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Quest Means Business

Fed Pauses Rate Rises After 10 Straight Hikes; 79 Dead After Vessel Sinks Off Greece; EU Parliament Passes New Rules Governing Artificial Intelligence; Blinken To Travel To Beijing On Friday; Etihad CEO Squashes Rumors Of Potential Merger; China F.M. Rebukes U.S. In Phone Call With Blinken. Aired 3-4p ET

Aired June 14, 2023 - 15:00   ET

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

[15:00:28]

ELENI GIOKOS, CNN INTERNATIONAL HOST: Stocks are diving lower as investors listen to a media briefing from Jerome Powell and the markets are in the

red. Dow Jones is losing 258 points as we speak right now. Of course, everyone is absorbing what we're seeing on the interest rate front. Of

course, the Fed deciding to pause this month.

Well, those are the markets and these are the main events. The Fed hits pause, but signals it's not done raising rates just yet.

The EU says Google's advertising business should be broken up.

And the US secretary of State will head to China this weekend.

Live from Dubai, it is Wednesday, June 14th. I'm Eleni Giokos, I'm in for Richard Quest, and this is QUEST MEANS BUSINESS.

Tonight, the Federal Reserve is taking a break ending its streak of 10 straight rate hikes. The Fed decided to keep its benchmark rate at five

percent and will wait for more data to guide its decision next month.

Markets dipping on that announcements. The Dow falling sharply. It is now down around 250 points. The reason is the dot-plot.

In March, most of the Fed's policy makers expected rates would peak this year at just over five percent, a few of them thought it might go higher.

Now they expect rates will go higher and stay there for longer. The consensus is for rates to go above five-and-a-half percent. One expects

rates will end up at over six percent.

Jerome Powell is speaking right now. Just moments ago, he told reporters why the Fed is not raising rates today, even as he acknowledged that more

rate hikes are to come.

(BEGIN VIDEO CLIP)

JEROME POWELL, US FEDERAL RESERVE CHAIRMAN: Nearly all committee participants expect that it will be appropriate to raise interest rates

somewhat further by the end of the year. But at this meeting, considering how far and how fast we've moved, we judged it prudent to hold the target

range steady to allow the committee to assess additional information and its implications for monetary policy.

In determining the extent of additional policy firming that may be appropriate to return inflation to two percent over time, the committee

will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation,

and economic and financial developments.

(END VIDEO CLIP)

GIOKOS: All right, Matt Egan is with me. A pause, a skip, call it what you want, but more is to come and that is the point. I mean, we are seeing

markets responding in tandem with what Jerome Powell is saying, and I think that just looking at the data, it's not where the Fed wants it to be, so

more pain, more tightening is expected.

MATT EGAN, CNN REPORTER: That's right, Eleni. The Fed is making clear that this is a pause, but it is not a finale. That is the message that Jerome

Powell is trying to drive home.

Now of course, it is a very big deal that after these 10 straight interest rate hikes, the Fed is taking a different strategy. They are pausing here,

but they are of course not anywhere near declaring victory over inflation, and nor should they, because inflation does remain much too hot for Fed

officials comfort.

Now, in the statement, Fed officials, they said that inflation remains "elevated." During the press conference, Jerome Powell he said that the

July meeting is a "live meeting," which means that they could in fact, raise interest rates at that next meeting in July.

He said no decision has been made, but he left open the door for another interest rate hike.

So what does all this mean? Well, it's certainly good news for consumers, that borrowing costs are no longer going to be skyrocketing. Right? We've

seen this big spike in mortgage rates in credit cards and car loans, and for at least the moment, there's a little bit of a break on that front.

It's also I think, encouraging that the Fed no longer thinks the economy needs to get pumped with all of this inflation fighting medicine every

single meeting because inflation has cooled off.

But one of the really important points that Powell made again and again during this press conference, which is ongoing is that interest rate hikes,

they hit the economy with a lack. It is kind of like antibiotics, right? If you take medicine, you might not feel it right away, it doesn't mean it's

not working, it just, you just haven't felt it yet.

[15:05:05]

And so with the Fed raising interest rates as aggressively as they've been doing, I mean, they were effectively slamming the brakes on the economy.

The risk all along was that they were going to go too far and cause a recession.

