Evelyn Reynolds

The Fed’s decision to cut its key borrowing rate by a quarter percentage point seems to be sitting well with the White House if National Economic Council Director Kevin Hassett is any indication.
Assessing the economic variables at play and deciding on the incremental reduction was a proper move, said Hassett, who has been mentioned on the short list of Trump’s picks as the next Fed chair.

The Federal Reserve’s decision to cut its key borrowing rate by a quarter percentage point seems to be sitting well with the White House, if National Economic Council Director Kevin Hassett is any indication.
In a CNBC interview Thursday, the day after the Fed’s move, Hassett noted that the administration, and new Fed Governor Stephen Miran, had been pushing for a bigger reduction. Miran, who is on leave as head of the Council of Economic Advisers, pushed for a half-point cut but was outvoted 11 to 1 on the Federal Open Market Committee.

However, Hassett was not critical of the committee’s decision.
“The bottom line is that moving kind of slow and steady and heading towards a target, watch the data come in, that’s what prudent policy is,” he said on “Squawk Box.” “So I know that my colleague Stephen wanted to go to 50 [basis points], but I think 25 was pretty broad consensus, and I think that’s a good first step in the right direction to much lower rates.”
President Donald Trump, who nominated Miran to the post, has yet to comment on the Fed’s decision.
In the past, Trump has launched a barrage of criticism at the central bank, nicknaming Chair Jerome Powell “Too Late” and calling for quick and aggressive cuts. The president has suggested the benchmark federal funds rate should be 3 percentage points lower, a position not reflected in FOMC projections for the future course of policy in updates released Wednesday.
Hassett noted strong economic growth trending above 3% for the third quarter, something that normally wouldn’t argue for lower interest rates, particularly with inflation running above the Fed’s 2% target.

However, Trump has said cuts are needed to support the struggling U.S. housing market and to help manage financing costs for the nation’s $37 trillion debt.
Assessing the economic variables at play and deciding on the incremental reduction was a proper move, said Hassett, who has been mentioned on the short list of Trump’s picks to replace Powell as chair next year.
“I think it’s much more prudent for the Fed to be looking at all the models, to have a diversity of opinions and decide, ‘What are we going to do in this economy that really looks to be taken off with inflation that’s decelerating, but higher than the target?'” he said. “They split the baby in this decision, and I think that’s probably a pretty prudent call.” More

The Bank of England is watching inflation data closely after forecasting the consumer price index could peak at 4% in September.
The U.K.’s annual inflation rate was steady at 3.8% in August.
August core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, rose by an annual 3.6%.

Interior of cheese monger specialist cheese shop, Mons cheese mongers, East Dulwich, London, England, UK.
Geography Photos | Universal Images Group | Getty Images

The U.K.’s annual inflation rate was steady at 3.8% in August, according to data released by the Office for National Statistics (ONS) on Wednesday.
Economists polled by Reuters had expected inflation to reach 3.8% in the twelve months to August.

August core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, rose by an annual 3.6%, down from 3.8% in the twelve months to July.
“The cost of airfares was the main downward driver this month with prices rising less than a year ago following the large increase in July linked to the timing of the summer holidays,” the ONS’ Chief Economist Grant Fitzner said on the X social media platform.
“This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year.”
Food price inflation climbed for the fifth consecutive month, the ONS noted, with small increases seen across a range of vegetables, cheese and fish items.
The data comes after the consumer price index hit a hotter-than-expected 3.8% in July, exceeding forecasts.

Finance Minister Rachel Reeves commented that she recognized that “families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.”
Pound sterling was slightly lower against the dollar after the data release, at $1.3637.

