Trump backs Warsh on interest rates before Fed decision
Trump praised Fed Chair Kevin Warsh and pushed for lower rates as markets expect the central bank to hold steady this week.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
Trump Warsh interest rates comments put the Federal Reserve back in the political spotlight two days before its next policy decision. President Donald Trump praised Fed Chairman Kevin Warsh on Monday while arguing the U.S. should have the lowest borrowing costs in the world, a position that matters for investors because Fed rates shape everything from bond yields to credit-card and mortgage rates.
Speaking with reporters on Air Force One, Trump called Warsh “fantastic” and said the Fed chair “wants to do the right thing.” Trump also criticized other members of the Fed’s Board of Governors, saying they were “very political” and suggesting some had “perhaps bad intentions” because they have not moved to cut rates.
The remarks came ahead of the Federal Open Market Committee’s next interest-rate announcement. The FOMC is the Fed group that votes on monetary policy, including the benchmark overnight borrowing rate. That rate is the central bank’s main lever for influencing financial conditions: higher rates tend to make borrowing more expensive, while lower rates can make credit cheaper and support spending, though they can also add pressure when inflation is high.
What did Trump say about Warsh and interest rates?
Trump said Warsh has his support, but argued that the Fed board is blocking the direction he believes policy should take. “Rates should be lowered,” Trump told reporters. He also said the U.S. economy “could be at 8%, 9%, 10%, 12% GDP,” referring to growth in gross domestic product, a broad measure of economic output.
Trump added that the U.S. “should have the lowest interest rate in the world,” saying that was the case 30 years ago. CNBC reported that he has previously accused Fed officials of acting with ulterior motives when they resist lower rates.
What markets expect from the Fed
Traders are largely expecting the Fed to keep rates unchanged at this week’s meeting, according to CME Group’s FedWatch tool cited by CNBC. The same market pricing leaves roughly a one-in-three chance of a quarter percentage point increase.
A quarter percentage point is 25 basis points, a common way markets describe small rate moves. Investors watch those odds because even an unchanged Fed decision can move stocks, bonds and currencies if officials signal a different path for future policy.
The Fed has held its benchmark rate in a target range of 3.5% to 3.75% after cutting by three-quarters of a percentage point in the second half of 2025, according to CNBC. That level is about the same as the Bank of England’s rate, above the European Central Bank’s 2.25%, Japan’s 1% and China’s 3%.
Several Fed officials have recently pointed to inflation that remains too high, CNBC reported. Dallas Fed President Lorie Logan, who votes on the FOMC this year, said benchmark rates should be “modestly higher,” making her one of the clearest voices favoring tighter policy ahead of the meeting.
For retail investors, the tension is straightforward: Trump is pressing for cheaper money, while some Fed officials are focused on inflation risk. The decision this week will show whether the central bank stays on hold again or responds to those inflation concerns with a rate increase.
This story draws on original reporting from CNBC.
