Tag Archive for: Economic

Steve Bannon Proposes Bold Leadership Move: Can Scott Bessent Lead Both Treasury and the Fed?

Steve Bannon Proposes Dual Role for Scott Bessent as Treasury Secretary and Federal Reserve Chair

Steve Bannon, a close White House aide and former chief strategist under President Donald Trump, has set out a new idea. He wants Scott Bessent to serve as both the U.S. Treasury Secretary and the head of the Federal Reserve at the same time. This idea was raised during a podcast chat with Sean Spicer, who worked as President Trump’s press secretary during his first term.

Bannon’s Unusual Idea

Bannon wants Bessent to keep his current job at the Treasury while also leading the Federal Reserve for a short period. On a podcast scheduled for 6 p.m. Friday on YouTube, Bannon said:

“I am a strong believer that on a temporary basis, Scott Bessent should be both the leader of the Federal Reserve and the Treasury secretary, and then step down from Treasury after the midterm elections to fully take over the Fed.”

No modern leader has ever held both roles at once. In the past, before the Banking Act of 1935 set up how the Fed works today, the Treasury Secretary held a seat on the Fed’s Board of Governors by default. But having one person head both key financial bodies is new and untested today.

Reaction from the White House

Even though Bannon has some sway in parts of the administration, the White House did not accept the idea. A spokesperson said:

“Such an arrangement is not being and has never been considered by the White House.”

This statement makes clear that officials have no plan to give Bessent both roles.

Context on Scott Bessent and Fed Leadership

Scott Bessent is now the U.S. Treasury Secretary. He also plays a part in finding a new leader for the Federal Reserve as Jerome Powell’s term ends in May 2026. Reports note that about 11 candidates are being examined for the Fed Chair role. Bessent was once mentioned as a possible candidate, but he has shown that he is happy in his current job at the Treasury.

The top job at the Federal Reserve is very important. The person in charge sets the rules for money and credit, which affect growth, prices, and jobs. Jerome Powell has faced criticism from former President Trump over how the Fed handles interest rates.

Historical Note and Examples

There is no current case where one person runs both the Treasury and the Fed at the same time. Janet Yellen once led the Fed and later became Treasury Secretary, but she did so in different periods. Bannon’s plan would bring both roles together at once.

Summary

  • Steve Bannon suggests that Treasury Secretary Scott Bessent should hold both Treasury and Federal Reserve roles temporarily.
  • The White House quickly dismisses this plan.
  • No recent example shows one person in charge of both agencies at once.
  • Bessent helps with the Fed Chair search, yet he focuses on his Treasury work.
  • Jerome Powell’s term as Fed Chair ends in May 2026 amid high political and economic scrutiny.

Bannon’s idea is unlikely to move forward, but it adds to the talk about who will lead the Federal Reserve and guide U.S. economic policy as the nation gets closer to the midterm elections.

Stay tuned to CNBC and other trusted financial news sources for updates on the Fed Chair search and U.S. economic leadership.

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Germany’s Economic Revival: Experts Remain Skeptical Amid Sluggish Growth and Spending Delays

Germany’s Role as Europe’s Growth Driver Under Scrutiny by Economists

Germany sits as one of Europe’s main economic powers. Economists now question its ability to spark growth for the entire continent. Earlier this year, experts focused on Germany with hope tied to a strong economic bounce. This rebound was expected to lift the euro zone and Germany alike. New data and expert views now show that these hopes might come too soon.

High Hopes Amidst Policy Shifts

The surge of hope came with major policy moves. The German government changed its debt brake rule. This rule once kept the federal debt in strict limits. New rules let some defense and security spending go over the limit. Germany also started a €500 billion ($592 billion) fund for roads, energy systems, and climate plans. These steps aimed to push up the slow economic pace.

These moves were seen as a chance to turn around weak growth. After years of annual declines in 2023 and 2024, growth was expected to pick up in 2025. The latest data shows that Germany’s GDP barely rose by 0.3% in the first quarter of 2025 before it dropped by 0.3% in the second quarter.

