# Fed Holds Rates Amid Tariff Inflation and AI Infrastructure Race

**Podcast:** Marketplace
**Published:** 2026-01-29

## Transcript

What if Jay Powell's press conference today wasn't really about the economy?
I have nothing for you on that today.
I can't comment on that.
I'm not going to be getting into that.
I have nothing for you.
Sorry.
From American public media, this is Market Place.
In Los Angeles, I'm Kai Risdell.
It is Wednesday today, the 28th of January.
Good as it always is, everybody, to have you along.
Okay, look, to be clear, Chair Powell's press conference today was really about the economy.
But given the Department of Justice subpoena from a couple of weeks ago, the possibility of a criminal investigation, his video in response who the next person in the hot seat might be, and whether Powell's going to stay on the Board of Governors' post-chairmanship, as is his right, there was, shall we say, a subtext to the proceedings.
All of them met firmly by various thesaurus alternatives to no comment.
Anyway, the economy.
Hence no cut in interest rates.
Growth is um is on a solid footing, it looks like.
From Kristen Schwab.
But what I hear you asking about inflation, Kai?
Most of the overrun in goods prices is from tariffs.
And that's actually good news because if it weren't from tariffs, it might mean it's from demand.
And you know, that's that's a harder problem to solve.
We we do think tariffs are likely to move through and be a one-time price increase.
Definitely good news if it turns out to be true.
And then finally, Chair Powell, sir, where or where might the central bank be taking this economy?
Inflation, the labor market, what are you looking at?
So we'll always be looking at both things.
And so there could be combinations, infinite numbers of combinations that would cause us to want to move.
Didn't want to pick a side.
Certainly, a weakening labor market would be an argument for loosening.
But what's happening with inflation?
If inflation were at the same time getting worse, you know, you'd just you just have a very difficult situation there.
So we'll be looking at both.
Okay, fine.
Wall Street today, traders did what they do on a Fed day when what the central bank is going to do is already priced in.
That is, we all knew what was going to happen.
We will have the details.
Yeah, when we do the numbers.
This morning, Treasury Secretary Scott Besson tried to do a little cleanup, saying the United States has always had a strong dollar policy.
Setting aside for just a second here, the irony that it is the administration's own policies that have been sending the dollar lower.
A falling dollar is a sign the greenback might be losing its safe haven luster.
Its decline, though, also affects the rest of the world.
As the dollar falls, other currencies have been rising.
The Euro hit a buck twenty earlier this week, the highest it's been since 2021.
Marketplace Justin Ho explains what that is going to mean for the Eurozone.
Here's the problem when a currency gets too strong.
Currency appreciation makes the exports of that region more expensive.
Ricardo Amaro is a lead economist at Oxford Economics.
He says when the Euro's value rises.
European producers that sell in the US will find their products uh suddenly more expensive there.
And when exports get too expensive, sales slow down.
Growth has been relatively sluggish in recent years.
It's expected to pick up some momentum this year, but still in a relatively slow price of growth.
A strong euro poses a particular challenge for Germany, the biggest economy within the Eurozone.
It relies heavily on exports, says Zachary Griffiths with the research company Credit Sites.
The export to GDP ratio for Germany is around 47 to 50%.
So that's certainly very substantial relative to, say, the United States, which is only about 10 to 15%.
The Euro has been appreciating while Germany is in the middle of pushing through a big stimulus package meant to bolster defense in the region and grow its economy from within.
Griffiths says a strong euro pushes against those efforts.
Because you have that that external factor that could weigh on the competitiveness of exports, and so that leaves more of the job to be done kind of internally with something like the fiscal spending package.
The strengthening Euro could also affect what the European Central Bank decides to do with its interest rates.
Kenneth Kim is senior economist with KPMG.
He says that's because weak demand for European exports could result in inflation that's too low.
That might put the ACB in the spot where with inflation falling, perhaps the ACB might have to lower rates if inflation does continue to go down.
Last year, an ECB official told Bloomberg News that the euro at a buck 20, which it recently hit, could complicate things for policymakers.
Ricardo Amaro with Oxford Economics says while the Euro's value isn't currently raising any red flags.
I think it's more where things go from here.
Like, do do we get some stabilization or does the dollar weaken further?
The ECB will make its next decision on interest rates a week from tomorrow.
I'm Justin Howe for Marketplace.
Tariffs were, as you heard earlier, a topic of interest at Jerry Powell's press conference today.
So we thought we would reach out to some small businesses feeling the weight of said tariffs.