So it certainly makes some sense that they're going to move at a slower pace here, but Eleni, Powell is making clear that the war on inflation is

not over, it is just moving in a more deliberate phase right now.

GIOKOS: Absolutely, I mean, he was talking about speed was really important last year. Now this year, where we are right now, it's time to evaluate the

data, but he doesn't seem too optimistic about what that data will be. Right? He is being very cautious about what messaging he is sending in

terms of the lag effect of this aggressive rate hiking cycle.

EGAN: Yes, and I think that's for two reasons. One, I mean, this has been just a completely unpredictable cycle, right? I mean, very few people saw

inflation coming until it arrived. The Fed reacted late, very few people thought that the Fed was going to be able to get inflation down as much as

they have without causing a recession. And so far, they've been able to do that.

I think the other major point, though, here is that core inflation really hasn't improved as much, right? I mean, headline inflation, yesterday's CPI

report showed that, yes, consumer prices are moving at a much slower pace. It's a two-year low. You can see it on that chart. There has been a lot of

improvement there on an annual basis, but core inflation really hasn't.

Powell made comments a few minutes ago, saying, you know, we're "not seeing a lot of progress with core inflation." He said the goal here is to get

inflation back to that two percent level they're targeting while doing as little damage to the economy as they can.

But Eleni, he did stress that ultimately, they will get inflation back to two percent, one way or another.

GIOKOS: How long that will take is the question, Matt, and of course, as you say, doing as little damage to the economy as possible and we've seen

the impact, at least in the banking sector and we know what consumers are feeling.

Matt Egan, great to have you on. Thank you so very much.

EGAN: Thank you.

GIOKOS: All right, the Federal Reserve's path forward is particularly uncertain as we of course, we've ascertained inflation doves are growing

louder. The headline rates has fallen by more than half since peaking in June, banks have tightened their lending after three of them collapsed,

that's helped the Fed cool off the economy.

Now hawks are continuing to push for higher interest rates. They point to the strong labor markets and high wage growth and core inflation is still

above five percent. We're calling that very sticky.

Alan Blinder is with us. He is a former vice chair of the Fed. He's now a professor at Princeton University in New Jersey. Great to have you with us,

sir.

Look, I know that you were part of, those that believed that a pause or a skip was pretty much in line in terms of what we should have been

expecting.

But I want to ask you this. If you were in the Fed right now, would you be signaling perhaps two more rate hikes this year? Do you think that that

should be on the cards?

ALAN BLINDER, FORMER VICE CHAIR OF THE FEDERAL RESERVE: Well, it is within the realm of the possible. I wouldn't personally be singling, if I had a

dot to put in the dot-plot, I probably would have only gone up one more from where they are.

What you need to realize is that at this stage, not earlier, but at this stage in the tightening cycle, differences between hawks and doves are

starting to emerge and Jay Powell has a very difficult balancing act.

And I think this statement and the SEP together are an illustration. You give something to the doves, which is you don't raise interest rates, but

you give something to the hawks, which is you pop up the -- or you let them pop up the dot-plot without any resistance, and that is, of course, what

the market is reacting to.

I am a little bit surprised that the market is that surprised, because it always looked like least to me, one or two more 25-basis-point hikes this

year were likely.

GIOKOS: Interesting look, I mean, headline inflation, we know is going down, which is great news. Core inflation is sticky. That seems to be the

issue.

We've heard Jerome Powell talking about the lag effect. We don't really -- you know, we haven't really seen the full effects of this aggressive rate

hiking cycle. Is one pause or skip enough to be able to ascertain just what impact it is having on the economy?

BLINDER: It is probably on the short side, if I take your word enough. You know, sometimes you have to sell what you have. It is only until July, it

is not a long period between now and the next FOMC meeting. We'll know a little bit more about inflation, a little bit more about growth, a little

bit more, and this is important, he mentioned that in the presser about how much the banking system is suffering from the aftermath of let's just call

it Silicon Valley Bank. You know, the books are not closed on that one, either.

[15:10:26]

GIOKOS: Alan, I mean, do think that the banking sector can handle another 25 basis points hike or 50-basis-point high by the end of the year?

BLINDER: I think so, yes. Remember what happened, the banking sector -- some parts of the banking sector got clobbered by 500 basis points quickly.

