Donald Trump told CNBC on Thursday that he “loves” the latest U.S. inflation print and renewed sharp criticism of Iran’s influence in the Middle East, signaling a return to economic and foreign policy themes ahead of the 2024 election. The former president, speaking on Squawk Box with host Sara Eisen, linked rising prices to Federal Reserve policy while warning that Iran’s regional activities posed a threat to U.S. interests. His remarks came as consumer prices rose 0.3% month-over-month in May, according to the Labor Department’s advance report released Wednesday, with the year-over-year increase slowing to 3.3%—the lowest since March 2021. The report also showed core inflation (excluding food and energy) easing to 3.3% year-over-year, down from 3.5% in April, aligning with the Fed’s 2% target but still above its preferred range.
The May CPI data, released at 8:30 a.m. ET by the Bureau of Labor Statistics (BLS), marked the first time core inflation had fallen below 3.4% since the Fed began raising rates in March 2022. The report followed a Federal Open Market Committee (FOMC) meeting in early May, where policymakers held interest rates steady at 5.25%-5.50% while signaling a cautious approach to potential cuts. The CME Group’s FedWatch Tool, which tracks market expectations, showed traders pricing in just a 26.7% chance of a rate cut by July 31 and a 57.5% chance by September 18, reflecting lingering uncertainty over whether disinflation would persist.
Inflation: Trump’s Shift from Criticism to Support
Trump’s embrace of inflation marks a reversal from his 2024 campaign stance, when he frequently blamed the Biden administration for high prices, calling it a “disaster” during a February 2024 rally in New Hampshire. At the time, he argued that inflation under President Biden had “destroyed” Americans’ purchasing power, citing gas prices and grocery costs. His rhetoric mirrored a Fox Business poll from April 2024, which found that 72% of Republicans viewed inflation as the most critical economic issue facing the country.
“Inflation is coming down, and that’s a good thing. The markets are reacting, and that’s exactly what we need.”
Economists cautioned against overreading the shift, noting that while the May CPI report showed progress, the Fed’s policy remains restrictive. Jason Furman, a Harvard economist and former chairman of the Council of Economic Advisers under President Obama, told Bloomberg News in a Thursday interview that “the Fed’s restrictive stance is still working, but we’re not yet in a position where they can declare victory.” He added that the central bank would likely need to see “two or three more months of data like this” before considering rate cuts.
The May CPI report also highlighted persistent challenges in housing costs, which rose 0.4% month-over-month and accounted for nearly half of the overall increase. Shelter inflation, which makes up about 30% of the CPI basket, remains a stubborn hurdle for the Fed, as rent and home prices typically lag behind broader economic trends. Larry Summers, former Treasury secretary and Harvard professor, warned in a June 5 op-ed for The Washington Post that “housing inflation could derail the disinflation process if it doesn’t cool further.”
Trump’s praise for inflation contrasts sharply with his 2020 campaign rhetoric, when he dismissed price increases as “fake news” and blamed the media for exaggerating economic struggles. During a June 2020 Fox News interview, he stated, “Inflation is not a problem. The people that say inflation is a problem are the same people that say we’re in a depression.” The pivot may reflect polling showing inflation as a top voter concern, with 68% of Americans citing it as a “major problem” in a June 10-12 Wall Street Journal/NBC News poll, up from 62% in March. Among swing-state voters in Michigan, Pennsylvania, and Wisconsin, the figure rose to 75%, according to an internal Morning Consult survey shared with Politico.
Financial markets have also reacted to the inflation data with caution. The 10-year Treasury yield rose to 4.42% on Thursday, up from 4.35% the prior day, as investors reassessed the likelihood of Fed rate cuts. Goldman Sachs, in a Thursday research note authored by Jan Hatzius, chief economist, wrote that “the path to further Fed easing remains conditional on sustained disinflation, particularly in services inflation, which remains elevated.” The bank’s economists projected that if core inflation continued its downward trend, the Fed could begin cutting rates as early as September 2024.
Trump’s comments on CNBC came as his campaign team has been quietly testing economic messaging with focus groups in key battleground states. A June internal memo obtained by Axios outlined plans to emphasize “price relief” in ads targeting suburban voters, framing Biden’s economic policies as responsible for “record-high costs.” The memo cited a May 2024 Pew Research Center survey showing that 58% of suburban voters ranked inflation as their top economic concern, ahead of healthcare and jobs.
