The US Federal Reserve began its quiet period this weekend, with officials still weighing whether or not increased interest rates are needed to dampen inflation.
The Fed's self-imposed blackout window refers to the two-week period in which US central bankers are prohibited from making public remarks on policy. The current quiet period began on Saturday and will run until September 17, the day after the Fed's next rate-setting meeting.
Policymakers entered the period uncertain if a move to increase interest rates is needed to clamp down on energy-driven inflation from the supply crunch in the Middle East, or if they feel inflation is contained.
This week's blockbuster labour report, which showed the US economy smashed expectations with 162,000 job gains in August, suggested the market is stronger than previously believed. Separate government data last month showed the Fed's inflation remained firm at 3.7 per cent.
“The August employment report was stronger than expected, but not enough to cause us to change our call for the Federal Reserve to remain on hold. However, the bar for raising rates is probably lower if the Fed doesn’t see progress on inflation,” Nancy Houten, lead US economist at Oxford Economics, wrote in a note on Friday.
About 60 per cent of traders believe the Fed will deliver an increase of a quarter of a point on September 16, raising its target range for the federal funds rate to 3.75 per cent to 4 per cent, according to CME Group data.
However, a prominent member of the Fed's board of governors suggested a rate increase is not certain.
Governor Christopher Waller told Reuters he was willing to support “holding the policy rate at its current level” if he saw continued progress towards the Fed's long-term 2 per cent inflation target.
“If inflation comes in hot, I would consider a rate hike,” Mr Waller said, referring to the upcoming Consumer Price Index inflation report this week.
The report will be the final major inflation print policymakers receive before their September 15-16 meeting. Wells Fargo economists anticipate CPI inflation rose 0.4 per cent on a monthly basis in August and 2.4 per cent year-on-year.
“All told, we expect the report to show that while headline inflation remains influenced by the ebbs and flows of the conflict in the Middle East, core inflation remains contained,” they wrote.
The September meeting follows a July decision in which the Fed held rates steady for a fourth straight meeting. Three officials dissented against the decision, preferring a rate increase. Minutes released from the meeting later showed growing hawkish sentiment within the rate-setting committee.
Trump turns up heat on Warsh
The White House used the most recent labour market data to argue for lowering interest rates, with President Donald Trump escalating the pressure on Fed chairman Kevin Warsh.
“Lower the rate or I'll stop trading with countries with which he have a deficit,” Mr Trump wrote in a social media post on Thursday. It was the first time he threatened to use tariffs it the central bank did not lower interest rates.
It also showed the administration is increasing the pressure on Mr Warsh, who so far Mr Trump has withheld from attacking unlike his predecessor Jerome Powell.
Other senior members in the administration including Vice President JD Vance and Treasury Secretary Scott Bessent also said the Fed should not be raising interest rates.
Mr Warsh, who has largely avoided indicating to markets how the Fed might move on policy, said during his Jackson Hole keynote address the central bank might be forced to act if inflation does not moderate.
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That's our job,” he said.
