The Dictatorship
Trump says inflation is ‘defeated’ and the Fed has cut rates, yet prices remain too high for many
WASHINGTON (AP) — Inflation has risen in three of the last four months and is slightly higher than it was a year ago, when it helped sink then-Vice President Kamala Harris’ presidential campaign. Yet you wouldn’t know it from listening to President Donald Trump or even some of the inflation fighters at the Federal Reserve.
Trump told the United Nations General Assembly late last month: “Grocery prices are down, mortgage rates are down, and inflation has been defeated.”
And at a high-profile speech in Augustjust before the Fed cut its key interest rate for the first time this yearFederal Reserve Chair Jerome Powell said: “Inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs. Upside risks to inflation have diminished.”
Yet dismissing or even downplaying inflation while it is still above the Fed’s target of 2% poses big risks for the White House and the Federal Reserve. For the Trump administration, it could find itself on the wrong side of a potent issue: Surveys show that many Americans still see high prices as a major burden on their finances.
The Fed may be taking an even bigger gamble: It has cut its key interest rate on the assumption that the Trump administration’s tariffs will only cause a temporary bump up in inflation. If that turns out to be wrong — if inflation gets worse or remains elevated for longer than expected — the Fed’s inflation-fighting credibility could take a hit.
That credibility plays a crucial role in the Fed’s ability to keep prices stable. If Americans are confident that the central bank can keep inflation in check, they won’t take steps — such as demanding sharply higher pay when prices rise — that can launch an inflationary spiral. Companies often increase prices further to offset higher labor costs.
But Karen Dynan, a senior fellow at the Peterson Institute for International Economics, said this week that with memories of pandemic-era inflation still fresh and tariffs pushing up the cost of imported goods, consumers and businesses could start to lose confidence that inflation will stay low.
“If that proves to be the case, in hindsight it will be that the Fed cuts — and I do expect several more — are going to be seen as a mistake,” Dynan said.
So far, the Trump administration’s tariffs haven’t lifted inflation as much as as many economists expected earlier this year. And it remains far below its 9.1% peak three years ago. Still, consumer prices increased 2.9% in August from a year earlier, up from 2.6% at the same time last year and above the Fed’s 2% target.
The government is scheduled to release the September inflation report on Wednesday, but the data will probably be delayed by the government shutdown.
Tariffs have pushed up the cost of many imported items, including furniture, appliances, and toys. Overall, the cost of long-lasting manufactured goods rose nearly 2% in August from a year earlier. It was a modest gain, but comes after nearly three decades when the cost of such items mostly fell.
The cost of some everyday goods are still rising more quickly than before the pandemic: Grocery prices moved up 2.7% in August from a year ago, the largest gain, outside the pandemic, since 2015. Coffee prices have soared nearly 21% in the past year, partly because Trump has slapped 50% import taxes on Brazil, a leading coffee exporter, and also because climate change-induced droughts have cut into coffee bean harvests.
Most Fed officials are still concerned that inflation is too high, according the minutes of its Sept. 16-17 meeting. Yet they still chose to cut their key interest rate, because they were more worried about the risk of worsening unemployment than about higher inflation.
But the concern for some economists is that the ongoing rollout of tariffs and the fact that many companies are still implementing price hikes in response could result in more than just a temporary boost to inflation.
“It is a big gamble after what we’ve been going through … to count on it being transitory,” said Jason Furman, an economist at Harvard University and a former top adviser to President Barack Obama. “Once upon a time, (3% inflation) would have been considered really high.”
Just two weeks ago, Trump slapped new tariffs on a range of productsincluding 100% on pharmaceuticals, 50% on kitchen cabinets and bathroom vanities, and 25% on heavy trucks. On Friday, he threatened “a massive increase of tariffs” on imports from China in response to that country’s restrictions on rare earth exports.
Some companies are still raising prices to offset the tariff costs. Duties on steel and aluminum imports have pushed up the cost of the cans used by Campbell Soups, leading the company’s CEO to say in September that it will implement “surgical pricing initiatives.”