So compared to that, another 25 or another 50, especially if it's expected, and I think by now, it is strongly expected, at least in many quarters, you

know, it will cause some of those capital losses that played Silicon Valley Bank and a few others, but it is nothing comparable in magnitude to what

happened in the past.

GIOKOS: Yes. This made such a big focus on the employment scenario playing out. We've got a red hot jobs market right now. It keeps hitting above

consensus, we've got low unemployment.

You know, we know that the Fed's mandate is to try and target full employment, but also try and manage inflation. It is a tough balancing act,

do we need to see a break in the labor markets? Higher unemployment, because you know, where I come from in an emerging market, you don't want

to see high unemployment, you know, what impact that has socially on people. Why are we focusing on that? Is there another tool that they should

be focusing on, as opposed to saying, look, we need to increase unemployment to try and temper wage growth.

BLINDER: The traditional Phillips Curve view is what you just said, that you temper wage growth by causing slack in the labor market. With wages

growing more slowly, prices could grow more slowly and that is the indirect chain, by which you get the core inflation rate down.

We need to appreciate that Jay Powell and his colleagues are trying to pull off a Houdini act here. We don't have precedents for beating down the

inflation without pushing up the unemployment rate substantially. I don't mean by three-tenths of a percent, but much more than that. That's what

they're trying to do and that is one of the reasons that he wants to pause and take a look at developments and make a better judgment with a little

bit more data in July, or maybe in September, or whenever the pause ends.

GIOKOS: In terms of terminal -- okay, I think we've run out of time. Alan, look, it was great to speak to you. Thank you very much for joining us. I'm

sure we're going to have more of these conversations throughout the year. So much to focus on when it comes to the Fed. Of course, Jerome Powell

still speaking right now. We'll be giving you an update later on some of what he said throughout the day.

Great to see you, Alan, thank you so much.

All right, moving on now, the European Union takes the lead on regulating AI. What the bloc is proposing to keep up with a fast emerging technology,

that's coming up next. Stay with CNN.

(COMMERCIAL BREAK)

[15:16:14]

GIOKOS: All right, well, Greece has declared a national mourning for three days after a boat carrying migrants capsized off the coast in the early

hours of Wednesday. At least 79 people are dead and hundreds more are missing. One hundred and four people have been rescued. It is still unclear

how many were on board the fishing vessel. The NGO says there could have been 750.

Rescue crews are still searching in the Mediterranean Sea.

CNN's Barbie Nadeau joins me now from Rome.

What a tragic story playing out. Give us, in terms of what we understand, I think what we have -- the information we have right now is that people

didn't have life jackets. Do we know how the boat capsized? And how quickly they were able to get assistance for the people that were able to be pulled

out of the Mediterranean Sea. Barbie, what are the details here?

BARBIE NADEAU, CNN CONTRIBUTOR: Yes. No. Eleni, it's another tragedy. It's not just a tragedy. This has happened over and over and over again and

these are the ships we know about.

You know, the migration across the Central Mediterranean is the deadliest in the world. So many people have lost their lives making this crossing.

We don't know exactly how this boat capsized, but it was well over capacity. We took a closer look at this particular tragedy.

(BEGIN VIDEOTAPE)

NADEAU (voice over): Exhausted migrants who survived the shipwreck rest at a rescue center in Greece. The Greek Coast Guard responded to the latest

Mediterranean tragedy on Wednesday. They say no one on board was wearing a lifejacket. Scores of people drowned, the death toll continues to rise.

Hundreds of migrants crammed onto a boat in Libya hoping to reach Italy or get rescued on the way, but that didn't happen.

Their boat sank in the Central Mediterranean, the most dangerous maritime crossing in the world.

YANNIS KARVELIS, REGIONAL HEALTH DIRECTOR (through translator): It is indeed a tragic situation, a very difficult situation with a very large

number of shipwrecked people, a number that I think we have not faced in the past to such an extent and volume.

NADEAU (voice over): This is the deadliest first quarter on record in the Mediterranean since 2017. In February, a migrant boat carrying more than a

hundred people broke off the rocks of Calabria in Southern Italy. Ninety- four bodies were recovered.

