President Donald Trump has once again taken aim at Federal Reserve Chairman Jerome Powell, demanding immediate action in response to the latest inflation data. Following the release of August’s numbers, Trump expressed his frustration on Truth Social, declaring, “Just out: No Inflation!!! ‘Too Late’ must lower the RATE, BIG, right now. Powell is a total disaster, who doesn’t have a clue!!!” His remarks underscore a growing impatience with Powell’s approach to monetary policy.
The recent report from CNBC stated that the producer price index (PPI), which assesses input costs for goods and services, showed a surprising decline of 0.1% for August. This came after a revised increase of 0.7% in July. Economists had originally anticipated a rise of 0.3%. On a year-over-year basis, the PPI still reported a 2.6% gain, but the month-over-month drop was unexpected. “That’s a real shocker… the idea that inflation is so much weaker than anticipated,” CNBC host Becky Quick commented, reflecting the broader surprise among economic analysts.
Rick Santelli, another CNBC host, echoed this sentiment, expressing genuine surprise at the drop. “Real progress here: 2.6 percent on year-over-year headline. We were expecting 3.3 [percent],” he noted, suggesting a hopeful trend after months of higher inflation rates. Santelli indicated that earlier inflation spikes might be fading, stating, “Those little blips seem to be moving back into the sunset.”
Confirming the implications of the data was Allianz Chief Economic Advisor Mohamed El-Erian. He offered insights on how consumers have been less burdened by tariffs than anticipated. El-Erian explained, “There’s the exporter, there’s the importer, and there’s the consumer, and so far the consumer is carrying the least of the burden.” He later noted that companies are assessing their pricing strategies closely, unable to pass on as much of the price increase to consumers as they had wanted. “What we’re learning is that the final impact [of tariffs] on the consumer is much less than people expected,” he concluded.
El-Erian’s remarks paralleled Trump’s past assertions regarding tariffs, as he maintained that high tariffs would not significantly harm consumers. The inflation figures, if indeed accurate, raise questions about the Fed’s next steps. El-Erian posed a pivotal question: “If the Fed is truly data dependent, the question should be, ‘Why not 50 [basis points]?’” Lowering rates could make borrowing cheaper for homeowners and consumers, potentially spurring economic growth.
In a previous message to Powell, Trump argued passionately for cutting interest rates. He wrote, “Jerome, you are, as usual, ‘too late.’ You have cost the USA a fortune — and continue to do so.” The president pointed out how U.S. rates were among the highest in the industrialized world, calling for substantial reductions. “You should lower the rate — by a lot! Hundreds of billions of dollars being lost! No inflation,” he added, emphasizing the urgency he sees in the current economic discrepancy.
The Federal Reserve Board is scheduled to meet soon and is expected to consider lowering the interest rate, a move that could align with Trump’s demands. With the current target rate sitting between 4.25 and 4.5 percent, the prospect of a 50-basis point cut could elevate it to between 3.75 and 4 percent. Such a decision would not only satisfy Trump but might also influence how consumers and markets respond to the economic landscape in the months ahead.
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