Full Breakdown
Trump Presses Fed to Cut Rates After First Hike Under Chairman Kevin Warsh
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Core Event: Federal Reserve Raises Benchmark Rate While President Calls for Cuts
The Federal Open Market Committee voted unanimously to lift the federal-funds target range by a quarter-percentage point to 3.75 %–4 %, marking the first increase in three years. The move was justified by “elevated” inflation and the need to support a timelier return to the Fed’s 2 % price-stability goal.
Background & Context
During his first term, Trump repeatedly attacked former chair Jerome Powell, calling him a “real dummy” and accusing him of costing the country a fortune.
Data & Statistics
- Rate hike: +25 basis points, new range 3.75 %–4 % (first since 2023).
- Consumer-price data: August CPI rose 0.4 % month-over-month, quadruple July’s pace.
- Market expectations: Futures indicated a 93 % probability of a hike before the vote.
- Median Fed projection (June): Federal-funds rate to end 2026 at 4.1 %, implying at least one more quarter-point increase before year-end.
Official Statements & Responses
He said he had told Warsh that voting with the board would not affect the outcome, emphasizing his willingness to give the chair leeway while still demanding lower rates.
Chairman Warsh, speaking after the vote, highlighted persistent inflation and cited geopolitical risks—including the ongoing conflict in Iran—as contributors to price pressures. He reaffirmed the Fed’s commitment to independence despite political pressure.
The Fed’s post-meeting statement described the economy as “strong” with robust productivity growth, capital investment, and job gains, while maintaining that inflation remains elevated and that the policy action would support a timelier return to the 2 % target.
Verbatim Quotes
- “Interest rates in the United States should be 1%, or less, because we are the best credit in the world—by far,” — Donald Trump, president — Donald Trump, president
- “The plain fact is that inflation is too high and had been for too long,” — Kevin Warsh, spared fed chairman — Kevin Warsh, Fed chairman
- “He’s got a very tough board…The board is hostile and political.” — Donald Trump, president — Donald Trump, president
- “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the great Fed Chairmen, maybe the best,” — Donald Trump, president — Donald Trump, president
- “I do, I mean I’m relying on Kevin,” — Donald Trump, president — Donald Trump, president
What’s Next
Warsh indicated that additional rate hikes remain possible this year, with several committee members already contemplating further increases. The president’s continued public pressure on the central bank suggests an ongoing clash between the White House and the Fed over monetary policy direction.