Trump's Fed pick raises rates for first time in three years, defying the man who named him

…(cont) Set that beside the memo running the other direction. Since the start of his second term the President has pushed for lower rates, and by September 8 he'd raised the stakes, threatening to cut off trade with certain countries if the Fed didn't cut instead. The market's filed response to a presidential trade threat aimed at the Fed was to shrug — investors went right on pricing in a hike, one week out, threat and all.

Five days after that threat, on September 13, the administration's own economist took the follow-up question. Kevin Hassett, director of the National Economic Council, played it down: "I don't expect the trade's going to go to zero, but I do think that the president has a very strong opinion that interest rates could be" lower. Filed under the same drawer, that translates plainly enough: the trade war is staying, it just isn't the thing that's supposed to move rates. Inflation is. And inflation is filed at 3.4.

So the ledger closes like this. The chairman spent August telling everyone exactly what number he was watching, and the number didn't blink. The President spent two weeks telling everyone what he wanted instead, and his own trade threat got downgraded, by his own staff, from a lever to a permanent condition. The Fed does not answer to the trade desk; the trade desk, on the record, admits it. Warsh raised rates Wednesday under a chairman Trump himself installed, over a demand Trump himself made repeatedly and in public. Whatever this arrangement gets called at the podium, the filing calls it a hike — that's the whole story, hon, the rest is just who's still pretending they didn't see it coming.