, U.S. District Judge John Bates in Washington, D.C., granted the doctors' request for a temporary restraining order and told the agencies to restore the identified pages by midnight. Coming up, some early signs of what to expect next from the Fed. That's after the break. Federal Reserve Chair Jerome Powell began two days of testimony in front of the Senate

Banking Committee today. Lawmakers pressed him on President Trump's policies and the outlook for interest rates. Powell sidestepped questions on tariff policy while defending last year's rate cuts as inflation improved and the labor market cooled. The Fed held rates steady at its meeting last month. In his testimony, Powell suggested that the Fed will continue its wait-and-see approach. With our policy stance now significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.

But inflation data out tomorrow might affect that outlook. WSJ Economics reporter Matt Grossman is here to tell us what to look for. Matt, January data for the Consumer Price Index, the Fed's preferred metric for inflation, is out tomorrow. What makes the report particularly important? It's a tough moment for inflation data right now because after making a lot of progress over 2023 and 2024, inflation has really stalled out. And the Fed really wants to see further progress getting back to the 2% target before they

are ready to move forward with more interest rate cuts. Yeah, do we have any sense of what the data tomorrow will show? before they are ready to move forward with more interest rate cuts. Yeah, do we have any sense of what the data tomorrow will show? The consensus expectation from the survey that the Wall Street Journal runs, we survey economists, mostly work at Wall Street banks, they're expecting to see that inflation basically held steady in January compared with December. The consumer price index is expected to come in at 2.9%. That's a 2.9% increase over the last 12 months. And obviously that's a lot closer to 3% than 2%. So most

investors are expecting that the Fed's going to hold interest rates steady again in March. My understanding is that January data is particularly important. What makes it so? is that January data is particularly important. What makes it so? Yeah, so the data are supposed to be seasonally adjusted, which means that any particular things that happen at different times of the year, like the holiday season or people's vacations, the government statistics are supposed to adjust that so you don't see those effects. In January, it's a time of the year when a lot of companies might, with their new forecasts and new outlook for the year, reset their prices. It's kind of a natural time to raise prices. The government statistics are supposed to

adjust for that effect, so you're not seeing that in the January data, but a lot of economists spent a lot of time arguing in the last few weeks whether that statistical adjustment really works So if we see a big price increase in January is that evidence of especially stubborn inflation? Or does it just mean that the seasonal adjustment in the data isn't working as well as it's supposed to so, you know You were talking about what experts are expecting the Fed to do at the meeting next month You know, you were talking about what experts are expecting the Fed to do at the meeting next month. But this data that's out tomorrow, this inflation data, isn't the only data that the Fed takes

into account when deciding that, right? No, absolutely not. There is another inflation report coming just this week that looks not at consumer prices, but at producer prices. Those are the prices that companies charge for the goods and services they produce. The Fed has its own inflation metric that we won't learn until the end of February. And that's only half of what the Fed cares about. The Fed's also very focused on employment. And there was a slightly weaker but still relatively solid jobs report that we got last week that showed

the labor market held up pretty well in January. Before the Fed meets again in the middle of March, we will get an update on how the job market did in February. And that'll also be really important to the Fed as it weighs what to do next. Where does President Trump fit into all this? I mean during Powell's testimony in front of the Senate, he really kind of declined to comment on anything that the president is doing. But I would imagine that things like tariffs would have an impact on inflation and so on the Fed's decision, right? That's been a big source of interest over the last few months, really, since President

Trump won the election. Economists debate how much tariffs might or might not increase inflation. They debate whether that increase would be temporary or permanent. So Jerome Powell, the Fed chair, got a lot of questions about that kind of thing today. And with the tariff news changing so quickly, very hard to predict what that situation is going to look like just about four or five weeks from now when the Fed meets for the next time. That was WSJ Economics reporter Matt Grossman.

Thank you, Matt. Thank you. Escalating trade tensions had pushed major indexes lower, but stocks pared their losses after Powell's remarks in front of Congress. US stock indexes ended, but stocks paired their losses after Powell's remarks in front of Congress. U.S. stock indexes ended the day mixed. The Dow was up about 0.3 percent, the S&P 500 rose less than a tenth of a percent, and the Nasdaq fell roughly 0.4 percent.

In business news, Elon Musk's bid to take over OpenAI is causing headaches. Today, OpenAI CEO Sam Altman was at the AI Summit in Paris and followed up on his earlier comments that we told you about this morning. He told reporters, The company is not for sale, neither is the mission. We're happy to buy Twitter if we can talk about that. The nonprofit will continue as a very, very strong thing. The mission is really important and we're just, you know, we're totally focused on making sure we preserve that. Altman is under pressure because the bid is complicating some delicate negotiations. Berber Jinn, who covers startups and venture capital

for the journal, spoke with our tech news briefing podcast about it. Right now, OpenAI is undergoing a very tense, high stakes negotiation to turn its current structure, where a nonprofit governs a for-profit subsidiary, turn that into a for-profit company. So when Musk says that he wants to buy the nonprofit's assets for $97 billion, it throws a curveball to the nonprofit board because they're obligated to consider this offer. They have to act in the interest of the nonprofit mission and also ensure the

nonprofit is getting fairly compensated as a part of this transition. To hear more from Berber, check out tomorrow's Tech News Briefing podcast. Aluminum tariffs could raise the price of President Trump's favorite drink, Coke. CEO James Quincy said that Coca-Cola imports aluminum from Canada for its US cans. He said that the company is working to ease any potential price increases by examining ways to use less aluminum and finding different sources

of the material. And New York insurer Travelers said that it expects $1.7 billion in pre-tax catastrophic losses from the Los Angeles wildfires last month. Analysts have estimated that the wildfires could cost the insurance industry around $30 billion. And finally, it's an unfortunate fact of life that there are things that increase our

risk of getting diagnosed with cancer. Some of them we know well, like cigarettes and too much sun exposure. One that many people still don't know about is alcohol. According to a 2021 study in the journal Preventative Medicine Reports, about 70% of Americans didn't know that alcohol was a cancer risk factor. Experts now wanna change that.

WSJ Your Health columnist, Sumathi Reddy, is here to tell us more about the link between drinking and cancer. Colorectal cancer, liver, breast, mouth, throat, esophagus, and voice box. It's really these seven cancers that we know of for sure that are linked to alcohol consumption and it does differ. There's colorectal cancer, which the risk increases when you're a moderate to heavy drinker and there's breast cancer where it increases with even light drinking.

I mostly spoke with breast cancer oncologists and surgeons and their advice to women is typically try to limit your drinking to a couple, you know, maybe two to three drinks a week. They do think that people should not be doing sort of the full seven drinks a week that the dietary guidelines say is okay. There's only a couple of things you can really do to reduce your risk. It's like exercise, eat a healthy diet, don't smoke, and limit your alcohol consumption to the best of your ability. That was your health columnist, Sumathi Reddy. And one last thing before we go,

heads up, we made a correction to this morning's episode. We incorrectly said that former Illinois Governor Rod Blagojevich was a Republican. He's a Democrat. And that's what's news for this Tuesday afternoon. Additional audio in this episode from Reuters. Today's show was produced by Pierre Bienneme and Anthony DeBansi with supervising producer Emily Martosi.

I'm Alex Osla for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.