Trump’s inflation comments may give Kevin Warsh room on rates
Inflation and Trump’s softer tone may give Fed Chair Kevin Warsh more room See why markets still expect rates to hold and what could move them next
President Donald Trump’s comments on Wednesday about inflation may reduce pressure on new Federal Reserve Chair Kevin Warsh to cut interest rates quickly.
After the Bureau of Labor Statistics reported that annual inflation rose 4.2% in May, Trump said he “loves” inflation and called the data “great.” That is a notable shift from his years of criticism of Jerome Powell, whom he repeatedly urged to lower rates faster.
Market expectations still point to the Fed holding its benchmark rate steady at 3.5% to 3.75% when officials meet next week. Some Fed policymakers have said recent inflation and higher energy prices tied to the Iran war argue against an immediate cut, and a few have even suggested further hikes could be needed later this year.
Warsh has said the Fed should focus on underlying inflation rather than temporary price jumps caused by geopolitics or other shocks. Trump’s more relaxed tone suggests he may be willing to let Warsh make those decisions with less public pressure, at least for now.