Dem
47
GOP
53
The new Fed chairman, multimillionaire Kevin Warsh, got off to a bad start yesterday at his first Federal Open Market Committee (FOMC) meeting. Not only did the FOMC keep interest rates steady, but Warsh suggested that they may be raised if inflation keeps up. The vote was 12-0, the first unanimous decision in a year. Trump wants a rate cut now. The computer models the Fed is using suggest that inflation will fall to 2.3% next year, but the models don't take into account things like the next war Trump might start or how much in "fees" Iran might charge for safe passage through the Strait of Hormuz.
The official statement from the Committee differs quite a bit from the one it released in April. If you want to see what changed, here it is. Basically, all the nice stuff about how great the economy is was axed. The suggestion that a rate cut might be forthcoming also bit the dust.
Markets reacted calmly to the announcement. Investors may now think that Warsh has what it takes to stand up to Trump and do what the economy needs, rather than what Trump wants. The S&P 500 was off only 1.2% at the close of trading.
One thing that Warsh did say is that he plans to limit the Fed's public communication going forward. This immediately got a response from Sen. Elizabeth Warren (D-MA), who said: "I'm very uneasy when the head of any government agency says they would like less transparency into their actions and thinking." Warren has previously called Warsh Trump's "sock puppet."
Trump is probably unhappy with Warsh, but trying to fire the Chair after a week on the job might freak out the markets. Besides, Trump has his hands full with all the flak he is going to take about the Iran MOU without picking another fight. At least for now. (V)