Despite the dangers, the number of undocumented people seeking a better life in Europe has soared in 2023. The Italian government says more than

55,000 people have arrived by boat since January. They're fleeing conflict at home, the climate crisis, and sweeping economic inequality.

But European leaders can't seem to agree on how to solve the crisis, which has grown increasingly deadly. Ongoing negotiations with Tunisia and Libya

where most of the boats come from have stalled.

So the boats keep coming, and the death toll keeps rising.

(END VIDEOTAPE)

NADEAU (on camera): And you know, Eleni, this is just the story we hear over and over again. In this particular situation, we know that the NGO

Alarm Phone signaled to authorities in Malta and Italy about this boat 24 hours before it went down. We don't know if anyone ignored those calls and

we don't know exactly the dynamic right now of how that boat went down -- Eleni.

GIOKOS: All right, Barbie, thank you so very much for bringing us those details.

Well, another antitrust challenge for Google, the European Union officials say the company's ad business should be dismantled, echoing a lawsuit

brought by the US Justice Department in January.

Anna Stewart has more from VivaTech, Europe's biggest tech fair hosted in Paris.

[15:20:04]

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN REPORTER: The EU is telling Google it should break up as online advertising business saying it is bad for competition.

Brussels has filed antitrust charges against the search giant accusing it of abusing its dominance in the market in buying and selling online

adverts. These claims centered around AdX, which is Google's online auction house. It matches advertisers with publishers and the EU believes that

Google has unfairly pushed customers to use AdX rather than rival ad exchanges.

This is just the latest blow for Google. In January, the US Justice Department filed a lawsuit and also called for a breakup of the company.

Here at VivaTech in Paris, you'll see all the big tech giants including Google, and it is where I caught up with Bruno Le Maire, France's finance

minister. He says he supports the EU's findings.

BRUNO LE MAIRE, FRANCE'S FINANCE MINISTER: I think that we are just sticking to the rules and the commission as a whole to be sure that every

private company is abiding by the rules. So I fully support the work that is currently done by the Commission.

Innovation does not mean that you should get rid of any old rule.

STEWART: The EU Commission has submitted its findings in writing to Google, according to officials and that kickstarts a legal process which could end

in billions of dollars of fines and a breakup of the company.

Google says it doesn't agree with the EU's findings and they will respond accordingly.

Anna Stewart, CNN at VivaTech in Paris.

(END VIDEOTAPE)

GIOKOS: And the EU isn't stopping there with respect to tech regulations. European lawmakers have approved the Artificial Intelligence Act. It is a

step forward, legislating how and where it can be used.

The new rules include bans on biometric surveillance, as well as facial and emotional recognition, police use of biometrics would be strictly

constrained.

The Act would require developers to register their AI models and to label AI generated content.

Clare Duffy joins us now. She's in New York for us.

Clare, this is a conversation I think we've had quite intensively over the past few months, right, as we start to see this huge quantum leap with

regards to AI.

How important is this regulatory framework in terms of managing the effects of AI? Do you think it's going to have the desired effect?

CLARE DUFFY, CNN BUSINESS WRITER: I mean, Eleni, this is huge. This would be the first major regulation of AI and this comes at a time when you have

companies racing to implement AI tools into their products to make AI available to consumers, but at the same time, you have leaders in this

industry who are saying that AI could cause everything from the extinction of humanity, which feels a bit far out, but also real concerns about

election misinformation, for example.

And so this is huge and this regulation by the EU could act as a model for lots of other governments who are also trying to figure this out right now.

GIOKOS: Yes. I mean, it's such a good point. Look, we've heard the warnings on AI. You know, even from tech experts, we've seen the petitions coming

through as well.

This is going to be in the EU. What about as seeing other regulatory frameworks emerging that will be sort of looked at from a global level?

DUFFY: Yes, I mean, again, I think this could offer a really good example, a really good model of where to start. This EU bill targets some of the

biggest concerns, some of the highest risk use cases of AI and I was really struck by the purpose that the EU laid out in this draft bill.

As I was reading it earlier, I think we can pull it up, but it says that the EU wants to promote the uptake of human-centric and trustworthy AI

protecting health, safety, fundamental rights, democracy, rule of law and the environment while supporting innovation.

And so these are really huge ambitions, but I do think this offers a really good sort of framework for how to think about all of the different types of

risks that AI can present.

