If Donald Trump expects Kevin Warsh, his hand-picked chair of the US Federal Reserve Board, to deliver the interest rate cuts that he has continuously clamoured for, he is about to be disappointed.
asserted
he → expect → that
It now appears inevitable that the Fed will deliver its second rate rise in this cycle – the first was in September – after the US inflation rate came in above expectations for the third successive month.
asserted
rate → appear → month
The only question – and just raising it will upset Trump – is whether the US central bank hikes its policy rate by 25 basis points or 50 basis points when it meets again next month.
asserted
it → raise → points
The US Bureau of Labor Statistics said on Tuesday that consumer prices rose 0.4 per cent in October.
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prices → say → October
While calculations are muddied by the fact that a government shutdown meant there was no data collected in October last year, most calculations put the annual inflation rate at 4 per cent.
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calculations → muddy → cent
Even if energy and food costs are excluded to remove the direct effects of the war in the Middle East on oil and fuel costs, “core” inflation in October was 0.3 per cent and the annual core inflation rate 2.8 per cent – well above the Fed’s target of 2 per cent.
asserted
rate → exclude → cent
Moreover, inflation is spreading across the US economy, thanks to Trump’s tariffs and the indirect effects of the higher oil and refined product prices on transport costs that are now feeding into goods and services prices.
asserted
that → spread → prices
The only question – and just raising it will upset Trump – is whether the US central bank hikes its policy rate by 25 basis points or 50 basis points when it meets again next month.
asserted
it → raise → points
Fed officials are already preparing the ground for more than one rate hike.
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officials → prepare → hike
Fed governor Christopher Waller (a Trump appointee) told an audience in London on Tuesday that, should the inflation rate for the month come in above 0.3 per cent, a half-percentage point (50 basis point) rate rise might be needed.
uncertain
rise → tell → cent
A conventional 25 basis point rise, he argued, would do little to win confidence that the Fed was serious about tackling inflation.
asserted
Fed → argue → inflation
Also on Tuesday, Dallas Fed president Lorie Logan said it was clear that the Fed needed to make “at least” two more 25 basis point rises and may need to move quicker than the bank had moved thus far.
uncertain
bank → say → rises
Kansas City’s Fed president Jeffrey Schmid said he believed the central bank’s current stance was “fairly accommodative” while another Fed governor, Michelle Bowman, indicated that she, too, would support another rate rise.
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she → say → rise
Markets immediately priced in a 100 per cent probability of a 25 basis point rise in December as bond yields rose and the sharemarket fell.
asserted
sharemarket → price → December
The yield on two-year Treasury securities jumped 19 basis points – its biggest one-day rise since Trump’s “Liberation Day” tariffs were announced in April last year.
asserted
tariffs → jump → April
The inflation rate rose even though oil prices were mostly flat throughout the month.
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prices → rise → month
It would appear to be the delayed impacts of higher gasoline and, in particular diesel prices, that are now flowing through the economy and bleeding into consumer prices.
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that → appear → prices
The oil price has fallen back this month to trade at around $US92 a barrel and gasoline prices are sliding, albeit that they are, at $US3.98 a gallon, still about 30 per cent higher than they were a year ago.
asserted
they → fall → US3.98
The oil price has been falling because oil flows from the Middle East have been restored to close to pre-war levels (albeit with far higher transport and insurance costs) and because Trump keeps saying that a negotiated end to the war is within reach, although he has said similar things throughout this year, but the conflict has yet to be resolved.
asserted
conflict → fall → year
With the US midterm elections out of the way, the administration may, however, find it easier to accede to some of Iran’s demands.
uncertain
it → find → demands
Even if the oil price continues to retreat, however, refined product prices - of which diesel is the key product - are unlikely to subside as quickly, as the wars in the Middle East and Ukraine have significantly damaged refinery capacity.
asserted
wars → continue → capacity
The result of the midterms will help the Fed if it starts more aggressively raising US interest rates.
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it → help → rates
That might infuriate the president, but there is little he can do about it.
uncertain
he → infuriate → it
If the wars were to end soon, it would still take well into next year for volumes to recover.
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volumes → end → year
In the meantime, the higher cost of transporting goods and food will continue to push up goods and grocery prices.
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cost → transport → goods
Tariffs remain another contributor to the inflation rate with their stop-start history, thanks to the courts consistently ruling them illegal and the Trump administration’s continuing efforts to reimpose them using new legislative headings.
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them → remain → headings
Then there’s the impact of the boom in artificial intelligence, which is pushing up the prices of semiconductors and impacting the prices of computers, smartphones and other devices as well as electricity prices.
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which → ’ → computers
The inflation data underscores why US voters gave the Republicans such a thrashing at the midterm elections.
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voters → underscore → elections
For ordinary US households, the cost-of-living pressures are real and intensifying.
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pressures → intensify → living
The result of the midterms – a Democrat majority in both chambers of Congress – will help the Fed if it, as expected, starts more aggressively raising US interest rates.
asserted
it → help → rates
That might infuriate a president who wanted Warsh to deliver greatly lower rates, but there is little he can do about it.
uncertain
he → infuriate → it
Trump has tried, unsuccessfully, to remove former Fed chair Jerome Powell from the board, threatening to prosecute him for cost overruns in the renovations of the Fed’s Washington headquarters.
asserted
Trump → try → headquarters
He’s still trying to unseat another governor, Lisa Cook, with flimsy accusations of mortgage fraud.
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He → try → fraud
Even if he were able to sack Cook (there is a handpicked administration panel “investigating” her), or Powell decided to retire before his term ends in January 2028, the Democrats are most unlikely to approve a new Trump nomination to the board.
asserted
Democrats → sack → board
And other Fed governors are now less likely to feel intimidated by potential administration responses to votes in favour of rate rises.
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governors → feel → rises
On Monday, the Congressional Budget Office released its summary of the outcomes from the 2026 fiscal year which, in the US, ends on September 30.
asserted
which → release → September
The Trump administration presided over a deficit of $US2 trillion ($2.9 trillion), or 6.2 per cent of GDP, a significant increase from the $US1.8 trillion (5.8 per cent of GDP) deficit in fiscal 2025.
asserted
administration → preside → 2025
The administration is spending more (outlays were up 6 per cent) while, thanks to the One Big Beautiful Bill Act’s tax cuts for companies and the wealthy, generating only 3 per cent revenue growth.
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outlays → spend → growth
Corporate tax revenue fell 16 per cent.
asserted
revenue → fall → ?
Customs revenue fell 11 per cent because the administration had to refund $US126 billion after the US Supreme Court deemed Trump’s original global tariffs illegal.
asserted
tariffs → fall → billion
…and 5 more, not listed.
The Aporia