The Bank of England is closely watching inflation data after forecasting the consumer price index could peak at 4% in September, before retreating in the early half of 2026.
The central bank cut interest rates in August, taking the key rate from 4.25% to 4%, and saying it would take a “gradual and careful” approach to monetary easing, mindful of inflationary pressures but aware of the need to promote growth and investment.
It next meets on Thursday, but it is not expected to adjust rates this month, and there’s uncertainty as to whether it could cut in November.
Sticky inflation is restricting the opportunity for a fourth rate by the BOE this year, Scott Gardner, investment strategist at J.P. Morgan-owned digital wealth manager, Nutmeg, commented Wednesday.
“While wage growth has fallen in recent months, more progress is required on the inflation front to convince the Bank’s policymakers that a further rate cut is possible in the current economic environment. A fourth rate cut in 2025 will require further labour market weakness, a somewhat pyrrhic victory,” he said in emailed comments.
“With forecasts suggesting inflation could rise even further in the short-term and hit 4% going into the autumn, the cost-of-living strain on household finances will persist in the months ahead,” Gardner said, adding that “in short, already sticky inflation is likely to get stickier.” More

With so-called reciprocal tariffs set to take effect in November, Treasury Secretary Scott Bessent said during a CNBC interview that he expects further talks to happen before then.
The statement comes with talks taking a series of twists and turns since Trump announced his initial “liberation day” duties on U.S. global trading partners April 2.

Treasury Secretary Scott Bessent expressed confidence Tuesday that a trade deal with China is near.
With so-called reciprocal tariffs set to take effect in November, Bessent said during a CNBC interview that he expects further talks to happen before then.

“We’ll be seeing each other again,” he said during a wide-ranging exchange on “Squawk Box. “Each one of those talks has become more and more productive. I think the Chinese now sense that a trade deal is possible.”
The statement comes with talks taking a series of twists and turns since Trump announced his initial “liberation day” duties on U.S. global trading partners April 2.
Under the initial move, China would have faced tariffs up to 145%, but those were suspended as talks continued. An initial pause on reciprocal tariffs was to expire on Aug. 12, but Trump extended the suspension to Nov. 10.
Bessent said he has been told by U.S. trading partners that “Chinese goods are flooding their markets, and they don’t know what to do about it. They’re slightly apoplectic that these goods are coming in.”
The U.S. had a nearly $300 billion trade deficit with China in 2024. That’s on pace to decline significantly in 2025 and was at $128 billion through July.

Bessent noted that U.S. Trade Representative Jamieson Greer expects the deficit “will narrow by at least 30% this year and probably more in 2026.”
“So the idea here is to come into balance, to have fair trade,” he said. More

As the U.S. and China head into a second day of talks, Treasury Secretary Scott Bessent said good progress has been made on technical details, with both sides close to reaching an agreement on TikTok.
China’s market regulator said in a statement Monday that a preliminary investigation has found that Nvidia was in violation of the country’s anti-competition laws.
Officials are also expected to discuss the details of a potential meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping later this year.

U.S. Treasury Secretary Scott Bessent arrives to meet Spain’s Foreign Minister Jose Manuel Albares, to continue discussions on trade, economic and national security issues, in Madrid on Sept. 14, 2025.
Ana Beltran | Reuters

U.S. and Chinese trade negotiations have stretched into a second day in Spain, with an agenda of several sticking points ranging from tariff rates, export controls and an imminent deadline for a divestment of Chinese-owned social media TikTok.
A first day of negotiations — led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer on the U.S. side, and by Chinese Vice Premier He Lifeng and by top trade negotiator Li Chenggang for China — focused on TikTok, tariffs and the economy, according to a U.S. official.

The latest talks in Madrid mark the fourth round of bilateral meetings in four months, after both sides reached an agreement in May to pause most of the steep tariffs and walk back some of their mutual restrictions. A trip to Washington by Chinese senior trade negotiator Li Chenggang last month yielded little progress.
As the parties head into the second day of talks, Bessent said they made good progress on technical details and are close to reaching an agreement on TikTok.
“Our Chinese counterparts have come with a very aggressive ask,” he said, according to Reuters. “We will see if we can get there at present. We are not willing to sacrifice national security for a social media app.”
Tensions have ramped up in recent days. Over the weekend, China launched two investigations targeting the U.S. semiconductor industry, including an anti-dumping probe relating to certain American-made analog IC chips, along with an anti-discrimination investigation into U.S. moves against the Chinese chip sector.
The investigations were kicked off after the U.S. added 23 more China-based companies to its entity list last Friday.

