A federal judge blocked President Trump from removing Lisa Cook from the Federal Reserve Board of Governors while a lawsuit challenging her firing proceeds.

Also, a Fed official who called the jobs slowdown has become a dark-horse candidate to succeed Jerome Powell when his term expires in May.

A federal judge late on Tuesday blocked President Trump from removing Lisa Cook from the Federal Reserve Board of Governors while a lawsuit challenging her firing proceeds.

Judge Jia Cobb in Washington, D.C., granted Cook’s request for a temporary court order to keep her seat on the central bank’s seven-member board for now. The decision comes just days before the Fed’s next meeting, set for Sept. 16-17.

Cobb said Cook is “substantially likely” to succeed on her claim that Trump violated the Federal Reserve Act because her purported termination didn’t comply with the statute’s requirement that officials can only be removed for cause.

Federal Reserve governor Christopher Waller warned publicly that private-sector hiring was “near stall speed and flashing red” in July, even though the job market seemed to be holding up. A Fed colleague gently ribbed him.

“Come on, Chris, you’re a better economist than that,” the colleague said. The labor market looked fine, with the unemployment rate steady at 4.1%.

Two weeks later, Fed officials voted to hold rates steady, but Waller voted for a cut. Two days after that, a weak July jobs report vindicated the plain-spoken economist’s contrarian stance. Last week’s August jobs report further validated Waller’s hypothesis.

That prescience has put Waller in the conversation for one of the most consequential economic appointments of President Trump’s second term: Federal Reserve chair. The economist from Minnesota with blue-collar roots has emerged as a dark-horse candidate to succeed Jerome Powell when his term expires in May.

If confirmed to the Fed by the Senate, Stephen Miran plans to take a leave of absence from his current job as chair of the Council of Economic Advisers, rather than resign. In a letter to Miran, Democrats on the Senate Banking Committee criticize that plan, arguing that it will infringe on Fed independence.

"It is ludicrous to contend that you could exercise independent judgment regarding monetary policy and financial regulation," the senators write. "Any action you take as a Fed Governor would be questioned as a self-serving ploy to satisfy the demands of the President and retain your position in the White House," they add. The Democrats point out that even though Miran's term would nominally last only four months, he would be allowed to continue to serve until a successor is confirmed. (Dow Jones Newswires)

China’s deflationary pressures persisted in August, with a gauge of consumer prices slipping back into contraction as an uncertain growth outlook dents sentiment.

The country’s consumer-price index fell more than expected last month, underlining worries that deflation may be becoming entrenched.

Data from the National Bureau of Statistics showed that the index fell 0.4% from a year earlier in August after being flat in July. A poll of economists by The Wall Street Journal had predicted a 0.2% drop.

The August decline was mostly driven by a steep fall in food prices and a high base from last year, Dong Lijuan, a senior state statistician, said Wednesday.

Fitch Ratings has nudged up its world growth outlook for 2025 despite growing gloom about the U.S. economic outlook, saying China and Europe aren’t as downbeat as earlier thought.

There is now clear evidence that the U.S. economy is slowing, and world growth will still be significantly weaker this year, it said.

Fitch now forecasts global growth to be 2.4% in 2025, up 0.2 percentage points since June, but still slower than 2.9% last year.

The U.S. added 911,000 fewer jobs over the 12 months that ended in March, the BLS said. If that holds, it would bring the average pace of employment gains from 147,000 jobs a month over the period to about 71,000.

• Jamie Dimon Says Economy Is Weakening

The data also show how average households haven’t gained ground economically since the Covid-19 pandemic hit, underscoring the continued toll of rising prices. Inflation-adjusted median household income last year was at roughly the same level as in 2019, before the pandemic struck, following sharp declines after Covid’s onset and a tepid recovery since then.

The Long-Term Stock Exchange plans to petition the Securities and Exchange Commission to eliminate the quarterly earnings report requirement and instead give companies the option to share results twice a year, the group told The Wall Street Journal.

8:30 a.m.: PPI
10 a.m.: Monthly Wholesale Trade

8:15 a.m.: ECB interest rate announcement
8:30 a.m.: CPI
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

Interest-rate markets are pricing in an extended series of Fed rate cuts starting this month that would bring the Fed's target range below 3% by the end of 2026. That anticipated path of aggressive cuts is unlikely to be reflected in the Fed's September dot plot, per Renaissance Macro's Neil Dutta, setting up a sharp contrast between the central bank and the trajectory that markets expect. "Heading into the FOMC meeting next week, it is tough to see how the Fed can satisfy expectations," Dutta writes. For the September dot plot to match market forecasts, eight Fed officials would have to move their 2026 interest-rate dots to 3% or lower. — Matt Grossman

Norwegian core inflation was in line with Norges Bank's 3.1% year-on-year estimate, but the details are slightly worrisome, SEB strategists Erica Dalsto and Olle Holmgren write. A reduction in kindergarten fees lowered the year-on-year rate in CPI-ATE by 0.3-0.4 percentage points. The lower fees mean underlying inflation is actually higher than Norges Bank expected, SEB says. This could raise doubts regarding a rate cut next week. "We continue to see a September cut as most likely, though uncertainty regarding the number and pace of rate cuts thereafter has increased," the analysts say. Thursday's Regional Network Report will be important to evaluate growth, employment prospects and underlying price pressures. — Dominic Chopping

Given the downgrades in U.S. job creation, the Fed may indeed have fallen behind the curve while trying to anticipate tariff-led inflation, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank. It could mean bigger and faster rate cuts in the coming months, depending on inflation. In the coming hours, the U.S. will publish PPI update for August, but the real question is how much of the rising input costs will flow into the CPI due tomorrow, she says. The stronger the inflation figures, the slower the Fed will lower interest rates, and that could demoralize investors who are currently happy to see the jobs market weaken in exchange for larger rate cuts, she says. — James Glynn

• Media leaks from the Bank of Japan about the possibility of raising interest rates again this year could be intended to shore up the yen, Evercore ISI analysts say in a note. BOJ officials are considering raising rates despite political instability after the resignation of Prime Minister Shigeru Ishiba, Bloomberg reports. (Dow Jones Newswires)
• U.S. drivers can expect to spend less of their disposable income on gasoline while driving more in 2026 as lower crude oil prices reduce prices at the pump, the Energy Information Administration said Tuesday. In its latest Short-Term Energy Outlook, the EIA estimates an average retail price for regular gasoline of $3.10 a gallon in 2025, or 20 cents per gallon less than in 2024. Average prices are then projected to fall to $2.90 a gallon in 2026, with prices in all regions except the West Coast below $3 a gallon.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.