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Isa Soares Tonight

Fed Chair Jay Powell Speaking Now from Washington, D.C.; Israeli Defense Minister: "New Era" of War Beginning; Princess of Wales Returns to Work. Aired 2:00-3p ET

Aired September 18, 2024 - 14:00   ET

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

[14:00:00]

ISA SOARES, HOST, ISA SOARES TONIGHT: Hello and a very warm welcome, CNN's coverage of a new wave of explosions in Lebanon continues just a moment,

but we start with breaking news from the Fed, our Richard Quest, our business editor-at-large is with us. Richard, has there been a decision?

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: Yes, it's just been announced and the market had gone backwards and forwards between a quarter point and

a half a point. They have cut rates by half a percentage point, 50 basis points in the language that we say in the markets.

This is quite stunning, Isa, for the simple reason that they could have done just 25 basis points, a quarter, but they've gone for a half, and by

doing that, they are essentially telling us that the economy is slowing further and faster than they are comfortable with if they're going to

follow their dual mandate of price stability and low unemployment or full employment.

The reason, Isa, that they're now really concerned about it, inflation has been coming down quite majestically over the last two years, but

unemployment has been rising and the number of jobs being created is falling. And look at that --

SOARES: Yes, you're seeing the reaction right there --

QUEST: You don't see that every day, essentially, the markets are off to the races, do forgive me, I've just got the statement here, which I'm just

going to while you ask your next question, I should have a quick look at --

SOARES: Yes, I was going to -- well, as you peruse through the papers. Let me ask --

QUEST: Yes --

SOARES: I mean, does this mean -- I mean, this is a proper -- this is on the -- on the wider side, of course, a jumbo-sized interest rate card. Does

this mean, Richard, the Fed, it's won its battle with on inflation?

QUEST: They're --

SOARES: How do you interpret this move? Are they always more --

QUEST: Right --

SOARES: More reserves, right?

QUEST: Right, so, you've got two things. You've got inflation and you've got a full employment. At any given time, you're balancing the two. The

last two years that it's been inflation that's been the number one concern. This decision says they're not so worried about inflation, they are worried

about full employment.

They are worried about the strength of the U.S. economy. It is two years of very high rates at 5.25 percent, that ratcheted it up very quickly, boom --

SOARES: Yes --

QUEST: Eleven raises in rates. Now that they're basically seeing the slowdown that's taking place. And what this half a percentage point does

is, rates! It's all happening a bit farther and a bit too fast for us. So, we better give some stimulus. We better put our foot on the accelerator,

and that's what they're doing here.

As I look into the statement, we'll get some more into this, the committees monitoring events, they decided they're going to take into account the

range of information, but essentially, they are now saying that full employment --

SOARES: Yes --

QUEST: Is the priority and they're worried.

SOARES: And the market seemed to like the decision, we see the Dow Jones up more than half of a percent. We're going to be listening, Richard, to

Jen(ph) --

QUEST: Yes --

SOARES: Powell, Jerome Powell in what? Less than some 27 minutes or so. What should I be listening out for here?

QUEST: Two things. How fast is the economy going to slow down? Is he worried about it going into recession? Does --bearing in mind the cake that

is baked that's already happened. Is he now worried that they've -- they were too late, half a point, Isa, is telling us, you know, we should have

done -- we should have started cutting sooner.

You don't cut by half unless you're worried. And what they're saying is, well, we had to do more than we would have liked, probably because we were

too slow to get going.

SOARES: Richard Quest with the very latest, and Richard will be back in about two hours or so with his show "QUEST MEANS BUSINESS", Richard,

appreciate it as always, thank you. Well, let's look at the political implications of this move. CNN economics and political commentator

Catherine Rampell; she's a "Washington Post" opinion columnist.

[14:05:00]

Catherine, your reaction. Was this the right move you think, 50 basis points?

CATHERINE RAMPELL, CNN ECONOMICS & POLITICAL COMMENTATOR: I think it is quite a reasonable move. You know, reasonable people can disagree about the

appropriate size of the rate cut. There had been some softening in the job market, at other economic indicators recently that had led the Fed to

decide, you know, maybe we should cut rates even more than we normally would.

That's the half a basis -- excuse me, half a percentage point rather than a quarter percentage point, which is the usual pace of these things when they

-- when they happen. I think what was also interesting in today's release is that Fed officials put out an update for their forecasts for this year,

next year, and years onward, about where they think the economy were going -- will be going. And those forecasts suggested that they are much more

pessimistic about the economy --

SOARES: Yes --

RAMPELL: Than had been the case just a few months ago. So, you know, unemployment rate ticking up a little bit more than they had expected or

forecast back in June. They're expecting to cut interest rates more next year than they had, you know, sort of projected earlier. So, there are a

number of indicators there that the Fed is worried that --

SOARES: Yes --

RAMPELL: Maybe they didn't act soon enough, and that they may -- they may need to stimulate further.

