Jerome Powell's tenure as Fed Chair officially ends today. And to mark the occasion, wholesale inflation came in at 6% for April. Biggest PPI jump since 2022.
The estimate was 0.5% month-over-month and we got 1.4%. Energy is driving most of it. The Iran situation has kept things tense around the Strait of Hormuz, oil prices won't come down, and gas is averaging above $4.50 nationally.
Kevin Warsh inherits this starting tomorrow. He walks into a situation where:
- PPI at 6% and accelerating
- CPI still around 3.8%
- Labor market hasn't cracked enough to justify cuts
- Markets are actually pricing in odds of a rate hike, not a cut
Meanwhile Bessent is out there saying he sees "substantial disinflation ahead." I don't really know how you look at a 6% PPI print and say that. Maybe he's seeing something the rest of us aren't.
The political angle is getting louder too. There's a pretty direct line from the Hormuz situation to energy costs to this inflation print. Gas at $4.50 makes abstract economic policy feel very personal very fast. The anti-war argument basically writes itself at this point.
Curious what people think Warsh does first. Does he try to hold rates where they are or does data like this force a move?
Powell walks out of the Fed today and PPI just printed 6% — quite the farewell gift
byu/Carter_LW ineconomy
Posted by Carter_LW
12 Comments
The real inflationary wave has not hit yet. The question is whether it will be a heavy storm or a giant tsunami.
nah warsh is cooked
Well a rate cut is the wrong move so expect that.
What will be the leverage Trump tries to use on Walsh to get him to cut rates?
Fucking lost me at
“Maybe bessent sees something we dont”
If you are taking trump admim at their word or assign good faith to them, you are wasting EVERYONE’S time.
Wake up so we can bring liberal sanity back to america ffs
C’mon OP….
You’re implicitly blaming Powell for the inflation when this is 100% the responsiblity of Trump. The Fed can do what it can but when you start a war that causes oil prices to spike while your randomly throwing tarriffs around, this is what you get. When Trump took over inflation was 2.8%.
Secondly, Warsh serves at the behest of Trump. He is not independent of him, which is why he was chosen. As such he will ALWAYS want rates to go down despite spiraling inflation because he works for Trump, not the interests of the US.
Third, why the hell are you listening to what Scott Bessent says? Please, if you’re actually paying attention you’d know the man is a professional cheerleader without the pom poms or any sense of shame.
To answer your question, there are 12 members on the FOMC. Five are now Trump sychopants (Warsh, Bowman, Cook, Miran. Quarles) so all it takes it 2 of the other 7 to lower rates.
Enjoy $10 gas, bread, and milk.
Common, do you really trust Bessent to say anything else ?
It’s transitory…
but Warsh likes to use “alternate” measures of inflation so I’m sure his alternate measure will support a rate cut.
How long do you think until Trump tries to fire Warsh?
I mean how is that Powells fault? It was the big orange douchebag.
Warsh is a Austrian school of econ guy, so he’s gonna go full Volcker