Trump stands by his ‘brilliant’ Fed pick despite no rate cuts
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US President Donald Trump (right) said on July 29 that his handpicked Federal Reserve chairman Kevin Warsh is a “brilliant guy”.
PHOTO: REUTERS
- President Trump continues to support Federal Reserve Chairman Kevin Warsh despite no interest rate cuts under his leadership.
- Warsh indicated a preference for raising rates due to rising inflation and a strong job market.
- The Fed has kept rates steady, but market expectations suggest a rate hike is likely at the next meeting in September.
AI generated
WASHINGTON – US President Donald Trump on July 29 refused to turn on his “brilliant” handpicked central banker in chief even though Federal Reserve chairman Kevin Warsh has not delivered the rate cuts the US leader desperately wants and has dim prospects for doing so any time soon.
“He’s a brilliant guy,” Trump told reporters in the Oval Office.
“I know he’d love to see lower interest rates, but he’s got a board, and it’s a political board, and they want to keep rates up. But we fight through rates.”
Warsh, by contrast, hinted at a press conference following the Fed’s decision to leave rates unchanged that he may in fact be more inclined towards rate hikes as the appropriate response to the stiffening inflation now occurring alongside a resilient job market and economy.
“Any central banker, especially a central banker where the labour markets are more or less at equilibrium... any central banker, when he or she sees underlying inflation moving higher, he or she is more inclined to tighten policy. Again, when you’ve achieved the other side of your mandate, and you see underlying inflation falling, he’s more inclined to loosen policy,” he said.
“That’s my reaction function.”
Trump’s remarks came on the heels of the second Fed policy decision since Warsh took over in May from Jerome Powell, whom Trump relentlessly attacked for not cutting rates aggressively as he repeatedly demanded.
In both instances, the Fed has held rates steady in a range of 3.5 per cent to 3.75 per cent, but at this week’s meeting, three of Warsh’s new colleagues dissented in favour of a rate hike.
Indeed, that may well be the next action the Warsh Fed delivers. Rate futures markets currently see greater than a 60 per cent probability of a quarter-point increase when central bankers meet again in September. REUTERS
