From Business Insider · Allie Kelly · · 1m 30s
Trump demands Fed slash rates to 1% or less
The president pressures the central bank after its first rate hike in three years, testing Fed independence.
In brief
The president pressures the central bank after its first rate hike in three years, testing Fed independence. Trump is publicly demanding lower interest rates that would boost growth but risk higher inflation, putting pressure on Fed Chair Kevin Warsh to resist political interference. Originally reported by Business…
Fed raises rates for first time in three years
The Federal Open Market Committee voted unanimously to raise interest rates by a quarter point to help stabilize prices and combat inflation.
Trump demands rates drop to 1% or less
President Trump posted on Truth Social that US interest rates should be 1% or lower, citing America's strong credit standing and booming investment.
“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World, BY FAR.”
Inflation still outpaces wage growth
Inflation remains above the Fed's 2% target, driven by supply shocks from the Iran War and shifting White House tariff policies that undercut wage gains.
Lower rates would risk higher inflation
Trump's push for 1% rates would likely boost growth but increase inflation and living costs for Americans, creating a tradeoff between short-term stimulus and long-term price stability.
Warsh faces test of Fed independence
Fed Chair Kevin Warsh, nominated by Trump, must resist political pressure while the White House has previously pursued legal actions against Fed officials who resisted rate cuts.
“Fed independence is a two-way street.”
History of White House pressure on Fed
Trump previously pushed Jerome Powell to cut rates and later pursued a DOJ investigation into Powell's building decisions and a mortgage fraud case against Governor Lisa Cook.
The one thing
Trump is publicly demanding lower interest rates that would boost growth but risk higher inflation, putting pressure on Fed Chair Kevin Warsh to resist political interference.