SOARES: Yes, and this is something that Richard was just talking about right there. So, given this move, bold move, not unexpected, of course,

there, it was kind of divided in which way it was going to go. What does this tell you potentially about where the Fed sees the state of the U.S.

economy heading? And I know we'll hear from Jerome Powell in some 25 minutes or so.

RAMPELL: Yes, so, it does look like the Federal Reserve's baseline scenario is that there will be a so-called soft-landing, that's the coveted

--

SOARES: Yes --

RAMPELL: Outcome of -- you know, you finish up a inflationary cycle and you don't actually crash the economy, you land softly, you manage to avoid

a recession. That seems to be their baseline scenario. Although, as I said, there are signs within the projections that they released today, that they

do think that the economy is softening more than they had suggested(ph) it up just a few months ago.

That they do think that the unemployment rate is going to tick up. They also said that they think that actually inflation will come down a little

bit more towards the end of this year and next year than had previously been forecast. So, that's good at least. But some of the other things that

they telegraphed or that, yes, you know, most likely scenario is that we squeak out OK, but there may be some bumps there.

SOARES: Yes, and look, it's important to put this into context for our viewers right around the world, Catherine, this was a critical decision

from the Fed. The first cut, I think in four years. And it comes at a critical time during a presidential election. What kind of impact, if any,

do you think this have on the presidential race?

We have seen already, not just among key -- in key states, I should say, whether the economy is the main concern for people. So, how do you think if

this decision will affect some of the campaign and the presidential race?

RAMPELL: I think the optics probably matter more than the actual effects on the ground --

SOARES: Right --

RAMPELL: In the sense that this is the Fed acknowledging that the economy is slowing, that they need to act to stimulate or at the very least, to

ease credit conditions, ease financial conditions, and maybe make it a little bit easier to borrow. That's what they're telegraphing. And of

course, this is happening right before an election.

Now, the Fed for its part really likes to keep itself above the political fray. They -- the last thing that they want is to look like they are doing

something because of an election. Whatever they do, they want it to be, you know, untied to --

SOARES: A political --

RAMPELL: A political outcome, as they're politically -- yes, they're politically independent. They're not trying to help or hurt any given

candidate. And frankly, whatever they do today is probably unlikely to affect the economy, a ton between now and November. Interest rates are

known for having long and variable lags.

That's the term of art. The idea that whatever the Fed does, it's probably not going to really be felt in the economy for a while. You know, maybe not

even a year --

SOARES: Yes --

RAMPELL: From now, or at the very least, many months. So, it's not actually likely to like juice the economy between now and November, but

certainly, Donald Trump has seized on it at saying, hey, this is meant to help Biden which the Fed, you know, will adamantly deny of course.

And the optics are, maybe they're worried and maybe they feel like -- they being the Fed, maybe they feel like they need to do something to zush the

economy a little bit.

SOARES: Yes, and we will of course be listening to what the Vice President Kamala Harris and to the former President Donald Trump, what he has to say

on this decision.

[14:10:00]

We'll also be waiting to hear from the main person actually behind this. This isn't just Jay Powell speaking about 20 minutes or so. Catherine

Rampell, always great to have your insights, appreciate it, Catherine.

RAMPELL: Thank you.

SOARES: Now, let's get to our breaking news. And a second wave of explosions in Lebanon just a day after that highly coordinated attack

targeting Hezbollah.

(BEGIN VIDEO CLIP)

(EXPLOSION)

UNIDENTIFIED MALE: Silence -- Allah.

(END VIDEO CLIP)

SOARES: Lebanon's Health Ministry says numerous walkie-talkies exploded today, killing at least 14 people and wounding hundreds more. And this

blast happened as you can see, at a funeral for Hezbollah fighters in Beirut. Other blasts happened inside buildings. So, you see a damaged -- a

damage you could see inside a political party office, that's in southern Lebanon.

CNN has learned that Israel is behind yesterday's mass explosions of pagers used by Hezbollah, at least 12 people were killed in that attack including

children, nearly 3,000 others were injured. Well, Israel hasn't directly commented, but in what appears to be the first tacit acknowledgment of

responsibility.

Defense Minister Yoav Gallant today said, quote, "a new era of war is beginning". He says the quote, "centre of gravity is moving north." Have a

listen.

