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Inflation Heated Up in August, Boosting Case for Fed Rate Hike; Iran-Backed Rebels Capture Key Port, Tighten Grip on Red Sea; Anthropic Says Iran Tried to use Models to Target U.S. Navy Ships; Industry Insiders Issue Dire Warnings About AI Going Rogue. Aired 2:30-3p ET

Aired September 11, 2026 - 14:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[14:30:00]

OMAR JIMENEZ, CNN HOST: All right, folks, the odds just went up that we will see the first interest rate hike in more than three years. That is how some analysts are reacting to the latest economic report, which shows inflation is heating up more than six months after the Iran war began and less than two months from Election Day. Consumer prices for August went up 3.4 percent. As you can see behind me here, it adds to the pressure the Federal Reserve is under to cool rising costs. And then another factor, record diesel prices, which just went past six dollars a gallon for the first time -- 6.06, not a number you want to see in any world.

Let's get right to CNN senior reporter Matt Egan to break down the latest data. So, Matt, what are you learning from these new numbers released today?

MATT EGAN, CNN TECH REPORTER: Well, Omar, inflation has been hot for months, but it got even hotter in August. And the fingerprints from the Iran war were all over this report. So consumer prices were up by point four percent on a monthly basis.

That might not sound like a lot, but that's a big jump. And that was enough to push the annual rate up to 3.4 percent. That's well ahead of the Fed's 2 percent goal.

And when we look at the trend so far this year for monthly inflation, this is roughly when the Iran war started, right? And so as the war started, so oil prices skyrocketed, gasoline got much more expensive.

And of course, that pushed up inflation for months. But then you had the opposite happen, right?

Gas prices went down. There were all these hopes of a resolution to the war, and we saw less pressure on inflation. But now clearly, it's moving in the wrong direction again.

So what got more expensive? Well, look, the news wasn't all bad. Some things are getting cheaper.

Eggs, 23 percent cheaper. Chicken gotten cheaper as well. Car insurance is going down, which is nice to see used cars as well. However, if you want to fill up that car with a tank of gas, it's going to cost you a lot more money. Twenty seven percent increase year over year for gasoline. Jet fuel has skyrocketed.

And so airfare is 23 percent more expensive. And we're also seeing evidence of all of the demand for technology driven by the AI boom because computer prices were up by 8 percent. And look at this software, 25 percent increase in prices for software.

That's the most since the government started tracking. Now, what's really important to remember is this is all measuring prices last month. And we know that energy prices have only gone higher this month.

As you mentioned, we're dealing with a lot higher prices. So gasoline 4.30 a gallon is the new national average. That's not just a three month high.

That's the highest price for gasoline ever during the month of September. And an even bigger deal is, yes, diesel up by seven cents in just the past day, above six dollars a gallon for the first time ever. Gas gets all the headlines.

[14:35:00]

But arguably, this is an even bigger problem for inflation because diesel is the fuel that really powers the modern economy, right? It's powering the trucks and trains, tractors, construction vehicles and ships. And a lot of these companies, they're going to pass along at least some of these costs to all of us as consumers.

So the fact that you have diesel at record high and you have gasoline well above four dollars a gallon, Omar, that does suggest that inflation is going to potentially stay hot and go even hotter in the months ahead.

JIMENEZ: So you were talking about sort of where inflation is based on where the target is in terms of what the Fed looks like. So how are you thinking about all of this when the Federal Reserve Board meets next week?

EGAN: Well, Omar, we've gotten not one, but two hot inflation reports in the last two days. And so a week ago, the market thought it was close to a coin flip whether or not the Fed would raise interest rates next week. But look at this.

Now the market is pricing in an almost 90 percent chance of an interest rate hike. This would be the first interest rate hike in three years. And it would be the first interest rate hike under Federal Reserve Chairman Kevin Warsh, who, of course, was nominated by President Trump, who obviously favors lower interest rates.

Now, these numbers can move around. So we'll find out for sure in the coming days. But the message from the market is that, yes, an interest rate hike may be coming to try to calm inflation down. Now, the message from Main Street has been one of deep frustration when it comes to prices. New numbers out from the University of Michigan today show the consumer sentiment in the United States is historically low, falling sharply this month to the second lowest level on record. This chart goes back to 1980.

