President Donald Trump discusses his trade fight with Canada. Federal Reserve chair Kevin Warsh addresses elevated inflation and interest rates. #foxbusiness
0:00 | U.S. and Canada locked in trade dispute
0:22 | Steve Forbes breaks down political consequences of Trump tariffs
1:25 | Fed Chair Kevin Warsh on U.S. economy
8:16 | Edward Lawrence on monetary policy
11:28 | E.J. Antoni dissects Kevin Warsh's speech
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What Kevin Warsh said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Federal Reserve Chairman Kevin Warsh, in a speech, said the labor market is broadly consistent with full employment despite low monthly job gains, but inflation is the Fed's predominant concern. He cited the 12-month PCE price index at 3.7% and the 6-month change above 4%, both above the 2% target. Warsh noted that 54% of PCE basket components showed price increases above 3% over the last 12 months, and 49% over the last 6 months, still elevated versus pre-pandemic levels. He said inflation expectations remain well anchored but must be closely monitored. Warsh accepted responsibility for 65 months of sustained elevated inflation, stating the Fed must be confident underlying inflation moves to its objective clearly and at sufficient speed, otherwise 'we have work to do.' He committed to a discipline, not a decision, and emphasized using interest rates as the primary tool, not unconventional methods.
Key takeaways
Warsh said the Fed's predominant focus should be on prices, with PCE inflation at 3.7% year-over-year and above 4% over six months.
Warsh accepted responsibility for 65 months of sustained elevated inflation, saying the Fed must see underlying inflation moving to target 'clearly and at sufficient speed.'
Warsh said 54% of PCE basket components showed price increases above 3% over the last 12 months, still elevated versus pre-pandemic levels.
Warsh said inflation expectations are well anchored but must be closely minded, and the Fed must ensure they do not get unanchored.
Warsh committed to a 'discipline, not a decision,' indicating no immediate policy action but a clear standard for future moves.
Well, ultimately it's going to be very good for us because we're losing—when you talk about affordability, we're losing $62 billion a year on average with Canada. And if you really look at it, we're losing more than that. It's too much. It's too much. We can't lose that. We don't want to lose that. We don't want to lose it anymore.
I need to know where we stand on these trade issues. I need to know, you know, how Republicans are going to re-message affordability going into the midterms. That's what I need.
Well, I think most people understand tariff is another word for tax, and they figure this is just going to add another cost. If you look at the cost of steel and aluminum in the United States, as candidly pointed out, we're paying 60-70% more than other countries do. That hurts our manufacturing margins and the like. Self-inflicted wound. So, in terms of the trade dispute, we're already in negotiations about redoing the USMCA agreement that he negotiated in President Trump's first term. Why are you getting these fights now? We're making progress apparently negotiating with the Mexicans. Get this off the table. Why pick a fight right now where you're going to end up losing? And by the way, what state's going to be most affected by this? Michigan. What's in Michigan? Key Senate race. Another one, Maine. Key Senate race. Timing not good.
In my view, the relatively low turnover in today's labor market is partly a result of the significant re-matching between employers and employees that happened in the post-pandemic environment. But when labor supply is barely growing, monthly job gains are naturally going to run low. There are always areas of concerns in the labor market. For example, among recent graduates. In general, though, people who want to work, by and large, are holding or finding jobs. They may well be concerned about future labor disruptions, but as of now, I believe the labor markets are broadly consistent with full employment.
But on the price stability side of our mandate, the numbers are more concerning. The Fed's preferred measure of inflation, the one I talked about earlier, the 12-month change in the PCE price index, stands at 3.7%. The 6-month change, a little above four. The comparable measures from the CPI index are also elevated. As are core measures both of PCE and CPI inflation. None of these measures are perfect. But they all tell a similar story: inflation is running above our 2% target. So, the Fed's predominant focus right now should be on prices.
So, what's our job? The job for policymakers is to capture underlying trend inflation. Easier said than done. We want to gauge whether underlying inflation is rising, falling, or seems to be stuck in place. We also want to understand not just the direction of travel, but the speed. Each of these broad inflation measures have fallen significantly from their highs of a few years ago. But progress over the last couple of years has been more modest. And while this summer's PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved. The data also show moderate wage growth. But in my view, in tracking underlying inflation, wage growth has not proven a reliable indicator of future inflation for a very long time.
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Warsh, K. (2026, August 30). Trump ESCALATES Canada trade fight, Warsh puts central bank ON NOTICE | Market Recap [Interview transcript]. Fox Business. CEOInterviews.AI. https://ceointerviews.ai/interview/1284383/
MLA
Kevin Warsh. "Trump ESCALATES Canada trade fight, Warsh puts central bank ON NOTICE | Market Recap." Fox Business, 30 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1284383/.
BibTeX
@misc{warsh2026_1284383,
author = {Kevin Warsh},
title = {Trump ESCALATES Canada trade fight, Warsh puts central bank ON NOTICE | Market Recap},
howpublished = {Interview transcript, Fox Business. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/1284383/},
note = {Speaker-attributed transcript with timestamps}
}