Chris Butler, CEO of National Tree Company, the nation’s largest artificial Christmas tree seller, says his company will raise prices by about 10% this holiday season on its trees, wreaths, and garlands to offset tariff costs. About 45% of its trees are made in China, with the rest from Southeast Asia, Mexico, and other countries. The cost of labor and real estate is too high to make them in the United States, he said.
Butler also expects there will be a reduced supply of artificial trees and decorations this year, which could lift industry-wide prices further, because most production in China shut down when tariffs on that country hit 145% earlier this year. Production resumed after Trump reduced the duties to 30% but at a slower pace.
Butler has pushed his suppliers to absorb some of the cost of the tariffs, but they won’t pay all of it.
“At the end of the day, we can’t absorb the entirety of it and our factories can’t absorb the entirety of it,” he said. “So we’ve had to pass along some of the increases to consumers.”
Many Fed policymakers are aware of the risks. Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, who votes on interest rate decisions, said Monday that high inflation that results from a loss of confidence in the central bank is harder to fight than other price spikes, such as those that result from supply disruptions.
“The Fed must maintain its credibility on inflation,” Schmid said. “History has shown that while all inflations are universally disliked, not all inflations are equally costly to fight.”
Yet some Fed officials say that other trends are offsetting the impact of tariffs. Fed governor Stephen Miran, whom Trump appointed just before the central bank’s September meeting, said Tuesday that a steady slowdown in rental costs should reduce underlying inflation in the coming months. And the sharp drop in immigration as a result of the administration’s clampdown will reduce demand, he said, cooling inflation pressures.
“I’m more sanguine about the inflation outlook than a lot of other people are,” he said.
DUBAI, United Arab Emirates (AP) — Iran again launched drone and missile attacks targeting Bahrainand Kuwaiton Sunday following new U.S. airstrikes against the Islamic Republic, and threatened a “complete halt” in negotiations to end the warif Washington continues its attacks.
Efforts to reopen the Strait of Hormuzwithout Iran’s oversight has sparked days of crossfire. A multinational maritime body overseen by the U.S. Navy said Saturday it would expand a route near Omanfor inbound and outbound traffic.
Iranian Foreign Minister Abbas Araghchi on Sunday reiterated the claim that Tehran must govern the strait to the Persian Gulfthat once carried a fifth of the world’s oil and natural gas.
“Any attempt to establish new or separate arrangements from those currently being carried out by the Islamic Republic of Iran will only lead to further complications, delay the reopening of the Strait of Hormuz and increase the level of tension,” Araghchi said.
The strait has long been considered an international waterway despite its location in Iran and Oman’s territorial waters. In recent days, Iran has twice attacked vessels going through a route near the Omani side.
A Pakistani official involved in the technical talks between the U.S. and Iran told MS NOW Sunday that talks between the sides are on hold given the ongoing fighting between the two sides. The source, who did not want to be named to discuss the sensitive matter, said the U.S., Iran, Pakistan and Qatar all have representatives currently in Switzerland to restart discussions when instructed to do so.
But the Trump administration said nothing has been canceled and technical talks are on track for the coming days.
Talks include arrangements around the strait, the removal of a U.S. blockade on Iranian ports and sanctions on Iran, and the future of Iran’s stockpile of highly enriched uranium. The two sides have 60 days from their signing of the memorandum of understanding earlier this month to work out details.
Continued conflict in Lebanon threatens the agreement, which says fighting must end on all fronts before certain issues can be discussed.
Strikes target Gulf states hosting US military
Iran’s paramilitary Revolutionary Guard claimed responsibility for the attacks in Bahrain and Kuwait.
Kuwait, which hosts a major U.S. military base, said air defenses intercepted Iranian drones and two missiles just after the U.S. strikes in Iran. There were no reports of injuries or damage.
Bahrain said the Iranian strikes damaged a residential building near the international airport and no one was killed. Bahrain is home to the U.S. Navy’s 5th Fleet. The damaged building was not near its headquarters.
Bahrain’s Foreign Ministry denounced what it called “a dangerous escalation that reveals that what Tehran is doing is not a passing act, nor an isolated incident, but rather a deliberate approach and a systematic pattern of repeated aggression.”
