Trump publicly pressured Kevin Warsh, the central bank chief he personally nominated, to cut interest rates on the eve of Warsh’s first Federal Reserve policy meeting as chair.
In an interview with NBC’s 'Meet the Press' on Sunday, Trump stated unequivocally: “There is absolutely no reason to raise interest rates.” He added, “We built this country by doing things right and maintaining low interest rates. Raising rates is an attempt to kill success. I don’t want to kill success. We should actually be cutting rates.”
While Trump ostensibly gave Warsh room to act independently, his remarks carried a veiled message: “Kevin is excellent, and I hope he acts according to his own judgment,” he said. “But my feeling is that when a country is performing well, it shouldn’t be punished immediately with rate hikes—it should be incentivized.”
Warsh was officially confirmed as Chair of the Federal Reserve last month and will preside over his first Federal Open Market Committee (FOMC) meeting on June 16–17.
Trump’s timing was notably sensitive. Just last Friday, a robust jobs report was released, showing that the U.S. labor market has stabilized following a turbulent 2025. Markets immediately increased their bets that the Federal Reserve might be forced to raise rates this year to counter inflationary pressures.
Inflationary pressures are real, and ‘hawkish’ voices are emerging within the Federal Reserve.
The root cause of rising inflation is the war in the Middle East. At the outset of the conflict, Iran blocked the Strait of Hormuz, causing oil prices to surge—a price shock that has since rippled through the entire U.S. economy. In April, U.S. inflation rose to 3.8%, a three-year high. According to economists surveyed by Bloomberg, the May figure—set to be released this Wednesday—is expected to climb further to 4.2%.
Some Fed officials have already voiced public concern. Beth Hammack, President of the Federal Reserve Bank of Cleveland and an FOMC member, said on Friday: “If recent trends persist, action may be needed very soon.” She noted that the latest employment report shows the labor market is now “broadly balanced,” while “high inflation remains the greater risk.”
Treasury Secretary Bessent took a more moderate stance, stating it would be reasonable for the Federal Reserve to wait until the impact of the war on inflation becomes “clearer” before implementing further rate cuts.
Trump’s logic: If the economy is doing well, it shouldn’t be punished.
Faced with this situation, Trump’s stance was: the stronger the economy, the less the Fed should raise interest rates.
‘We’re doing very well, but every time you’re doing well, they want to raise rates—it’s unfair,’ he said. ‘It should be the other way around.’
Trump has previously called publicly on multiple occasions for a sharp cut in the Federal Reserve’s benchmark interest rate—currently in the range of 3.5% to 3.75%—to 1% or even lower. He has also repeatedly criticized Powell, the predecessor of Warsh, calling him a ‘clown’ and a ‘dummy’ for not cutting rates quickly enough.
Regarding Warsh, Trump appeared to give him ample room—but with an implicit message. ‘Kevin is excellent, and I hope he acts based on his own judgment. I don’t want to exert too much influence on him,’ he told NBC. ‘But my feeling is that when a country is performing well, it shouldn’t be punished immediately with rate hikes; instead, it should be incentivized.’
Warsh had previously indicated a preference for lowering borrowing costs, but the surge in inflation following the outbreak of conflict in the Middle East has led some FOMC members to begin discussing the possibility of raising interest rates.
Editor/KOKO