Trump calls Fed board ‘very political’ and ‘doing the wrong thing’ after first rate hike in 3 years

US President Donald Trump stepped up his criticism of the Federal Reserve on Wednesday, calling for interest rates to be cut sharply after the central bank raised borrowing costs to combat persistent inflation.

In a post on Truth Social, Trump said US interest rates should be "1%, or less" and urged the central bank to move quickly.

Also Read: A 25 bps hike: US Federal Reserve raises interest rates for first time since 2023


"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World - BY FAR," Trump wrote.

"LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" he added.

The comments marked Trump's most direct criticism yet of US Federal Reserve Chair Kevin Warsh, whom he selected earlier this year to succeed Jerome Powell. Trump had repeatedly attacked Powell during his tenure for not cutting rates as aggressively as the president wanted.

Speaking to reporters ahead of a midterm campaign rally in North Carolina, Trump sharpened his criticism of the Federal Reserve, accusing its board of acting for political reasons and making what he described as the wrong decisions. “The board is very hostile. They’re very political. They’re doing the wrong thing. They’re a bunch of politicians,” Trump said.

The latest clash came shortly after the Fed unanimously raised its benchmark interest rate by 25 basis points to a range of 3.75%-4%, its first increase in more than three years. The central bank also signalled that borrowing costs could rise further as it seeks to bring inflation back under control.

Warsh defends rate hike

Warsh, who took office in June, defended the decision at a press conference, describing it as "a sober decision, serious decision, responsible decision."

"The plain fact is that inflation is too high and has been for too long," Warsh said.

The Fed's latest projections showed that 16 of 18 policymakers expect at least one more quarter-percentage-point increase by the end of the year, while two see rates remaining at current levels. Warsh has said he does not favour providing forward guidance and did not submit a rate projection.

The central bank's policy statement said economic activity was expanding at a solid pace, while inflation remained elevated. It said the latest rate increase would support a "timelier" return to the Fed's 2% inflation goal.

Warsh said recent inflation readings had not convinced him that underlying price pressures were improving.

"This summer's inflation readings do not tell me that underlying trends have improved," he told reporters.

Asked whether he planned to meet Trump to explain the Fed's decision, Warsh declined to comment.

"I don't have anything for you on discussions with the president," he said.

Also Read: Explained: What US Fed’s first 25 bps rate hike in 3 years means for Indian stock market

Trump links rates to trade deficit

Trump's latest criticism also appeared to connect US trade deficits with the Fed's interest-rate policy, although the two issues are largely separate.

"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.

He has previously threatened to cut off trade with countries running trade surpluses with the United States if the Fed did not lower interest rates.

The White House had spent much of the week publicly urging the Fed to keep rates unchanged. One former White House official told Reuters that Trump's latest post represented a relatively restrained response to the broader campaign against the central bank.

"The president is making clear he disagrees with the policy without explicitly saying Warsh is personally to blame, giving him a nickname, or threatening retaliatory action against the Fed," the former official said, speaking on condition of anonymity because they were not authorised to speak publicly.

"Instead he's redirecting his ire toward trading partners, which have little to do with the monetary policy decision."

Warsh's balancing act

Trump chose Warsh in January to replace Powell, whom the president had repeatedly criticised and nicknamed "too late" over what he viewed as insufficiently aggressive rate cuts.

Warsh took office pledging to preserve the Fed's independence over monetary policy while working more closely with the White House on other issues.

Since becoming chair in June, he had initially steered policymakers towards keeping rates unchanged, despite disagreement among officials over how to respond to persistent inflation. On Wednesday, however, he backed the decision to raise rates.

The Fed's latest move reflects continued concern over inflation even as economic activity remains resilient. Reuters reported that global import tariffs, an energy shock linked to the US-Israeli war with Iran and strong capital spending associated with the artificial intelligence boom have contributed to persistent price pressures.

Trump's latest attack on the Fed came days after he also criticised three Supreme Court justices he appointed, following the court's rejection of his attempt to regulate how states issue mail ballots.

"These are not the people I interviewed to serve on the United States Supreme Court, they are merely a shell of their original selves," Trump wrote.