Fed Raises Interest Rates, Iran War and Oil Prices, EU-Canada Alliance

him to do. He raised interest rates. The president is not happy and pressed the Fed to reverse course and lower rates how is the new chair reacting to the pressure? I mean, Martinez, that is Michelle Martin and this is a burst from NPR News.

From Syria to Portugal, people are protesting higher fuel prices with the Warren Iran showing no sign-up ending, countries are drawing from their oil reserves and Saudi pipelines are under attack. Canada's Prime Minister will address the European Parliament today after an invitation to

become the EU's first associate member, Trump threatened more a tariff if he decides

it's a hostile act.

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“Interest rates are higher this morning after the federal reserve raised them for the first”

time in three years. The vote on Wednesday was unanimous, and now the Fed's benchmark short-term interest rate is a quarter of a percentage point higher, which is exactly the opposite of what President Trump wanted when he chose a new Fed-year. NPR is something to sell you because you had to walk us through the latest good morning.

Hello, hello. Okay, so we know what happened.

Let's talk about why and what it means that the Fed has raised the interest rate.

Well it means the Federal Reserve is making the move to cool down inflation. I'll tell you my corny metaphor for this. You know how in a fire, there's like a red box that says in case of emergency break glass. Well if you think of inflation as a fire, the rate hike is like the Fed's saying emergency

and breaking that glass to grab the extinguisher. But the Fed is also hoping they don't have to like blast away for a long time, which is to say the Fed's rate setting committee signaled one more rate hike this year and that's it. Dad joke, but we'll take it so let's get to the political drama here.

Trump pressured the previous Fed-Share Jerome Powell to lower interest rates. He even threatened to fire Powell over this not clear that he could but he threatened it. So Powell's term is chair ended Trump picked a replacement Kevin Worsh and now pretty soon after Worsh took over the Fed raised rates. So where does this leave the Fed chair now?

Yeah last night, Trump began on social media press the Fed for lower rates. This dynamic came up a lot in Worsh's press conference yesterday. Like Powell, Worsh refused to engage. He kept saying the Fed is independent, the Fed should stay in its lane and he has nothing to say about the president.

Same old about the argument for raising rates. So fundamentally, the Fed has a certain credibility maintained and the data is the data which is what Worsh essentially said, the inflation trends are simply not improving. The plain fact, is that inflation is too high and has been for too long. Inflation has been above the Fed's goal for five years and Worsh made the case that this

is a strong economy to absorb this rate hike. People are employed. They're still shopping. Actually, just yesterday, we got the latest data on retail sales that showed people spending more across the board, including on fun things like hobby supplies and sporting goods.

The Fed has to walk a narrow line, putting the brakes on the economy without tipping it into a recession. And that's part of why this rate hike is not huge only a quarter of a percent. And also you were reminding us that actually it wasn't just Worsh. It was all 12 members of the Fed rate sitting committee voting unanimously.

“Okay, so for people who aren't economists, how does a rate hike by the Fed work to fix inflation?”

Raising interest rates makes it more expensive to borrow money, which theoretically means people and businesses will think long and hard before getting a mortgage or a business loan buying a car, shopping on credit, and that kind of cool down forces prices to stay in check. But only theoretically though?

Well, one big factor right now is the fact that the big driver of current inflation is the war in Iran. It has pushed up the cost of gasoline and the price of decals at historic highs, and that's definitely not something an interest rate hike can fix. The Fed also has no say on tariff policy, which is another driver, and we have the fact that wages have not been keeping pace with inflation.

For five months now, people's paychecks have been losing their buying power.

Either way, any positive effects of this are unlikely to be very quick.

That is, and Pierre Zellina, I mean, thank you. Thank you. People around the world have been protesting over rising gas prices. And it comes as Saudi Arabia, the world's biggest oil exporter, faces a renewed war in Yemen against the hoothees with attacks on its energy infrastructure.