GIOKOS: Yes, a really good point. Clare Duffy, great to have you on. Thank you so much.

Well, Ukraine is now on the offense and its efforts to retake territory or gradual amid intense ground fighting. Kyiv says it has had partial success

and advances on Wednesday towards Bakhmut and Zaporizhzhia.

These battles happening as Russia unleashed a wave of missile attacks. Ukraine says missile strikes killed three people in Odesa and three others

died in the Donetsk region.

CNN's Frederik Pleitgen and his crew followed Ukrainian troops on the frontlines in southeastern Ukraine. He shows us what they're facing and why

they're confident of victory.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Ukrainian forces firing at Russian troops holed up in Blagodatnoye in south

Ukraine. This video the brigade says shows the Russians making a final stand here. Much of the area near the frontlines deeply scarred by combat.

[15:25:00]

PLEITGEN (on camera): This is the area of Ukraine where the heaviest fighting is currently taking place and you can see what it has done to a

lot of the buildings and the cities and villages around this area and that fighting is set to get even worse.

PLEITGEN (voice over): We are with the 68th Jager Brigade, which has been making important gains here. The soldiers, confident and grateful for US

supplied gear.

(UNIDENTIFIED MALE speaking in foreign language.)

PLEITGEN (voice over): "A lot of the times, it saved my life," he says. "It saves our lives every day from shrapnel, shelling, and bullets." But some

of the vehicles have already been lost and the Russians continue to fire back. Constant artillery shelling and even air strikes too close for

comfort as our crew had to duck for cover.

Still, the deputy brigade commander says his soldiers are just getting started.

(UNIDENTIFIED MALE speaking in foreign language.)

PLEITGEN (voice over): "Our counterattack will definitely be successful," he says. "We believe in victory. We are moving forward towards our goal, we

are advancing."

On this part of the frontline, the Ukrainians believe they have the gear, the manpower, and the determination to advance far into Russian-held

territory.

Fred Pleitgen, CNN, Velyka Novosilka, Ukraine.

(END VIDEOTAPE)

GIOKOS: America's top diplomat is heading to Beijing this weekend to try to cool tensions between the US and China, but a phone call today between

Antony Blinken and his Chinese counterpart highlights just how difficult the job might be. All the details up next on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[15:30:03]

GIOKOS: Welcome back. And returning to our top story. The Fed has held rates steady for the first time in more than a year. It indicated more rate

rises are coming which sent markets sharply lower. Stocks started climbing during Jerome Powell's news conference. He indicated there's been progress

bringing down inflation.

As you can see, the Dow is down 240 points. He also said there's still ways to go. Powell has just finished speaking, he said now that the Fed is

closer to its terminal rates, it is time to slow down the pace of hikes.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIR OF THE FEDERAL RESERVE OF THE UNITED STATES: Speed was very important last year, as we get closer and closer to the destination

and according to the SCP we're not so far away from the destination in most people's accounting. It's reasonable, it's common sense to go a little

slower just as it was reasonable to go from 75 basis points to 50 to 25 at every meeting.

And so, the committee thought overall that it was appropriate to moderate the pace, if only slightly.

(END VIDEO CLIP)

GIOKOS: Jerome Powell there. The U.S. Secretary of State Antony Blinken will travel to Beijing this weekend as Washington tries to thaw relations

with China. In a phone call ahead of the trip, China's Foreign Minister urged the U.S. to stop meddling in its affairs. Tensions have been building

again in recent weeks over two military-related incidents, Blinken postponed a planned trip to Beijing in February due to a Chinese spy

balloon transiting in the U.S.

Alex Marquardt is in Washington, D.C. for us. It is important to get the U.S. and China around the table, engaging in conversation. And as we've

said now, and we've seen, you know, Antony Blinken trying to get to speak to his Chinese counterparts as well. Is this going to be the meeting that

could start shifting the relationship as it stands right now?

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: It could start shifting in, Eleni. But certainly, the state department of the Biden

administration not raising any kinds of expectations about anything concrete that will come out of this. That phone call between Secretary

Blinken and his counterpart just yesterday, I think really embodies the tone of what Secretary Blinken is walking into in Beijing here.

