Transcript for ABC News Live: Fed hikes interest rates again
[AUDIO LOGO] - Hello, everyone. I'm Terry Moran, and here are some of the top headlines, starting with breaking news. Two Americans who were being held by Russian-backed forces in Ukraine have now been released following an intervention from the Saudi Crown Prince Mohammed bin Salman. That's according to the Saudi Foreign Ministry. These Americans are both military veterans from Alabama. They were reported missing in Ukraine in June after they had volunteered to help Ukraine fight the Russians. The men's families say they are currently in the custody of the US embassy in Saudi Arabia now.
And former Minneapolis police officer Thomas Lane, who pleaded guilty to aiding and abetting the second degree manslaughter in the killing of George Floyd, was sentenced to three years in prison today. Lane is already serving 2 and 1/2 years on federal charges for violating Floyd's civil rights.
And protests are intensifying in Iran after a woman was killed by the nation's morality police because she wasn't properly wearing an Islamic headscarf known as a hijab. Iranian women are waving and burning their hijabs in protest, some even cutting their hair in public. The US has called on Iran to end its, quote, "systemic persecution of women."
And more breaking news here on ABC News Live. Any moment now, the Federal Reserve is set to hike interest rates again. This will be the third time it's done so since June to try and slow that soaring inflation. For more, let's bring in ABC News Business Reporter Alexis Christoforous and ABC News Elizabeth Schulze.
First, Alexis, we know you're digging through the data right now, so is Elizabeth. And we're going to start with you first because I guess this has come out. So, Elizabeth, this is likely to be the fifth rate hike so far this year. Explain what the Fed is watching, what's going on.
- Well, Terry, this is another aggressive move by the Federal Reserve to try to cool down some of those red hot consumer prices. The Fed is raising rates at a historically rapid pace in very high amounts because, simply put, it's trying to make borrowing more expensive for consumers and for businesses, basically slow down demand in the economy, slow down all the money that's out there in the economy to bring down these prices.
And the Fed is saying that this is the number one priority right now. So this latest interest rate increase is a way to say that they are serious about this fight against inflation. In fact, they're so serious about it, Terry, that they're saying they might be willing to tip the economy into recession to slow down other sectors of the economy, even risk job growth in order to try to get inflation down. And that's one of the key things of this decision today, Terry.
- All right, so that's the background. Alexis, what'd they do?
- They did they expected, Terry, and handed us the third straight 3/4 of a percentage point rise in short-term interest rates. This was a move that was widely expected. Some actually thought the Fed might even get more aggressive and raise rates by one full percentage point. But clearly here, the Fed staying on course, aggressively raising interest rates to try to rein in inflation.
This is the fifth rate hike of the year. And so far, Terry, it is not having the desired effect because inflation remains stubbornly high at 8.3% in the month of August, the highest we've seen since the early 1980s. And yes, while gas prices have come down, and that is certainly welcome relief for Americans, we are paying more for just about everything, including food, including rent, clothing, you name it.
- So why, Alexis? This is the hammer that the Federal Reserve has to slow down the economy. This is the third 3/4 of a point interest rate raise in the last few months. Why isn't it having an effect? Is this an economy that's unusual? Or are they just going to keep hammering until it comes down?
- There are a couple of reasons why this economy has remained so strong in the face of those higher interest rates because coming into this high interest rate environment, we have a very strong job market, which remains very strong. The unemployment rate continuing to be near a 50-year low right now. And despite all of these higher prices, consumers continue to spend money. Perhaps we're not spending on the things we were just a few months ago.
We're spending more on dining out, and travel, and experiences more than we were on things during the height of the pandemic. But those two things-- the higher consumer spending and the strong job market-- continue to be pillars of this economy. So these interest rate hikes as they begin to filter through the economy may be taking longer this time around than they would during a scenario where perhaps the unemployment rate was very high.
- Got it. So there's some good news mixed in on the employment numbers, but that is contributing to the roaring economy in some ways. So, Elizabeth, what about the impact on the average American of these interest rate hikes, especially this one today?
- Well, Terry, one of the most obvious places that we are seeing these rate hikes show up for consumers is in the housing market. Mortgage rates tend to rise as overall interest rates rise. So so far, we have seen mortgage rates for a 30-year fixed mortgage now at above 6%.
That is the first time they've been at that level since the 2008 financial crisis. It's double where they were at the start of this year. And, Terry, I've been talking with people out there who are trying to buy a home, who are actually cutting down their budgets or making other trade-offs as they are feeling the effect of these higher mortgage rates.
