Former economic adviser Stephen Moore warned on Monday that Federal Reserve Chair Kevin Warsh might need another interest rate hike to tackle persistent inflation, despite President Donald Trump's demands for lower borrowing costs.

Moore Warns Inflation May Require Further Tightening

"It's a tough position for my friend Kevin Warsh because I think job number one for the Fed [is to] get that inflation rate down to 2 percent or lower. That might mean another rate hike," Moore told CNN News Central.

Moore's warning follows the Fed's unanimous September decision to raise interest rates by 25 basis points, bringing its benchmark range to 3.75%–4%.

The Bureau of Labor Statistics reported that annual inflation accelerated to 3.7% in September from 3.4% in August. Gasoline prices jumped 9.1% during September, accounting for more than half the monthly increase, while underlying inflation reached 2.6% annually.

Trump's Rate Cut Demands Complicate Warsh's Decision

Trump previously demanded interest rates of 1% or lower, criticizing the September hike despite appointing Warsh.

"The plain fact is that inflation is too high and has been for too long," Warsh declared following that decision, reiterating the central bank's commitment to restoring price stability.

The Fed's September projections left the door open to additional tightening, complicating Trump's push for cheaper credit. Reuters reported that policymakers expect persistent inflation and resilient economic activity to keep further increases under consideration.

Markets Expect Fed To Hold Rates

Despite Moore's warning, markets overwhelmingly expect the Fed to hold rates at 3.75%-4% at its October 27–28 meeting.

Fed Vice Chair Philip Jefferson urged patience during an October 1 speech at the University of Virginia, saying, "My colleagues and I will need to come to our own judgment, which may take more time."

Reuters reported on Monday that rising Treasury yields have tightened financial conditions, potentially allowing officials to delay additional increases. However, persistent inflation could revive pressure for another hike later this year.