(BEGIN VIDEO CLIP)

YOAV GALLANT, DEFENSE MINISTER, ISRAEL (through translator): The IDF has made excellent achievements together with the ISA and Mossad, the results

of their work are impressive. We know how important it is at this time to carry out our activities in close cooperation.

(END VIDEO CLIP)

SOARES: Let's go to our Ben Wedeman, who's in Beirut, who has been outside a hospital, not now, but he was earlier. So, Ben, a second wave of

explosions with devastating effects. I'm just seeing 14 dead now today, 450 injured according to the Health Ministry. What more can you tell us?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, this are as you said, the second day in a row of these hundreds of explosions today, the

exploding devices were walkie-talkies, we don't know what tomorrow will be exploding. But these explosions went off not just in Beirut and southern

Lebanon, but also in the northern Beqaa Valley, the city of Baalbek and elsewhere.

Clearly, Israel is upping the pressure on Hezbollah, the purpose it's not altogether clear. It's certainly engaging in what one might charitably call

unconventional warfare with Hezbollah. But speaking to many Lebanese, they feel it's really -- is little more than terrorism because keep in mind, for

instance, you showed that footage of the blast that happened at a funeral, these are not all Hezbollah members.

They are women and children at these events, and it is pretty random when you take into account that somehow these devices are being exploded when

people are in the middle of crowds, in markets, driving cars. It really does pose a serious public hazard and people are very concerned.

Keep in mind, Isa, that since last October, even though there have been notable exceptions by and large, most of the bombing and most of the death,

most of the injuries, the destruction has been limited to the border area. But suddenly, you are having, for instance, today, according to some

Lebanese security sources, as many as 15 to 20 explosions in the southern suburb of Beirut itself.

So, suddenly, the war has come to the Lebanese capital in ways that nobody ever anticipated. Israel using methods of warfare the likes of which no one

has ever seen anywhere, Isa.

SOARES: And the panic and the fear, I can't even imagine. Ben, appreciate it, thank you very much. Well, let's get more on all of this, I'm joined

now by former CIA officer Bob Baer, he's worked extensively in the Middle East, and he's the author of "The Perfect Kill: Twenty One Laws for

Assassins", a well-known face here on the show.

Bob, welcome back to the show. Let me just get your reaction to what we've heard in the last hour or so. Israel's Defense Minister has said that the

centre of gravity of the war was moving north, that a new era in Israel's war effort is beginning. I mean, how do you interpret those words?

ROBERT BAER, AUTHOR & FORMER CIA OFFICER: I interpret them as an incursion into Lebanon. Whether it's divisions or commandos. But I think Israel is

going to go to war against Hezbollah and taking out its communications is a prelude to this. This is what you'd want to do tactically so they can't

communicate among units.

[14:15:00]

When you take out the push to talk radios, the walkie-talkies, that's their main form of communication. It's all -- it's encoded, you know, call sheets

and the rest of it is fairly secure. But if you take out those walkie- talkies and we don't know how many have been. You're talking about a military force that can't communicate.

SOARES: So, you're looking at a case we've had the walkie-talkies -- we've had the walkie-talkies today, of course. But how soon do you think -- the

pagers yesterday, how soon do you think, Bob, this would happen? And do you think that Israel will be looking to move troops from Gaza to the north?

Speak to the dynamics here.

BAER: Well, the Israelis have already talked about pivoting, and they are pivoting --

SOARES: Yes --

BAER: Force north, whether it's an invasion force or not, they're not saying. But as I understand it, in order to take those rockets out, you

can't do it by -- from air. You need to do it by a ground force because so many of them are deepen caves and they could withstand the bombardment. So,

if you really wanted to eliminate Hezbollah as a military threat, you'd have to go in by land. You can't do it otherwise, and you also can't do it

by commandos.

They just -- the Israelis have learned their lesson and Lebanon over the years -- and last time they went in a major force was 2006, and they

wreaked havoc and destruction in Beirut, and it looks like they're going to do it again. It's my best guess.

SOARES: And Bob, if they go in, I mean, given how they penetrated their Intelligence, the communication systems, would you guess they would go in

quickly in the next few days whilst they're weakened? How -- give us a sense of timeline if they were to act here?

BAER: Oh, well, I think they would -- there would be some sort of bombardment, that would be the next sign --

SOARES: Yes --

BAER: That they're going to go in, they're going to have to bombard bridges, routes, you know, and if Israel can take as courier network,

they'd also want to take out the leadership, whether that would be Nasrallah or somebody else, they know where they live now, we'll see that

first.

