David Zervos, Potential Fed Chair Candidate, Advocates for Aggressive Interest Rate Cuts

Wall Street veteran and Jefferies’ chief market strategist, David Zervos, now earns attention as a leading name for the next Federal Reserve chair. On Thursday, he spoke in favor of quick cuts in interest rates. His view joins others who ask for Fed action without delay.

Calling for Immediate Rate Reductions

For the last three Fed meetings, Zervos has asked for a half percentage point cut in the federal funds rate. In a CNBC interview, he repeated his call even as data shows inflation still holds on. Zervos noted the July Producer Price Index (PPI) shows a rise in pipeline prices.

He sees the PPI data not as a stop sign but as the last mark in a long fight against rising prices. A quick drop in rates, he says, will help keep the labor market strong and could add a million new jobs.

"I’m still absolutely there. I think there is a reasonable storyline, a very cogent storyline, that suggests monetary policy is restrictive," Zervos stated. "Generally speaking, I don’t see any reason why this [PPI] number changes that view."

Expanding the List of Potential Fed Chairs

At first, discussions on Jerome Powell’s successor—whose term ends next year—named only a few people. In recent days, the list has grown to close to a dozen. Among these are former Fed workers, Trump team advisers, and well-known Wall Street economists.

Zervos and BlackRock bond strategist Rick Rieder stand out. They bring real market skills rather than a pure economics view. Zervos thinks a Fed filled with market-smart staff would really work well.

"I think it would be an incredible benefit to have more market-competent people involved in the monetary policy decision," he commented.

Broader Support for Rate Cuts

Zervos is not the only one who wants a clear rate cut. Economist Marc Sumerlin, also eyed for the Fed chair job, backs a similar half-point drop. He says the Fed has been too slow in taming inflation.

Former President Donald Trump has pressed for even bigger cuts. He suggests dropping up to 3 percentage points (300 basis points) from the current rate of about 4.33%. Zervos admitted he might not cut that much, but he remains open to a drop of up to 200 basis points. He sees modern tech changes and shifts in supply as reasons that could shape future price drops.

Navigating Politics and Monetary Policy

Zervos says politics will not shake his view. He faces harsh words from people like Trump. He knows that the Fed chair job comes with political ties. Zervos stressed that facts should lead the discussion and that decisions must follow the rules set by Congress.

"You go into that job fully understanding that you’re involved in the political process… The goal is to have the debate be driven by facts and be driven by what is best for achieving the mandates that Congress sets out," Zervos said.

In the race to select the next Federal Reserve head, support for fast rate cuts shows worries about balancing price controls with growth and jobs. David Zervos’s solid market view and call for easier monetary policy mark him as an important choice in this leadership change.

Economists Warn of Rising Tariff-Driven Inflation as Trump Criticizes Goldman Sachs

Tariffs and inflation now drive many talks. Economists on Wall Street agree that tariffs will raise consumer prices soon. Recent consumer price data look upbeat. Tariffs, however, will push prices up. Goldman Sachs said prices affected by tariffs will increase. This view upset many, including former President Donald Trump. Many experts share this warning.

Goldman Sachs Faces Backlash Amid Broad Consensus

Goldman Sachs sparked conflict when its economists showed that tariffs will hit consumers harder in the second half of 2025. Trump shared his anger on Truth Social. He told CEO David Solomon to fire the economist behind the study or to leave the job himself.

Goldman Sachs economist David Mericle spoke on CNBC. He said, "If we fired every economist who shares this view, Wall Street would soon have many empty seats." His words keep market views close and simple.

Wall Street Economists See Inflation Creeping Upward

Many economists see a steady rise in prices. Companies use up cheaper stocks and then pass on the high cost of tariffs. Tariff rates climbed from 3% to almost 18% this year. Soon, consumers will see higher bills.

• Michael Feroli of JPMorgan Chase says tariffs may take 1% off the economy and add 1% to 1.5% to inflation.
• Brian Rose, a senior economist at UBS, sees core inflation stop falling as tariffs push store prices higher; he notes that slowing shelter costs and a consumer check might limit the jump.
• Pantheon Macroeconomics watches core inflation climb 1 percentage point, reaching 3.5% by year-end.
• PNC chief economist Gus Faucher sees core PCE inflation rising above the Fed’s target soon.

Most experts see no wild inflation. They expect a slow rise of 0.3% to 0.5% each month. This rise may place core inflation in the low- to mid-3% range.

