President Donald Trump demanded that U.S. interest rates be cut to 1% or lower Wednesday, pushing back against the Federal Reserve hours after Chair Kevin Warsh led the central bank's first rate increase in three years and signaled that additional tightening could follow as policymakers confront persistent inflation.
The Fed unanimously raised its benchmark federal-funds rate by a quarter percentage point to a range of 3.75% to 4%. Most policymakers projected at least one additional increase by the end of 2026, putting the central bank on a path sharply different from Trump's preference for lower borrowing costs.
"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World - BY FAR," Trump wrote on Truth Social.
"Our Country is BOOMING with new Investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. 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. LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" Trump added.
Trump had called for lower rates before Wednesday's meeting, but Warsh offered little indication afterward that the Fed was preparing to reverse course. Instead, he emphasized that inflation remains the central bank's immediate concern.
"The plain fact is that inflation is too high, and has been for too long," Warsh said, describing the Federal Open Market Committee's "predominant focus" as the price-stability side of its mandate.
"This summer's inflation readings do not tell me that underlying trends have meaningfully improved," Warsh added.
The FOMC reinforced that message in its policy statement, saying "inflation remains elevated" and that the increase "will support a timelier return to the Committee's 2 percent goal." Policymakers nevertheless described the economy as resilient, saying economic activity is expanding at a solid pace despite uncertainty partly related to geopolitical developments.
"Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little," the FOMC said.
The disagreement puts Warsh in a politically sensitive position only months after Trump selected him to succeed Jerome Powell, whom the president repeatedly criticized for not cutting rates quickly enough. Warsh had previously argued that lower rates could be possible, but inflation pressures have intensified, particularly as higher energy prices have complicated the outlook.
Financial markets had largely anticipated Wednesday's increase. The 10-year Treasury yield had reached 5% ahead of the decision, contributing to higher mortgage and other long-term borrowing costs.
Market participants are also preparing for rates to remain elevated. A CNBC survey conducted before the decision found that 86% of economists, fund managers and strategists expected at least one increase in 2027, while 55% anticipated more than one.
Energy prices remain a major risk. Roughly three-quarters of CNBC survey respondents expected higher energy costs to spread into broader prices, though their economic-growth forecast remained around 2.25% for both this year and 2027, while the estimated probability of a recession over the next 12 months held at 29%.