SOARES: Yes --

BAER: So, it's sort of like the United States went into Iraq.

SOARES: And we are waiting to hear -- I think Nasrallah is expected to speak tomorrow about 5 O'clock London time, 10:00 a.m. Eastern Time. But we

have also heard, Bob, that they would retaliate. They said they would retaliate. How does it go about doing that in a way that saves face, but

doesn't start a wider war, which is something that we keep hearing.

BAER: Well, Hezbollah has been -- had a measured response since 7th of October because they don't want a major war. But this could be a

humiliation and a wound that it can't get over unless it retaliates. And in order for that to happen, Iran has got to agree, because Iran pays for

Hezbollah still until this day and supplies them with arms.

And is Iran ready to go into a major war at this point because almost certainly, if it did, the United States would be involved. So, we're

talking about the possibility of an escalation that I don't think anybody wants, except maybe the Israelis because this is their big opportunity to

get rid of Hezbollah, which has been a persistent threat, going back to 1982, 1983.

And don't forget Hezbollah is the only force that's ever beat the Israelis in the field of battle when they withdrew in 2000.

SOARES: But Hezbollah, I mean, is not Hamas, I'm sure you'll correct me. They are more akin to conventional army. They've got 150,000 rockets,

precision-guided ammunitions, how do you -- how do you think this would -- how do you think they stuck up? I mean, clearly, it's a humiliation for

Hezbollah.

I just also wonder, Bob, and you can talk to this -- both those points, whether you think there is a scenario right now, and it doesn't look like

there's been -- you're the expert here, whether this scenario -- where this acts as a deterrent what we have seen in the last 48 hours, whether this

acted as a terror at all.

BAER: I think it's the opposite of a deterrent --

SOARES: Yes --

BAER: Because Hezbollah, don't forget is religiously-based movement. It's almost a cult. So, they don't -- they don't look at this rationally. And

killing women and children indiscriminately may have pushed them over the edge on this, and they may -- they may go for broke, and they're willing to

take -- you know, as they call martyrs and suicide bombings.

And this is something they've gotten away with, you know, traditional Guerrilla warfare, but they're certainly capable of going back to it if the

Israelis went in, it would be a mess. Whatever. I don't know who'd win, but it would be a mess. It would be a serious war.

[14:20:00]

And Israeli would -- Israel would take serious casualties.

SOARES: And it is, we're at a dangerous moment right now as we continue to follow this breaking news. Bob, really appreciate you taking the time to

speak to us. Bob Baer there with the very latest. Thank you. And still to come tonight, we'll bring you Fed Chair from Jerome Powell, so I was saying

to you, press conference expected to happen about ten minutes or so, we'll bring that to you and what it means, of course, for Americans all over the

world and for the world economy too.

(COMMERCIAL BREAK)

SOARES: Well, with just 48 days until the U.S. presidential election, both candidates are reaching out to key groups of voters. Just a short time ago,

Vice President Kamala Harris made her pitch to Latino voters. She spoke at the congressional Hispanic Caucus Institute's Annual Leadership Gala in

Washington.

In a couple of hours, she'll hold an event for young voters. Meantime, the Harris campaign has launched an ad slamming Donald Trump for his stance on

reproductive rights. It features a Kentucky woman who became pregnant when she was 12 years old after she was raped by her stepfather.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Because Donald Trump overturned Roe v. Wade, girls and women all over the country have lost the right to choose even for rape

or incest. Donald Trump did this. He took away our freedom.

(END VIDEO CLIP)

SOARES: Well, at a campaign stop in Michigan on Tuesday, Trump tried to make a connection between his economic proposals and the two apparent

assassination attempts against him, saying only consequential Presidents get shot at. Well, later today, he'll hold a rally in New York in an effort

to chip away the Democrats appeal among blue-collar working class voters in the state.

Our Priscilla Alvarez is covering the Harris campaign while Alayna Treene has the latest from the Trump camp. Priscilla, let me get to you, we heard

a little clip there, Vice President Kamala Harris appealing today to both Latino as well as young voters with these two events. Speak to the

importance here for our audience, our viewers right around the world of what these voting groups -- of what we're likely to hear from the Vice

President.

PRISCILLA ALVAREZ, CNN CORRESPONDENT: Yes, this is part of a broader push by the Harris campaign to bolster the Democratic coalition, and of course,

the Vice President trying to shore up support among these voting blocs, particularly Latinos.

[14:25:00]

Latinos have shown waning enthusiasm in polls and in some cases, former President Donald Trump has held an edge over the Vice President. Now, this

of course, is in a critical bloc for the Vice President to secure, going into November. And while she was here at the Congressional Hispanic Caucus

Institute, she ticked through multiple of -- multiple issues that she often does in the campaign trail, of the economy, reproductive rights,

affordability.

