Trump Pressures Fed After Rate Hike, Warsh Cites Stubborn Inflation
The Federal Reserve raised interest rates by 25 basis points, prompting President Trump to demand lower rates on social media.
US President Donald Trump on Wednesday renewed his criticism of the Federal Reserve after the central bank raised interest rates by a quarter of a percentage point, posting on his Truth Social platform that US rates should be "1%, or less" and urging the Fed to lower borrowing costs "fast."
The Fed's rate-setting body voted unanimously to lift the benchmark rate to 3.75%-4.00%, a move Chair Kevin Warsh described at a press conference as "a sober decision, serious decision, responsible decision." Warsh said inflation remains too high and has stayed elevated for too long, adding that this summer's price readings did not convince him underlying trends had improved.
Fresh policy projections showed 16 of 18 policymakers expect at least one more quarter-point increase before the end of the year, while two see rates holding steady. Warsh, who has said he opposes forward guidance, did not submit a projection.
Trump's post stopped short of naming Warsh directly, though it marked his sharpest criticism yet of the Fed chief he picked earlier this year to replace Jerome Powell, whom he had frequently attacked as "too late" on rate cuts. The president also tied the decision to US trade deficits, calling the word "deficit" a "fancy word for LOSS" and saying the country cannot keep "carrying" other nations.
Warsh took office in June after a Senate confirmation that was nearly derailed by a federal investigation into Powell and renovations at the Fed's headquarters. Since then he initially kept rates steady despite pressure from some officials worried about inflation, before Wednesday's increase.
Asked whether he would meet Trump to explain the decision, Warsh declined to comment on any discussions with the president.
The social media attack was Trump's second this week on his own appointees, following his criticism of three Supreme Court justices he named after the court struck down his effort to regulate how states issue mail ballots. White House officials had spent much of the week publicly pressing the Fed to hold rates steady. One former White House official said the president's post was a restrained response in that context, noting he did not blame Warsh personally, give him a nickname or threaten retaliation, instead directing his anger at trading partners.