- And, Alexis, one of the questions that I have is, what is the mood on Wall Street? What are corporate executives, investors, thinking about the direction of this economy?
- Great question. I'm actually looking at the numbers right now, and the Dow, the NASDAQ, the S&P, they were all higher heading into this decision, and they turned on a dime and are all lower now. And the fear is for Wall Street, for corporate America, is that these aggressive interest rate hikes will push the economy into a recession and will raise the unemployment rate. Right now, we see the Dow at its lowest level of the day, off 267 points. Some are saying if we do fall into recession, it should be a mild one and a short-lived one.
Nevertheless, we're starting to see companies now lay off workers. In just the past few weeks, Gap, Walmart, Stitch Fix among the retailers saying, you know what? Business is starting to slow down, and we need to start shrinking our payrolls. And even Fed Chief Jerome Powell has said we're going to have to see the unemployment rate rise a little bit more to reach that inflation target of 2%, which they're looking out for.
- So more people need to lose their jobs, I guess, to get on top of inflation. That's the brutal math of the economy at this point. So, Elizabeth, let's get more into these interest rates and the connection that they have to home ownership. How is this impacting people looking to buy a home?
- Right. You know, Terry, so really, the bottom line here is it's more expensive if you're trying to buy a home, especially if you're trying to get a new mortgage right now. We see it in housing. We see it in credit cards. We see it in autos.
But particularly for a new mortgage right now, because of those higher mortgage rates across the board, you're going to be paying more. And that means that you may have to downsize. It may means you have to make other sacrifices. Some of the homebuyers I've been talking with really gave detailed information to us about how many sacrifices they are making. Take a listen.
- It was frustrating, and it did add-- I don't know-- $300, $400 to the potentially monthly costs to our mortgage.
- We had to give up on some of the things we wanted, like a garage, less square feet, and even farther out from DC than we had originally planned.
- Well, if there's nothing that is affordable, then I will just wait.
- So this is a really important point here, Terry, a lot of buyers still stuck on the sidelines. We've talked about how the housing market prices are surging, just as a lot of prices in the economy are surging. Rent is surging, food, groceries.
But housing prices have been extremely high over the past couple of years. And when you factor in those higher interest rates, it just makes it that much more unaffordable for someone who hasn't owned, who is trying to own. And this is something that really is getting felt across the economy right now, Terry.
- Absolutely. Elizabeth Schulze, Alexis Christoforous, thanks very much. And you can catch more of Elizabeth's reporting tonight on ABC News Live Prime, starting at 7:00 PM Eastern. And now, to breaking news out of New York.
The state attorney general there, Letitia James, announced a $250 million civil lawsuit against Former President Donald Trump, three of his children, and his family business. The lawsuit accuses the Trump family of grossly inflating the former president's net worth by billions of dollars, cheating lenders, and submitting misleading financial statements.
- Claiming you have money that you do not have does not amount to the art of the deal. It's the art of the steal. And there cannot be different rules for different people in this country or in this state. And former presidents are no different. And so today, we are making good on that promise, on our commitment, because no one, no one is above the law.
- New York State Attorney General Letitia James there. For more, let's bring in ABC News Senior Investigative Reporter Aaron Katersky outside the AG's office in Downtown Manhattan, Investigative Reporter Katherine Faulders as well as Jeff Robbins, Former Chief Minority Counsel to the US Senate permanent subcommittee on investigations, all the experienced people looking at investigations like this. Aaron, first, what more are we learning about this civil lawsuit?
- This is a civil lawsuit, as you say, so there are no criminal charges associated with it, Terry, but it really has to sting Former President Trump because it goes to the very heart of why he ran for president in the first place-- on the back of his purported business acumen. And here, the attorney general in New York, Letitia James, after a three-year investigation, said his business for the last 20 years has been a fraud, based on fraudulent and misleading financial statements for nearly every major property in his real estate portfolio, from golf courses to apartment buildings. And the values of those things were so grossly overstated, James said, that it improperly inflated Trump's net worth by billions of dollars and deceived banks into giving him loans on more favorable terms than he otherwise deserved.
- So, Katherine, about these assets, some of them among the most famous in the world. You could make the case that Trump's real genius is for marketing more than anything else. But what kind of assets are we talking about that have been so inflated that they, according to the attorney general of New York, that he should be sued for it?
