{"id":333490,"date":"2026-08-31T01:26:12","date_gmt":"2026-08-31T01:26:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/333490\/"},"modified":"2026-08-31T01:26:12","modified_gmt":"2026-08-31T01:26:12","slug":"trump-administration-live-updates-u-s-and-iran-trade-fire-for-first-time-in-a-month","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/333490\/","title":{"rendered":"Trump Administration Live Updates: U.S. and Iran Trade Fire for First Time in a Month"},"content":{"rendered":"

Kevin M. Warsh cleared a crucial hurdle<\/a> at his first appearance as the Federal Reserve\u2019s chairman at its annual conference in Jackson, Wyo.<\/p>\n

He offered his most comprehensive views to date about the state of the economy. He cleared up confusion about the central bank\u2019s commitment to getting inflation down to its 2 percent target after sending mixed messages the month prior. And he acknowledged that the Fed might have \u201cwork to do\u201d to make good on that pledge, suggesting a readiness to raise interest rates if price pressures do not ease.<\/p>\n

But the path ahead for Mr. Warsh is a precarious one. Financial markets now see a quarter-point increase at the central bank\u2019s next meeting on Sept. 15-16 as more likely than not, leaving Mr. Warsh with a tough decision whether to follow through with action.<\/p>\n

Another month of benign inflation data will alleviate the pressure on him to raise rates in September. But as the market blowback<\/a> to his last meeting in July showed, the onus will be on him to explain how doing nothing aligns with his intolerance for elevated inflation.<\/p>\n

A rate increase next month would help to underpin the seriousness around Mr. Warsh\u2019s inflation pledge. Delivering that just before midterm elections, however, would create an immediate showdown with the Trump administration.<\/p>\n

\u201cHe has multiple targets on his back,\u201d Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund, said on the sidelines of the conference. \u201cIt\u2019s a no-win situation.\u201d<\/p>\n

A Shift in Tone<\/p>\n

Mr. Warsh on Friday sounded like many of his fellow policymakers at the Fed who had grown impatient about the slow pace of progress on taming inflation after half a decade of it overshooting the target. He not only dismissed data that showed easing price pressures this summer, but also suggested that there was not much restraint on an economy that has been growing at a robust pace. He also made clear that with the labor market stable, the Fed\u2019s focus was chiefly on tackling inflation.<\/p>\n

It is those same views that prompted Alberto G. Musalem, president of the Federal Reserve Bank of St. Louis, to support raising rates last month. Mr. Musalem is not a voting member on this year\u2019s policy setting committee, so he was not one of the three who officially opposed<\/a> July\u2019s decision to hold rates steady.<\/p>\n

Mr. Musalem, in an interview, endorsed Mr. Warsh\u2019s message on Friday, especially his decision to put \u201ca level and a sense of timing\u201d around inflation\u2019s retreat before some tightening is required.<\/p>\n

Mr. Musalem, who said he was keeping a \u201cvery open mind\u201d going into the September meeting, conveyed that there was a solid case for raising rates to squash inflation.<\/p>\n

Given his views that there are \u201cboth supply and, very importantly, persistent demand forces pushing inflation above 2 percent, I believe that without some restraint on inflation, the probability that inflation will be meaningfully above target 18 months from now is higher than the probability that we\u2019re going to converge to target\u201d by then, he said.<\/p>\n

Mr. Musalem noted that while inflation expectations did not indicate a loss of confidence in the Fed\u2019s commitment to reaching 2 percent, that conviction was contingent on the Fed\u2019s adjusting its policy settings appropriately.<\/p>\n

\u201cIf we delay action in spite of data, expectations may be affected by that,\u201d he said. \u201cRight now, inflation expectations are very anchored because the same markets expect us to raise interest rates by about 75 basis points in the next nine months or so.\u201d<\/p>\n

Raising rates by three-quarters of a percentage point, the argument goes, would ensure there is some downward pressure on economic activity, helping in part to snuff out price pressures.<\/p>\n

Mr. Warsh, left, with Andrew Bailey, governor of the Bank of England, and Tiff Macklem, governor or the Bank of Canada, arriving at the annual Jackson Hole Economic Policy Symposium.Credit…Amber Baesler\/Associated PressForgoing Forward Guidance<\/p>\n

Mr. Warsh had a plea during his speech on Friday that people in attendance who know him well said the public should heed. \u201cJust don\u2019t call it forward guidance,\u201d the chairman quipped when outlining the contents of his speech.<\/p>\n

Many in markets were quick to perceive it exactly as that, however, despite Mr. Warsh leaving himself room to maneuver.<\/p>\n

\u201cHe was very clear: He is not telling us what he\u2019s doing at the next meeting,\u201d said Kristin Forbes, a former Bank of England official who is now at the Massachusetts Institute of Technology. Still, Ms. Forbes conceded that Mr. Warsh was in a \u201ctricky situation\u201d as he contends with markets reading it as such.<\/p>\n

\u201cHe might feel the pressure to verify what people are saying, and then fall back into that trap or he might feel pressured to not verify what people are saying to show that there is not guidance in a speech like that about the economy,\u201d Ms. Forbes said. \u201cI think he does have enough credibility and wants to do the right thing enough that he will not make a decision just to send a lesson.\u201d<\/p>\n

Austan D. Goolsbee, the president of the Chicago Fed, said in an interview that the right decision came down to whether the data showed the most recent bout of inflation, caused partly by the Iran war and President Trump\u2019s tariffs, was persistent or just a one-time increase in the level of consumer prices.<\/p>\n