Euro Zone Growth Remains Tepid

The rest of the euro zone seems to share Germany’s struggles. The region’s GDP grew by 0.6% in the first quarter of 2025, then slowed to 0.1% later. Martins Kazaks from the European Central Bank said this month that Germany plays a key role in the euro zone. Still, many experts now doubt the speed and size of its impact.

Spending Delays and Economic Impact

Holger Schmieding at Berenberg noted a rise in defense orders and new road and energy works. Yet, these sums have not come through in the nation’s output data. He said, “The actual spending moves slower than many of the more upbeat voices had thought. In Germany, it takes time to spend money.”

Franziska Palmas at Capital Economics saw more challenges below the surface of the new spending plan. She noted that, aside from more money on defense and roads, the government also uses extra funds for:
• Cuts in electricity tax for businesses
• Higher spending in pensions, healthcare, and social care driven by the aging population

Palmas made clear that while lowering taxes may spur some economic action, more spending on healthcare and pensions will mainly cover rising costs, not boost economic growth.

Modest Growth Expectations for 2026

Big German economic groups now predict a growth just above 1% for Germany in 2026. The European Central Bank sees the euro zone growing around 1% too. Schmieding of Berenberg thinks that Germany’s new spending will add about 0.3 percentage points to its growth. This should raise the euro zone figures by about 0.1 percentage point. Palmas expects a similar effect where Germany might lift euro zone growth by about 0.2 percentage points.

Other factors shape the euro zone’s growth. Recent cuts in interest rates by the ECB and strong performance in countries like Spain, which benefit from more immigration and jobs, help. Yet, factors like U.S. tariffs and tighter spending plans in France may hold back progress.

Broader Implications Beyond GDP

Even with a cautious view, many expect Germany’s slow but steady recovery to bring small gains to its neighbors. Schmieding noted, “Germany’s move from a short recession until mid-2024 to growth after late 2025 will give its neighbors a small boost. Germany remains an important trade partner.”

In summary, Germany’s bold fiscal changes have sparked hope, but the pace of spending and real growth numbers remain slow. Experts warn that 2026 may bring only a limited rise, amid a mix of spending challenges. Still, as Europe’s largest economy, Germany’s bounce-back will count for the overall health of the region.

For continuous updates on European and global economic developments, stay tuned to CNBC.

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White House Supports Fed’s Prudent Rate Cut: Kevin Hassett’s Insights on Economic Strategy

Federal Reserve’s Quarter-Point Rate Cut Seen as a ‘Smart Move’ by White House Economic Advisor

September 18, 2025 — The Fed cut its borrowing rate by 0.25%. The White House sees the move as wise. White House advisor Kevin Hassett told CNBC on Thursday that the decision fits a careful style of managing the economy.

A Steady and Careful Move

The FOMC voted to drop rates by 25 basis points. Most members agreed. Some in the administration wanted a deeper cut. New Fed Governor Stephen Miran, known from the Council of Economic Advisers, pressed for a 50 basis-point cut. But the vote came out 11 to 1, and his view did not win.

Hassett said that the cut builds slow progress. He said policymakers will watch each new piece of data before they act again. On CNBC’s Squawk Box, he said:

“Moving kind of slow and steady and heading towards a target, watch the data come in, that’s what prudent policy is.”

He added that although Miran wanted a deeper cut, the 0.25% drop marks a sound start if further cuts are needed.

In the White House and Market

President Donald Trump, who picked Miran for the Fed, has not yet shared his view on this choice. In the past, Trump has been critical of the Fed and has pressed for faster and larger cuts. He even called Fed Chair Jerome Powell “Too Late” for a slow pace in meeting economic needs.

The president has asked for cuts up to 3 percentage points. His view stands apart from the latest FOMC plans. Trump often points to the slow U.S. housing market and the rising federal debt, which now nears $37 trillion.

Economic Prospects: Growth, Price Rise, and a Fine-Tuned Plan

Hassett pointed out that the Fed faces a tough task. The U.S. economy grew above 3% in the third quarter. Such growth usually makes a rate cut less likely. Yet, price rise stays above the 2% goal, although it shows signs of slowing down.

