How Trump Will Bring Back Inflation
Start with tariffs. Then replace Jerome Powell with a lackey.
The Trump tariffs are starting to show up in the inflation numbers, with the Consumer Price Index rising three times as fast in June as it did in May. Inflation remains a relatively-low 2.7 percent (compared to 2.4 percent in May), but the spike is probably sufficient to dissuade the Federal Reserve from lowering interest rates in July. That in turn will prompt Trump to scream and yell once more that Fed Chair Jerome Powell must go. But this time Trump has a plan to get rid of him.
A Fed chair can be fired only “for cause,” at least in theory, so now Trump is building a case against Powell based on cost overruns on some renovations at the Fed, and the leading candidates to replace Powell are competing to show who can express greater disapproval of Powell’s housekeeping; who can cheer the inflationary tariffs more enthusiastically (Kevin Hassett’s winning that one); and who can most reassure Trump that, if appointed, Fed policy will be dictated from the Oval Office (Hassett’s winning that one, too). If you think June’s inflation numbers are worrying, you ain’t seen nothin’ yet. That’s the subject of my latest New Republic piece. You can read it here.