Trump's Interest Rate Threat Sparks Opportunity for Fed Chair Warsh
US President Donald Trump's comments on interest rates and trade have left many scratching their heads. In a recent post, he linked US interest rate policy to trade ties with America's biggest partners, suggesting that if the Federal Reserve doesn't lower interest rates, he'll stop trading with countries that run a deficit.
However, this argument makes no sense, according to many economists and commentators. Even those who support Trump have struggled to understand his reasoning.
For Fed Chair Kevin Warsh, this could be an opportunity to distance himself from the White House and boost his credibility by pushing for a rate hike this month.
A 25bps hike would not only underscore the Fed's commitment to its inflation target but also confirm Warsh's control of the central bank, helping him to move away from being seen as a 'sock puppet' of Trump.