With mixed signals, Hassett said it makes sense for Fed members to look at all the models and listen to many views. He asked, “What can we do in an economy that is growing and has inflation slowing but still above target?”

Hassett called the 0.25% cut a careful balance—a move that shows hope without taking a big risk in pushing up prices.

Looking Ahead: Fed Chair Hints

Some see Kevin Hassett as a strong choice to take over from Jerome Powell next year. His words show a preference for a plan built on clear data and many opinions on the economy.

Summary of Key Points:

  • The Fed dropped its main rate by 0.25% as a careful measure.
  • White House advisor Kevin Hassett called the move smart.
  • Fed Governor Stephen Miran had asked for a 0.50% drop, but most members disagreed.
  • President Trump has often pushed for deeper cuts, though he did not comment on this move.
  • The U.S. economy grew over 3% even as inflation stayed above 2%.
  • Hassett stressed the need to view multiple data points and ideas.
  • Hassett is seen as a likely candidate for Fed Chair next year.

For more news on economic changes and the Fed’s plans, follow CNBC’s live updates and expert chats.

Watch the full interview with Kevin Hassett on CNBC’s Squawk Box for more in-depth details.

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Heavy Truck Sales Plummet: Is the U.S. Economy Heading for a Recession?

Heavy Truck Sales Plunge—Is the U.S. Heading Toward a Recession?

September 17, 2025 — New data shows U.S. heavy truck sales fall fast. The U.S. Bureau of Economic Analysis reports that trucks weighing over 14,000 pounds now sell at levels unseen in four years.

Steep Decline in Heavy Truck Sales

In August 2025, truck sales dropped by over 15% from last year and by 21% compared with August 2023. This steep fall pulls worry from both economists and investors. Heavy trucks like tractor-trailers act as signs of industry strength. When truck demand grows, the manufacturing and construction scenes gain. When sales fall, the economy may slow down and enter a recession phase.

Historical Context and Economic Implications

Joe Brusuelas, chief economist at RSM, calls the trend important. He writes that the drop began in 2023 and needs a close look by policymakers.

  • During the Global Financial Crisis, truck sales dropped by more than 67% from their 2006 peak to the 2009 low.
  • In the early 2000s, as the dot-com burst hit, sales fell nearly 50% from late 1999 until 2002. These past numbers show a strong link between truck sales and overall economic work. Lower truck sales can come before a recession.

Is This a Traditional Signal or Something New?

Not all experts agree that lower truck sales clearly signal a coming recession. Paul Hickey, co-founder of Bespoke Investment Group, points out that the drop marks a slowdown in manufacturing. He also sees that today’s economy may work in different ways.

Hickey notes that while truck sales fall, the U.S. economy still grows. He sees a shift from manufacturing work toward more service and digital work. Many businesses now use online methods and technology as much as they rely on heavy industry.

As Hickey states, "Falling sales are often a recession indicator. The key word is often." His view reminds us that truck sales once gave a clear picture of the economy. New tech, like artificial intelligence and digital work, may change this picture.

What Lies Ahead?

Even after this drop, truck sales had returned near their peak after the pandemic. This makes the current fall stand out and may point to wider issues in the economy.

Investors and lawmakers now watch the next economic data. They want to know if this drop will pass or grow into a bigger issue.

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UK Inflation Holds Steady at 3.8% in August 2025: What It Means for the Bank of England and Households Ahead

UK Inflation Steady at 3.8% in August 2025: Implications for Bank of England’s Monetary Policy

The UK keeps its annual inflation at 3.8% for August 2025. The Office for National Statistics (ONS) released the data on Wednesday. The inflation figure meets economists’ hopes. The Bank of England stays alert and watches these numbers.

Inflation Details and Core Inflation Trends

  • Overall Inflation:
    The consumer price index (CPI) holds at 3.8% from July. This number stands against a 3.8% reading the month before. The BoE sees inflation close to its expected peak near 4% in September.

  • Core Inflation:
    Core inflation leaves out energy, food, alcohol, and tobacco. In August, core prices rise by 3.6% year-on-year, down from 3.8% in July. This small drop shows a slow shift in underlying prices.

