By Matt Grossman
Two weeks after Kevin Warsh's first meeting as Fed chairman, a top Trump economic adviser is hinting that the White House might have little patience for any move to raise rates.
The Fed's preferred inflation index is running above 4%, and Warsh has emphasized that wrestling it back down to 2% is nonnegotiable. But in an interview on Fox Business on Wednesday morning, National Economic Council Director Kevin Hassett warned that raising rates to fight price increases would be misguided.
Hassett argued that the economy is surging amid a "supply-driven boom." He noted that Warsh has championed a similar view-a perspective Warsh emphasized when he was campaigning last year to lead the Fed. "In that backdrop, it's just a macroeconomic mistake to raise rates," Hassett said.
President Trump continuously lambasted his previous Fed chair, Jerome Powell, for holding rates higher than Trump wanted. At times over the past few months, Trump has indicated he will give Warsh more runway to guide policy as he sees fit. Hassett's Wednesday comments, though, point to a White House that still has strong ideas about how the Fed should set policy.
For his part, Warsh has said little about how he plans to respond to elevated inflation. In his press conference after the Fed's June decision to hold rates steady, he declined to address whether a rate hike would be under consideration at the next meeting in late July. He punted again on addressing the interest-rate outlook during a panel discussion at a central-banking conference in Portugal Wednesday morning.
This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).