Inflation, Fed Independence, & Iran 1/15/26

0:00Bring in show music please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, deadly protests in Iran and a potential attack from the U.S. Dan Sinor of the Call Me Back podcast on the high stakes in the region. The lives that will be changed if the regime falls in Iran is extraordinary. You're talking about tens of millions of people's lives. And the president versus the Federal Reserve, the latest in President Trump's quest to replace current chair Jay Powell and have a greater say in the work of the central bank. A couple of years ago, if you were riding in an Uber or a cab and you said you think the Fed should stay independent, they'd say, what Fed?

0:48Feds? Now, I'm sure people have an opinion. Our Steve Leisman walks us through the numbers behind the debate. It's policy in context. When did you want the Fed to reverse course in the middle of the pandemic? And we talked to a voting member of the Fed's key rate-setting committee, Chicago Fed President Austin Goolsbee. We've been five years fighting to get inflation on a path back to 2%, and we've made some progress, but we need that, and if we get that, I think rates can come down. Plus how the criminal investigation into Fed Chair Jay Powell plays into all of it. You're going to get inflation come roaring back if you try to take away the independence of the central bank.

1:35It's Thursday, January 15th, 2026, and Squawk Pod begins right now. Stand and or buy in three, two, one, cue Andrew. Good morning. Welcome to Squawk Box right here on CNBC. We are live at the Nasdaq market site in Times Square. It is just the boys this morning. I'm Andrew Ross Sorkin, along with Joe Kernan. Becky is off today. Have you read some of, well, its effect on crude. Have you read some of the things that we were close? I don't know if it's confirmed, but apparently the president was thinking about doing something to Iran as he is threatened. They didn't execute that one individual. And supposedly those are often I watched some of the president's comments yesterday about, you know, whether things are cooling down.

2:22I watched a crazy interview with Brett Baer from, I think, the foreign minister of Iran. It reminded me of Baghdad Bob. Yeah. That's their line, and they're sticking to it. But for whatever reason, it didn't happen, and oil is down a little bit today, down almost 4%, below 60 again. Yesterday, it saw its highest close since October. As I just said, prices fell after President Trump signaled that he would hold off or could hold off attacking Iran over its treatment of protesters. The president had previously threatened to take strong action against Iran if it executed prisoners. So we've got a lot of hot spots around the globe.

3:05And we don't talk about Ukraine much anymore, given Greenland. All of the other situations. Greenland, Iran. President Trump now saying he is not planning to try to fire Jay Powell amid this Justice Department probe into the Fed chair, though he said it was too early to say what he ultimately would do. He made those comments in an interview with Reuters. The question of Fed independence came up when I spoke just yesterday with Carlisle CEO Harvey Schwartz at the Economic Club of New York, as a lot of business leaders are now being asked about this very issue. I actually think all this is reinforcing central bank independence.

3:44There is so much discussion about central bank independence that existed before this investigation that you now have central banks around the world writing letters. You now have former treasury secretaries signing letters. I think it's actually brought it to a peak in terms of a discussion. Personally, I think one of the great lessons from past crises and economic history is that central bank independence is incredibly important. In that Reuters interview, President Trump suggested he would choose National Economic Council Director Kevin Hassett or former Fed Governor Kevin Warsh to succeed Jay Powell.

4:20So it really is the two Kevins. He also dismissed the idea that curtailing Fed independence could lead to a weakening of the dollar and a spike in inflation. It's all pretty interesting. What Ford said was interesting, I think. Well, there is this. I mean, the backlash is real. And it's on the front burner. And everybody suddenly knows and is against taking away or even chipping away at Fed Independent. A couple of years ago, if you were riding in an Uber or a cab or something like that. Nobody would even know what the topic is. And you said you think the Fed should stay independent. They'd say, what Fed?

4:54The Fed? Now, I'm sure people have an opinion. Yeah. And I think this is a little bit reflective, actually, to give Scott Besson some credit. when he spoke to the president, and I don't think we know the full details of it, but when he was saying, look, this could backfire in its own way in terms of what happens next, I think that's an element of that to some degree. And the other piece of this is that it's more likely, perhaps, that he, meaning Jay Powell, will stay as a governor on the board of the Fed because of this very issue. Counterproductive for President Trump. And so it doesn't remove that slot.