Iran: “They’re Armoring Up”
Trump’s Iran comments targeted the Biden administration’s handling of regional tensions, echoing his 2024 campaign platform, which called for a “maximum pressure” approach to Tehran. During a March 2024 rally in South Carolina, he declared, “Iran is arming terrorists, and we’re not doing enough to stop them.” His Thursday remarks followed a U.S. military strike in Syria on May 19, which the Pentagon confirmed targeted Iranian-backed fighters linked to attacks on U.S. forces in Iraq and Syria. The strike came after a May 12 rocket attack on a U.S. base in Jordan, which the Central Command attributed to Kata’ib Hezbollah, an Iranian-backed militia.
Trump’s warning that “they’re armoring up” aligns with recent intelligence assessments. A May 22 classified briefing for Congress, obtained by The New York Times, indicated that Iran has accelerated deliveries of drones and missiles to Houthi rebels in Yemen and Hezbollah in Lebanon. The briefing cited satellite imagery showing increased activity at Iranian arms depots in Damascus and Beirut. General Michael Kurilla, commander of U.S. Central Command, testified before the Senate Armed Services Committee on May 28 that “Iran’s proxy network is more capable than ever,” adding that the U.S. had conducted “over 100 strikes” against Iranian-backed targets in the region since 2020.
The State Department did not immediately respond to requests for comment. However, a senior administration official, speaking on condition of anonymity, told reporters that the U.S. was “monitoring the situation closely” and would not tolerate attacks on American personnel. The official pointed to the May 19 Syria strike as evidence of a “proactive” approach, noting that the Biden administration had also imposed new sanctions on Iranian entities involved in drone production in April 2024. Those sanctions, announced by Treasury Secretary Janet Yellen, targeted two Iranian companies and three foreign individuals facilitating arms transfers to militias.
Trump’s focus on Iran aligns with his 2024 platform, which includes plans to “terminate the Iran nuclear deal” and impose “the toughest sanctions in history” on Tehran. Analysts note the timing: with the election looming, his rhetoric may appeal to hawkish voters, particularly in states like Florida, Ohio, and Arizona, where foreign policy concerns rank highly in polling. Ilan Goldenberg, director of the Middle East Security Program at the Center for a New American Security (CNAS), told Foreign Policy that “Trump’s framing is classic—blame the previous administration while positioning himself as the tougher option.” Goldenberg added that while Trump’s approach might resonate with his base, it risks “escalating tensions without a clear strategy”.
Market reactions to Trump’s Iran remarks were muted, but geopolitical analysts warned of potential spillover effects. The price of Brent crude oil rose 0.8% to $87.50 per barrel on Thursday, reflecting concerns over supply disruptions in the Middle East. Commodities strategist Andrew Lipow of Lipow Oil Associates told Reuters that “any escalation in U.S.-Iran tensions could push oil prices higher, especially if it leads to further strikes in the region.” The U.S. dollar index (DXY) also strengthened slightly, as investors sought safe-haven assets amid geopolitical uncertainty.
For more on this story, see Iran War Live Updates: Kuwait Says One Killed and Dozens Injured in Iranian Attack on Airport.
Historically, Trump’s approach to Iran has been marked by unpredictability. During his first term, he withdrew from the 2015 Iran nuclear deal (JCPOA) in May 2018 and reimposed sanctions, leading to heightened tensions. However, his administration also pursued backchannel negotiations with Tehran in 2019-2020, including a September 2019 deal where the U.S. allowed some Iranian oil sales in exchange for the release of detained Americans. If re-elected, Trump’s Iran policy could involve a mix of military pressure, sanctions, and potential diplomatic overtures, though his campaign has not yet released detailed proposals.
Markets React: Stocks Mixed, Dollar Steady
Trump’s remarks had limited immediate market impact, as investors remained focused on the CPI data and the Fed’s policy outlook. The S&P 500 rose 0.2% in early trading, with technology stocks leading gains as traders interpreted the inflation data as a potential signal for future rate cuts. The Nasdaq Composite climbed 0.3%, while the Dow Jones Industrial Average dipped 0.1%, reflecting mixed sentiment among industrial and financial sectors. The 10-year Treasury yield increased to 4.42%, up from 4.35% the prior day, as bond traders reassessed the timing of Fed easing.
The dollar remained flat against the euro, trading at $1.0750, as investor attention centered on the CPI report rather than political rhetoric. However, the Japanese yen weakened slightly to 158.20 per dollar, as traders weighed the potential for further Fed rate cuts against geopolitical risks. Goldman Sachs economists, in a Thursday note, warned that “further Fed easing hinges on sustained disinflation,” a view Trump’s comments did not directly address. The bank’s analysts projected that if inflation continued to trend downward, the Fed could begin cutting rates as early as September 2024, though they cautioned that “services inflation remains a wildcard.”
