Trump Faces Interest Rate Humiliation After Grim Inflation Report

Donald Trump’s crusade to cut interest rates took a major hit when the U.S. Consumer Price Index report, released Friday, showed inflation was still climbing.

Overall inflation continued its 3.4 percent annual rise, and a wide range of core goods and services grew more costly in August.

The Bureau of Labor Statistics reported that the consumer price index rose a seasonally adjusted 0.4 percent for the month. There was little change from July.

The CPI report is the final inflation figure the Fed will see before deciding on whether to act on interest rates at its meeting on Wednesday.

Economists predicted that interest rates would rise if inflation wasn’t kept in check over the summer. The Wall Street Journal suggested traders now put the probability of an interest rate hike next week at 90 percent.

“The debate has quickly shifted from whether the Fed will hike to the more important question of how many hikes this cycle will ultimately require,” Seema Shah, chief global strategist at Principal Asset Management, told the Journal. “We do not expect the Fed to be one-and-done.”

The inflation state of play was the most anticipated in years because of the significance of the Fed’s meeting next week. The former Fed Chair Jerome Powell was fired because he tuned out Trump’s incessant demands for a rate cut. Now, with the pressure on his successor, Kevin Warsh, to deliver, he will face even more pushback from non-Trumper members of his board to try and tackle inflation by inching up the rate.

Policymakers have claimed a quarter-point rise would do little to bring inflation down sufficiently.

With the war with Iran seemingly unresolvable, soaring gas prices at the pump remain the biggest sticking point. Gas prices rose 3.9 percent in August, and AAA said Friday that diesel prices had reached $6 a gallon. Fuel oil rose 10.1 percent.

Core prices, which exclude food and energy, rose 0.3% from July, according to the Labor Department.