5:29It doesn't open up that slot for him either. But you said, you saw, and this plays into your overall, you know, sort of opinion of the way things work with President Trump in charge. Scott Besant did come out, and he didn't change exactly what he said about, say, power, what he reportedly said, but he did say everyone's accountable. Right. Everybody needs to be accountable. There's nothing wrong with looking at the fact. It's almost like he didn't backtrack, but he sort of changed, amended a little bit. Because he might have heard from President, because we talked about it yesterday. Right, I think you can hold both ideas in your head at the same time.

6:12Which is, by the way, and that's one of the things that I think is important. I think as a U.S. taxpayer, you should be able to hold... Although this isn't... I know that people say that. I think you should be able to hold all of these agencies and institutions accountable. I think that Scott Besson and I agree on that. I think the question is how you go about it. For example, could you hold hearings specifically about the renovations and the cost overruns? Could you bring an auditor in to review all of these things? I think that that's one approach. And then there's a very different one, which is when you have a criminal investigation, which has all sorts of other implications.

6:53I mean, once you're into a criminal investigation, you're in a whole other world. And obviously this investigation is about perjuring yourself in front of Congress. Right. Which does sound like a pretext for, because he's been so critical of Powell for the last year. Or maybe even longer. But I just want to be 100 % clear. I believe you can hold these agencies accountable without interfering with their independence. My point was yesterday, I was lauding Scott Besson, aren't you glad he's there? sometimes you know the president may need a calming uh influence and i i know the president never likes really to be overshadowed and by the way he's in charge scott's been pretty outspoken about you know when people say you know scott besson is the adult in the room right it sort of cuts both ways you think you'd like that no but it actually is not what you'd like because you know what a good cop bad cop works in almost all settings in in the world it works with your kids that works you know in a lot of negotiations and you know the president says one thing other people pull it back a little but you remember what the president said uh and it and he says it for a reason we i don't know if we'll talk greenland later but that was really interesting also yesterday because it almost seems like it was amicable am amicable to some extent with those meetings i don't know if anything comes of it i thought it was interesting um what the uh the gentleman from Denmark said, he said, look, there's no way the United States is prepared to do what we do for green in terms of European style welfare state.

8:29So they know they even know over there how, you know, yeah, maybe we don't. We don't want to take on that that burden. Bank of America CEO Brian Moynihan also highlighting the importance of an independent Fed. Is there anyone who who says the Fed should not be in the I have yet to come. We talk about it like it's headline. Shockingly, Moynihan told Becky yesterday that he was for Fed independence when she interviewed him on CNBC's Power Lunch. If you think about the US economy, you think about the strength of this country, you think about us leading the world across all dimensions, one of the important parts of that is to have an independent Fed who will then set interest rate policies based on what they see.

9:11Moynihan also talked about President Trump's pitch to cap credit card rates at 10 % for a year. Becky asked him what rating a customer would need to qualify for a card under those circumstances. You'd have to be well into the 700s, which if you think about the array of the population moves you to a very small portion of the population. So the people outside that range will want credit. How they'll get credit is to go to people outside the regulated industry, quite frankly, or use non-credit card facilities to get to that credit. Moynihan saying that a cap on rates would lead to a dramatic pullback in credit availability probably is not a great thing.

9:52Anyway, so Andrew, this reminds me a little bit of when we first did the Affordable Care Act. And remember the young people who really are not probably going to get sick and they were going to sort of shoulder everybody else. And I was going to say do good credit, but my credit's not so great. But do good credit people pay higher rates because some people have really bad credit and are still able to get it? A little bit, but not really. That's a whole other misnomer. I think the banks use that as a red hair. I think that's a little bit different in this case.