And Pierre International correspondent, A.A. Batalli, is covering this from Dubai, good morning, A.A. Good morning, Michelle. So let's start with the fallout from higher energy prices. Yeah, so this spike in prices is leading to protests in Syria, the Philippines, Indonesia,

other countries. You also have Bangladesh rationing electricity with frequent power cuts there. And this latest war in Yemen and the attacks on Saudi energy from that just adds to the existing pressure on oil markets where prices are way up. Diesel has already hit a record high in the US, and that means higher costs for trucking

and farming. The current crude has been trading about $105 a barrel, that's up some 50% from before the war with Iran. So you have all these various pressures now and refineries across the Gulf from the attacks on their infrastructure, from the US warn Iran, to continue to tax on shipping

through the state of Hormuz. And we know that countries are drawing from their strategic oil reserves to try to plug the gap. So tell us how this escalation between the Saudis and the Houthis is challenging energy supplies.

So Michelle, let's start with the numbers.

That from OPEC shows that Saudi Arabia's oil output fell to around 6.2 million barrels

a day last month. Now, compare that to 11 million barrels a day before the US war with Iran. And the Saudis are now facing these two chokeholds one in the state of Hormuz and since July, a blockade on its ships by the Houthis through Beb and Mendeb.

“That is the other key shipping straight through the Red Sea.”

The Saudis were using the Red Sea to bypass the state of Hormuz. But because of these Houthi attacks on Saudi ships, the kingdom is now taking a much longer and more expensive route. They have to go up north through the Suez Canal than through the Mediterranean Sea and all around Africa just to reach Byers and Asia.

But then Saudi Arabia's energy ministry confirmed that a 750 mile long pipeline that was carrying oil from Saudi refineries in the east to the western coast in the Red Sea was hit by drones this time from Iraq forcing that pipeline to shut down last week.

And the Saudis have not disclosed how long repairs could take or the extent of damage

on its or other Iran coast sites that have been hit recently by the Houthis. But Empire has seen satellite images of damage to that pipeline's pumping stations. And hey, let's not forget about the human tool of these wars in the Gulf. What can you tell us about that? Yes, Michelle.

Let's start with Iran. There's a report out today by a UN investigative body that says there are reasonable grounds to believe the US committed war crimes in air strikes on Iran at the start of that war. They say those air strikes killed at least 178 civilians, including 120 school children at a school in Minab in southern Iran.

The Pentagon is still investigating that attack. And Yemen, well, it is really from 11 years of conflict. But this month, the fighting between the Houthis and Saudi Brecht groups for territory along Yemen's western coast has displaced more than 100,000 people according to the UN. And we have reached out to people in Yemen who say there is simply not enough shelter

or aid to assist everyone and that families are just sleeping under trees. And the Houthis say the Saudis have fired hundreds of air strikes on Yemen in past days. And the Saudis say dozens of people have been wounded in the kingdom from Houthi attacks.

“Are there any talks going on, maybe behind the scenes to calm things down?”

Well, Egypt is getting involved a bit. We know the Saudi conference visited Cairo this week, but President Trump, you know, he's still mired in the war in Iran. And so he hasn't shown any willingness so far to strike the Houthis like he did last year.

And now Vice President Vance's the U.S. is talking with the Houthis. An official Saudi Arabia who spoke anonymously in order to discuss security matters confirmed to NPR that there was a meeting over the weekend between the U.S. and the Houthis in Alman. And the official says that sent com chief Brad Cooper, briefed Saudi Crown Prince on Monday

about that meeting and said that the Houthis said they would not attack U.S. or Israeli vessels in the Red Sea that those attacks are focused only on Saudi oil tankers and carriers. And that official told NPR that even after that meeting with the Houthis Michelle, the U.S. is helping the Saudis with planning and sharing intel on Houthis forces and weapons depose.

That is. And here, correspondent in Dubai, Abatahi Aya, thank you. Thank you. Canada has made it clear it does not want to become the 51st U.S. state, but will it become

“a 28th member of the European Union or something like it?”