- So look, you heard her reference the apartments, for example, Mar-a-Lago, which has been in the news lately. She mentioned 23 assets. The suit mentions 23 assets that were grossly inflated and used on Trump's financial statements over the course of 10 years. She specifically said that there were more than 200 specific examples of false and misleading assets, asset valuations, used on these financial statements. And that she alleges this was, as Aaron pointed out, over the course of 10 years.
And really, and Aaron mentioned this, what has to sting for Trump, even though there aren't any criminal charges, is that she was saying that he's representing that he has more money than he has, that he simply just doesn't have this money that he's claiming to have to get more favorable terms on loans and that type of thing. Now, she also said they use different methods, different valuation methods for various different properties to determine what the terms would be. So again, has to sting for Trump. But also, she said that they were making criminal referrals to the IRS and the Southern District of New York as well.
- Well, that would be a different investigation should it happen. Jeff, on this one, what's at stake for Former President Donald Trump?
- Well, for one thing there's a request for forfeiture of $250 million. That's not chump change. That's pretty much a weekend package at Trump Towers. There's a seeking of an order barring the Trump family from doing business, from owning real estate.
And as has been pointed out, there is going to be, there has been, there is being right now, a criminal referral. Because what this 200-plus page complaint is is a compendium of allegations of mail fraud, tax fraud, wire fraud, insurance fraud, bank fraud, the very stuff that may be criminal violations under the federal criminal code. And that means that the Trump family, those with whom they work, all of them, including, of course, the former president, may be exposed to direct criminal liability, in the case of the former president, of yet one more kind. So the consequences are potentially very severe.
- And it looks like it's a suit that has been brought after a lot of homework was done. Aaron, how is the former president responding to all this, the investigation which found all of these allegations, and what are the next steps that are going to happen?
- It's been a three-year investigation that Trump has fought every single step in various courts. And finally, it ends up here with the allegations laid out in a complaint that runs more than 200 pages. Trump calls it yet another witch hunt. He calls the attorney general, Letitia James, racist. Says this is part of a political agenda.
But as outlined, there are very real potential consequences here and referrals to criminal prosecutors. Although the standard, Terry, in under New York law is a lot less burdensome for Letitia James on the civil side. Under the business fraud statute she's working with, she does not have to prove intent and does not have to necessarily prove the kind of harm that a criminal prosecutor could.
- And she doesn't have to prove anything beyond a reasonable doubt, which is the criminal standard, so it's a different kind of case but a very serious one. And, Aaron, Katherine, and Jeff, thanks very much for helping us out with it. Well, coming up, President Biden is not holding back. He's blasting Vladimir Putin's invasion of Ukraine at the United Nations today.
- This war is about extinguishing Ukraine's right to exist as a state, plain and simple.
TERRY MORAN: And we'll speak with a member of Ukraine's parliament live right after this break.
Welcome back. President Biden delivered a blistering speech at the United Nations today, slamming Russian President Vladimir Putin, accusing him of making, quote, "overt nuclear threats," unquote, violating the core tenets of the UN Charter and seeking to wipe Ukraine off the map.
- This war is about extinguishing Ukraine's right to exist as a state, plain and simple, and Ukraine's right to exist as a people. Whoever you are, wherever you live, whatever you believe, that should make your blood run cold.
- That speech comes just hours after Vladimir Putin, in a rare address to the Russian people, announced he was ordering a partial mobilization of military reservists to help fight in Ukraine, and he suggested he's willing to use nuclear weapons to defend Russia. ABC News White House Correspondent MaryAlice Parks and member of the Ukrainian parliament, Kira Rudik, join me now. Kira, thank you very much for being with us. So what did you make of President Biden's speech?
- Well, the support for Ukraine from the United States will continue. And from Ukrainian side, we will continue fighting Russians. It's actually very flattering for us that after Putin said that he will take Ukraine at two or three days, in seven months, he has to announce partial mobilization to continue fighting, to continue trying to destroy us. We will not allow that to happen.
No matter how many Russians will come to our land, we will kill all of them, and we will win, and protect our right for our freedom, for the freedom of Europe, and for the freedom of the free world. We are acting as a shield for the whole democratic world, and we will continue doing that. But we sorely depend on the support from our allies, and we would need that to continue to get us weapons to fight, and to get us financial support to exist and support our country.
- It has been amazing to the world, watching what the Ukrainian people have done, standing up to this invasion. And I understand you were protesting outside the United Nations today with fellow Ukrainians. Why? What's your message you're trying to send to the United Nations and to Russia?