ONS Chief Economist Grant Fitzner discusses price moves:

“Airfares drove prices down this month. Prices climbed less than one year ago after a big rise in July linked to the summer holidays. At the same time, prices at the pump rose, and the cost of hotel stays fell less than last year.”

Food prices go up for the fifth month in a row. The ONS sees small rises in vegetables, cheese, and fish items. These small jumps add to the overall inflation.

Economic and Market Response

Finance Minister Rachel Reeves speaks of household challenges:

“I know many families find life tough, and the economy may seem stuck. I want to bring costs down and help those who face high bills.”

After the inflation news, the British pound falls a bit against the US dollar. It trades at about $1.3637.

Bank of England’s Position on Interest Rates

Inflation stays a weighty point in the BoE’s choices. In August, the bank cut the interest rate from 4.25% to 4%. This move shows care in easing money rules while supporting growth and investment.

The BoE plans to keep rates unchanged at its meeting on Thursday. Some experts doubt a rate cut in November. Scott Gardner, Investment Strategist at Nutmeg and part of J.P. Morgan’s digital team, notes:

“Sticky inflation stops a fourth rate cut this year. Though wage gains slow, the inflation drop must continue before policymakers feel safe to cut rates again. A fourth cut would need signs that the labour market is soft—a win that brings its own costs.”

Gardner adds that a near-term rise in inflation toward 4% may push living costs up for households. He hints that “sticky inflation is likely to stay long.”

Looking Ahead

  • The BoE holds a careful view, seeing inflation match or exceed forecasts even after rate cuts.
  • Families feel pressure from high food and fuel costs.
  • Both markets and households wait on further news and signals from the BoE in the coming months.

This unfolding story shows the tight task for UK leaders. They work to keep inflation in check while still pushing the economy forward.

This is a developing news story. Further updates will follow.

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Anticipated Trade Deal with China: Treasury Secretary Bessent’s Optimism Ahead of November Tariff Deadline

Trade Deal with China Likely Before November Reciprocal Tariff Deadline, Says Treasury Secretary Bessent

In a CNBC interview, U.S. Treasury Secretary Scott Bessent felt hope. He sees a trade deal with China on the way. He adds more talks will occur before the November deadline. The deadline triggers new reciprocal tariffs.

Anticipated Talks Ahead of November Deadline

Bessent stressed that U.S. and China talks are now productive. He said on Squawk Box, “We’ll be seeing each other again.” His words show that Chinese officials see a chance to agree. The talks follow months of tense debate and shifts in stance. They began on April 2 when former President Trump announced "liberation day" tariffs on many global partners, including China.

At first, the plan was to impose tariffs as high as 145% on Chinese goods. The measures were put on hold to keep talks open. This pause would have ended on August 12 but was stretched to November 10 by the Trump team, giving both sides more time to discuss.

Impact on Global Markets and Trade Deficit

Bessent said that U.S. trading partners worry because Chinese goods flood their markets. One partner remarked, “They don’t know what to do about it.” He described markets that are upset with the quick flow of imports.

Bessent noted that in 2024, the U.S.-China trade gap reached almost $300 billion. By July 2025, the gap dropped to $128 billion. U.S. Trade Representative Jamieson Greer projects a gap reduction of at least 30% this year. He expects the trade gap to shrink further in 2026. ### Aiming for Fair and Balanced Trade

Bessent said, “Our goal is to come into balance, to have fair trade.” The deal is meant to fix trade gaps. It also sets fair rules for commerce between the two large nations.

Tensions and talks go on. Global markets watch each move. The tariff pause shows that both sides want a solution. This change may start a new era in U.S.-China trade relations.

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High Stakes: U.S.-China Trade Talks Intensify Amid Nvidia Probe and TikTok Deadline

Nvidia Probe and TikTok Deadline Loom Over U.S.-China Trade Talks

Madrid, September 15, 2025 — Trade talks between the United States and China stretch into a second day in Madrid. The discussions focus on TikTok’s role, tariff levels, and export controls. Tensions rise as new probes and tight deadlines add weight to decisions. Each word links closely to the next, making every connection count in this debate.