The foreign minister saying stop interfering in our internal affairs. So this in the administration's view is really a trip about getting those

lines of communication. Those vital lines of communication back open. The - - there was a call previewing the trip earlier today by a top Trump -- by - - excuse me, Biden administration officials, saying that this is going to be really a crucial series of engagements aimed at preventing the

possibility of the U.S. and China veering mistakenly into potential conflict.

Of course, the last meeting, the last trip by Secretary Blinken to Beijing was cancelled by the U.S. side back in February because of that Chinese spy

balloon that was in that moment crossing the United States. The U.S. saying at the time that it would not have been productive for the Secretary of

State to visit Beijing. And in that time, the tension really has gotten only worse, particularly on the military front.

In the -- in the past few weeks, we've seen some very close incidents between the Chinese and American Air Forces above the South China Sea.

We've seen a Chinese warship cutting off a U.S. Naval destroyer in in the Straits of Taiwan. We've also seen recent reports about Chinese spying that

has been taking place over the past few years on spying of the United States from Cuba. So that is the backdrop against which Secretary Blinken

is heading to Beijing.

Also, the cancellation or rather the refusal by the Chinese for a trip or a meeting between the Secretary of Defense Lloyd Austin and his Chinese

counterpart at a summit in Singapore just a few days ago at which the head of the Chinese defense ministry said mind your own business. So, they will

of course be discussing some very big topics like Taiwan and Ukraine. But at the same time, the State Department's saying, do not expect major

results or major outcomes from this trip, Eleni.

GIOKOS: Yes. I have to say just hearing you speak, I mean, this sounds like a really big agenda. There's just so much on the table, right? It's not

just about the U.S. and China relationship. It's not just about the, you know, the miscalculations. The issues that we've seen on the spy balloons,

whether we've seen the military issues coming through as well. But there are global issues as well, which will be on the table.

But conversation is important right now. Something perhaps that has been lacking since the beginning of the year.

MARQUARDT: Yes. You're going to see the two countries of course, speak about bilateral issues, regional issues, and then global issues. And the

topics that we have been told will be raised and discussed between U.S. and Chinese officials are the Taiwan issue which of course China wants the U.S.

to stay as far away from as possible they see it as an internal issue.

[15:35:05]

The U.S. very keen to talk about Chinese support for Russia in the war in Ukraine, of course, the U.S. has been watching very closely to see what

kind of support China has been offering Russia to date. It has been non- lethal aid, of course, the U.S. very concerned that at some -- that at some point, it could become lethal aid. There's also the question of prisoners,

which the U.S. says are wrongfully detained in China.

Three American citizens who they say are wrongfully detained by China. Those are some of the major topics -- concrete topics that we know

officials are going to be discussing. This all happening, of course, on the diplomatic front. We also know that is -- it is a big priority of the

administration to get the two militaries speaking again. It has been quite some time since the Chinese and U.S. militaries have had face-to-face

meetings.

And that is going to be a major priority. We have seen these very close calls in the past few weeks. Of course, the U.S. keen that kind of thing

stop happening. Eleni?

GIOKOS: All right, Alex Marquardt, thank you so very much. Great to see you. Well, here in the UAE, two carriers, Etihad and Emirates operate from

hubs just an hour apart. Their interline partnership has revived the perennial question of a possible merger. In a recent interview, Richard

Quest asked Etihad's chief executive Antonoaldo Neves about what the future holds.

(BEGIN VIDEOTAPE)

ANTONOALDO NEVES, CHIEF EXECUTIVE OFFICER, ETIHAD: I think there's going to be a market for everyone. And we are today, the only airline in the region

that still have flying rights to add capacity (INAUDIBLE)

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Now to the tough bit. I saw recently, you announced recently, a very limited code sharing agreement

with Emirates that basically allows in out -- in and out of one of the other airport, open jaw. Hard to find. This is me, not us saying this. This

is the first move to joining the airlines together into one carrier.

NEVES: I think that's pushing (INAUDIBLE) too far. Right? I mean, it's so important for us, you have partners. I mean, we're strengthening our

relationship with Air France-KLM. We're strengthening our relationships with JetBlue. I mean, Emirates is there, I mean, our networks so small

compared to Emirates. That the best thing we can do is have an interline agreement with Emirates so that our customers can go back and forth which

is need for instance, where you fly only one flight a day using Emirates as well.

