Will the Federal Reserve lower interest rates?

0:00 Speaker 1 What is today is one of our leading economists in the country, Steve Moore, and he’s also got the show on WABC every Saturday to More Money Show, Steve Moore, What the heck is going on? The market was down all last week most of the week, rumors on interest rates not going down, and other people say it’s going down.

0:23 Nobody really knows what’s going on.

0:27 Speaker 2 So good to be with you, John. Look, this was a week when we saw more signs of higher inflation. And that’s known to people by just what they’re paying at the gas pump. You know, the gas price has gone up at the pump by you know, about thirty forty cents in the last few weeks. In some places

0:47 they’re facing five dollars gallon gasoline again. And I think if you look at I like to look at the commodity prices, the prices of everything from oil to gas, to corn and wheat and copper, and those prices just since the beginning of the year have gone up by about twelve percent. So I’m here to tell you I

1:05 think that we have not slayed what I call the inflation dragon. I think it’s still out there. People who have to do grocery shopping. People who have to fill up their tank know exactly what I’m talking about. But there’s another element to this, John, and that’s what’s going on with the mortgage market understood.

1:23 Speaker 1 And the mortgage market is creeping up because the doubt of interest rates going down and the fact that just wus Canal and the Red Sea is still stuck.

1:38 Speaker 2 Yeah, that’s exactly right. So when Trump left office, people forget that the mortgage interest rate was about three percent. It rose as high as seven percent. But now I think in many markets they averaged about six and a half percent. But that’s still a pretty high rate compared to what it was. And so now these new reports

1:56 are coming out, John, you may have seen these US releases that the average family in America can no longer afford to buy the media in value house, and so people are being placed out of the market in a large part because the mortgage payments are up so much.

2:14 And so, for example, the average mortgage payment on a home for a new sale, it used to be being paying about eighteen hundred dollars a month. Now it’s three thousand and three, five hundred dollars a month, and that means the dream of home ownership for many Americans is become out of reach.

2:32 Speaker 1 Yes, housing markets are not going down. Are they going down because of higher interest rates?

2:40 Speaker 2 The stock market?

2:42 Speaker 1 No, the stock office going down, is down, and hundreds of points. I’m talking about the housing market.

2:49 Speaker 2 Yeah, so you’re going to see I think that it’s starting to go down a little bit. Job. But if these rates continue to be high, and if they continue to rise, then I think you’re going to see correction in the market. And that correction is exactly what you’re describing. That home values will have to fall because you don’t people can’t afford the homes, and the

3:11 interest rates are higher, so the payments are more. So Yeah, I think we’ve hit a turning point and housing prices. I mean, let’s remember that they went through a big, big boom over the last four or five years.

3:23 Speaker 1 But I mean the Red Sea and the Suez Canal, the Iranians. The price of oil crude oil is up to eighty six dollars WTI, maybe over ninety on on Brent, So people are going to be seeing four dollars oil soon, which is not going to make the or voters very happy.

3:48 The price of food not going down because of the price of oil. The only thing that was going up was the stock market, and it seems to be a little bit on the retreat now. I mean what I mean, what’s the prognosis for November? I mean, if President Biden wants to win, he has to do something.

4:12 Speaker 2 Yeah, you know, you can’t run for reelection if the economy isn’t isn’t strong, And right now it’s not strong. In fact, I’d argue, you know, we had about a year of you know, improvement, but now it looks like things are turning a little bit the other way. Remember, inflation run out up to nine percent in twenty twenty two,

4:29 of the highest rate in thirty years, and then it came down to about three and a half percent. But what I’m here to tell you is now it’s rising to four. I’m predicting four and a half five percent inflation, and that’s a long way from the two percent inflation target that the FED has set. Now what does that

4:45 mean for four in terms of the FED policy? I do not see a case right now for the Fed lowering interest rates, in pumping more money into the economy because they have not defeated inflation. I know, all your friend John on Wall Street would love to see lower rates, but when you’ve got prices rising by nearly five percent,

5:05 it’s going to be hard for the FED to cut those rates and then say, oh, we’re not being political, we’re not trying to help Biden, because that would be the only argument for cutting rates right now, understood.

5:17 Speaker 1 And the Hoothy leaders, the Hoothies are advertising that they’ve attacked over ninety boats so far. I mean, what the hell is going on.

5:29 Speaker 2 Any way? Say that again that they’re complaining about.

5:31 Speaker 1 What they leaders, the Hoothies in the red seat, they are advertising, we have already tacked ninety boats. That’s why the price of oil is up. That’s why the price of food is up. That’s why the stock market is down.

5:48 Speaker 2 And you know what it shows, Sean, that United States we appear on the little international scene as weak. And I hate to say that about this great country of ours, but I don’t think if you had Donald Trump in the White House he would have tolerated this kind of thing.

6:01 We were taken those people out within the first couple of weeks. John, how long has this been going on? Now for a couple of months.

6:08 Speaker 1 Yes, And we got problems.

6:11 Speaker 2 I mean you can’t. You can’t have pirates on the high seat. This is twenty twenty four, it’s not eighteen eighty four.

6:20 Speaker 1 Well, Steve Moore, let’s keep watching them markets, we pray for our country, and thank you for coming on and we’ll talk to you again real soon.

6:30 Speaker 2 Thank you. John