Warsh Faces First Major Test as Trump Presses for Lower Rates

Fed Chief Kevin Warsh Faces First Major Test Amid Trump's Pressure and Market Expectations

US Federal Reserve Chair Kevin Warsh is set to face his first major test as he navigates a strong jobs report, growing market expectations of a rate hike, and pressure from President Donald Trump to lower interest rates.

The jobs report showed nonfarm payrolls increased 162,000 last month, while July's job losses were revised away. However, analysts say the report alone is unlikely to determine the Fed's next move, with the central bank's decision expected to hinge largely on next week's inflation data.

President Trump has been calling for lower interest rates since the jobs report was released, tweeting that the US is a 'much stronger credit than it was just a short time ago!' and urging the Fed to 'get smart' and be 'patriots for a change.'

Fed officials are concerned about persistently high inflation but are divided over how monetary policy should respond in the near term. Some policymakers, including Governor Christopher Waller, have hinted that they may favor a rate hike if inflation data comes in 'hot,' while others, like Warsh, have talked tough on inflation without committing to specific action.