Impact on Federal Reserve Policy and Consumer Spending

The rise in inflation will affect the Fed’s plans. With price pressures growing, many economists think:

• The Fed may wait to cut rates, starting later as the job market drops and if inflation seems brief.
• Higher prices may slow down how much people spend. This change could also slow economic growth for the rest of the year.
• JPMorgan projects that tariffs might lower GDP growth by nearly 1%, while the Blue Chip Economic Indicators report shows about 0.85% growth in the second half of 2025. —

Near-Term Concerns and Inflation Stickiness

Some risks may push inflation higher. On August 29, the tariff break for goods under $800 ends. This rule change may raise retail prices.

Other worries are that some prices move slowly. Rent, insurance, and home items change over longer periods. The Cleveland Fed measured sticky-price CPI inflation at a 3.8% yearly rise. This level is the highest since May 2024. It shows that price increases persist in some areas, even when food and energy do not change as much.

BNP Paribas notes that inflation may spread. Service prices also show upward moves. The key worry for the Fed is if high prices will stay for a long time.

Summary of Expert Views on Tariff Inflation Effects

• Tariffs may drive inflation up by 1 to 1.5% and reduce GDP by about 1%.
• Core inflation may rise slowly, reaching about 3.5% by year-end.
• The Fed may hold off on rate cuts until it sees that price rises are short-lived.
• Ending tariff breaks might push store prices higher.
• Slow shifts in some prices could lead to lasting cost increases.

Conclusion

Experts share one clear message. Tariffs seem set to push inflation higher soon. This shift will challenge both buyers and policy makers. Trump’s anger at Goldman Sachs shows the tight politics around this trend. Yet, the firm’s forecast fits many Wall Street views. In the coming months, buyers should get ready for modest price hikes, especially for items hit by tariffs. Investors and policy makers now watch as these changes shape economic growth and Fed moves.

For continual updates on inflation, tariffs, and market reactions, stay tuned to CNBC.

Fed Board Contenders Miran and Bullard Say Trump’s Tariffs Do Not Drive Inflation

In recent talks, two top economists and leading Fed candidates, Stephen Miran and James Bullard, argued that Trump’s tariffs do not add to inflation. They link their view with Trump’s own claim that tariffs do not push prices higher. This claim has stirred debate among economists and decision makers.

Tariffs and Inflation: Diverging Perspectives

Miran, who serves on the White House Council of Economic Advisers and is picked to finish a short term as a Fed governor, told CNBC that there is “no proof that any tariff raised prices.” He noted that forecasts of harm from tariffs did not come true when the years passed.

Bullard, a former head of the St. Louis Federal Reserve and a likely candidate to take over as Fed Chair, voiced a similar idea. He said that data shows “Trump’s aggressive tariffs have not driven inflation.” Bullard explained that price jumps lately seem to be one-time changes rather than a slow and steady rise.

Fed Policy and Interest Rate Outlook

Each economist skipped a direct vote on future rate moves. Bullard hinted that the FOMC might cut rates again as soon as September 2025. He said the Fed could lower its key rate by one full point within one year. This plan would bring rates near a “neutral” level.

Bullard mentioned that the Fed stopped cutting rates because of uncertain tariff effects. Now, with half a year of new data, he sees the taxes as having small and short-term effects on price levels instead of causing a lasting rise.

Inflation Data and Market Reactions

The discussion followed a report from the Bureau of Labor Statistics. The report noted that the Consumer Price Index (CPI) increased by 2.7% for July 2025. Although this is above the Fed’s goal of 2%, it is lower than what Wall Street expected. This news has sparked new debates on the tariff’s role in price movements.

Federal Reserve Independence Amid Political Pressure

Both Miran and Bullard stressed the need for the Fed to work without outside influence. Their remarks came while tensions grew between Trump and Fed Chair Powell. Trump has often taken aim at the Fed and pressed for strong rate cuts. After the recent CPI report, Trump posted on his social media and demanded a 3 percentage point rate cut. He blamed slow policy moves for the current issues.

Bullard replied in a measured tone, noting, “He has his view. Many have their view.” His words remind us that the Fed needs to consider many points of view.

Context: Fed Leadership Changes on the Horizon

Miran is set to serve out the rest of former Governor Adriana Kugler’s term after her exit. Meanwhile, Bullard is considered among several names to fill the gap when Jerome Powell’s chairmanship ends in May 2026. —

Key Takeaways:

• Miran and Bullard dismiss the idea that tariffs cause ongoing inflation.
• July 2025 data shows a CPI rise of 2.7%, which cools some earlier fears.
• Bullard sees a chance for Fed rate cuts to start by September, to ease borrowing.
• Both stress that the Fed must work free from political pressure.
• A shift in Fed leadership may change the future path of U.S. monetary policy.

As the Fed moves through these changes, the views of candidates like Miran and Bullard will be closely watched for clues to the future direction of U.S. money policy.