Federal Reserve Interest Rates, Reports Reveal Iran War Costs, Kennedy Center Closure

The Federal Reserve is expected to raise interest rates today for the first time in three years. The Iran War pushed inflation higher, how much more expensive could borrowing get? I'm Leyla Faldin, that's Amartina's, and this is up first from NPR News. Two new reports put the cost of the Iran War above $30 billion. They also detailed the damage to US bases from Iranian attacks and shortages of key weapons. Did the reports reveal that the Pentagon has not? And the Kennedy Center Board says the historic arts complex in dire condition and voted to shut it down. The decision came just after a judge that President Trump's name cannot go on the building. And Trump says he won't make renovations unless that changes. Stay with us as we got the news you need to start your day. The Federal Reserve is expected to raise interest rates today. Prices have been climbing faster than wages in recent months, so the typical worker has been losing ground. Inflation has been higher than the central bank wants it to be for a long time. MPR's Scott Horsley joins us now. Scott, it's been more than three years since the Fed has raised interest rates. Why do it now? A, the US War with Iran has rekindled inflation, pushing oil and gasoline prices higher. The Congressional Budget Office warns the war is likely to keep putting upward pressure on prices into next year. Just today, AAA said the price of diesel had jumped to another record high, $6.31 a gallon. And Fed Chairman Kevin Worsh renewed his promise to get inflation under control when he spoke last month in Jackson Hole, Wyoming. While higher interest rates won't automatically bring lower prices at the gas pump, raising rates is the Fed's primary tool for fighting inflation. And forecaster Omar Sharif says if the Fed doesn't use that tool after Worsh's hawker speech last month, the Fed risks losing credibility. And to think it's time to either raise rates or just sell the market, we don't play out raising rates. It doesn't really matter what happens with inflation, we're just going to sit tight. Investors are definitely anticipating that the Fed will deliver on Worsh's hawkish comments this afternoon. Odds and market odds of a rate hike are north of 90%. OK, so that's the answer to why on raising interest rates. Next question, Scott. How high? Respect to the raise its benchmark interest rate by a quarter percentage point today. And then beyond today's meeting, we'll see what happens. The central bank has two more meetings on the calendar this year. It's possible the Fed could push rates higher, especially if inflation remains elevated. But Sharif suspects Worsh will temper any rate hike today with a cautious news conference. So investors don't walk away thinking that additional rate hike certainly baked in. In addition to the chairman's news conference, we're going to get a series of forecasts this afternoon from the other members of the Fed's rate setting committee indicating where they think interest rates might be going. Back in June, the average Fed policymaker was projecting only one quarter point rate hike this year, followed by a rate cut next year. We'll see if those forecasts have changed now that we've had another burst of energy-related price hikes. Those forecasts got how reliable are they? Whether or not a road map and they're not a promise, they're really just kind of the series of best guesses of where the individual committee members think rates might be going based on their personal views of the economy. Obviously, Worsh and tariffs and other events can change those views and that's the outlook for interest rates. By the way, Chairman Worsh will probably not offer a forecast today. He did not make one in June and he has generally discouraged any kind of forward guidance. Worsh thinks that can tie the Fed's hands and leave policy makers with less room to maneuver. Not all of his colleagues are on the same page, however, Fed Governor Chris Waller spoke at a Reuters event earlier this month and Waller said he generally doesn't think it's helpful for the Fed to try to surprise people. If you were in the state transportation department, you were going to close down three lanes of a highway. You cannot say a word and let people just compiling into this construction zone. Or you can start giving them signs way in advance saying, "Look, there's construction ahead." I think we all would prefer to get the information prior to make better decisions. So we'll see how the traffic cones line up this afternoon. While the Fed said short-term rates, longer-term interest rates are set in the bond market and they've been moving up. That's making it more expensive for anyone trying to get loaned to buy a house or a car or finance or growing business. That's MPR Scott Horsley. Scott, thanks. You're welcome. All right. Scott just mentioned one report showing that the war with Iran drove up prices for consumers in the U.S. Now we turn to new details about the cost to the government. According to that report and one other, the Iran war has caused damage to U.S. bases, shortages in American weapons, and has a price tag well over $30 billion in climbing. For more, we're joined by MPR National Security Corp. Greg. Mairee? Greg, who's responsible for these reports? Yeah. One of them comes from the Congressional Budget Office and the other from the Pentagon's Inspector General, and both of these are independent, nonpartisan agencies. These reports detailed the extensive damage to U.S. bases and military equipment like the U.S. naval base in Bahrain. And this is something the Pentagon has really not wanted to talk about. The Pentagon Inspector General said the Iranian strikes damage and destroyed, quote, hundreds of buildings and structures at U.S. bases, and it listed eight countries in the region where this has happened. So around 60 U.S. aircraft have been damaged or destroyed. Now about half of these are reaper drones and they cost at least $30 million a piece, but also around a dozen refueling aircraft and several fighter planes. And eight, we should remember that in past wars, the Pentagon held multiple briefings every week. We might get this kind of information over time, but briefings have been