And you can see that consumer sentiment right now is lower than it was during the Biden era inflation crisis, right? Lower than during the 2008 financial crisis, lower than 9/11. And the University of Michigan said a lot of this has to do with frustration over the cost of living.

So, look, Omar, you put it all together. You have inflation up, consumer sentiment is down. That's never a great recipe for the economy, nor for the political party in power ahead of the midterms.

Back to you, Omar.

JIMENEZ: Matt Egan, appreciate you helping us get through those numbers. Thanks for being here.

EGAN: Thanks so much.

JIMENEZ: All right. Ahead on CNN NEWS CENTRAL, Iranian allies capture a Red Sea Island in a vital waterway. We're going to talk about how this could impact the conflict.

Stay with us.

[14:40:00]

(COMMERCIAL BREAK)

BRIANNA KEILAR, CNN HOST: We're following major developments in the widening conflict in the Middle East. Today, Iran-backed rebels in Yemen captured a strategic island in the Red Sea. This is an island that is located in the sea's narrow Bab al-Mandeb Strait, which is another key regional choke point similar to the Strait of Hormuz.

And that takeover comes one day after Houthi rebels captured the nearby port town of Mocha as the group seeks control of the Red Sea coast. The news sent shockwaves worldwide over the possible impact on global shipping and oil prices, as well as the risk of opening a new front in the U.S.-Iran war.

We're joined now by CNN's Nic Robertson. And, Nic, you were recently given exclusive access to this island that was just captured. Tell us a little bit about that. Help us understand the potential impact of what's happening here.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: When you're standing on the island, it's so narrow, that Strait of water, the Bab al-Mandeb Strait. You can see Africa. You can see Djibouti.

You can see Eritrea across the water from you. So, you know, in the past, the Houthis have had these sophisticated, long-range anti-ship missiles. They can fly hundreds of miles, skim the surface of the water, try to evade radar detection on ships, tankers, commercial vessels, and in some cases sink them.

They don't need that anymore. Now they have this island, Perim Island, the Bab al-Mandeb Strait. They can literally do what the Iranians have been doing in the Strait of Hormuz, which is put a few mines in there, or even shoot heavy guns from the shoreline at shipping, because it's so narrow, it's easy to block.

And we heard from the Houthi spokesman today saying that this Strait, don't worry, international community, he said, it's going to be open for all shipping, except Saudi oil tankers, except for Saudi vessels. You know, I just sat down a little while ago and interviewed down the line in Yemen, another Houthi spokesman. And I said, look, you're saying that you're stopping Saudi vessels coming through.

That's an oil blockade in any other name, because no one else but the Saudis are shipping oil down the Red Sea. So the Houthis are already doing on the Red Sea through Bab al-Mandeb what the Iranians are doing in the Strait of Hormuz. So they're doubling down.

They're going to be able to do that with much greater ease. And also, I asked this same spokesman, OK, what happens if the Iranians tell you to block all shipping like they're doing in the Strait of Hormuz right now? And he said, well, we're an independent country, but they're our friends.

If it's good for them, it's good for us. Well, if we think it's good for the region, we'll do it. So there's a clear, substantial, established threat mechanism to do it for the Houthis to even further close down all shipping on that Strait.

That's the significance of the point of where we're at today.

KEILAR: Nic, incredible. Thank you so much for sharing that with us.

[14:45:00]

And ahead on CNN NEWS CENTRAL, another alarming report on AI. This time Iran potentially trying to use the technology to target U.S. naval ships. We're going to discuss the threat from AI and what should be done about it after a quick break.

(COMMERCIAL BREAK)

JIMENEZ: If you needed a new reason to worry about AI today, well, you got it. A security report from Anthropic says Iranian agents used its AI models to target U.S. Navy warships. The company says it disrupted the plot, but the disclosure is raising new questions about what AI models can be used for and how much control these companies actually have over their own technology.

[14:50:00]

It also comes as a former Anthropic researcher warns that AI could one day, quote, kill us all.

So former 2020 presidential candidate Andrew Yang joins me now. He's the CEO of Noble Mobile and the founder of the Forward Party. I appreciate you taking the time. So let's just start high level here.