10:29Senior economics reporter Steve Leisman is at the table and joins us now. Good morning, sir. Morning, Andrew. So what do we think? Well, I'm interested in Harvey Schwartz's idea that this is reinforcing Fed independence. I think it looks to me like the administration has come up against a limit here on how far it can go. The pushback beginning with the Fed chair buttressed by several regional bank presidents. We'll have another one coming up at 830. Talk to Austin. And now the bankers themselves seems to be like, OK, Mr. President, that's that's an investigation too far. I'm also interested in how, I've been away for a little bit, the structure of the outlook for rates has changed in part as a result of this.

11:15What do you mean by that? If you look at the Fed funds futures market, I went back to the beginning of January and to now, pretty much the market has ruled out a final Fed Chair Powell cut before he leaves. There was some toying with it. It was at 50 percent, 60 percent for April or so. That's gone now. Really, the idea is Fed Chair Powell leaves and a new Fed chair comes in. What's the number here? 68 percent for the June hike. But before that, 36, 23. I don't know if we have the chart. Did it move yesterday on that PPI that Rick said was much hotter than people thought? It might have. I was looking for you yesterday.

11:55On that, I was still, there we go. There's the chart. So look at those probabilities. Yellow is the beginning of the year, January 2nd. Blue is where we are now. So there is no Powell cut on the way out. And there's also a reduction in the odds of the new guy coming in. Now, this may, interestingly enough, I don't know if we have the Calci odds, but this may go along with the idea that Kevin Warsh has been elevated over Hassett. I don't know if somebody went in. They're so good in the back. Do we give enough credit for that? I mean, I said Calci. Say Calci, see Calci. So there we go, 46%. Walsh now above.

12:35I don't think it's crazy to think of Kevin Walsh as being more hawkish or perhaps less dubious than Kevin Hassett. We all think that. Less likely to follow directly orders from the administration. So there's that, and it's been an interesting thing. But also a big critic of the Fed in general in terms of the, I don't know, how much transparency, you know, every waking thought that we hear and some of the other mechanics of the Fed. And there are some people, and I'm hearing more and more, that when we, like Austin, I think, called him, what, a first ballot Hall of Famer or something? There are people that still think that the mishandling of the 40-year highs in inflation is a permanent, and almost said, okay, you're making the arsonist a demigod for just putting out the fire.

13:31Congress approved of that. That was something the Fed went to Congress for. And these payments to the banks are part of a process of managing the Fed funds rate that Congress has approved of. But they make a lot of money. And it doesn't go out to the real economy where people could use the credit. That's what I was about to say was you can have a good debate about the Fed's actions during the pandemic inflation. I'm not sure we've had that discussion. Right. And I have gone back and I've lectured on this at a couple of universities and tried to understand, you know, maybe Sorkin writes the next book about this.

14:10But but the idea of that, here's the thing. It's policy in context. When did you want the Fed to reverse course in the middle of the pandemic? Everybody is brilliant looking back on this. But when I try to find the moment that they screwed up and it's like three or four months. What else? There's something there for everyone for what caused that inflation. I always blame. I say there was too much fiscal stimulus in the midst of other people say it was all supply chain. It was around the world. There was inflation everywhere. This is the same debate we're having now in the sense that people who are proponents and supporters of the president want the Fed to cut rates because of what the fiscal side is doing.

14:51But you do not want to have had the Fed to raise rates while the fiscal side was pumping in stimulus on the other side. So how the monetary side responds to the fiscal side is a very important debate. And now I'm screaming and we've got to go. I'm sorry. And you forgot to talk about AI, which changes all the calculus. Which may change all the calculus. Thank you, Joe. Coming up in the one and only. Cheese will be next. Coming up on Squawk Pod, Iran warns of retaliation as the U.S. weighs military options there. Former White House foreign policy advisor under President Bush, Dan Sinor. At this point, there's no U.S.

15:32support in a kinetic sense for these protests. I think the regime has a chance of surviving. We'll be right back.

15:46This is Squawk Pod.

16:10President Trump said help is on the way. Joining us right now is Dan C. Nor. He served as foreign policy advisor in the George W. Bush administration. He now hosts Call Me Back. It's a great podcast. Good morning to you. Good morning. Good to see you. So what do you think should happen here? If you were advising President Trump, do you think that there's an opportunity? We were talking to Amos Hoxton yesterday about whether we should be doing more and actually either, you know, some kind of military help or something else. And whether there's really opportunity for effectively regime change at this point.

