President Donald Trump continues to face mounting inflation woes, explained Ed Elson of Prof G Markets on MS NOW Wednesday.
The Federal Reserve acted hours before to raise interest rates by 25 basis points — the first such hike in three years, and a reflection of a surge in energy prices.
"The reason they were raised is that we're trying to get inflation under control," Elson told anchor Katy Tur. "And what we're starting to see is something of a runaway train in terms of inflation."
Ultimately, he said, the war in Iran is the main driver of price spikes.
"We can look at the price increases," he said. "Since the start of the war, corn prices are up 16 percent. Wheat is up almost 25 percent, cotton more than 30 percent, rice almost 50 percent. And this all comes back to oil. Oil prices are rising, which of course affects gas prices and diesel prices. Diesel is used for transportation. It's used for fertilizer. It's one of the most important inputs into our economy."
The bottom line, he said, is "the Federal Reserve has decided it's time to do something about it. It's time to raise rates."
Trump has pushed for interest rates to be lowered, believing that cheap money and a short-term unemployment reduction would bolster his party's prospects in the midterm election — a sharp departure from traditional Fed independence.