extremely rare under Defense Secretary Pete Hegseth. But they tend to be pretty much along the lines of what we've been hearing. The Congressional Budget Office put the cost so far at $38 billion. The Pentagon Inspector General came up with $33 billion. These numbers are just above and below the $37 billion that Hegseth gave back in July. And all three are actually using slightly different cut-off dates, so they do seem to be pretty much in the same ballpark. Now they do not count the cost of rebuilding these damaged U.S. bases. The CBO said it tried to get this information, but the Pentagon did not respond. And the Congressional Budget Office says if the war continues at roughly the same pace as the past few months with a large U.S. presence and periodic fighting with Iran, this is going to add an additional $2 to $3 billion in monthly costs. Now does the Trump administration accept those findings? Yeah, they really haven't said that much since the reports came out. The president did take to true social before they came out. And he said that the U.S. was, quote, "producing more exquisite and elite weapons that at any time in our history." But both these reports noted that the U.S. was using many patriot interceptor missiles that shoot down Iranian ballistic missiles. The CBO says the military is burned up to two-thirds of the patriots, and it could take up to five years to replace them. The U.S. still has large stockpiles of many weapons, but the war has put a strain on some important munitions, particularly high-end defensive weapons. By the way, Greg, one more thing. I mean, how is the U.S. funding this war? Well, the Trump administration is asking for an additional $67 billion to cover the Iran war and pay for what it says there are other urgent military needs. Now, Congress hasn't acted, and it may not act before the November elections. As our colleague Scott Horsley noted a moment ago, inflation remains elevated, and the Congressional Budget Office says the Iran war is one key reason. It's also predicting that inflation will be about a half-percentage point higher up until the first part of next year than it would have been without the war. All right, that's NPR's, Greg. My regret, thanks a lot. Sure thing, eh? The Board of the Kennedy Center has voted to shut the arts complex down. Shortly before that vote on Tuesday, a federal judge ruled that the Board cannot add President Trump's name to the exterior of the building or its grounds. There are still a lot of questions about what happens next. Joining us to help walk us through these questions is NPR Culture Correspondent Anastasia Silkas. So walk us through the timeline of what happened yesterday. So federal judge Christopher Cooper's decision came down around noon, and then the board meeting started at 12.30 pm. There was only one item only agenda to vote whether or not to close the center. The board says the centers in dire circumstances both financially and structurally. The board meeting took place by Zoom and a source with close knowledge of the meeting told me about it, but asked not to be identified because this person had not been authorized to speak to the media. This person said there was a very heated back and forth between President Trump, who is now chairman of the center, and represent Joyce Beatty, the Democrat from Ohio, who is an ex-officio member of the board, and Beatty sued Trump in the rest of the board. Anyway, Trump and Beatty got into it and the board voted for the shutdown. Within a couple of hours of that vote, though, Trump had posted about the court ruling on his truth social platform, and he vowed publicly not to go ahead with the renovation unless his name is on the building. So on that, I mean, how are we supposed to take that? Where's the makeup app? - Well, it's hard to know how seriously to take Trump's statement, but immediately, baby's legal team filed that post with Judge Cooper, and as of late yesterday afternoon, Trump and the board had already filed an appeal. - All right, so let's assume for the moment that the shutdown does indeed happen, is that all planned out? - At this point, there are honestly more questions unanswered than answered. We obtain the lengthy memo that the board received over the weekend, prior to the vote. That only address structural matters at the center, not programming. For example, the board told Judge Cooper it intends to move to the signature annual offense, the Kennedy Center Honors, and the Mark Twain Prize, somewhere else, where and how is unclear? The board says it will continue to support the National Symphony Orchestra. How that's gonna happen is unclear. For example, the orchestra has moved its upcoming concert elsewhere, where's the grain of rehearse? Who will pay for it? That's unclear. And it's worth noting that none of the people in the board or in upper management, the Kennedy Center, have that kind of programming experience. - Wow, so there's still a lot that we don't know. - For sure. Last winter, when President Trump started talking publicly about this huge renovation he wanted to put on, I put together a long list of questions for the Kennedy Center officials. I've still received no answers. For example, will the public know what is being spent and on what? How transparent will the bidding process be? Are there any performing arts experts? People experiencing music, theater, or dance will have any oversight or at least be consulted? What happens to the archives of the Kennedy Center? What happens to the valuable artworks and historical artifacts? How's there? Many of those were gifted to the United States by foreign nations. All of these things are things I will continue to seek answers on. - All right, that's NPR's Anastasia Silkas. Thank you very much. - Thanks so much for having me. - And that's up first for Wednesday, September 16th of May, Martinez. - And I'm Layla Faudel, today's episode of Up First was edited by Rafael Nomm, Andrew Sussman, Steve Drummond, Mohammedan Vartici, and Alice Wolfley. It was produced by Ziyad Butch and Niyadou Moss. Our director is Christopher Thomas. We get engineering support from Zach Coleman. Our technical director is Carly Strange, and our supervising producer is Michael Lipkin. Join us again tomorrow. (upbeat music) [BLANK_AUDIO]