The Federal Reserve raised interest rates for the first time in three years — and President Donald Trump is not happy.
“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR,” he wrote on Truth Social. “Our Country is BOOMING with new Investment!”
While Trump did not mention him by name in the post, Chair Kevin Warsh faced a major test of Fed independence Wednesday. The Federal Open Market Committee voted unanimously to increase rates by a quarter point to encourage price stability. Inflation continues to outpace wage growth in the U.S. and stays above the Fed’s 2% target, largely due to supply shocks from the Iran War and shifting White House tariff policies.
In quarterly economic outlooks, the committee also expects GDP growth to remain relatively robust, unemployment to stay steady, and inflation to persist above 2% for the rest of the year. Multiple members foresee another rate hike on the horizon.
Trump — who appointed Warsh to the chairmanship — has been consistently pushing for lower interest rates, a monetary strategy that would likely lead to higher inflation and increasing costs of living for Americans.
Congressional leaders, economists, and FOMC participants have expressed concerns about how Trump’s policy pressures could shape a long-term, nonpartisan central bank. Should a hike occur, Warsh could face greater scrutiny from the White House.
Trump repeatedly urged former Chair Jerome Powell to reduce rates during the latter portion of his term. Pressure on the central bank culminated in a Department of Justice investigation into Powell’s management of construction at the Fed’s Washington DC headquarters and a mortgage fraud case against Governor Lisa Cook that reached the Supreme Court.
Warsh declined to address any questions regarding Trump during the September 16 press conference. He stated that Fed independence is “a two-way street.”
The central bank will maintain its current path, Warsh noted, and lawmakers should similarly stay within their own domain.