Trump criticises Fed rate rise while maintaining confidence in Chair Kevin Warsh

Washington, United States. President Donald Trump criticised the Federal Reserve’s decision to raise interest rates, urging rapid cuts while saying he retained confidence in Fed Chair Kevin Warsh. Policymakers unanimously increased rates by 25 basis points to a range of 3.75% to 4.00% on Wednesday.

Trump calls for lower rates

Trump said in a Truth Social post that US interest rates should be 1% or lower because the country had the best credit in the world.

“LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” he wrote.

The comments were Trump’s most pointed, though still indirect, criticism of Warsh, whom he selected earlier this year to succeed Jerome Powell as Fed chair. Trump had frequently criticised Powell for not delivering the substantial rate cuts he had demanded.

Comments on Fed board and trade deficits

Trump later told reporters that he had spoken to Warsh and said he still had confidence in him.

“I … talked to Kevin,” Trump said, appearing to confirm an interaction that Warsh has not corroborated. “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.”

Trump also linked persistent US trade deficits to borrowing costs set by the central bank. He had previously threatened to halt all trade with countries with which the United States has trade deficits if the Fed did not lower interest rates.

“The word ‘Deficit’ is nothing more than a fancy word for LOSS. We are ‘carrying’ almost every country in the World, and that cannot go on any longer,” Trump wrote on Wednesday.

Fed outlook

Warsh described the rate increase at a subsequent news conference as “a sober decision, serious decision, responsible decision.”

“The plain fact is that inflation is too high and has been for too long,” he said.

New policy projections showed that 16 of 18 policymakers expected at least one further quarter-percentage-point increase by the end of the year, while two expected rates to remain unchanged. Warsh said he remained opposed to providing forward guidance and did not submit a projection.