Trump demands 1% rates after Fed hikes to 3.75%-4% range
The Federal Reserve raised its benchmark target rate a quarter point to a range of 3.75% to 4%, its first increase in three years, and the White House replied the same day. President Trump posted on Truth Social…
Key takeaways
- The Federal Reserve raised its benchmark target rate by a quarter point to a range of 3.75% to 4%, its first increase in three years.
- President Trump posted on Truth Social the same day demanding rates fall to "1%, or less" and that the Fed act "AND FAST!"
- Twelve of 18 Fed officials project at least one additional hike before year's end, with four of those expecting two more, leaving no room for an imminent pivot toward 1%.
- Kevin Warsh, Trump's own pick as Fed chair, faces a 275-to-300-basis-point gap between the White House's stated 1% floor and the range his committee just set.
- Trump did not attack Warsh personally, a contrast with his sustained public criticism of former chair Jerome Powell.
The Federal Reserve raised its benchmark target rate a quarter point to a range of 3.75% to 4%, its first increase in three years, and the White House replied the same day. President Trump posted on Truth Social demanding rates fall to "1%, or less" and that the Fed act "AND FAST!" Kevin Warsh, Trump's own selection as Fed chair, now absorbs public pressure from the president on the first major rate call of his tenure.
The Fed's internal distribution runs counter to the White House's stated preference. Twelve of 18 officials project at least one additional hike before year's end. Four of those 18 expect two more. That scorecard leaves no room for an imminent pivot toward 1%, and the president's post does not change the vote count.
Trump's Truth Social argument rested on two claims. He described the United States as "the Best Credit in the World" and said a rate of 1% or below is the appropriate price for a borrower of that standing. He also argued that ending trade with countries where the U.S. runs a deficit, which he wrote covers most trading partners, would generate "at least 1.5 Trillion Dollars a year." He characterized the word "deficit" as "nothing more than a fancy word for LOSS."
The Warsh question
The restraint in Trump's post was in where the pressure landed. He did not attack Warsh personally. That marks a clear contrast with how he handled former chair Jerome Powell, who absorbed sustained public criticism during his tenure. Warsh now has to manage a 275-to-300-basis-point gap between the White House's stated floor and the range his own committee just set.
Whether Warsh addresses the pressure publicly or stays quiet will signal how the new Fed leadership reads the question of central bank independence. The next rate decision is the practical milestone. Twelve officials already leaning toward at least one more hike is the number to keep in mind.