Progress and Challenges in Ongoing Negotiations

In the fourth round of talks over the past four months, the U.S. team sends Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. China stands with Vice Premier He Lifeng and lead trade negotiator Li Chenggang. In May, both sides agreed to pause harsh tariffs and lift some limits. Today, they build on that step to ease trade strain.

Bessent said both sides made good headway on small details. They near an agreement on TikTok’s status in the United States. He stressed, “Our Chinese counterparts asked hard things. We will see if we can meet that. We are not ready to risk national safety for a social media app.”

TikTok Deadline and Its Significance

TikTok, owned by Beijing’s ByteDance, faces a hard deadline on Wednesday. The company must close a deal to keep operating in the U.S. Its recommendation code sits at the center of these talks. Washington wants more limits on how it runs, while Beijing has put this tech under export rules.

The app holds a key spot in politics and culture, especially for young American voters. Neo Wang, a lead China strategist at Evercore ISI, said Beijing might agree to Trump’s needs on TikTok if that cuts U.S. tariffs by 10% or more.

Rising Tensions: Investigations and Regulatory Actions

Troubles mount on both sides. Over the weekend, China began two probes of the U.S. semiconductor industry:

• An anti-dumping probe on some U.S.-made analog IC chips.
• An anti-discrimination inquiry into U.S. measures that target China’s chip work.

These probes came after the U.S. added 23 China-based firms to its watch list last Friday.

On Monday, China’s market regulator said an early review found Nvidia violated the country’s law on unfair competition. More checks on the U.S. chip maker are planned. George Chen, partner at The Asia Group, said Nvidia now plays a role in moves by both sides. He sees the long probe as a tactic from China.

Diplomatic Maneuvers and Future Engagements

Officials also plan to talk about a possible meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this year. Reports state that Beijing wants Trump to visit China for the first state trip since 2017. Success in that meeting may depend on today’s decisions and on solving the TikTok issue.

Broader Implications and Reactions

Wendy Cutler, former U.S. trade representative and head of the Asia Society Policy Institute, called the talk style before the Madrid rounds “not encouraging.” She warned that China will likely ask for a rollback of new limits during Trump’s second term.

She added that the economic ties between the nations seem stuck. Both sides trade with limits on exports and tech.

Meanwhile, China’s Ministry of Commerce criticized Trump’s call for the European Union to impose up to 100% extra tariffs on China for its purchases of Russian oil. The ministry called the move a clear case of one-sided economic bullying and said it would act to guard its interests.

Outlook

As the U.S. and China work through trade disputes—amid tariff fights, technology rules, and social media debates—observers watch with care. The coming days in Madrid will shape the path of one of the world’s most important trade links.

For continuous updates on U.S.-China trade talks and related developments, stay tuned to CNBC.

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UK Economy Stalls: Implications of July’s Stagnation Ahead of Upcoming Autumn Budget

UK Economy Stalls in July as Signs of Slowdown Emerge

In July the United Kingdom’s economy did not grow. The numbers now point to a slowdown that puts more strain on Chancellor Rachel Reeves. She prepares for the Autumn Budget on November 26, 2025. The Office for National Statistics shared the data on Friday. The report shows no growth in July. It matches economists’ checks and slows down from the 0.4% rise in June.

Key Highlights from the Economic Data

  • Stagnation in July: The economy stayed the same in July. There was no drop; there was no rise.
  • Sector Performance:
    • Production output fell by 0.9%
    • Services and construction moved up by small steps.
  • Quarterly Growth Trends:
    • Growth in the second quarter of 2025 came in at 0.3%
    • This is lower than the 0.7% seen in the first quarter
  • Economic Outlook: Economists now see a slower pace for the UK later in 2025. ### Expert Perspectives

Sanjay Raja from Deutsche Bank, who acts as the lead UK economist, said:
"After a strong second quarter that showed the fastest growth among the G7, all ties now suggest a slowdown in the second half of the year." He connects this with shifts in trade, stockpiling behavior, changes in net purchases of precious metals, and cuts in public sector spending.