Later on Sunday, Qatar said a civilian had been killed, and another person was hurt, by shrapnel related to “military operations in the area” after a vessel didn’t return at its scheduled time on Saturday. It did not give details.
Trump accuses Iran of violating ceasefire
The U.S. military said it struck Iranian military “surveillance infrastructure, communication systems, air defense sites, drone storage facilities and minelayer capabilities” following an attack on a ship on Saturday. The Panamanian-flagged tanker Kiku carried crude oil for the state-run energy company of Qatar, another key mediator.
U.S. President Donald Trump on social media accused Iran of violating the deal and warned of a point where the U.S. may “be forced to militarily complete the job.”
“If that happens, the Islamic Republic of Iran will no longer exist!” Trump wrote.
The exchanges of fire began when an Iranian drone struck a merchant vesseloff Oman on Thursday and the U.S. military retaliated.
Ship traffic on the strait had increased over the past 72 hours, “despite the elevated threat environment,” the multinational maritime body overseen by the U.S. Navy said Sunday, adding that “U.S.-assisted commercial transits continued uninterrupted.”
It said 89 such transits had been made, below the historical average of 138 vessels a day.
Iran calls for new ‘conflict control unit’ in Lebanon
Last week, Israel and Lebanon signed a framework agreementto end the latest fighting between Israel and the Iranian-backed Hezbollah militant group, which began two days after the Iran war started when Hezbollah fired at Israel. Israel has responded with an invasion of southern Lebanon and it has said it will not withdraw until Hezbollah is disarmed.
The agreement did not include Iran or Hezbollah, which has criticized itand rejected calls to disarm.
On Sunday, Iran’s foreign minister again said the U.S. must force Israel to halt attacks and withdraw. Israel occupies around 600 square kilometers (231 square miles) in southern Lebanon, which it says it needs as a security buffer.
Sporadic clashes have continued, and Hezbollah’s leader said Saturday that the group would continue fighting until Israel withdraws from Lebanon.
Key Iranian negotiator and parliament Speaker Mohammad Bagher Qalibaf said Sunday that a meeting of a new “conflict control unit” formed among Iran, the United States and Lebanon should meet as soon as possible, Iran’s state broadcaster reported.
Two strikes hit southern Lebanon on Sunday morning — one in Taybeh town and the other in the Nabatiyeh area, according to Lebanon’s National News Agency. There was no immediate word on casualties.
Overnight, Hezbollah militants killed an Israeli soldier in Deir Siryan village in southern Lebanon, according to Israel’s military. Hezbollah did not comment.
Israel targets a village in Syria
Israel’s military targeted Abdin village in southern Syria’s Daraa province with artillery shelling Sunday evening, Syrian state media reported. There was no immediate report of casualties.
State news agency SANA earlier reported that residents had blocked the road into the village with stones to prevent Israeli forces from entering it again after they had entered and withdrawn.
Earlier Sunday, Israel’s military said it had killed several armed men in southern Syria but gave no details. There was no statement from Syrian officials.
Israel seized control of a U.N.-patrolled buffer zone in southern Syria in December 2024 following the ouster of former Syrian President Bashar Assad in an insurgent offensive. Israeli officials initially called the move temporary, but more recently they have said they plan to occupy the zone indefinitely.
New York Mayor Zohran Mamdani has a message for political opponents using him as the new face of the Democratic Party: “Let them.”
Recent primary races in New York turned into a proxy war between progressives, including democratic socialists like Mamdani, and establishment Democratic politicians after candidates endorsed by Mamdani faced off against those endorsed by House Minority Leader Hakeem Jeffries and New York Gov. Kathy Hochul. After all three of Mamdani’s endorsements bore fruit, a national spotlight shone on the mayor as a growing influence in the Democratic Party.
Asked on ABC News’ “This Week” on Sunday how he felt about Republicans making him the “poster child” for the Democratic Party, Mamdani said, “Let them. We don’t have to ask ourselves what life looks like if a socialist wins. I won last November, and over the course of these last six months, what we’ve delivered for working people are the very things we were told were impossible.”
He touted recent campaign promises he delivered on, including freezing rents for nearly one million rent-stabilized apartments, expanding free child care and filling potholes across the city.