16:41The regime is the weakest it's ever been. What we've seen over the last couple of years is whenever there's been military action against Iran, whether from Israel or the United States, the regime has been in a weaker position. There have been a number of protests against the Iranian regime going back to 2009 with the Green Revolution after the quote-unquote election of Ahmadinejad in 2009. So there's 2009, there was 2018-19, there was 2022. We've had protests after protests after protests. None of them have been like this. They've only strengthened. The President of the United States has said he has the Iranian people's back, that he will not tolerate them being savage, brutally savage, and attacked the way they have been.

17:23And I think that if at this point there's no U.S. support in a kinetic sense for these protests, I think the regime has a chance of surviving. It still may fall, but I think U.S. military action will not only weaken the regime and the instruments of terror within the regime, but it'll also strengthen the morale of the Iranian people that are on the streets. What do you make of the argument that it's just not ready to crack yet? That this is not a situation like Venezuela Yeah, well, you mean the protest movement is not fully, like, we have to wait for the protest movement to have even more energy and even more people?

17:58No, that there's just too many other people behind this regime that would remain in power, that you wouldn't be able to topple it all in one shot. I look, on October 7th, 2023, Hamas attacks Israel. Virtually no country in the world, no government in the world defends what Hamas does against Israel. Some criticize Israel as responsible for, quote unquote, the root causes. But no government defends what Hamas did except for Iran. Since October 7th, Hamas is gone. Hezbollah is gone. This is basically Iran's proxy system in the region that Iran had invested hundreds of billions of dollars in developing.

18:36Iran's client state, the Assad regime in Syria, gone. Iran's nuclear program seriously weakened. And I mean, this is a regime that if you look at its 46, 47 year history has never been on the edge the way it is now in terms of the external pressure it's under. Like that all this whole proxy system is gone. There's no Hezbollah. There's no Iranian nuclear program. And then suddenly internally, we've never seen levels of protests against the government like we have now. So I don't know what I don't know what people are waiting. Like what? So what's the next thing that you're hoping for? I estimate public sentiment in Iran.

19:10I mean, the leadership still says that they've got plenty of people that are backing the current regime. Then I see it's 80 percent against the regime. But I don't know whether we know. Do we have an actual number? It's very hard to know. Look, if I were to make the case... Remember Iraq? Iraq, it was going to be flowers in the street, and there were so many dead-enders. It was almost half the country were dead-enders, weren't they? If you if you I could make the argument that Iranian inflation in Iran is off the charts. Right. So something like 50 percent, as we understand it, for food, it's something closer to 70 percent.

19:42The economic conditions are unsustainable. That said, not just ideologically, it's actually very practical, very practical, except the regime does have these security forces that they've been investing in. And those have staying power, which means you've got to hit the security forces. Security forces will be 20 percent. This is not the Soviet Union in 1989 or 1990 or 1991, because back then you had a Gorbachev, regardless of what one thinks of Gorbachev, who had already made the decision to bring reform to the Soviet Union. So the Soviet Union was already starting to shrink in terms of its centralized power.

20:18There's nothing like that in Iran, which means if the Supreme Leader is committed to sticking around and strengthening the regime, they'll have some staying power. absent U.S. forces. With U.S. force, U.S. military projection of power, I think things could change. What do you think that, we've been talking just even off camera just about sort of where, what's happening in this country right now. And I'm curious how you think it relates actually to what's happening in this country, what relates to what we either do or don't do externally, which is to say in a sort of America first world, I think there was a view, a lot of Trump voters, actually, that he was not going to be getting involved in wars, that he was not going to be getting involved outside of the borders.

21:01He was going to be focused squarely here, and therefore how much support he has or doesn't have for some of these efforts. I think one of the fascinating things about Trump is what people project onto him as a political figure rather than what he actually represents. Trump has never been an isolationist. He has never saw a paradox between American power and America first, that you can use American power abroad. And that is actually an America first interest. I'm just the way he talks about it. You can go back to him taking out Soleimani in Iran in his first term. You can look at what he invested in in the Abraham Accords, which obviously wasn't war.

