Trump vs. Fed: Strong Jobs Report Puts Rate Hike Back on the Table

The August jobs report has put Federal Reserve Chair Kevin Warsh on a collision course with President Donald Trump, who wants lower borrowing costs. The economy added 162,000 jobs in August, exceeding the 31,000 average monthly gain over the prior 12 months, while unemployment held at 4.1 percent.

Trump has been pressing for lower interest rates, and Vice President JD Vance said the administration believes the Fed 'should be lowering interest rates' to reduce costs for homebuyers. However, Warsh faces pressure from data showing inflation is still above target: the Commerce Department's July PCE price index rose 3.7 percent from a year earlier.

Warsh has stated that the Fed's predominant focus should be on prices and that underlying inflation must move to the objective at sufficient speed. He used his first Jackson Hole speech last month to underscore this point, saying 'the responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank.'

The next policy meeting is set for September 15-16, leaving one more inflation reading to shape the decision.