Fed Holds Rates Steady Despite Trump's Wishes and GDP Rebound, Khalil Legal Showdown: AM Update 7/31

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Good morning, everyone.

I'm Megan Kelly.

It's Thursday, July 31st, 2025, and this is your AM update.

We should be the lowest interest rate, and we're not.

Federal Reserve Chair Jerome Powell meeting heavy pushback on his decision to keep interest rates steady as the latest GDP numbers surpass expectations.

I really can't even express how bonkers it is.

You've got the immigration stuff and then you've got a normal case, but the normal case is messing with the immigration case.

Why can't the Trump administration boot Columbia student agitator Mahmoud Khalil out of the country?

We'll have a full report.

And New York City mayoral candidate Zoran Mamdani calls for more gun control in the wake of the Midtown Manhattan mass shooting.

Is that the answer?

All that and more coming up in just a moment on your AM update.

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On Wednesday, Federal Reserve Chair Jerome Powell bucking the president's intense public public pressure campaign, opting not to reduce federal interest rates.

In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged.

We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.

That decision facing backlash not just from the Trump administration, which argues the positive economic trends justify lowering rates, but also from fellow members of the Fed's Board of Governors.

CNN reporting on the internal split.

Not one, but two members of the Fed's powerful board of governors, they voted in favor of an interest rate cut.

Sometimes we do see one governor dissent, but this is the first time we're seeing two governors dissent since 1993.

And it does show how Fed Chair Powell, he's not just facing pressure from the White House to cut interest rates, he's also facing pressure from some of his colleagues inside this building.

President Trump, Wednesday from the Oval, slamming Powell's decision.

We should be lowering the rates.

You know, each point that this gentleman keeps up costs us $365 billion a year.

Think of that.

One point.

$365 billion.

We should be the lowest interest rate.

And we're not.

We're 38, number 38, because of the Fed.

It's all because of the Fed.

He's

done a bad job.

Now, he's got a meeting today, but I hear they're going to do it in September, not today.

For what reason?

Nobody knows.

But Europe, as you know, cut their rates 11 times in the last short period of time.

But the good news is we're doing better than anybody anywhere in the world.

Nobody's doing anything even close to us, even with the higher rates.

The higher rates do affect housing, though, because people can't go out and get a loan or refinance their housing.

The announcement coming just hours after the release of new data showing GDP grew 3% in the second quarter, beating expectations and marking a rebound from the first quarter when economic activity slightly shrank.

Director of the National Economic Council, Kevin Hassett, over the moon about the latest numbers.

It's really one of the best GDP announcements or releases that you could imagine because there's blockbuster growth way above expectation.

And there's also a real, real, almost collapse in inflation.

It went down by about a percent and a half all the way down to 2.1%, which is the Fed's target.

And so to have high growth with low inflation and also high income growth, personal income growth was 3%.

That's just like about a sweet spot for a GDP release.

And I will add that all of this happened while $127 billion in tariffs was raised, which is clearly not harming the American consumer.

And we've been downsizing government in order to be more fiscally responsible.

70,000 federal jobs have been reduced, and 5%, there was a 5% reduction in federal government spending while all this was going on.

Coming up, Columbia University student agitator Mahmoud Khalil has become a media darling, but what is he still doing here?

And far-left socialist candidate for New York City Mayor Zoran Mamdani uses the Midtown Manhattan shooting to call for more gun control.

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Mahmoud Khalil, the Columbia University student agitator and Algerian citizen, at the center of a high-profile deportation fight with the Trump administration, hitting the media circuit, enjoying the spotlight since his release from ICE custody in June.

Wasn't this guy deported?

ICE officials arresting Khalil, who has a student visa and a green card, in March.

The Trump administration seeking to remove him under a law that states: quote, an alien whose presence or activities in the U.S.

the Secretary of State has reasonable ground to believe would have potentially serious adverse foreign policy consequences for the United States is deportable.

Secretary of State Marco Rubio making that determination about Khalil, given his role in the Columbia University Apartheid Divest Group.