“I think we are seeing a hunger that is not just felt by New Yorkers, but frankly by Americans from coast to coast for a new politics, one that puts working people at the heart of it,” Mamdani told ABC.
Mamdani dismissed criticism from Republicans and Democrats alike. Jeffries, who represents parts of Brooklyn and Queens, said last week that he and the mayor “agree to strongly disagree about some of his endorsements, and he’s got work to do in terms of the conversations that he’s going to have with members of Congress moving forward.” Democratic Sen. Richard Blumenthal of Connecticut said, “The effort to nationalize New York is going to fail.”
Mamdani said he’s focused on the three congressional candidates he has already endorsed: Brad LanderDarializa Avila Chevalier and Claire Valdez. But he didn’t rule out future endorsements outside of New York.
“It’s not just New York City where working people are asking themselves ‘why can’t I afford my rent, why can’t I afford my groceries, why can’t I find enough money in my pocket for childcare no matter how hard I work?,’” Mamdani said.
When asked about a recent manifesto penned by a number of moderate House Democrats and Democratic candidates, promoting capitalism over socialism, Mamdani doubled down on his vision for the party.
“I’m not interested in writing a manifesto, or frankly, in reading one,” the mayor said. “I’m interested in delivering.”
Mamdani also criticized Democrats who continue to make antagonizing Trump the center of their politics rather than working people.
“You’ve got to have something that you are not just willing to stand up for, but that you’re also willing to explain how this is relevant to working people,” he said. “And I think this just comes back to the fact that I’m leading a city that’s the wealthiest city in the wealthiest country in the history of the world. I could end the sentence there and say that life is great for 8.5 million people. But it’s also a city where one in four are living in poverty. And for far too many Americans, those contradictions have become their day to day life.”
Erum Salam is a breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian.
Despite remaining undefeated in the initial round of the World Cupthe Iran national team is going home after failing to secure enough points to advance. But they do not leave quietly.
Iran’s tumultuous journey in the World Cup has been the subject of widespread attention amid the U.S. war with Iran, with the United States being one of three countries hosting matches. The Iranian team captain, Mehdi Taremi, blamed FIFA, saying, “It’s a disaster World Cup. A disaster.”
“I mean, FIFA, they have to solve every problem here but unfortunately they could not solve it since the beginning,” Taremi said at a press conference Friday after his team drew with Egypt, knocking Iran out of the tournament.
He pointed to the team’s biggest obstacle. “We don’t have our logistics people here. They don’t have a visa,” Taremi said, adding, “We always complain about these things but no one helps. No one.”
The Trump administration denied visas to key Iranian staff and severely restricted players’ travel. The team’s base camp was moved from Arizona to Tijuana, Mexico, where it was required to return immediately after each game.
“How is it possible we always have to travel from Tijuana? We love the people in Tijuana. We love Mexico,” the Iran team captain said, but added, “It’s not fair.”
Throughout the tournament, the Football Federation of Iran lamented the number of issues, threatening to lodge a formal complaint against FIFA. Head coach Amir Ghalenoei called his team the “most oppressed” in the tournament. A few days before Iran’s final match against Egypt in Seattle on Friday, the U.S. loosened travel restrictions to allow players to enter the United States two days before the game.
“The Iran team will still be required to leave the day the match ends,” the Department of Homeland Security said ahead of the match. “The overall security measures and protocol are the same. We remain committed to providing the safest tournament possible for players, staff, and fans alike.”
Still, Iran finished Group G in third place with three points earned after drawing in its matches against Belgium, New Zealandand Egypt. Under FIFA’s new 48-team format, the top eight of third-place teams move on to the next round, but Iran narrowly fell short.
The team initially seemed poised to advance when it was tied with the same amount of points as Algeria, which scored a goal in stoppage-time against Austria Saturday night. But moments later, Austria tied the game, guaranteeing Iran’s elimination.
Off the field, tensions with Iran heightened Friday when the U.S. struck Iran despite signing a memorandum of understanding meant to halt hostilities in order to finalize a peace deal.
Erum Salam is a breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian.
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