Top White House Economist Points to 1.6% Inflation as Evidence the Fed Doesn't Need Higher Rates
Kevin Warsh argues the Fed can hold rates steady as 1.6% core CPI and stronger-than-expected jobs data shape the debate, officials said.
- On Thursday, President Donald Trump threatened to impose tariffs if the Federal Reserve does not lower interest rates, escalating pressure on Fed Chair Kevin Warsh.
- National Economic Council Director Kevin Hassett argues expansion is not inflationary, citing 1.6% core CPI and 5% growth, while Vice President J.D. Vance and Treasury Secretary Scott Bessent advocate against rate hikes.
- Markets anticipate a 60% chance of a rate hike on September 16 following August data showing 162,000 new jobs, though former Fed Vice Chair Roger Ferguson warns core inflation remains around 2.5%.
- Policymakers entered a mandatory two-week quiet period on Saturday, prohibiting public remarks until after the September 16 meeting, as Fed Governor Christopher Waller previously indicated willingness to hold rates steady if inflation shows progress.
- Key inflation-linked data expected next week will likely determine the final policy path, as officials weigh whether energy-driven inflation from Middle East supply crunches necessitates higher rates or if expansion remains sustainable.
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View: Warsh has plenty of excuses to delay a rate hike
Liz’s viewThere are reasons for Kevin Warsh to raise interest rates next week — though President Donald Trump’s new Fed chief was chosen to keep rates low — and there’s no shortage of possible excuses to perpetually wait and see.First, Friday’s job report was stronger than expected, but doesn’t show an overheating labor market that could spark a wage spiral (though the Buc-ee’s pay scale is worth watching). Restaurants, hospitals, and local gove…
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Top White House Economist Points to 1.6% Inflation as Evidence the Fed Doesn't Need Higher Rates
Kevin Hassett says the economy is roaring without sparking inflation, but former Fed officials, record gas prices, and skeptical analysts are lining up to challenge that claim before the next rate decision.
With his demand for lower interest rates, Trump is also putting pressure on Powell's successors. No matter how the next decision comes out: Warsh has only bad options, says Astrid Dörner.
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