What worries you most about the threats we've seen just this week? Is it a bioweapon? Something else?

What's top of mind?

ANDREW YANG, 2020 DEMOCRATIC PRESIDENTIAL CANDIDATE: One reason why everyone's paying attention is that this Anthropic researcher stepped right before an IPO -- probably cost himself millions of dollars. And why do you do that unless you're deeply concerned? I'm concerned about unwarranted military conflict, convincing us that nukes are falling. And so we actually launched nukes, super viruses, new bioweapons, hacking of either our power grid or the financial system.

Those are the things that are top of mind. And they're all eminently realistic now.

JIMENEZ: You know, there's been more talk about lawmakers acting to restrict AI, which I know you've been supportive of. You look at the AI Kill Switch Act, for example, which was introduced in the House. But it would require companies to report incidents, create technical capacity to shut down or potentially suspend their very powerful AI systems. Even if something like that passes, would you see that as enough?

YANG: It would certainly be a major step in the right direction. Another step in the right direction would be clear civil liability for these AI companies if the models are used destructively. Right now, it's unclear whether you would blame, in this case, I guess you'd blame Iran for using Anthropic products, even though that particular plot was foiled.

There are probably another half dozen or like a hundred plots that we're not quite sure about, in part because these AI companies are black boxes. Occasionally, they tell us, hey, there was a jailbreak. Models got out.

The bots started hacking real-life companies. And there are other instances we might not know about. So this is, to me, social media times a thousand in terms of government being asleep at the switch.

But this time, it's going to be more than just our kids getting anxious and depressed, which is itself horrendous. This time, it could be a nationwide cataclysm.

JIMENEZ: And, you know, there are so many use cases for all of these AI systems where a lot of people are using it casually. Some people are using it for education, to help build businesses, whatever it may be. So there are uses on the sort of average use end that are not pushing the edges of what is ethical.

But the counterargument here is when you're pushing the capabilities of these systems is that, well, when you look internationally, if you don't do this or build and have this capability, then that means others will, which to me kind of feels like the arguments around the developing of nuclear weapons and what we saw at the time. Do you see this as any different?

YANG: Yes, the researchers are sounding the alarm because all the incentives are in the wrong direction. It's all a go, go, go. There's a trillion dollar IPO on the line for multiple companies.

And so in that environment, if you are the person who raises their hand and says, guys, maybe we should have guardrails, maybe we should have some safety mechanisms, everyone's going to ignore you and blow you off. And so if you can imagine multiple countries working on nuclear weapons, to use your example, and at that time it was World War II, and everyone was going as quickly as possible. Well, unfortunately, we're in that kind of environment now.

And what you need is sane leadership from our political figures and legislators saying, guys, we can do two things at once. We can compete against China and safeguard American lives and interests and livelihoods by adopting some sensible measures like a kill switch that everyone can understand.

JIMENEZ: So you don't think it's plausible for these companies to sort of be the ones to lead the way here? Do you think it's going to take pressure from the outside to actually make them end up in a safe place?

YANG: Yes. And 80 percent of Americans agree with this. Asking these companies to self-regulate is ridiculous.

And what the AI companies have done is said, we're the experts. You guys are too dimwitted to understand these technologies. So sit back and let us do what we want to.

And by the way, if we don't do it, then China is going to win. You have to call B.S. on this stuff and say, look, I might not know the AI inner workings as well as you do, but I understand the threats to our national security, our power grid, our financial system, you know, not having new novel viruses. Like these are things that our legislators have to actually drop the hammer down and say, we will not let you continue down this path until you can reassure us and the American people that these things are off the table.

[14:55:00]

JIMENEZ: Andrew Yang, really appreciate you being here and laying all that out. A lot to watch for moving forward. Appreciate you taking the time.

YANG: We've got to seize this opportunity now, Omar, because we don't have unlimited time.

JIMENEZ: Fair enough. Good to see you.

Ahead on CNN NEWS CENTRAL, Remembering 9/11, 25 years later from New York to the Pentagon to Shanksville, Americans remember the day that the world changed.

We're going to take a look at how the day has been marked next. (COMMERCIAL BREAK)

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