Ally Trella Jones is the owner of Bruised Boutique Skate Shop in Nashua, New Hampshire.
I never thought when I started a small business selling roller skates that I would be looking into, you know, what's happening in the government so closely.
The constant changing of tariffs and the constant changing of prices has not only made it an unusual environment for us to try to figure out what the year is going to be like, but it also poses a little bit of a challenge because our employees then have to go through and change the prices of each vendor.
Like all skateboards are made out of Canadian maple, for example.
So we can't get Canadian maple here.
We have to import it.
Um and so you know the price of skateboards is constantly changing as well, too.
So we took out a hundred thousand dollar loan in order to keep our business afloat.
Um we have been paying it back slowly, so it's very it's good that it's like a low interest loan um through the small business association.
We are not planning on purchasing more inventory until we hear more from the Supreme Court.
Um, and it seems like every month it just gets pushed back another month.
Um, but we're hopeful that we'll hear something soon.
And I think that also not only myself as the small business buying in inventory, I think our vendors, as talking to them, they're also holding out on buying inventory as well.
And so this creates a supply chain issue down the line for everybody.
There's this difference.
I used to wake up every day and be like so excited to go to work.
And I still do love my job.
I still do love to go in and it is a respite place for me.
But there is this like just wait on my chest every single day because it's become so difficult that I question whether I want to continue, you know, regularly.
That ladies and gentlemen is not a great thing.
Allie Trella Jones, she owns bruised boutique skate shop in Nashua, New Hampshire.
Closely related, of course, to how retailers are feeling is how consumers are feeling.
And on that score, there is some not great news.
Chair Powell alluded to this.
The conference board has shared its latest consumer confidence numbers.
The January index fell to the lowest it's been in almost 12 years, May 2014 is when that was to save you the mental gymnastics.
Confidence was down across political affiliation, across household income, and across age groups.
On that age thing, though, the drop was sharper among older Americans, Gen X, baby boomers, and the silent generation.
Marketplace's Kristen Schwab reports now on the confidence gap among age gaps.
Michael Strain has been going to the same French restaurant in Arlington, Virginia, for more than a decade.
And in the last handful of years, he's watched menu prices climb.
I kind of feel like somebody's punching me in the face and taking a couple of $20 bills out of my wallet.
That produces a sour feeling.
Strain is an economist at the American Enterprise Institute.
So he obviously understands all the forces behind inflation.
And he's done the math on whether his earnings have kept up.
They have.
But this logic only takes him so far.
He still feels bad about inflation.
I feel that way because I am comparing prices today to what they used to be.
What prices used to be.
Strain is 44, so that's an actual reference point for him.
A history that most people in their 20s are too young to have.
And it's likely a big reason why Americans under 35 have a bit more confidence in the economy, and why those 35 and older have less.
As a barely Gen Xer, I will totally own our saltiness.
Michael Matowitz is an economist at the Roosevelt Institute.
And it's true, Gen X has the lowest level of consumer confidence according to the conference board's survey.
Maybe you're taking a long review and you're saying, yeah, what are the conditions like in the future?
And you're thinking of that as more of a 10 or 20-year thing instead of a like six-month thing.
You know, I think that could really change your your overall outlook.
Can I pay for my kids' college?
Can I support my aging parents?
Will I be able to collect social security?
Dana Peterson, chief economist at the conference board, says it's important to measure consumer confidence by age because it can help us better understand the economy.
For instance, less confident Gen Xers might pull back during their peak earning and spending years.
That's super important because consumption is 75% of the economy if you add in goods, services, and housing.
She says, in some ways, a specific age group's feelings can be a more pointed signal to understand where the economy is heading.
I'm Kristen Schwab, a millennial, and according to consumer confidence data, a slightly less grumpy than average American for marketplace.
Here's Kristen Talheimer Bingham.
She's the co-owner of Dean Suites in Portland, Maine.
Tariffs for Coco ended in mid-November of last year, so not that long ago.
And even though the tariffs aren't in place right now, the chocolate we're using now to make our products was purchased when the tariffs were active.
So we really haven't escaped the tariffs, not yet, anyway.
We had to raise our prices last fall because of the tariffs and the increase in the cost of chocolate.
And so we are living now with the effects of both of those things.
We are starting to see price resistance with some customers.
So that means even more than in the past, we think about every penny and every dime.
Future tariffs, if they came back at a higher rate, could be the one cost that could be too much for us.
Right now, the concern we're hearing from our suppliers is more about the availability of chocolate.
