The July Consumer Price Index numbers on inflation are leading one White House official to make the case for the Federal Reserve to loosen up.
The Federal Reserve has not cut rates since last December, where there was a moderate 0.25 percent cut, which has not been raised since then, either.
Peter Navarro, senior counselor to the president for trade and manufacturing, penned an op-ed in RealClearMarkets titled “July Inflation Blows a Hole In the Fed-Must-Remain-Tight Story,” on Wednesday in response to the new data.
JUST IN: Inflation eased a bit in July. CPI inflation cooled slightly in July to 3.4% (down from 3.5% in June and 4.2% in May). But beware: Rising gas prices due to the war in Iran remain a key risk.
— Heather Long (@byHeatherLong) August 12, 2026
The monthly gain was +0.1%. Energy costs, restaurant costs and medical… pic.twitter.com/h1LzdlgoG4
“The 3.4 percent headline inflation number will get the headlines, but it badly obscures what is happening underneath,” Navarro argued. “The main distortion is energy. Energy prices are still 14.7 percent higher than a year ago, with gasoline up 24.6 percent, largely reflecting the oil shock associated with the conflict in Iran.”
“The signal in July is unmistakable: underlying inflation is cooling fast, tariff pass-through remains contained, and real wages are moving higher,” he continued. “The Fed should read the data in front of it, not the anti-tariff forecasts behind it.”
“Tariffs are not setting America on fire. The inflation scare is running out of gas,” Navarro added.
President Donald Trump pushed for his desire for rates to get cut aggressively under then-Federal Reserve Chair Jerome Powell, and he’s acknowledged that there is a tough board to do so under the current chair, Kevin Warsh.
“Kevin’s fantastic, but he’s got a board, and the board members are very political, I would say,” Trump has said previously, according to CNBC.
The Federal Open Market Committee voted 9-3 to hold the rates at its July meeting.
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the committee stated. “Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”
“Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability,” the statement continued.
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