Trump lashes out on US Fed chief after rate hike

U.S. President Donald Trump escalated his pressure on Federal Reserve Chair Kevin Warsh on Wednesday, demanding interest rates be reduced to 1% or lower after the central bank raised rates and suggested additional increases to combat persistently high inflation. In a post on Truth Social, Trump stated, "Interest rates in the United States should be 1 per cent, or less, because we are the best credit in the world – BY FAR," urging the reduction of rates for the United States of America "FAST!"

Later, Trump told reporters that he continued to trust Warsh, who he appointed earlier this year to replace Jerome Powell, but claimed to have discussed the rate decision with him. "I talked to Kevin," Trump said, seemingly confirming a conversation that Warsh has not confirmed. "And I said you might as well vote with the board because it’s not going to matter. The board is very hostile. They’re very political. They’re doing the wrong thing."

Following the rate increase, Warsh defended the decision in a press conference, describing it as "a sober decision, serious decision, responsible decision." He noted that inflation remains excessively high and has been for too long. According to new policy projections, 16 out of 18 policymakers anticipate at least one additional quarter-percentage-point rate hike by the end of 2026, while two expect rates to remain unchanged. Warsh expressed opposition to providing forward guidance and did not submit a projection.

Trump also seemed to connect the US trade deficit to borrowing costs, despite the fact that trade balances and monetary policy are distinct economic issues. He had previously threatened to end trade with countries that maintain deficits with the United States if the Fed did not lower rates.

Warsh, who began his tenure in June after Senate confirmation, had pledged to maintain the Fed's independence in setting monetary policy while collaborating more closely with the White House on other matters. When asked whether he intended to meet with Trump to clarify the Fed's decision, Warsh stated, "I don’t have anything for you on discussions with the President."

Trump's latest comments marked his second public disagreement this week with members of institutions he helped establish. Following the Supreme Court's rejection of his attempt to regulate how states issue mail ballots, he criticized three justices he had appointed. White House officials have been actively supporting the Fed in addressing interest rates over the past week.

One former White House official stated that Trump's recent post represented a comparatively moderate expression of disagreement, pointing out that he criticized the policy without directly blaming Warsh or threatening action against the central bank.