Phelan says Trump's $5,000 checks would not necessarily be inflationary
The Council of Economic Advisers chair also said higher oil prices have started "bleeding through" into the broader economy.
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Council of Economic Advisers Chair Phelan said Wednesday that Trump's proposed $5,000 checks would not necessarily fuel inflation. He also warned that the "frenzy" around Federal Reserve decisions can overshadow other economic data, and said higher oil prices have started "bleeding through" into the broader economy. Inflation remains elevated, he said, though it continues to decline.
The comments come after the Fed raised interest rates 25 basis points to a range of 3.75% to 4%, in a unanimous 12-0 vote. Fed Chair Kevin Warsh has said inflation remains too high, with multiple categories of goods still running above 3%. White House official Desai called the rate hike "rather unfortunate." Trump has renewed his call for lower rates, saying he wants cuts done quickly.
Traders currently price about a 50% chance of another rate hike in October, a pullback from earlier bets that further tightening was almost certain. Those bets had climbed as high as two more increases this year, beyond the one further move the Fed's own median projection calls for.
Phelan's remarks give no new reason to shift that outlook. His view that $5,000 checks need not be inflationary sits at odds with the Fed's current stance on elevated price pressures, while his point about oil prices bleeding into broader inflation actually reinforces Warsh's focus on sticky, above-3% categories. Markets have already priced in the chance of further hikes this year, and Wednesday's comments do not change that calculus.