It's been and still is quite touch touch and go.
Our suppliers can't always get what they order or even predict what will be available a month from now.
Dean and I are generally optimistic people.
We don't see a day when tariffs will be the thing that hurts our business most.
That may not be true for our neighbors or for other businesses we know and work with.
So we might worry more about that.
And at the same time, we're also witnessing how consumers respond to higher and higher prices.
We may be on the edge now, and if we get hit with tariffs again, something would have to give.
Chris and Tallheimer Bingham making chocolate in Portland, Maine, coming up.
Everyone's heard that an awful lot.
It's like the boy that cried wolf.
Maybe this time, though, it's not a false alarm.
First, though, let's do the numbers.
Dow Industrials up 12 points.
We'll call that flat 49,001.
The NASDAQ found 40 points in the couch cushions, about two tenths percent, 23,857.
The SP 500 briefly crossed 7,000 before going back to where it started, ending things at 6978, as I said, priced in.
Bank stocks after the Fed's rate decision.
Well, thanks for asking.
JP Morgan Chase rose a tenth percent.
Bank of America down seven tenths percent.
Citigroup down about a half percent.
Amazon share price declined seven tenths percent today after the word it's laying off 16,000 corporate employees.
The letter to employees, the email, not a letter, email.
Here's the quote We've been working to strengthen our organization by reducing layers, increasing ownership, and removing bureaucracy.
So there you have it.
Company did hire something like 175,000 people to get through the pandemic.
You're listening to Marketplace.
This is Marketplace.
I'm Kai Rizdal.
It's infrastructure week on the program this week.
A kid.
Kinda.
In our series, past couple of days about artificial intelligence and you, we've been talking about what AI actually looks like.
And it turns out a lot of it looks a whole lot like infrastructure.
Not the roads and the bridges and the airports and all the rest of the stuff that you're used to hearing about when we talk about infrastructure.
Digital infrastructure is the name of the AI game.
Like those data centers.
You heard on the show yesterday, as well, the networks of wires and plugs that connect them all together.
As of the end of 2024, investors had put 1.6 trillion with a T dollars into AI, and the biggest piece of that by far was on infrastructure.
Here's Marketplace's Megan McCarty Carino on what that looks like at one RD lab in Cupertino, California.
Sometimes the thing you remember most from a place is the sound.
It's literally humming in this lab.
What's going on in here?
So I'll walk you through some of the things that we do here, and then we can kind of go through some of the stations, and I'll explain you in detail.
All right, let's go.
I'm talking with Satish Vangala.
He's the director of network product development at Amazon Web Services.
AWS is the biggest cloud computing provider.
So the company's been scaling up network infrastructure for decades.
Network is almost like a data highway or information highway.
You have these massive A clusters of graphics or CPUs that are there.
They all exchange information.
And just like interstates and highways, if you don't have the right infrastructure, you can end up with pretty bad bottlenecks, right?
I think that's the whole point of what we do here is to ensure that your experience feels instant.
That means that we need to have a network that has uh no traffic jams or no delays.
As in no delays for you when you're trying to make an AI-generated holiday card, or getting Chat GPT to analyze your spending habits.
The problem is artificial intelligence increases traffic on that information highway.
Amazon Web Services and other cloud computing companies like Microsoft and Google are in an arms race to become the home of the AI economy.
Just a couple months ago, Amazon announced a $15 billion bond sale, its first in three years.
Today, the company announced another 16,000 corporate job cuts after 14,000 last year, as it focuses on building out AWS offices, a lot of what Satish and his team are working on is making data move faster.
This is our 800 gig generation product, so that means we have more lanes for uh data exchange.
There were wires everywhere, and workers in jeans and t-shirts hovering over screens filled with code.
In one room on a wall of computer servers, Satish pulled out a rack of little yellow plugs, kind of like the Ethernet cables you might stick into your home computer.
These are uh typically what we would see uh in a data center.
Yep, I've seen a lot of them recently as I've been reporting on data centers.
AWS has built about nine million kilometers of fiber cable to link computers around the world.
It's enough to stretch to the moon and back 11 times.
And it's all connected with fiddly little plugs like these.
Plugging in like these many connections, like these are 1632 ports, it's slowing us down.
So the ergonomics of actually plugging those individually.
Individually is a is it takes a lot of time, and doing it reliably is also a challenge.
So what we have done here is that we kind of looked into this problem and how we could actually miniaturize it so that we can actually reduce it.