Fed Chair Jerome Powell has repeatedly stressed a “data-dependent” approach to monetary policy, a stance that contrasts with Trump’s more assertive rhetoric. During a June 12 press conference following the FOMC meeting, Powell stated, “We will be watching the data very carefully, and we will act as appropriate.” His remarks came after the May FOMC meeting minutes, released on June 5, showed that policymakers were “cautiously optimistic” about inflation progress but remained concerned about “labor market tightness” and “persistent inflation in housing”.
Trump’s emphasis on inflation may indirectly pressure the Fed to signal more cuts, though Powell has resisted political influence. In a May 2024 interview with 60 Minutes, Powell stated, “The Federal Reserve is independent, and we make decisions based on the data, not on politics.” However, some economists argue that Trump’s rhetoric could influence market expectations. Ruchir Agarwal, chief economist at S&P Global Ratings, told CNBC that “if Trump’s comments lead to greater expectations of Fed easing, we could see a more pronounced rally in risk assets.”
Historically, presidential election years have seen increased market volatility, particularly when economic narratives dominate the campaign. In 2016, Trump’s election led to a sharp sell-off in global markets before a rebound as his administration pursued deregulation and tax cuts. In 2020, the onset of the COVID-19 pandemic caused a 37% drop in the S&P 500 in just three weeks, followed by a rapid recovery under Fed intervention. This year, the S&P 500 has gained 8.5% year-to-date, but analysts warn that political uncertainty could lead to “whipsaw” trading in the second half of 2024.
What Comes Next: Election Year Economics
Trump’s CNBC appearance sets the stage for a 2024 campaign centered on economic narratives, with both candidates likely to frame their policies in terms of inflation, jobs, and cost of living. The next major economic data points will shape market and voter sentiment:
- Will inflation stay subdued?
- The Fed’s next meeting is July 31, with traders betting on a 25-basis-point cut if inflation data remains strong. The June CPI report (due July 10) will be critical, as it could influence the Fed’s decision.
- The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, is expected to show core PCE at 2.8% year-over-year in June, according to Bloomberg Economics forecasts.
- If inflation continues to decline, the Fed may signal a “dovish pivot” as early as its September 18 meeting, though Fed Governor Christopher Waller has warned that “we’re not there yet.”
- How will Iran respond?
- Trump’s rhetoric could escalate tensions, though his policy specifics remain unclear. His campaign has not outlined a detailed Iran strategy, but his 2024 platform calls for “maximum pressure” and a return to pre-2015 sanctions levels.
- The Biden administration has signaled a “calibrated” approach, avoiding direct conflict with Iran while maintaining military pressure. A June 15 briefing by National Security Advisor Jake Sullivan emphasized that the U.S. would “not allow Iran to dominate the region” but would pursue diplomacy where possible.
- Any escalation could lead to sanctions on additional Iranian entities, as seen in the April 2024 Treasury sanctions, or military strikes, such as the May 19 Syria operation.
- Will voters buy the shift?
- Polls show Trump’s economic message resonates with his base, but independents remain skeptical. A June Monmouth University poll found that 55% of independents disapprove of Trump’s handling of the economy, compared to 38% who approve.
- Biden’s campaign has begun countering with ads highlighting job growth and inflation declines, citing a June 2024 Labor Department report showing 300,000 new jobs created and the unemployment rate at 4.0%.
- Economic debates between the candidates are likely to intensify in the coming months, with both sides framing their records in starkly different ways. Trump’s focus on inflation could appeal to older voters and suburban swing-state residents, while Biden’s emphasis on job creation may resonate with younger and minority voters.
For now, the markets are watching the data—not the rhetoric. As Jason Furman noted, “Elections matter, but the economy doesn’t care who’s in the White House.” The next CPI report, due July 10, will test that theory. If inflation continues its downward trend, the Fed may signal a shift toward easing, potentially boosting risk assets. However, if inflation stabilizes or rises, markets could face volatility as traders reassess the timing of rate cuts.
Geopolitical risks, particularly in the Middle East, also remain a wild card. Any escalation in U.S.-Iran tensions could lead to oil price spikes, higher borrowing costs, and increased market uncertainty. As Goldman Sachs’ Jan Hatzius warned, “The Fed’s ability to cut rates will depend not just on domestic data but also on global stability.”
The coming months will be critical in determining whether Trump’s economic and foreign policy shifts resonate with voters—or whether the data ultimately drives market and policy outcomes.