Paul Dales from Capital Economics, the chief UK economist, added:
"The flat real GDP in July shows that the economy is finding it hard to get back on track after past tax rises and hints of more in the Autumn Budget." He thinks any later tax rises will face close watch for their effect on growth.

Fiscal and Monetary Challenges Ahead

For Chancellor Rachel Reeves, who keeps the economy’s revival and spending control in view, the flat growth comes at a sensitive time. Reeves vows that spending will use tax money and not more debt. She wants to cut the UK’s debt in the coming years. Slower growth now makes these aims tougher to reach.

At the same moment, the Bank of England works between higher inflation and softer growth. Inflation hit 3.8% in July. The rise broke past forecasts and makes some worry that cuts to interest rates may pause.

Fabio Balboni from HSBC, a senior European economist, shared last week:
"Inflation staying high makes it tough for the bank to cut rates further. At the same time, fiscal issues grow as big deficits and stiff choices build up for the Autumn Budget."

Bank of England Interest Rate Outlook

The Monetary Policy Committee at the Bank of England will meet on September 18. In August, they lowered rates by 25 basis points to 4%. The split vote of 5–4 means that the bank is most likely to keep rates as they are now. Many now peer to the meeting on November 6. It comes just before the Autumn Budget and may mark a new step for money policy.

Carsten Brzeski, ING’s global head of macro, said:
"We still see a rate cut in November, though the firm tone seen in August makes us less sure of that idea."

Looking Ahead

Economic growth has slowed and inflation stays high. At the same time, uncertainty about government spending grows. The UK now faces many hurdles as it moves toward the end of 2025. Chancellor Reeves’ Autumn Budget stands as a key moment while the government seeks to balance growth with a strict fiscal plan. All this happens as global conditions stay cautious.

For ongoing updates and expert analysis on the UK economy and financial markets, stay tuned to CNBC and other leading financial news providers.

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Treasury Secretary Bessent Takes Charge in Search for New Fed Chair Amid Reform Agenda

Treasury Secretary Scott Bessent Meets Fed Officials as Fed Chair Search Heats Up

Washington, D.C., September 11, 2025 – The Fed prepares for a change in leadership next year. Treasury Secretary Scott Bessent takes a central role in the hunt for Fed Chair Jerome Powell’s successor. This week, Bessent met with former Fed officials. He met Lawrence Lindsey, Kevin Warsh, and James Bullard. Sources close to the matter told CNBC they had seen this process move forward.

High-Profile Candidate Discussions

The meetings start a key phase in President Donald Trump’s search for a new head of the central bank. Lindsey and Warsh once served as Fed governors. Bullard led the St. Louis Fed. Each brings a long resume in money policy. A Treasury insider said Bessent will wait until the current blackout period ends. This pause comes before he talks with Fed officials who now work at the central bank. The waiting helps him follow the rules inside the Fed.

Bessent’s candidate check fits into a wider review at the Treasury. The list from President Trump has names like Warsh, Kevin Hassett from the National Economic Council, and current Fed Governor Christopher Waller. His team now studies about 11 economists. The list covers both past and present bankers and market experts. This search covers faces known to many and new planners as well.

Pushing for Federal Reserve Reform

Bessent also pushes for changes at the Fed. One step in his plan asks the Fed to cut its large bond holding. The portfolio now holds nearly $6 trillion in U.S. Treasurys and mortgage-backed securities. The goal is to shrink this balance slowly. The change must happen so the markets stay calm, and the wider economy stays steady.

Bessent wants the Fed to step back from a wider role in the economy. A source near Treasury said he asks the bank to stick to its core jobs. These jobs are keeping prices steady and making sure people can work. He warns against activities that stray from these goals. In a Wall Street Journal article last week, Bessent wrote that the Fed’s tools have grown “too complex to handle.” He noted the bank often acts outside of the narrow limits set by law. His words point to a clear need for change in how the Fed works.

Fed Under White House Scrutiny

The White House keeps a close watch on the Fed. President Trump and others have asked the Fed to cut interest rates. The Fed has not lowered rates since December 2024, even though many expect a 25-point basis drop at next week’s meeting.