On Monday, China’s market regulator said that a preliminary investigation found Nvidia was in violation of the country’s anti-competition laws, adding that a further probe into the U.S. chip giant will be carried out.
Nvidia has become “a leverage for both sides,” with the extended probe as “clearly part of negotiation tactics run by Beijing to show its tough side to Washington,” said George Chen, partner of digital practice at business advisory The Asia Group.

These trading barbs exchanged ahead of the Madrid rapprochement were “not encouraging,” said Wendy Cutler, a former U.S. trade representative and head of the Asia Society Policy Institute in Washington, adding that “China is going to drive a hard bargain” in U.S. President Donald Trump’s second mandate and likely demand some compensation in exchange for lifting these new measures.
Cutler pointed out that Beijing had managed to get Washington to remove certain controls on exports of tech equipment to China, after it tightened exports of critical minerals and magnets to the U.S.
“With this approach, [it’s] hard to see how the bilateral economic relationship improves. More like running to [a] stand-still,” Cutler said.
Separately, China’s ministry of commerce in a statement pushed back against Trump’s request for the European Union to impose secondary tariffs of up to 100% on China over the country’s purchases of Russian oil.
This was “a classic act of unilateral bullying and economic coercion” and “a severe violation of the consensus reached” during a call between Trump and Xi earlier this year, a spokesperson for the ministry said in the statement, vowing to take “any necessary measure” to defend Beijing’s legitimate interests.

Officials are also expected to discuss details of a potential meeting between Trump and his Chinese counterpart Xi Jinping later this year. The Wall Street Journal reported Sunday that Beijing has for the past two months sought to broker a Trump visit to China, what would be the U.S. president’s first state visit to the country after a trip in 2017.
The chance for a potential Xi-Trump meeting will depend on the results of Madrid talk, in particular the fate of TikTok, The Asia Group’s Chen said, warning that temperature could rise further if Beijing finds Washington “disrespectful” as it seeks to manage the perception of its relations with the U.S. at home. 
Beijing-headquartered ByteDance faces a Wednesday deadline to reach a deal to continue operations in the U.S. Trump has extended similar deadlines three times this year with Beijing and Washington seeking controls of the app’s recommendation algorithm.
China, which must approve any sale, has put the technology on an export-control list and so far offered little indication of its willingness to allow such a transfer to an American owner.
Trump told reporters later on Sunday that the talks were “going fine” and that TikTok’s fate will depend on Beijing’s actions.
With TikTok being a useful bargain for Trump to win over American young voters, Beijing may be “more than happy to satisfy Trump’s terms on TikTok if that is a must [for the] reduction of U.S. tariff by 10% or more,” said Neo Wang, lead China strategist at Evercore ISI.
— CNBC’s Evelyn Cheng contributed to the report. More

The U.K. economy stagnated in July, in line with expectations, according to the Office for National Statistics.
It marks a slowdown of growth compared to the 0.4% expansion recorded in June.
The economic flatlining will weigh on Chancellor Rachel Reeves as she prepares to reveal her fiscal plans for 2026 in the Autumn Budget of Nov. 26.

A road closure sign leans against a wall outside Royal Exchange in the heart of the City of London, on 13th June 2022, in London, England.
Richard Baker | In Pictures | Getty Images

U.K. economic growth flatlined in July, according to data published Friday, adding to Chancellor Rachel Reeves’ headache ahead of the Autumn Budget.
The figure was in line with expectations of economists polled by Reuters, and follows a 0.4% expansion in June.

In July, weakness was concentrated in production output, which contracted by 0.9%, while services and construction output both inched higher, the U.K.’s Office for National Statistics noted.
It comes after the economy grew by a better-than-expected 0.3% in the second quarter, although this was down from bumper growth of 0.7% seen in the first quarter.
Economists now expect a slowdown to take hold of the U.K. in the latter half of 2025.
“After a surprisingly stronger second quarter, where the U.K. claimed the fastest growth rate among G7 economies, all signs point to a slowdown in economic activity in the second half of the year,” Sanjay Raja, Deutsche Bank’s chief U.K. economist, noted this week.
“A course correction in trade-fronting, stockpiling, net acquisitions of precious metals, and public sector spending, we think, will see U.K. GDP growth slow into the second half of 2025,” he added in emailed comments.