- Well, our goal right now is to kick Russia out of the United Nations. We are persuaded that they got the place in the United Nations unlawfully. They did not vote and did not accept UN Charter, and that is why they broke it at least 14 times over the last 30 years.
So my question is, if all the good international initiatives are blocked by Russia in the UN Security Council, so why to continue having it there? Because there are at least two important initiatives for the whole world-- making the largest nuclear plant in the whole Europe a neutral zone and stopping Russia from fighting there, and second is making Ukrainian ports a neutral zone to be able for us to continue to provide the grains for the rest of the world. So both of these initiatives are blocked by Russia.
All the attempts of the United Nations to pass them have failed. So my question to the democratic world is, why do you want to be still united with Russia? Why the United Nations, whose aim is to protect the peace in the whole world, still has Russia as a part of its state?
- There is talk about changing the Security Council. In fact, President Biden did mention that. MaryAlice, those were strong words in general from President Biden. We also saw him speaking after his address with UN Secretary General Antonio Guterres. Do you know what they were discussing there?
- Terry, we don't know specifics, but I imagine exactly this, like you said, proposed reforms. There's growing concern and frustration, you hear it there, that the UN just cannot deliver on its mission in its current state with its current rules. And that unless the Security Council is reformed, unless Russia's role on that Security Council is changed, the UN can't live up to its charter and its mission.
You heard the President during his remarks talk about how the United States was formally in favor of expanding the Security Council, but there are major questions about whether Russia should lose its right to a veto. And of course, you heard the President saying that with this invasion of Ukraine, Russia has in every way rejected and defied the UN Charter. So I think that the idea of reforms has never been so much at the forefront of the conversation as it is right now.
- It might be hard to accomplish. But, Kira, I was in Ukraine a couple of times this year and struck, as everyone is, by the spirit of the people, by the morale, the iron will to stand up and defeat Russia. But Ukraine has taken terrible losses as well. What is the mood there at this point as the war grinds on now for almost the entire year?
- We are extremely motivated because of the recent counteroffensive Ukrainian forces. We know that right now, the whole world sees what we have been telling everyone for the last six months. If we are provided with enough weapons, we are able to push Russians back, and we will push Russians back.
Right now, we are liberating more and more Ukrainian territories, and it is critically important to do that before the winter hits because it will be extremely hard to fight during the winter. And this is why we are calling for more weapons, more support, because you see the results, you see the effects if we are facing Russian forces not empty-handed. We are pushing them back. We are liberating our country, and this is fantastic. It makes everybody so, so, so motivated.
- It is, as I say, a remarkable moment in the history of Ukraine, certainly, but also in the history of the world. MaryAlice Parks, Kira, thank you very much. Well, coming up, Hurricane Fiona is gaining strength and on the move after wreaking havoc in the Caribbean. The latest from our Victor Oquendo on the ground in Puerto Rico when we come back.
Welcome back. Hurricane Fiona is on the move after hammering Puerto Rico, the Dominican Republic, and Turks and Caicos. Victor Oquendo has the latest from Puerto Rico.
- Hurricane Fiona is a monster of a storm, becoming a Category 4 hurricane with winds of 130 miles per hour as it marches north. Its wrath leaving behind a deadly trail of destruction. The US Department of Health and Human Services declaring a public health emergency in Puerto Rico as the flooding impact worsens. The now Category 4 killing at least four people in Puerto Rico, dropping nearly 30 inches of relentless rain in parts of the US territory. The damage surveyed from Coast Guard helicopters showing catastrophic remnants. This car nearly submerged in polluted water.
All of Puerto Rico lost power when Hurricane Fiona hit. This crew from LUMA Energy is working on repairing some damaged power lines in San Juan. Take a look up at the bucket truck. They tell me this is happening across the entire island. The company expects a large part of the island to have electricity back by today, but 81-year-old Minerva Marquez Villalongo is patiently waiting.
- [SPEAKING SPANISH]
- Everything she owns now she's moved it up here into these bags. She had to protect it from the floodwaters that came inside of her house. Fortunately, she has her daughter she can stay with.
- All right, Victor, thanks very much for that. I'm Terry Moran. Thank you for joining us. Remember, ABC News Live is here for you all day with the latest news, context, and analysis. And remember, ABC News Live is available on all of your streaming devices, plus the ABC News app and on abcnews.com. News continues right after this.
This transcript has been automatically generated and may not be 100% accurate.