Khalil worked as a student negotiator for that organization, which reportedly sympathizes with terror groups like Hamas and Hezbollah, calling for the end of Western civilization.

This, as it occupied Columbia's campus, setting up an encampment and seizing academic buildings, demanding the university cut ties with Israel or else.

The State Department also arguing Khalil was dishonest on his visa application, accusing him of omitting past work with the Hamas-linked UN Relief and Works Agency in order to secure his green card in the first place.

Khalil's ICE arrest, kicking off a multi-front legal battle as the government tries to deport this guy and his team of lawyers pretend he has a legal right to stay here.

Following his arrest, the DOJ transferring Khalil to an ICE detention center in Louisiana to await deportation.

Khalil's legal team filing a separate case called a habeas corpus petition in a federal district court in New Jersey.

That case was assigned to the Biden-appointed Michael Farbiage.

A habeas proceeding challenges one's detention.

This federal federal judge then ordering Khalil's release as his habeas case plays out.

In addition, Judge Farbiage attempting to rule that the immigration judge cannot deport Khalil based on Secretary Rubio's finding that Khalil is hurting U.S.

foreign policy, which is an extraordinary ruling in that Khalil's deportation is up to the immigration courts.

The federal district court should only be considering whether he's being properly detained in the meantime.

Investigative journalist at at the Federalist Margot Cleveland, who has been closely tracking this story, walks us through this legal morass.

So you have the New Jersey judge whose lawsuit only involved a claim called habeas corpus, which dealt with whether he's detained or not.

And you have that New Jersey judge now telling an immigration judge how to do his job.

I really can't even express how bonkers it is.

And kind of the simple way to think of it is they're two totally separate cases.

There is a normal process by which immigration cases are decided.

It starts with the case going to an immigration judge.

From there it goes to the Board of Immigration Appeals.

And from there it goes to a circuit court, not a district court.

His attorneys then want running back to the district judge in New Jersey, who has no power over immigration cases and asked the judge to enter a revised preliminary injunction.

And what the judge did is ordered the Trump administration to go to the immigration judge and say you have to change your ruling.

So as you can see there are a lot of different machinations going on with the court in New Jersey and the immigration proceedings in Louisiana.

But the bottom line is that the judge in New Jersey is acting completely beyond his jurisdiction and entering orders dictating what another judge, the immigration judge, can and cannot do.

Congress has prohibited that.

In response, the Trump administration filing an appeal with the Third Circuit Court of Appeals, arguing this New Jersey district judge is way out of bounds.

There is no way that this New Jersey judge will be allowed to micromanage the immigration proceedings that are ongoing in Louisiana.

That is so far beyond his authority, an authority that Congress expressly limited.

So I think the Trump administration is very likely to win because they're right, just for the same reason that the Supreme Court has stayed and given Trump a victory in, I think, 12 of the 13 cases.

But even if the Third Circuit sides with the Trump administration, Cleveland says Khalil's deportation is still a long way off.

So right now it's at the immigration stage,

at the IG stage, then it goes to a Board of Immigration Appeals and then it goes to the Fifth Circuit.

And from the Fifth Circuit, he could seek to go to the Supreme Court.

So this case and his deportation is very far off in the future.

Now, the reason that his attorneys are fighting so hard is because they don't think they're going to win through the immigration case because immigration courts have discretion that is very hard to challenge on appeal.

Cleveland saying this case is likely to have major ramifications on immigration proceedings besides Khalil's.

So this case is actually just one of many involving immigration proceedings that are wrongly being brought in federal district courts.

We are seeing virtually every immigration case that would typically go through the process Congress set up, which is immigration judge, Board of Immigration Appeals, circuit case, instead being brought in district courts.

That is a huge problem and in fact that's why Congress said that district court judges do not have jurisdiction because it slows down this process.

This case provides an opportunity for for the federal appellate courts to make clear when and when the district courts do not have the power to wade into immigration issues.

As all of that drama plays out, Khalil now filing a claim seeking $20 million in damages against the Trump administration, which means the federal taxpayers.

which could potentially lead to another lawsuit claiming he was falsely imprisoned and smeared as an anti-Semite.

