The panelists on CNBC’s “Squawk Box” got into a heated debate Friday over the reason the Federal Reserve massively cut interest rates just several weeks ahead of the 2024 election.

The Friday jobs report found that 254,000 non-farm payroll jobs were added in the U.S. in September while the unemployment rate dropped to 4.1%, exceeding economists’ expectations that 150,000 jobs would be added. The program’s panelists Rick Santelli and Joe Kernen predicted that a change in wages, transportation, and other basic issues in business would cause prices to rise, prompting the panel to discuss the merits of the Fed’s September rate cut.

“Just look at the rules in California! Look at the rules in California, look what they’re doing to trucking,” Santelli argued. “I’m sorry, but the bottom of the food chain issues whether it’s wages, transporting, all the things we use. The price of poker is going to be going up. I don’t see any way around that.”

“That doesn’t mean you have an inflationary spiral, Rick,” panelist Steve Liesman argued.

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The Federal Reserve reduced interest rates by 0.5% in September due to a labor market slowdown that led to fears of an economic slowdown. The Fed made its move after inflation dropped to 2.5% in August and job growth was weaker than expected in July and August.

Santelli argued prices will inevitably rise in the market despite the positive jobs report, causing Liesman to argue that a rise in price levels does not equal inflation.

“Don’t give me economics, I’m talking common sense here!” Santelli said. “Look west, look, no, no, economies never have any common sense in my opinion. Look east, look west … All I’m saying here is, you can throw all the economics around you want, there’s gonna be inflationary forces in the grid, inflationary forces in things like Diesel, in trucking, and these things are bottom of the food chain.”

“Look, Rick, if you have increases in the price level, that does not mean you have inflation,” Liesman argued. “It means you had an increase in the price level.”

Another panelist, Wendy Edelberg, suggested Republican nominee Donald Trump’s plans to impose tariffs and mass deportations of illegal immigrants will lead to inflation. Santelli argued against Edelberg’s suggestion, telling her not to get political.

“Right now, inflation is darn near target, and the labor market looks relatively balanced, remarkably balanced,” Edelberg said. “And so, it’s not appropriate for monetary policy to be restrictive right now. If inflationary pressures come up going forward, let’s say because we have massive deportation that reduces labor supply, let’s say because we have a 10% across-the-board tariff, the Fed has a lot of dry powder to fight inflation.”

“Oh, don’t get political,” Santelli shot back, with Liesman saying Edelberg’s comments were “fact.” “No, sorry, it’s not fact.”

Inflation rose from just 1.4% when President Joe Biden took office in January 2021 to a peak of 9% in June 2022. It fell to 2.9% in July, the first time it had decreased below 3% in two years.

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