But then she also spoke more forcefully on immigration, saying that there is a need for immigration reform, but that can also happen with border

security at the same time. And then as she went a little deeper, talking about former President Donald Trump's controversial immigration proposals

and policies including about family separation back under the Trump administration, and some of what he has pitched so far, including mass

deportations.

And so, that was a new argument that she made here in front of a crowd of Hispanic lawmakers among others that will continue to feature on the

campaign trail, and especially among Latino voters. Now, later today, she is going to also be just talking in a youth organizing call, this has been

part of this aggressive push by the -- by the campaign to make sure that young voters are registered to vote, knowing that she does hold an edge

with them when compared to former President Donald Trump.

SOARES: Stay with us, Priscilla, let me bring in Alayna because Alayna, I understand that GOP senators sent a letter, I think it was on Tuesday to

the acting director of the Secret Service, basically demanding that Trump receive the same level of protection as any sitting President.

Just talk us through in terms of the discussions that are happening within the Trump world about security ahead of his rally tonight, I think I

believe it's in Long Island

ALAYNA TREENE, CNN CORRESPONDENT: It is, it's actually in Uniondale, New York, which is in Long Island, a very blue state, New York obviously. So,

there's some questions from some folks about why Donald Trump is coming. But let me get to your question about security. Now, that letter you

mentioned from Republican senators, I will say it's not just Republicans who are pushing for more security enhancements and more Secret Service

resources to be devoted to Donald Trump and his team.

Democrats are saying this too. There's really been a bipartisan push. We've seen particularly in the last few days since that second apparent

assassination attempt on Sunday, to make sure that the former President is safe. Now, of course, this is the second time we've seen someone try to

make a violent threat toward Donald Trump.

You know, everyone -- many people I've spoken with continue to say he's lucky that he's alive, and so, there are a lot of security questions moving

forward about whether or not he needs more. And there's no question, you know, that Secret Service has been -- once you're not a sitting President

anymore, he does not have the same type of protection that he once had while in office, more than what President Joe Biden or Vice President

Kamala Harris have.

Now, to get into the security preparations around these specific events, because we've reported that Donald Trump is keeping his political campaign

schedule as it was before. They are moving forward with these events as planned. And part of that means though, that there needs to be security

enhancements around this.

And you'll see some of that or at least I'll see some of that here on the ground in Uniondale today. You're going to have more dogs sweeping the

area, more agents on the ground, more local law enforcement, all things they're trying to do to really amp up that protection for the former

President, Isa.

SOARES: Alayna and Priscilla, thank you very much, ladies, appreciate it. And still to come on the show tonight, we'll take you live to Washington

D.C. as Fed Chair Jay -- Jerome Powell -- Jay Powell holds a press conference on the latest rate decision, a half a point, choosing clearly

the most aggressive option in its first cut in four years. We'll have more.

(COMMERCIAL BREAK)

[14:30:00]

ISA SOARES, CNN INTERNATIONAL HOST: Welcome back, everyone. U.S. Federal Reserve Chair Jay Powell is speaking now from Washington, D.C. following

that release, that Fed decision of half a point. Let's listen in.

JAY POWELL, U.S. FEDERAL RESERVE CHAIR: GOOD afternoon. My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum

employment and stable prices for the benefit of the American people.

Our economy is strong overall and has made significant progress toward our goals over the past two years. The labor market has cooled from its

formerly overheated state. Inflation has eased substantially from a peak of 7 percent to an estimated 2.2 percent as of August. We're committed to

maintaining our economy's strength by supporting maximum employment and returning inflation to our 2 percent goal.

Today, the Federal Open Market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by a half percentage

point. This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor

market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 percent.

We also decided to continue to reduce our securities holdings. I will have more to say about monetary policy after briefly reviewing economic

developments.

Recent indicators suggest that economic activity has continued to expand at a solid pace. GDP rose at an annual rate of 2.2 percent in the first half

of the year, and available data point to a roughly similar pace of growth this quarter. Growth of consumer spending has remained resilient, and

investment in equipment and intangibles has picked up from its anemic pace last year.

In the housing sector, investment fell back in the second quarter after rising strongly in the first. Improving supply conditions have supported

resilient demand in the strong performance of the U.S. economy over the past year.

In our summary of economic projections, committee participants generally expect GDP growth to remain solid with a median projection of 2 percent

over the next few years.