Headache for Rachel Reeves

Finance Minister Reeves has made reviving the U.K. economy a top priority, but so far has struggled to turn her pledges into reality.
An economic slowdown is a blow to the government ahead of the Autumn Budget on Nov. 26, a high-stakes event for Reeves who has promised to ensure spending is funded by tax receipts, rather than borrowing, and to lower U.K. debt over the next few years.
As such, any potential tax hikes are a particular focus, Paul Dales, chief U.K. economist at Capital Economics, suggested in a note Friday.
“The stagnation in real GDP in July … shows that the economy is still struggling to gain decent momentum in the face of the drag from previous hikes in taxes and possible further tax rises to come in the Budget,” he said.
The Bank of England, meanwhile, is attempting to weigh this fiscal uncertainty with sticky inflation (which rose to a hotter-than-expected 3.8% in July).
“The soft performance of the economy in July probably isn’t enough to offset the Bank of England’s growing inflation fears,” Dales noted.
Fabio Balboni, senior European economist at HSBC, struck a similar tone, telling CNBC last week that “inflation resilience obviously makes it harder for central banks to cut further.”
“Then, on the other hand, you have fiscal concerns, still very large fiscal deficits, starting in the U.K., for instance, with very difficult decision looming ahead for the government at the Autumn Budget,” Balboni added.

The Bank of England is due to meet in the meantime on Sept. 18, but is expected to hold rates steady after cutting them in August. Then, the bank’s nine-member monetary policy committee voted by a majority of 5–4 to reduce the key interest rate, the “Bank Rate,” by 25 basis points to 4%, saying it was taking a “gradual and careful” approach to monetary easing.
The central bank’s Nov. 6 meeting is now in the spotlight, particularly as it comes just ahead of the budget.
“We still expect a rate cut in November, though the hawkish August decision weakened our conviction,” Carsten Brzeski, global head of Macro at ING, said Thursday. More

Treasury Secretary Scott Bessent has met this week with former Fed officials Lawrence Lindsey, Kevin Warsh and James Bullard to replace Fed Chair Jerome Powell next year, a Treasury source told CNBC.
In addition to the candidate interviews, Bessent is pushing for a reform agenda.

Scott Bessent, U.S. treasury secretary, in the Oval Office of the White House in Washington, D.C., on Aug. 6, 2025.
Bonnie Cash | Bloomberg | Getty Images

The search for the next Federal Reserve chair is continuing, with Treasury Secretary Scott Bessent taking point in meeting with several candidates on President Donald Trump’s short list.
In recent days, Bessent has met with former Fed officials Lawrence Lindsey, Kevin Warsh and James Bullard, a Treasury source told CNBC’s Steve Liesman. Lindsey and Warsh both served as governors, and Bullard was president of the St. Louis Fed.

Bessent will wait until the blackout period that surrounds Federal Open Market Committee meetings is over at the end of next week to interview sitting Fed officials, sources said.
While the goal is to add one or two names to candidates Trump has already mentioned, including Warsh as well as National Economic Council Director Kevin Hassett and current Governor Christopher Waller, there is a broader group under Bessent’s consideration that includes 11 economists, including former and current central bankers and a few market strategists.
In addition to the candidate interviews, Bessent is pushing a reform agenda for the Fed. He would like to see the central bank organically reduce the massive bond portfolio on its balance sheet, the source said. The key would be to reduce the $6 trillion in holdings of Treasurys and mortgage-backed securities in a way that is not disruptive to markets or the economy.
Moreover, Bessent wants to try to reduce the Fed’s economic footprint, the source said.
The news comes with the Fed under a White House microscope.