So these are 64 fibers that we connected, and here we got uh a single connector that actually can do exactly the same thing that we are doing in a smaller form factor here.
So that enables us to reduce our uh deployment uh time by more than 54 percent.
The whole point of this is to build data centers.
Satish also showed me these devices, they're called transponders that convert electric signals, aka data, into light waves.
And then the light gets sent over a fiber optic cable to any distance you want, and that's the information highway that connects across.
They look a little bit like nail clippers.
Yeah, they look like nail clippers, yes.
Yes.
I mean, when when we were looking at, you know, just the little sockets and how you're engineering all of this stuff, it just really calls to mind how the infrastructure build out, it's all these little pieces that have to come together to make it work.
What are the challenges on your side on the networking side to meeting that demand?
I think uh meeting that demand, that's the first goal that we have.
Second, as I said, how do we scale faster?
And that's where we are uh innovating in that process as well.
And then the finally we are looking at uh building our systems, resilient systems, so that when we do deploy them at scale, we're able to uh operate our network at a very high reliability.
That reliability is already important in our internet connected lives.
This past fall, an AWS outage caused all kinds of problems, from college students unable to access online textbooks to smart beds malfunctioning in the middle of the night.
And outages could be even more disruptive as AI gets integrated across different parts of the economy.
So those are the main challenges that we are really looking at so that we can deliver capacity at scale at very fast pace.
Tiny innovations like a cable that's easier to plug in, or something that increases the virtual speed limit on the information highway might seem small, but that's the infrastructure required to make the billions that investors have poured into AI research pay off.
Gretchen Blau is a customs broker manager at Logistics Plus in Erie, Pennsylvania.
And as much as she's looking forward to getting some clarity on how this is all going to play out, she is not holding her breath for a quick decision.
As the end of 2025 came upon us, uh, we kept hearing every week that we were getting a decision.
Everyone's heard that an awful lot.
It's like the boy that cried wolf.
So no one's really expecting anything anymore.
But we we do want to hear something.
We do want to be able to tell our customers something.
We're not able to prepare anything until we know how it's going to be implemented.
If it's an automatic refund, in order to receive that electronically, they have to file by um February 6th.
So we're hoping that everything goes through there, but you never know.
We'll probably have to file post-summary corrections.
That's kind of the way we're leaning on how this would be implemented if it happens.
That would be a little bit challenging because if you think about it, there's been over a year worth of entries filed, and we have to continue to file the day-to-day entries.
And then if we have to go back and correct all of those, that kind of doubles our workload.
The reason we're hoping it would be electronically, is each of these tariffs have been broken out with a different HTS code.
So there is a one-to-one correspondence in custom system in order to lock into what is you know a country tariff versus a 232 tariff versus the basic tariff.
So there is that one-to-one correspondence, but whether that can be implemented, we're unsure.
There's been so many unprecedented things with tariffs, you know, in the past year that it's hard to tell which way this will go.
But we didn't have much preparation on any of these tariffs, and we still got through it.
So we'll get through this as well.
Fingers crossed.
HTS, by the way, harmonized tariff schedule.
Gretchen Blau, there, our favorite customs broker manager at Logistics Plus and Eerie PA.
This final note on the way out today, we go back up to the top of the program and up to the top of Jay Powell's press conference, at which question number one was why he went to the Supreme Court argument in the Lisa Cook case about whether the president can fire a Fed governor.
I will tell you why I attended.
And I as I thought about it, I thought uh it would might be hard to explain why I didn't attend.
Uh in addition, um Paul Volcker went to a Supreme Court case famously, and I guess 1985 or so.
So it's precedented.
And uh I I thought it was an appropriate thing, and I did it.
Pal, by the way, I've said this before.
He was a lawyer back in the day.
Our media production team includes Brian Allison, John Fokey, Montana Johnson, Drew Johnstead, Garrow Keefe, and Charlton Thorpe.
I'm Kai Rizdal.
We will see you tomorrow, everybody.
This is APM.
For second and third generation kids, holding on to your family's culture can be difficult and expensive.
I'm Rima Gerais, and this week on This Is Uncomfortable, I talk with author and journalist Aaman Ismail about how passing down his Egyptian roots to his kids has become a line item in his monthly budget.
I don't want to have kids who can't speak Arabic or read Arabic.
This is the only chance I get to do this, right?
When they're really, really young.
I won't get another chance to help guide them and like help them learn Arabic for the sake of them being connected to this massive heritage that they're inheriting.
Listen to This Is Uncomfortable on your favorite podcast app.