In the labor market, conditions have continued to cool. Payroll job gains averaged 116,000 per month over the past three months, a notable step down

from the pace seen earlier in the year. The unemployment rate has moved up, but remains low at 4.2 percent. Nominal wage growth has eased over the past

year, and the jobs to workers gap has narrowed. Overall, a broad set of indicators suggest that conditions in the labor market are now less tight

than just before the pandemic in 2019.

The labor market is not a source of elevated inflationary pressures. The median projection for the unemployment rate in the SEP is 4.4 percent at

the end of this year, four-tenths higher than projected in June.

[14:35:00]

Inflation has eased notably over the past two years, but remains above our longer run goal of 2 percent. Estimates based on the Consumer Price Index

and other data indicate that total PCE prices rose 2.2 percent over the 12 months ending in August, and that excluding the volatile food and energy

categories, core PCE prices rose 2.7 percent.

Longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and

forecasters, as well as measures from financial markets.

The median projection in the SEP for a total PCE inflation is 2.3 percent this year and 2.1 percent next year, somewhat lower than projected in June.

Thereafter, the median projection is 2 percent.

Our monetary policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people. For much of

the past three years, inflation ran well above our 2 percent goal, and labor market conditions were extremely tight. Our primary focus had been on

bringing down inflation, and appropriately so.

We are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher

costs of essentials like food, housing, and transportation. Our restrictive monetary policy has helped restore the balance between aggregate supply and

demand, easing inflationary pressures, and ensuring that inflation expectations remain well anchored.

Our patient approach over the past year has paid dividends. Inflation is now much closer to our objective and we have gained greater confidence that

inflation is moving sustainably toward 2 percent.

As inflation has declined --

SOARES: You have been listening there to Fed Chairman Jerome Powell or Jay Powell, just the last line there, he said, that our patient approach has

paid dividends, speaking about inflation, he said, the economy is strong overall. The labor market has cooled. Inflation, he said, has eased to 2.2

percent. And there's growing confidence, he said, that strength in the labor market can be maintained.

Also listening to this our Julia Chatterley. Of course, we brought you the breaking news 37 minutes ago of this Fed decision going for 50 basis point.

Julia, is she still with us? Is she with us?

Yes, Julia. I see you. Fantastic. I need you to read -- to make sense of what he just said. He seems pretty optimistic, but some may say the 50

basis points suggest potentially some concerns ahead. Your thoughts here, Julia.

JULIA CHATTERLEY, CNN ANCHOR, FIRST MOVE: That's called managing the message. So, what he's done is done the maximum that people expected. And

then, you picked out the exact correct words, he talked about strong overall, committed to maintaining the strength. This big cut is about our

growing confidence that we can actually support the jobs market, but without causing a problem of seeing inflation rise again.

The bottom line is, they're more worried than they were in June. They're seeing elements in the economy slowing, and you can see that from what was

critical projections, and he talked about that. They're expecting growth to be a touch softer. They're expecting unemployment to be a touch higher than

they were thinking it would be and inflation a bit lower. So, that gives them room to maneuver.

For me, the forecast on what they think they can do as far as rate cuts is the critical thing, go back to September. They thought they'd get one

quarter of a percentage point cut this year, they thought they could do one percentage point of cuts next year, they still think they can do that, but

they think they can get one percentage point of cuts in this year. That's way more than they were expecting.

So, it's good news on the one hand for American borrowers, it's good news that they think they can do that because they've got inflation under

control, but there is a warning in there, of course, that they're doing this because they think the economy slowing.

Now, just to be clear, we're talking about growth of two percentage points this year and for the next few years, that's what he was saying just there,

this not recessionary. What they think they can do is engineer that soft landing and this what it's going to take. We'll hope he can continue to

manage the message. But yes, Isa, you heard it, you got it right there.

SOARES: And I'm just looking at the projections, I'm also keeping an eye, I'm looking at the right from my screen, the Dow Jones is up half of a

percent. It's come down slightly from what the decision 39 minutes ago. But, Julia, just explain to our viewers why the Fed waited four years to go

all in on this, right? Many were expecting 25 basis points. They went bigger. Why do you think they waited four years? Because he was talking

about a patient approach there. Has that approach worked thus far?

[14:40:00]

CHATTERLEY: That patient approach, right, if you remember that were transitory where they thought that inflationary pressures wouldn't build

the way that they did meant that they went through the fastest rate hiking cycle in four decades.

I am personally astonished that they've managed to engineer what appears to be a soft landing, if their projections prove correct, despite what they

did and the speed upon which they raised interest rates. So, the reason why it took four years to get to this point is because they've been in an

unholy battle with pricing pressures. And for American consumers out there, they know that, their grocery prices are a fifth higher than they were,

what, two, three years ago.

