US National Economic Council Director Kevin Hassett said President Donald Trump is likely to have a view if the Federal Reserve raises interest rates next week, while stressing that the central bank's independence should be respected.
Hassett said he has "high regard" for Fed Governor Kevin Warsh and emphasised the importance of allowing the central bank to make independent decisions.
"If the Fed hikes, Trump will have an opinion, I'm sure," Hassett said in an interview with Bloomberg TV.
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His comments come as financial markets have sharply increased bets on a Federal Reserve rate hike at its September 15-16 policy meeting following the latest US inflation data.
Markets Price In 90% Chance Of Rate Hike
Traders are now pricing in around a 90% probability of a 25-basis-point rate hike next week, up from roughly 70% before the latest consumer price inflation report, according to Bloomberg. The shift followed August's CPI data, which showed consumer prices rose 0.4% month-on-month and 3.4% year-on-year, broadly in line with expectations.
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However, core CPI, which excludes food and energy, increased 0.3% month-on-month, coming in above expectations. Core inflation stood at 2.4% year-on-year. The reading has raised concerns that underlying price pressures remain sticky, potentially limiting the Fed's ability to ease monetary policy.
Hassett Says Inflation Is Decelerating
Despite the renewed rate-hike expectations, Hassett said inflation has been clearly decelerating over the past three months. The comments come against a backdrop of elevated energy prices, with geopolitical tensions in the Middle East pushing up fuel costs and adding to inflation concerns.
Hassett also flagged diesel prices as a major concern for the US economy.
"We have a big issue with diesel because it's a refined product," Hassett said in comments to Fox Business, highlighting the pressure from higher refined fuel prices.
Oil And Diesel Add To Inflation Concerns
Energy prices were among the biggest contributors to August's CPI increase. Gasoline prices rose 3.9% during the month, accounting for more than one-third of the overall increase in consumer prices. The broader energy index rose 2.1% in August and was up 16.3% from a year earlier.
Higher crude and refined-product prices have added another layer of uncertainty for the Federal Reserve, particularly as policymakers assess whether energy-driven inflation could become broader and more persistent. The latest CPI report followed Thursday's producer price index data, which showed US wholesale prices rising 5.4% year-on-year in August.
With the September meeting just days away, markets will closely watch the Fed's decision and policymakers' guidance on the path for interest rates amid persistent inflation risks and a still-evolving geopolitical environment.
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