21:38Fordo was a weekend. Venezuela was a matter of hours. Surgical targeted strikes. His lessons from the Bush and Obama administrations. In some respects, you could argue he's taken the best lessons. from the Bush and Obama administrations, which is not to hold back from using American military power. It's just to do it differently. In no situation that he's gotten involved in so far has he kind of gotten into what he would call one of these forever wars. He said we have tremendous capabilities. I mean, what the U.S. did in Venezuela was unbelievable. 150 aircraft, in and out, very targeted. It had a real endgame.

22:11This is the objective. We want to get Maduro out. We're not going to leave troops on the ground. Same thing with the June attack against Iran. Let the IDF do all the, and the Israeli Air Force and the Israeli intelligence forces do all the front end work, and we'll come in and finish things off in and out. I think he's never seen a problem with that approach. And I think among the MAGA, quote unquote, the MAGA base, they don't have a problem with it either. You're getting the MAGA back, and you're even getting the neocons back, which is awesome. Only Trump could hold this coalition together. Throw Greenland into the mix.

22:46What do you think? I do not think there will be military action against Greenland. I think, look, I think President Trump is forcing a discussion among European leaders. I'm surprised by the divide among some of the European leaders right now about whether or not the U.S. has a legitimate case that it's in the U.S. and West, the Western security interest, to have some presence in Greenland or have some control of Greenland. But I do not think it's even worth having that conversation and the same conversation as whether or not the U.S. is going to unleash military power against Iran. It's just, one is that it's regime change.

23:19One is regime change. One is an action of war. This is not what we're talking about. I saw the Danish ambassador, and obviously the Danish ambassador was picked by the Trump administration, but she knows Denmark, and her reasoning was not that different than what you hear coming from, and I think even the individuals that were on last night from Denmark, They do concede a lot of the things that Trump, the end game is something they agree with. They can't really provide the security. They don't have the money to provide the security that might be needed to keep Russia and China out of Greenland.

23:55It's becoming more and more important. I just say between what's happening in the Western Hemisphere and what's been happening in the Middle East, I know a lot of people are very critical of President Trump. But if you just took a step back, remove him from the storyline, what is being accomplished right now in multiple theaters around the world is, this is like historic. To try to separate out what's happening here, I was going to tell you, new highs in the stock market, 5 % GDP, low unemployment, trade deals around the world, the southern border is closed, wages are rising. So I'm looking for the part of that story you told us where things, the culture wars, we're always going to argue about that.

24:38Now, maybe people think that Trump's going to leave the world in a worse position in terms of culture wars here in the U.S., but there's plenty of people that like the side of the culture wars where Trump is at this point. I will say the following. The lives that will be changed if the regime falls in Iran is extraordinary. You're talking about tens of millions of people's lives that we not only think they want to change, they're on the streets, and they are risking their lives every day for that change. And to your point about the culture wars, you go around American college campuses right now, Right.

25:11Crickets. Like, for Iran. Suddenly, suddenly there's, like, no concern about the brutal human rights violations of this most brutal human rights violating regime. Right. And the opportunity for it to be toppled. Like, whose side are people on? My Twitter feed is self-selecting, obviously. But someone today said, George Bailey, think of how many lives could have been, if Trump had never been born, that's the point you're making right now. How many lives were you talking about that wouldn't have been changed in the Middle East? Or, you know, take your pick. First of all, I don't think you would have had an end to the October 7th war.

25:46I don't think this fall we would have gotten all those hostages back, even though there's still one there, and the windup of the war. Every time a bell rings, Andrew, you know what happens. An angel gets its wings. Don't forget. Dan, thank you. You don't even know what to... He had no idea what I was talking about. I have no retort. I have no retort. The key questions about the independence of the Federal Reserve and the impact it could have on everything, from what you pay for groceries to how much you put in your gas tank. Chicago Fed President Austin Goolsbee argues that a strong, free-from-political-influence central bank is the only way to go.