The pain that people have faced is real. They've simply not felt able to be able to bring rates down before now without creating other problems. We can

debate and argue over whether they could have done this back in July, and they could have cut rates before, they could have been a bigger feel-good

factor, they didn't have to do such a big rate cut now. But hey, we've got going. They think they can do a lot and they're going to go, it seems, as

quickly down as perhaps they went quickly up.

Maybe this a good way to manage an economy. So, it's just a little sweaty in the interim. And of course, it means pain for people when you raise

rates amid very high prices. And it has been a period of great pain for many people.

SOARES: It has indeed. It has indeed.

CHATTERLEY: Yes.

SOARES: And there have been great discussions on this show about whether the Fed has done the right thing throughout the last year or so. Julia, I

know you'll go into further details in your show in a couple of hours. Appreciate it. Always great to have you here. Thanks, Julia.

SOARES: Thank you.

SOARES: Julia Chatterley there. We'll keep an eye, of course, on the stock markets. We're going to take a short break. We're back after this.

(COMMERCIAL BREAK)

SOARES: A new era of war is beginning. Those words today from Israeli Defense Minister Yoav Gallant tacitly acknowledging Israel's role in two

straight days of attacks against Hezbollah in Lebanon. Today, numerous walkie-talkies exploded, killing at least 14 people. Hundreds of others

were injured. Emergency crews have been racing to bring the wounded to hospitals and also put out fires triggered by the blasts.

Chooses attack, targeted, if you remember pagers used by Hezbollah killing at least 12 people and that includes children. Let's get more on all these

developments. Our Jeremy Diamond is following all this from us from Tel Aviv.

[14:45:00]

So, Jeremy, first, let me get your analysis to what we've heard from Israeli Defense Minister Yoav Gallant saying that the center of gravity of

war was moving north, that a new era in Israel's war effort is beginning. What does that mean? How do you interpret those words?

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, what's interesting to me is that it's not just rhetoric that we're hearing, we are also seeing,

coupled with that rhetoric, real military moves by the Israeli military, most notably the movement of the 98th Division, one of the key fighting

groups that has been in Gaza for much of the last year, that is now being redirected away from the Gaza Strip towards Israel's northern front with

Lebanon.

And now, this isn't the first time that we have seen military moves coupled with rhetoric, but it certainly is a significant one coming at a very

significant time. And then, you couple that with the rhetoric from Yoav Gallant, who is talking not only about a new era in this war, the center of

gravity moving north, also talking about the IDF and the Mossad having achieved, quote, "impressive results." That's that tacit acknowledgment of

Israeli involvement, as we have reported in the explosions, at least from yesterday, of those several thousand pagers.

And then, today, you have, once again, more explosions, fewer people injured, but more people were actually killed in today's explosions, which

appear to have mainly targeted walkie-talkies held by Hezbollah members.

And so, this putting us once again at a very tense moment in this region. And that does mean, of course, that, once again, the prospect of all-out

war with Hezbollah is renewed, especially as we are seeing some of these military movements, as we are hearing Hezbollah, once again, vowing to

retaliate for these attacks.

But we should note, of course, that we have seen different moments over the course of the last year at which it seemed like we were on the precipice of

that all-out war between these two sides. And yet, every single time, so far, the two sides have ultimately pulled back from the brink, making the

calculus ultimately that all-out war, it seems, is in neither is Israel nor in Hezbollah's interests.

But now, in addition to those comments from Gallant, you also have the Israeli security cabinet officially adding, returning Israel's northern

residents back to their homes, some 60,000 people who have been internally displaced as a key objective, official objective of this war. And so, that,

of course, adds another interesting layer of complexity to all of this. So, certainly a moment of tension. But again, in this region, nothing is

assured.

SOARES: Indeed, Jeremy, appreciate it. Thank you very much. Let me bring in Colin Clark. He is the Director of Policy and Research at the Soufan

Group and the author, "After the Caliphate: The Islamic State and the Future of the Terrorist Diaspora." He joins us from Laurel, Maryland. Good

to see you again, Colin.

So, let me just pick up what we heard from Jeremy. He said that the 98th Division is being redirected to Israel's northern front, and he caveated

the fact that it's not the first time that we've seen the IDF move to the northern front, but where do you -- I mean, given what we heard from the

defense minister, that the center of gravity of the war is moving north, how do you interpret these movements and these words?

