Warsh Hesitates: Strong Job Report and Labor Calamity Delay Rate Hike

Fed Chairman Kevin Warsh has several reasons to delay raising interest rates next week. The job report on Friday was stronger than expected, but it doesn't indicate an overheating labor market that could lead to a wage spiral. Instead of worrying about inflation, the Fed can focus on the potential for labor-market calamity, warned by some economists and tech leaders like Bill Gates.

The consumer price index is due out on Friday, but the Fed's preferred inflation index won't be released until September 30th, after the central bank's next rate-setting decision. Warsh can also argue that his plan to let financial markets take the lead needs more time to play out, as mortgage rates have been ticking up despite the Fed keeping baseline interest rates untouched.

The Fed has a hawkish flank led by Cleveland President Beth Hammack, but Warsh likely has enough allies to avoid raising rates ahead of the midterms. This decision would invite Trumpian fury and could affect the outcome of the elections.