Trump and multiple other administration officials have been pressing the Fed for an interest rate cut, something that hasn’t happened since December 2024. Markets widely expect the rate-setting FOMC in fact will approve a quarter-percentage-point reduction when it meets next week.
In a Wall Street Journal opinion piece last week, Bessent laid out his own vision for the Fed. He rejected what he called “gain of function” activity, in which the central bank has repeatedly overstepped the narrow objectives assigned to it for low unemployment and inflation.
“The Fed must change course,” Bessent wrote. “Its standard tool kit has become too complex to manage, with uncertain theoretical underpinnings.”
The Fed’s complexion could change considerably over the next year.
Chair Jerome Powell’s term expires in May 2026, and while he could stay on for two more years as governor, he is certain to be replaced in his current post. At the same time, the Senate is expected to take up a vote Monday on nominee Stephen Miran for a Board of Governors vacancy.
Trump also has pushed to oust Governor Lisa Cook on accusations of mortgage fraud, though a court has blocked him from doing so thus far.

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From clothing to auto parts to electronics and more, tariffs are making everyday items cost more at a time when the labor market is looking increasingly fragile.
Together, the increases may not sound dramatic. But they are enough to give both consumers and Federal Reserve policymakers at least some cause for concern.

A woman shops at a supermarket on April 30, 2025 in Arlington, Virginia.
Sha Hanting | China News Service | Getty Images

From clothing to auto parts to electronics and more, tariffs are making everyday items cost more at a time when the labor market is looking increasingly fragile.
A key Bureau of Labor Statistics inflation report released Thursday showed price increases for a variety of tariff-sensitive items.

Apparel prices rose 0.5% as did video and audio products. Motor vehicle parts climbed 0.6% while new car prices were up 0.3% and energy increased 0.7%. Groceries accelerated 0.6%, the biggest monthly move since August 2022. Furniture and bedding saw a 0.3% hit and are up 4.7% from a year ago while tools and hardware had a 0.8% jump, part of manufacturing-related goods that are particularly impacted.
(See here for a full inflation breakdown by item.)
More broadly, goods excluding food and energy rose 0.3% on the month and are up 1.5% from a year ago, the fastest rate since May 2023, according to Fitch Ratings. Coffee rose 3.6% on the month and is up 20.9% from a year ago.
Together, the increases may not sound dramatic. But they are enough to give both consumers and Federal Reserve policymakers at least some cause for concern.
“We’ve already been seeing tariffs in the data for several months,” said Luke Tilley, chief economist at Wilmington Trust. “Consumers were not in a really good place to handle the increased prices that are coming from tariffs.”

Consumers feel the hit

Moreover, the inflation numbers might be worse if it weren’t for consumers, wary of the higher prices from tariffs, cutting back on spending, particularly on services, Tilley added. That has meant companies have less pricing power, so the tariff impact has been less acute.
Still, inflation running near 3% on both core and headline is a good distance from the Fed’s 2% target and could jeopardize an economy that relies on consumer spending as the primary growth engine.
“The middle-class squeeze from tariffs is here,” said Heather Long, chief economist at Navy Federal Credit Union. “It’s troubling that so many basic necessities now cost more. Food, gas, clothing and shelter all had big cost jumps in August. And this is only the beginning of the price hikes. The situation will worsen in the coming months as more costs are passed along to American consumers.”
President Donald Trump and administration officials have insisted that the tariffs will not drive inflation higher.
Historically, that has been the case.
Economists generally view tariffs as a temporary price impetus but not contributing to longer-lasting inflation. Still, the persistence in prices combined with weakness in the labor market presents a stagflationary conundrum for the Fed.

Policy impact

Central bank officials are set to meet next week to vote on whether to lower their key overnight funds rate, currently running around 4.3%.
Markets rallied Thursday as hopes built that the Fed not only will cut when the meeting concludes Wednesday but also will lower rates at its ensuing two meetings this year and will continue easing through 2026, according to the CME Group’s FedWatch.