The change in leadership comes soon. Jerome Powell’s term as chair ends in May 2026. Powell may keep his role as governor for up to two more years. A new chair is almost a sure bet. At the same time, the Senate votes on Stephen Miran for a spot on the Board of Governors. Other moves continue at the Fed. Trump has tried to remove Governor Lisa Cook amid claims of mortgage fraud, but courts have so far blocked the move.

Looking Ahead

Secretary Bessent now leads the check of candidates and calls for reform. In the next few months, the Fed may see big changes in who leads and how it works. The search for the Fed Chair brings together known names and fresh views. This change happens amid many shifts in both politics and finance.

For more updates on the Federal Reserve’s leadership and economic policy, stay tuned to CNBC.

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Inflation Surges to 2.9% in August Amid Rising Jobless Claims: What It Means for the Fed’s Rate Decisions

Consumer Prices Rise at Annual Rate of 2.9% in August Amid Surge in Weekly Jobless Claims

Published: September 11, 2025 | Updated: 11 minutes ago
By Jeff Cox | @JeffCoxCNBCcom

A strong rise in prices shapes the current economy. The Consumer Price Index (CPI) climbed by 0.4% in August. This jump is the highest since January 2025. The annual rate now sits at 2.9%, a rise of 0.2 points since July. This value is the highest recorded since January this year.

Inflation Details: Core CPI and Key Contributors

Experts expected the monthly rise to near 0.3%. They guessed the yearly rate would stay at 2.9%. The core CPI, which drops food and energy costs, went up by 0.3% in August. This number lifts the 12-month rate to 3.1%. Fed officials see core numbers as a better sign of long-term trends.

The CPI rise came from several sources:
• Shelter costs grew by 0.4%. Shelter makes up about one-third of the CPI weight.
• Food prices moved up by 0.5%.
• Energy costs climbed by 0.7%. Gasoline prices jumped by 1.9%, which may be linked to recent tariff changes.

Employment Data Signals Rising Uncertainty

The Labor Department showed that weekly jobless claims grew to 263,000 for the week ending September 6. This seasonally adjusted number is above the expected 235,000. It is the highest level since October 2021. The steady figure of 1.94 million for continuing claims has not been seen since late 2021. Small layoffs marked the early part of the year, but the new claims show that some employers cut back on workers.

Market Reaction and Fed Outlook

Reports of higher-than-expected inflation pushed stocks up as traders adjusted their bets on Fed moves. Market talk now shows a 100% chance of a rate cut at the Fed’s meeting ending on September 17. Many now believe the cut will be by a half-point instead of the usual quarter-point, partly because labor data showed softness.

Seema Shah, Chief Global Strategist at Principal Asset Management, said:
"While the CPI report shows higher numbers than some thought, it will not slow the Fed as they plan a rate cut next week. The rise in jobless claims may push the Fed to act faster. Chair Powell could hint that we will see a series of rate cuts soon."

After the expected drop in September, many now see more cuts coming in October and December. This view comes from a growing belief that monetary policy will ease soon.

Tariffs and Inflation: A Look at the Impact

Fed officials have watched the numbers to see if tariffs affect prices. Some effects are visible in consumer prices, yet overall inflation stays low. In August, producer prices fell by 0.1% from the previous month. Prices for new vehicles, which feel tariff pressure, went up by 0.3%. In contrast, used cars and trucks, usually not hit by tariffs, increased by 1%. The Fed focuses more on service costs. Service prices, without energy, grew by 0.3% in August. Over the past year, service costs have jumped by 3.6%. Meanwhile, shelter cost growth eased from more than 8% in early 2023 to 3.6% now.

Conclusion

The new inflation and jobless claims data form a mixed picture for the economy. The rise in consumer prices, along with more jobless claims, makes the Fed work hard to balance measures. As the Fed meets later this month, these mixed signals will help set U.S. interest rates for the rest of 2025. —

For ongoing updates and expert analysis on the economy and market impacts, stay tuned to CNBC.

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