New Fed Chair Warsh Vowed a Policy Overhaul to Crush Inflation When He Took Office. Has He Followed Through?
The real problem with inflation isn't Kevin Warsh -- and it might be beyond his power to fix it anytime soon.
Overview
As of this writing, investor consensus in the bond market is that the Federal Reserve will hike interest rates at its next gathering on Sept. 15-16.
Recent inflation data has been hotter than expected. Energy prices have surged again due to the Iran war. Long-term interest rates have reached levels not seen since 2007. And President Donald Trump's newly expanded trade war with Canada is unlikely to help. President Trump appointed Fed Chair Kevin Warsh with two conflicting goals: lower interest rates and lower inflation. Trump has been vocal about his desire for the Fed to cut interest rates.
Details
But inflation hasn't gone away. The U.S. inflation rate in August was 3.4%, unchanged from the month before. That's higher than the Fed's so-called target of 2%. When Warsh was first nominated and appointed as Fed chair, he got some initial credit from the bond market. Warsh had a reputation as an inflation hawk, willing to be an independent voice to raise interest rates if necessary.
Source
Originally published at www.fool.com.