Trump Links Tariffs to Fed Rate Decision — SkimNews
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- Trump administration mounted an unusually broad pressure campaign on Fed Chair Kevin Warsh, with the president, vice president, Treasury secretary and senior counselor Peter Navarro all publicly urging the Fed against a rate hike ahead of the Sept. 15-16 FOMC meeting.
- Trump posted on Truth Social that he would halt trade with countries running trade surpluses with the U.S. unless the Fed cuts rates — the first time he has directly tied tariff threats to Fed rate demands.
- Peter Navarro, appearing on Steve Bannon's show Friday, called a rate hike "careless" and labeled FOMC members "clowns," while saying Warsh is "trying to do the right thing."
- Vice President JD Vance said "We believe that the Fed should be lowering interest rates"; Treasury Secretary Scott Bessent told CNBC the Fed typically doesn't raise during a supply shock until second- or third-order inflationary effects emerge.
- Markets are pricing a roughly 60% probability of a rate hike at the Sept. 15-16 meeting, lifted by August's strong jobs report — unemployment 4.1%, average hourly earnings up 0.3% on the month and 3.1% year-over-year.
- Three FOMC members — Beth Hammack, Neel Kashkari and Lorie Logan — dissented at the July meeting in favor of a quarter-point hike, while Warsh at Jackson Hole noted 54% of the 199 components in the PCE price index rose more than 3% over the prior 12 months.
- Administration officials are citing a 1.6% three-month annualized core CPI against core PCE at just over 3%, arguing supply-side growth from tax cuts and investment offsets inflation — a thesis Warsh's Jackson Hole speech implicitly challenged.
Why it matters: With inflation running above the Fed's 2% target for five years, three dissents already on record from July, and markets at 60% odds of a hike, Warsh faces a politically loaded decision two months before midterms — and Trump's novel linkage of trade policy to Fed rate demands raises the explicit cost of defying the White House.
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