# Economist Warns High Rates Are Fueling a Rent Driven Inflation Loop as the Fed Weighs Its Next Move

> Apollo chief economist Torsten Slok warns that elevated interest rates are discouraging new home construction, pushing rents and inflation higher in a cycle that complicates the Federal Reserve's next move under Chair Kevin Warsh.

- Source: American Post News
- Canonical URL: https://americanpostnews.net/article/economist-warns-high-rates-are-fueling-a-rent-driven-inflation-loop-as-the-fed-weighs-its-next-move
- Author: staff
- Section: Economy
- Published: 2026-10-05T23:01:08.264Z
- Updated: 2026-10-05T23:01:08.264Z
- Tags: Federal Reserve, Inflation, Housing Market

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Apollo Global Management chief economist Torsten Slok is warning that the Federal Reserve, now led by Chair Kevin Warsh, faces a self reinforcing problem tying its own interest rate policy to the housing market. Higher rates discourage builders from starting new projects, which limits the supply of homes and apartments, pushes rents higher, and in turn keeps inflation and interest rates elevated.

Housing data from August showed the strain. Housing starts fell 2.6% from July and were down 1.2% from a year earlier, totaling 1,275,000 units. Completions fell even more sharply, dropping 11.9% from July and 27.1% year over year to 1,128,000 units.

That slowdown in supply is showing up in the inflation data. The shelter component of inflation is up 3%, and owners equivalent rent alone makes up roughly a quarter of the Consumer Price Index. Overall inflation stands at 3.4%, still well above the Fed's 2% target.

The Federal Open Market Committee raised its base rate by 25 basis points in September, bringing it to a range of 3.75% to 4%. Complicating the picture further, September's jobs report showed only 29,000 jobs added, a weak number that adds pressure on the Fed from the other side of its mandate. Markets are currently pricing in a 79.5% probability that the Fed holds rates steady at its October meeting.

Other analysts are watching the same dynamic. Claudio Irigoyen and Antonio Gabriel at Bank of America, along with UBS's Andrew Dubinsky, have flagged similar concerns about how tight monetary policy is feeding into the housing shortage. New York Fed President John Williams and Fed Vice Chair Philip Jefferson are among the officials weighing how to balance the inflation fight against a labor market that is showing signs of cooling.

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Originally published by American Post News. Free to cite with attribution and a link to https://americanpostnews.net/article/economist-warns-high-rates-are-fueling-a-rent-driven-inflation-loop-as-the-fed-weighs-its-next-move.