Trump urges interest rate cut again, White House officials say there is no reason to raise interest rates at present
The White House has begun to put pressure on the Federal Reserve again after the latest economic data released in the United States showed that inflation is cooling more than expected. White House National Economic Council Director Kevin Hassett said on Wednesday that given the latest U.S. economic data, there is currently no reason to raise interest rates. "There's really no reason to raise interest rates right now," Hassett said on a show. He said that if the data trend continues, he expects the Fed to "think backwards" and lower interest rates. Hassett also added that the White House expects Fed Chairman Kevin Warsh, appointed by President Trump, to "guide the committee to make the right decisions."
The White House has begun to put pressure on the Federal Reserve again after the latest economic data released in the United States showed that inflation is cooling more than expected. White House National Economic Council Director Kevin Hassett said on Wednesday that given the latest U.S. economic data, there is currently no reason to raise interest rates. "There's really no reason to raise interest rates right now," Hassett said on a show. He said that if the data trend continues, he expects the Fed to "think backwards" and lower interest rates. Hassett also added that the White House expects Fed Chairman Kevin Warsh, appointed by President Trump, to "guide the committee to make the right decisions." Hassett's stance toward lowering interest rates is consistent with U.S. President Donald Trump, who has repeatedly pressured the Federal Reserve to cut interest rates quickly to boost the economy and reduce borrowing costs. On the same day, Trump also talked about interest rates. He said that it is better to suspend interest rate increases than to raise interest rates. He hopes to see interest rates drop and the United States should have the lowest interest rates in the world. Their remarks came a day after the latest Consumer Price Index (CPI) report released by the U.S. Bureau of Labor Statistics, which measures the cost of various goods and services in the United States, was well below market expectations. The report showed that the U.S. CPI fell by 0.4% month-on-month in June, the largest monthly decline in more than six years; it rose by 3.5% year-on-year, and both data were better than market expectations. Hassett said Wednesday it was "one of the best inflation reports I've seen in my entire career." Hassett attributed the fall in inflation to Trump's policies, while noting that the drop in prices was not just due to lower oil prices due to developments in the U.S.-Iran war. “When my team and I dug into the data, we found that because President Trump has made law and order a priority in big cities, people are no longer stealing cars, so it’s much cheaper to buy car insurance now,” Hassett said. Warsh downplays CPI cooling However, Federal Reserve Chairman Josh Warsh downplayed the data showing cooling inflation during two consecutive days of testimony before Congress. "There may be people who look at today's numbers and say, 'mission accomplished, everything went well,' but that's not my view," Warsh said Tuesday in testimony before the House Financial Services Committee. In testimony before the Senate Banking Committee on Wednesday, he said, "Any central bank would like to see data moving in the right direction. But I don't think any of these indicators are a perfect reflection of underlying inflation." Another important price indicator, released on the eve of Warsh's second day of congressional hearings, also posted an unexpected drop. The U.S. producer price index (PPI) in June increased by 5.5% year-on-year, and was expected to be 6.2%; it fell by 0.3% month-on-month, and was expected to be flat. After the data was released, investors further reduced their bets on the Federal Reserve's recent interest rate hikes. Defend the Fed’s independence At the same time, Warsh defended the independence of the Federal Reserve in the face of questions from members of Congress for two consecutive days. He said on Wednesday that Trump was not trying to influence Fed policy. If Trump tries to influence policy, he himself will keep a low profile. The day before, he vowed that if pressured by President Trump, he would "do his job well." Warsh declined to say Wednesday whether he has spoken with President Trump since he became Fed chairman, but he confirmed that he is in regular communication with the Trump administration. He stressed that this would not affect his independence. In keeping with long-standing tradition, the Fed chairman and Treasury secretary meet for breakfast every week. Warsh said on Wednesday that he would not only continue his tradition of meeting with Finance Minister Bessant every week, but the communication between the two sides would be even more frequent. "I do meet with the Treasury Secretary on a weekly basis and I communicate with him regularly in between meetings," Warsh said. But he also stressed that decisions on interest rates would be made independently by himself. Faced with questioning by the Senate Banking Committee, Warsh declined to say whether he had spoken with the president since becoming Fed chairman. But he suggested that even if he had an exchange with the president, it shouldn't be viewed as an issue. "Certainly, I would have no problem receiving a call from the chairman of this committee (Senate Banking Committee) or from the president of the United States," Warsh said. Hassett also said on the show Wednesday that he also recently spoke with Wash. He said he expressed his appreciation for Wash's new task force when the two spoke. (