\u201cThe reason to wait, just in theory, would be if that inflation is going to go away on its own, then you easily could generate a recession and you didn\u2019t need to,\u201d Mr. Goolsbee said.<\/p>\n

So far, the inflation data is \u201cambiguous,\u201d he said, pointing to the fact that price pressures across the services sector remain elevated. Monthly inflation readings near 0.3 percent are \u201cnowhere near target,\u201d Mr. Goolsbee added. \u201cThat\u2019s not evidence that we\u2019re headed back to 2 percent.\u201d<\/p>\n

In July<\/a>, the Fed\u2019s preferred inflation gauge, once volatile food and energy prices are stripped out, rose at an unrounded monthly pace of 0.246 percent.<\/p>\n

Susan C. Collins, president of the Boston Fed, also acknowledged in an interview that the inflation data was \u201cmixed,\u201d suggesting that higher rates are not a foregone conclusion but remain a real possibility if there is not a discernible improvement soon.<\/p>\n

She pushed back on the idea that there is a specific threshold for the monthly pace of inflation she is targeting that will tip her in one direction or another.<\/p>\n

\u201cPolicy should be based on the trajectory of the economy, and from my perspective, picking a particular number as a threshold for last month\u2019s inflation, while that is certainly an important part of the information that we have, it\u2019s not the only thing that I\u2019m going to weigh to try to understand the direction,\u201d she said.<\/p>\n

\u201cIf we are seeing progress, and there\u2019s enough uncertainty about a range of different dimensions of policy, I think there is a totally consistent, thoughtful argument for holding in that context.\u201d<\/p>\n

Based on the distribution of views at the Fed, Mr. Warsh will have the sway to resolve what is likely to be a close call in September.<\/p>\n

If the next Consumer Price Index report, scheduled for release on Sept. 11, comes in soft, Mr. Warsh, now having provided a framework for his thinking, could \u201clegitimately stand up\u201d in September and justify holding rates steady, said Donald Kohn, who served as vice-chair of the Fed from 2006 and 2010 when Mr. Warsh was a governor.<\/p>\n

\u201cYou have to have a good reason not to do it,\u201d Mr. Kohn cautioned about forgoing a rate rise.<\/p>\n

President Trump with Mr. Warsh in Washington, in May. Delivering a rate increase just before midterm elections, would create an immediate showdown with the Trump administration.Credit…Haiyun Jiang\/The New York TimesSparking a Showdown<\/p>\n

Increasing rates would put Mr. Warsh immediately at odds with Mr. Trump, who has gone<\/a> to great lengths<\/a> to pressure<\/a> the Fed into lowering rates. Mr. Trump handpicked Mr. Warsh for the job, after running an elaborate audition process that hinged on finding someone who would support his views.<\/p>\n

The administration\u2019s desire for lower rates was on full display this past month when the Treasury secretary, Scott Bessent, embarked on surprise interventions<\/a> amid a sharp rise in longer-term U.S. government bond yields.<\/p>\n

Policymakers at the Fed officially maintain that these interventions do not make their jobs harder, but there are reasons to think that it has some negative impact.<\/p>\n

For one, Mr. Bessent\u2019s actions have muddied the economic signals that the Fed would otherwise glean from the level of Treasury yields, which reflect heightened policy uncertainty, concerns about the country\u2019s debt load and higher growth prospects, among other factors.<\/p>\n

Moreover, Mr. Bessent, in making clear that he will take steps to tamp down borrowing costs, has created a situation in which yields are more likely lower than they otherwise would be. If that results in overall financial conditions that are less restrictive, that could make taming inflation more difficult.<\/p>\n

\u201cWith anything having to do with fiscal policy or debt management, what Treasury does impacts markets and the economy and so impacts what the Fed does, and vice versa,\u201d said Patricia Mosser, who previously worked as a top official at the New York Fed and is now at Columbia University. \u201cGoing at cross purposes is usually not a wise idea.\u201d<\/p>\n

Some believe Mr. Warsh, who has a close relationship with the president, will be more effective at managing the fallout in the event that the Fed raises rates. Mr. Trump has chosen so far to place blame on Mr. Warsh\u2019s colleagues for not cutting borrowing costs.<\/p>\n

The universal message from Fed officials is that they do not feel constrained by political considerations. What would imperil their independence more, they argue, is if they opt against a move that was necessitated by the data.<\/p>\n

\u201cThe central bank\u2019s timetable is not the market timetable, and it\u2019s not the election timetable and so we often face tensions with outside bodies,\u201d Mr. Goolsbee said.<\/p>\n

But defying Mr. Trump just before the midterms will no doubt raise tensions.<\/p>\n

\u201cIf they can possibly put it off till after the midterms, it would be good for the institution,\u201d said Kenneth Rogoff, a Harvard professor who previously served as chief economist at the I.M.F.<\/p>\n

\u201cWe\u2019re clearly in a constitutional crisis at the moment, and if you\u2019re trying to preserve Fed independence, are you preserving it better by spitting in his face, or are you preserving it better by laying low and waiting until the winter?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Kevin M. Warsh cleared a crucial hurdle at his first appearance as the Federal Reserve\u2019s chairman at its…\n","protected":false},"author":2,"featured_media":333491,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[1452,75,84,83,9,24,63,1069,1554,1876,7318],"class_list":["post-333490","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-donald-j","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc","tag-trump","tag-united-states-international-relations","tag-united-states-politics-and-government","tag-venezuela"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/333490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=333490"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/333490\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/333491"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=333490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=333490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=333490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}