That was a proposal on Wednesday from the European Commission head in a speech that U. Parliament in Strasbourg, France, Canadian Prime Minister Mark Carney will address that parliament this morning. We go now to NPR's Eleanor Beardsley, who's been following all this from Paris, morning

Good morning, Michelle.

“So what exactly happened, what has the U.S. proposed?”

Well, yesterday, the head of the European Commission, Ursula Fondalayan, addressed the European Parliament in her annual speech, often referred to as the EU's state of the Union. And apparently, it was a surprise. It wasn't in the draft.

She proposed making Canada the first associate member of this economic and political union.

Now, Canadian Prime Minister Mark Carney was there. He smiled, got up and embraced Fondalayan in front of the Parliament, which gave a standing ovation. And Fondalayan said the move is not against anyone, but clearly had the Trump administration in mind, and she made it clear that Canada and Europe have much to accomplish together

here she is. We see the world with the same eyes, from AI to climate change from the Arctic to geopolitics. And we have stood together on Ukraine, on defense, on raw materials, and supply chains.

“But above all, the American, Europe and Canada believe in democracy.”

I don't know why now, well, both Canada and the EU have felt bullied by this Trump administration, you know, with the tariffs, the threats to abandon NATO, threats to the Arctic, by taking over Greenland, it's frankly been relentless and shocking for countries that are historical allies of the US, and it's made Canadians and Europeans realize just how similar their outlook is, how much they have in common, and of course, it's pushed them closer together.

Even both France and Britain have deep roots in Canada, which is a member of the British Commonwealth, and also has French as an official language. What's been the reaction in Europe? Well, this morning, French Foreign Minister, Jean-Auel Barreau, said, "We will have to see what an associate membership means technically, but he welcomed working closer with Canada.

This seems for now mostly a symbolic act, but Barreau said Europe decides what it wants, and its sovereignty is not negotiable. He again highlighted how the EU and Canada have both felt that their sovereignty has been under attack by this Trump administration. And also this weekend, President Emmanuel Macron, will meet with Canadian Prime Minister Mark Carney, on French territory just off the coast of Canada, an archipelago called Sampiaire

and Mikhalon. You know, I just spoke with European Parliament member Natalie Wazou, who is in Strasbourg, in the European Parliament. She says everyone is waiting for Karni's response this morning, and she says there's huge appreciation for his leadership.

Wazou said what really struck her in Vunderlayan speech yesterday is that here is a German politician from the Center, Wright, a former defense minister, someone who's very pro-American.

She spoke for an hour and never even mentioned the US or President Trump, preferring to talk

about Canada. Here's what Wazou told me. Saying, well, guys, democracies are into attack, the geopolitical order is in ruins. So we have to team up the ones who consider that we have a message, we have common interests, we have common values, and we have to work closer.

It has President Trump responded. Well, he called Canada, joining the EU laughable, but he also said it could be interpreted as a hostile act, and if so, he would put very heavy additional tariffs on Europe. That is, and Paris owner, obviously a Paris owner. Thank you.

You're welcome. And that's up first for Thursday, September 17th. I'm Michelle Martin. I'm going to make our team as today's episode about first was edited by Rebecca Rossman, Miguel Macias, Tina Crya, Mohamed Elvar D.C., Alice Wolfley, and Lindsey Totti was produced by

the Advouch and Nia Demos, our director is Christopher Thomas, we get engineering support from Zach Coleman, our technical director is Carly Strange, and our deputy executive producer is Kelly Dickens, join us again tomorrow. This is Tanya Mosley, co-host of Fresh Air. 10 years ago, Colin Kaepernick took the knee during the national anthem, and it cost him

his NFL career. He's really talked about it since. Now, he tells the story of that decision, and why he still trains every day to play.

But I am not at the point of accepting that I will never step on a field again.

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