COLIN CLARK, DIRECTOR OF POLICY AND RESEARCH, THE SOUFAN GROUP: Yes, these are all indications and warnings of what could be the next phase in this

conflict. And so, I said yesterday, I wrote a piece for foreign policy and said, you know, this could be the opening salvo in what's a battle on the

northern front.

We know that Israeli Prime Minister Benjamin Netanyahu has been itching for a conflict with Hezbollah. Even if, you know, senior leaders in the IDF

aren't necessarily given how much they have their hands full with Gaza. But we could be looking at a serious conflict here in the coming days and weeks

if cooler heads don't prevail.

SOARES: Yes, and we've been -- I've been looking at your article that you've written about this junction, like, Jeremy was saying, it feels like

we are at the precipice of this war. I wonder from the military point of view here, Colin, could the IDF take on a full-scale campaign in Lebanon

alongside the Gaza war or do you think we'll be looking at troops -- more troops moving from Gaza to the north here? Just speak to the challenges.

CLARK: Look, fighting, you know, a multi-theater war on two fronts is difficult for any military, including the United States. The Israelis are

certainly among the most capable militaries worldwide, they're certainly the top military in the region. But this would be perhaps biting off more

than they could chew.

[14:50:00]

You know, they've struggled to deal with Hamas in Gaza to now turn to Hezbollah, which is an eminently more capable actor than Hamas. You'd

really be kind of stretching the IDF's bandwidth to its max. And if conflict does break out, the Israelis would want to make sure that it was

as quick as possible because the sustained conflict would really kind of wear down their force.

SOARES: Yes. And Hezbollah -- and we are expecting to hear from Nasrallah tomorrow, but Hezbollah just yesterday, in fact, said that it would

retaliate. You have written extensively, in your piece here as well, about Hezbollah's capabilities, it's arsenal. I think you said it has some

150,000 rockets. It's akin to a conventional military. It's got precision guided munitions. You've made the comparison, this not Hamas. How do you

think then Hezbollah will retaliate here, Colin?

CLARK: I don't think Hezbollah wants a war. I think Hezbollah will respond because they have to. They have to save face, right? There's nothing more

dangerous than weakness in the Middle East. And so, even if the response is performative in nature, meaning, they, you know, launch some rockets or

missiles with the intent to not escalate, you know, we're in a phase of this conflict now where miscommunication is likely.

And so, any response, which again, I think is eminent, could cause this conflict to further escalate. And then we get into this kind of vicious

cycle of tit for tat, which then escalates further.

SOARES: Yes, this feels like it's a different level what we've been seeing for the last several months. But look, if you are part of the Axis of

Resistance and you are seeing what is unfolding in Lebanon and the fact that the Mossad and the IDF were able to penetrate their communication,

you're thinking and doing what now, Colin?

CLARK: Yes, so if I'm the Houthis, if I'm Shia militias in Iraq or Syria, I am ditching all of my electronics, all of my tech, all of my

communications or comms, and I'm also conducting a wholesale comprehensive internal security sweep. And I think, you know, the Israelis will sit back.

They'll watch that. There could be a mole hunt within some of these proxy groups. There could be some bloodletting, you know, rooting out,

quote/unquote, "spies."

So, I think the Mossad is going to have a lot of fun sitting back and watching how these networks react. But again, I would caution, we may not

be out of the woods yet. There is more explosions today with walkie- talkies. We may see more in the coming days.

SOARES: Yes, this could indeed be a prelude to something big. And important to point out to our viewers, we are talking of 14 dead and more

than 450 injured just in today's explosions. Colin, always great to get your insight. Thank you very much indeed.

We are going to take a short break. We're back after this.

(COMMERCIAL BREAK)

[14:55:00]

SOARES: Well, the Princess of Wales has returned to her royal duties. Catherine hosts an early year's meeting at Windsor Castle on Tuesday,

marking her first official engagement since completing chemotherapy treatment. And this follows a deeply personal video message earlier this

month, if you remember, where she reflected on her fight against cancer and her quote, "new sense of hope and appreciation for life." The princess

plans to resume a light schedule of public engagements through the remainder of the year.

And September super moon is visible around the world this week. And in much of the world, if you looked up at it on Tuesday night, you will likely able

to see a partial lunar eclipse that occurs when the Earth moves between the sun and the full moon without being perfectly aligned. According to NASA,

even then the full moon peak last night, it can be seen through Thursday. Do you keep a look out for it.

That does it for us right here on the show. Thank you very much for your company. Newsroom with Jim Sciutto is up next. We'll have much more on that

breaking news. I shall see you tomorrow. Have a wonderful day.

(COMMERCIAL BREAK)

[15:00:00]

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