Warsh Signals Rate Hike; Markets Flip, Trump Shrugs

Bessent, speaking to CNBC from the G20 finance meeting in Asheville, N.C., pushed back directly. "It is my belief that we've seen a supply shock, and traditionally you don't raise into a supply shock unless you see second- or third-order effects," he said. "And we are seeing the core inflation has remained very, very restrained."

Citigroup economist Andrew Hollenhorst told clients Warsh's remarks were "relatively uncontroversial and have been restated by Warsh each time he has spoken" — more hawkish than usual, but "only marginally so." His call: "There will not be a consensus to hike rates in September."

David Kelly, chief global strategist at JPMorgan Asset Management, wrote that "the economy doesn't have quite as much momentum as Kevin Warsh suggested," and that markets "may have been premature" in pricing a September move.

Bank of America went the other way, keeping a call for three increases ahead. "Absent a material downside surprise, the onus is now on Warsh to deliver a [September] hike," economist Aditya Bhave wrote. "Otherwise, he risks undermining some of the credibility he gained on Friday."

The Fed chairman also drew scorn from the left. On MS NOW's "Morning Joe," host Stephanie Ruhle mocked Warsh over whose influence he answers to, Raw Story reported.

The Political Collision

Trump installed Warsh after blasting predecessor Jerome Powell for refusing to slash rates aggressively. A September hike would be the opposite of what the White House has demanded — and it would come with the president saying out loud that rates are already too high.

The American Conservative read the Jackson Hole remarks as Warsh setting up a potential showdown with the president who appointed him, arguing the chairman may be willing to buck Trump. CNBC framed the split more simply: Trump wants to floor it on growth while Warsh eyes the brakes.

One wrinkle for the White House: Powell has not vanished. He no longer runs the Fed but still holds a vote on whether rates go up — the same single vote Warsh has, as MarketWatch noted.

The bond market has already moved. The Frank reported Monday that Treasury yields topped 4.75%, their highest since January 2025, and MarketWatch asked whether bond investors should worry with Warsh running the Fed, calling U.S. government debt a formerly drama-free asset that is now causing concern.