In all, the market is pricing in the equivalent of six quarter-percentage-point cuts during the period, well ahead of the four that Fed officials penciled in during their last outlook published in June. The view is based on the idea that policymakers will look through the price increases and focus on job weakness.
“We expect over the next several months for it to be pretty clear that the Fed should be cutting rates,” Tilley said. “The somewhat minor pressure that we’re getting from tariffs on the goods side really is being outweighed by the slowdown in the economy, the slowdown in the labor market, the slowdown in consumer spending.”
While the Fed ponders inflation, it also will have to weigh labor market weakness.
Initial unemployment insurance claims last week hit their highest level since October 2021, though the main cause was what could be an anomalous spike in Texas and distortions from the Labor Day holiday. However, recent data indicate that the economy added virtually no jobs this year, a factor that would push the Fed to lower rates.
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The consumer price index posted a seasonally adjusted 0.4% increase for the month, the biggest gain since January, putting the annual inflation rate at 2.9%.
The Labor Department reported a surprise increase in weekly unemployment compensation filings to a seasonally adjusted 263,000, the highest since October 2021.
The reports provide the final pieces of a complicated data puzzle that central bankers will review at their two-day policy meeting that concludes Sept. 17.

Vegetables on display in a grocery store on August 15, 2025 in Delray Beach, Florida.
Joe Raedle | Getty Images

Prices consumers pay for a variety of goods and services moved higher than expected in August while jobless claims accelerated, providing challenging economic signals for the Federal Reserve before its meeting next week.
The consumer price index posted a seasonally adjusted 0.4% increase for the month, the biggest gain since January, putting the annual inflation rate at 2.9%, up 0.2 percentage point from the prior month and the highest reading since January. Economists surveyed by Dow Jones had been looking for respective readings of 0.3% and 2.9%.

For the vital core reading that excludes food and energy, the August gain was 0.3%, putting the 12-month figure at 3.1%, both as forecast. Fed officials consider core to be a better gauge of long-run trends. The central bank’s inflation target is 2%.

On employment, the Labor Department reported a surprise increase in weekly unemployment compensation filings to a seasonally adjusted 263,000 for the week ending Sept. 6, higher than the 235,000 estimate and up 27,000 from the prior period. The claims level marked the highest in nearly four years.
The reports provide the final pieces of a complicated data puzzle that central bankers will review at their two-day policy meeting that concludes Sept. 17.
“Today’s CPI report has been trumped by the jobless claims report,” wrote Seema Shah, chief global strategist at Principal Asset Management. “While the CPI report is a tad hotter than expected, it will not give the Fed a moment of hesitation when they announce a rate cut next week. If anything, the jump in jobless claims will inject a bit more urgency in the Fed’s decision making, with Powell likely signaling a sequence of rate cuts is on the way.”
The closely watched CPI reading saw its biggest gain from a 0.4% increase in shelter costs, which account for about one-third of the weighting in the index. Food prices jumped 0.5% while energy was up 0.7% as gasoline rose 1.9%, likely indicating tariff impacts on prices.

Market pricing indicates a 100% certainty that the Fed will lower its benchmark interest rate, currently targeted between 4.25%-4.5%. However, there has been a slight implied chance that the Fed might choose to deviate from its usual quarter percentage point move and cut by half a point considering weakness in the labor market this year and subdued inflation readings.
Traders also moved the probability of another reduction in October to a near certainty and see a high likelihood of a third move in December.
Fed officials have been watching the inflation data closely for clues on the impact from President Donald Trump’s tariffs. There has been some visible pass-through from the duties, though inflation figures have been relatively well-behaved. The BLS reported Wednesday that producer prices actually declined 0.1% in August.
Tariff-sensitive vehicle prices saw monthly increases, with new vehicles up 0.3%. Used cars and trucks, which are generally not influenced by tariffs, rose 1%.
The Fed, though, is more focused on services costs as signals of underlying inflation. Historically, tariffs have been looked at as temporary boosts to the prices of goods but not a longer-term inflation driver.
Services prices excluding energy rose 0.3% in August and are up 3.6% on the year. Shelter also was up 3.6% annually and has been steadily declining through the year after peaking above 8% in early 2023.
If Fed officials had any doubt about cutting, the jobless claims report may have sealed the deal.
Initial filings hit their highest point since Oct. 23, 2021, an indication that employers may now be cutting back on their workforce. Though hiring has slowed through the year, layoffs also have been tame, indicating more status quo rather than a material weakening in what Chair Jerome Powell repeatedly has termed a “solid” labor market.
Continuing claims, which run a week behind, held unchanged at 1.94 million but have been running near their highest level since late-2021 as well. More