Former White House economic adviser on Fed rates: ‘Tough position’ for Warsh

Stephen Moore, a former economic adviser to President Trump, said Monday that Federal Reserve Chair Kevin Warsh is in a “tough” position ahead of the central bank’s meeting regarding interest rates this week.

“It’s a tough position for my friend Kevin Warsh because I think job number one for the Fed [is to] get that inflation rate down to 2 percent or lower. That might mean another rate hike,” Moore said on “CNN News Central.”

Moore advised Trump during his 2016 presidential campaign and his first term in office. He is the co-founder of the conservative Club for Growth.

The Federal Open Market Committee (FOMC) will gather Tuesday and Wednesday, six weeks after officials unanimously voted to raise interest rates by a quarter point to combat persistent inflation.

“For more than five years, inflation has been running above target,” Warsh said after the Fed’s last meeting . “So our predominant focus is on the price-stability side of our mandate.

“The plain fact is that inflation is too high and has been for too long.”

Since then, Warsh and his FOMC colleagues have received data that shows inflation is not on the way down to the 2 percent target. Annual inflation rose from August to September, from 3.4 percent to 3.7 percent , according to the consumer price index.

The Federal Reserve Bank of Cleveland projects that the personal consumption expenditures (PCE) price index, the central bank’s preferred inflation metric , will report prices as being up 3.6 percent year-over-year in September.

The Bureau of Economic Analysis will release PCE data Thursday, after the FOMC decides on rates.

The hot inflation data puts Warsh in a bind , as Trump nominated the first-year Fed chair with the expectation he would cut rates .

After the FOMC raised rates last month, the president praised Warsh but criticized the other 11 members of the rate-setting panel, three of whom he appointed.

“He’s a good man, Kevin Warsh, but no matter how good a job [he does], he’s got a hostile board,” the president told reporters, hours after the Fed raised rates.

Despite inflation remaining above 2 percent, traders are pricing in a nearly 90 percent chance of the Fed holding rates at a range of 3.75 percent to 4 percent, according to the CME FedWatch tool .

Multiple FOMC officials, including Fed Vice Chair Philip Jefferson and Federal Reserve Bank of New York President John Williams, have said during the intermeeting period they need to evaluate economic data before deciding on the next course for monetary policy.

“My colleagues and I will need to come to our own judgment, which may take more time,” Jefferson said earlier this month at the University of Virginia.