In recent weeks, Khalil launched a full-blown media blitz, appearing across several friendly outlets, fielding questions from a typically fawning media.

However, in mid-July, one CNN interview going slightly off the rails when Khalil was asked a very simple question.

Just to be clear here, though, do you specifically condemn Hamas, a designated terrorist organization in the United States, not just for their actions on October 7th?

I condemn the killing of

old civilians, full stop.

But what

I don't want to get into is,

no,

I am very clear with condemning old civilians.

I'm very straight in my position in that

part.

But it's disingenuous to ask about condemning Hamas while Palestinians are the ones being starved now by Israel.

But it is fair to ask you about whether you condemn Hamas because the Trump administration has claimed that you are Hamas sympathizer.

So it's very important to actually ask that question in this broad conversation.

Yeah,

I simply asked and protested the war in Palestine.

Doesn't seem like a hard question.

Guess it was.

The State Department says that answer should be disqualifying for a green card in and of itself.

Professor Cleveland agrees.

I think that's pretty telling.

And America should not be admitting people into the United States who will refuse to acknowledge a terrorist organization is a terrorist organization.

That to me should be a very standard way to screen out individuals who will harm the foreign policy interests of the United States.

Democrat nominee for New York City Mayor Zoran Mamdani speaking publicly for the first time following the Monday mass shooting in a midtown Manhattan skyscraper.

One NYPD officer and three civilians killed in the rampage, one civilian critically injured.

On Tuesday, Mamdani posting in memory of the slain NYPD officer, Dittarul Islam, drawing fierce backlash and accusations of hypocrisy since he really clearly wants to defund the police.

He's said it many times.

Critics referencing those previous calls and resurfacing an old tweet in which he replied, quote, nature is healing to a post about a police officer seen crying in his car.

Mamdani, fresh off a plane from his native Uganda for his extravagant wedding, flanked by tons of security, addressing those comments.

Do you wish you hadn't said some of those things a few years back?

My statements in 2020

were ones made amidst

a frustration that many New Yorkers felt at the murder of George Floyd and the inability to deliver on what Eric Adams, of all people, described as the right for all of us to be able to enjoy safety and justice, that we need not choose between the two.

That's not a disavowal.

Mamdani also using the tragedy as an opportunity to call for more gun laws.

And as New Yorkers across the five boroughs and Americans across the country mourn this mass shooting, we are reminded that no matter how strong

our gun laws are in this state, we are only as safe as the weakest laws in this nation.

And so, in this moment, the onus is on all of us to follow the words of Alan's brother and to put forward a vision of stronger gun laws.

And I echo the call from Governor Hokul for a nationwide ban on assault rifles.

Many quick to note that New York City already has some of the toughest gun laws in the nation, including an existing ban on rifles like the one used in this attack.

To be clear, it appears Momdani wants to both take away the cops and the guns.

Okay.

The shooting, marking the first major test of Momdani's campaign, as a new poll from Zenith Research, shows the candidate with a commanding lead.

This poll, which was completed before the shooting event on Monday, shows that of likely New York City voters, Momdani is leading with 50% support.

Disgraced former Governor Andrew Cuomo running as an independent follows at 22%, Republican candidate Curtis Lewa at 13, and incumbent Mayor Eric Adams also running as an independent in the basement with just 7%.

The poll conducted by a longtime political pollster who says he worked on Governor Cuomo's 2014 reelection campaign, surveying 1,000 likely voters, crosstabs revealing Momdani's intense popularity among younger voters, garnering 82% of those aged 18 to 34.

Despite ongoing accusations of anti-Semitism, Mamdani also polling at 67% among Jewish voters aged 18 to 44.

Good luck.

Enjoy.

The election set for November 4th, how voters will weigh the fallout from this week's violence and Momdani's response remains to be seen.

And that'll do it for your AM update.

I'm Megan Kelly.

Join me back here for the Megan Kelly Show.

We'll be live with Glenn Greenwald today, live on Sirius XM Triumph channel 111 at Noon East on youtube.com/slash Megan Kelly and on all podcast platforms.

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