# Warsh's rate hike sparks Trump fury and market whiplash

> Fed chair Kevin Warsh hiked rates, stocks tanked, then rebounded, but the president is furious he didn't get his way.
- Title: Warsh's rate hike sparks Trump fury and market whiplash
- Summary: Fed chair Kevin Warsh hiked rates, stocks tanked, then rebounded, but the president is furious he didn't get his way. Warsh walked a tightrope between market…
- Keywords: kevin warsh, federal reserve, rate hike, donald trump, jerome powell, stock market, inflation, fed chair, treasury yields, labor market, Warsh's, rate
- Source: Fortune — https://fortune.com/2026/09/17/stocks-rebound-warsh-fed-rate-hike-trump-furious
- Author: Eva Roytburg
- Read time: 1 min
- Topics: kevin warsh, federal reserve, rate hike, donald trump, jerome powell, stock market, inflation, fed chair, treasury yields, labor market
## Warsh hikes rates, stocks crater
Fed chair Kevin Warsh voted to raise rates Wednesday, sending the S&P 500 to its lowest close since July. The move risked disappointing both bond markets and stock investors.
## Market bounces back by Thursday
By Thursday morning, traders had moved past the shock. The Nasdaq rallied over 400 points, the S&P gained more than 1%, and the Dow added 224 points after falling 630 the day before.
## Trump demands lower rates immediately
Trump told reporters he'd spoken to Warsh before the vote and called the Fed "very hostile" and "very political." He then posted on Truth Social demanding rates of "1% or less."

> "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"
## History repeating with Powell
Trump attacked Jerome Powell for not cutting rates fast enough and picked Warsh partly because he'd criticized Powell's Fed. Now Warsh is raising rates, creating the exact conflict Trump tried to avoid.
## Warsh defends the hike on inflation
Warsh said plainly that "inflation is too high" and defended the rate increase. When asked about Trump's pressure, he said only that "independence is a two-way street."

> "independence is a two-way street"
## Bond market and data support the move
The 10-year Treasury yield fell to 4.949%, signaling investors believe the Fed is serious about inflation. Jobless claims came in at 196,000, below expectations, supporting Warsh's case that the labor market can handle a hike.
## Global central banks follow suit
The European Central Bank hiked last week, the Bank of Japan is expected to hike Friday, and the Bank of England warned a hike is increasingly likely. Warsh is not alone in tightening policy.
## Key takeaway

Warsh walked a tightrope between market expectations and presidential pressure, ultimately choosing inflation control over Trump's demands for lower rates.