So it's just -- I mean, a culture agreement and interline agreement like anyone else we have. Of course, there's a lot of symbolism behind it,

right? But it's no more than that. And we're very fortunate to be in a situation today where these two carriers can sit on the table and just say,

look, what can we do to improve the customer experience? What can we do to --

(CROSSTALK)

QUEST: What can we do? Merge.

NEVES: No.

(CROSSTALK)

QUEST: The thing that surprised me was that the rulers did not take the opportunity of the pandemic, in the post-pandemic world to do the obvious

thing and put the two together.

NEVES: Well, the catchment areas are a bit different, right? I mean, if you see what's going on in Abu Dhabi is amazing. I truly believe --

QUEST: I'm not suggest -- and I realize this is above your paygrade. I'm not suggesting that you don't still have planes -- an airline out of Abu

Dhabi. It's the capital. It's entitled to have routes to London, Washington, New York, et cetera. But what you don't need is two-airline

infrastructures. You can operate as one carrier with two hubs. Which sir, as you know, with the new app, whatever gets built, the Emirates --

NEVES: It's coming.

QUEST: It's right in the middle. It's right in the middle between the two.

NEVES: Yes. But I can give you an example. JFK and Newark. I mean, I know its massive. It's a massive city, right? But I mean, Dubai today is the

number one destination in the world. Right? For leisure. So, why can't we replicate what United has in Newark and American has in JFK or Delta has in

JFK. You see what I mean? So, I see space for everyone, Richard. I see space for everyone. I mean, yes, of course.

I mean -- I mean, the division is -- the GDP vision is growing five to seven percent per year. Every time you get that kind of GDP growth,

aviation grows two times. I don't see any reason why in the next 10 years, right? This is not going to be tripled in size. Honestly, I mean, think

about that. Go back 20 years in time.

QUEST: You're right. But what it -- but it makes is no economic sense to have two airlines essentially doing the same thing 100 miles apart.

[15:40:08]

NEVES: I agree with that. We cannot do the same thing. In that we agree. I think we have -- we have to do different things. And we have to play

differently. I mean, the -- I mean, we're investing so much in becoming so efficient that we're going to be able to compete an efficiency level that I

hope my competitors will not match.

(END VIDEOTAPE)

GIOKOS: Well, that's for QUEST MEANS BUSINESS. I will be back at the top of the hour as we make a dash for the closing bell. Up next, Marketplace Asia.

I'll see you soon.

(COMMERCIAL BREAK)

[15:58:24]

GIOKOS: Hello. I'm Eleni Giokos. It is the dash to the closing bell. And we're just two minutes away. The Federal Reserve is holding rates steady

for now. It also indicated rates may need to climb more than previously thought. You can see markets fell sharply around 2:00 p.m. when the Fed

announced its decision, you can see that dip right there. The S&P 500 is flat currently. The NASDAQ struggling to stay in the green. Dow Jones is

down 260 points.

Mixed day it seems as we head towards the closing bell. Now former Fed Vice Chair Alan Blinder talked us through the Federal Reserve's rate decision.

He said Jerome Powell is walking a tightrope.

(BEGIN VIDEO CLIP)

ALAN BINDER, FORMER FED VICE CHAIR: At this stage in the tightening cycle, differences between hawks and doves are starting to emerge. And Jay Powell

has a very difficult balancing act. And I think this statement and the SEP together are an illustration. You give something to the doves, which is you

don't raise interest rates but you give something to the hawks which is you pop up the oil, let them pop up the dot plot without any resistance. And

that's of course what the market is reacting to.

(END VIDEO CLIP)

GIOKOS: All right. I want to check in on some of the biggest winners and losers of the day. Nike leads the way. Intel riding the A.I. wave. Boeing

and Disney are down rather sharply. UnitedHealth is at the bottom. It says more people are getting surgery after pandemics slow down. All right. Those

are the numbers as you can see as they're coming through.

That is your dash to the closing bell. I'm Eleni Giokos.

[16:00:02]

As you can hear, the closing bell is now ringing on Wall Street in just a moment and we've of course got "THE LEAD" with Jake Tapper starting now.

Thanks so much for joining us.

END