MercoPress. South Atlantic News Agency

Trump still has confidence in his Fed’s chairman, despite the rate increase to 4%

Fed chair Warsh said inflation has been “too high ... for too long, and we must be confident that underlying inflation is moving to our objective clearly and at sufficient speed”

President Donald Trump said he has confidence in the recerntly appointed Federal Reserve chair Kevin Warsh and found a way to justify the central bank’s decision to increase the benchmark interest rate to 4%, the first since 2023.

While on the campaign trail in North Carolina, Trump said, “I’m relying on Kevin, but he’s got, you know, a very tough board, he’s got a board that was put there by other people.”

“And I told, I talked to Kevin, and I said, ‘You might as well vote with the board. It’s not going to matter.’” Trump and his MAGA movement is facing a crucial midterm election next November and the president needs to keep Republican control of Congress.

On Wednesday the Federal Open Market Committee voted 12-0 to increase its key interest rate by a quarter percentage point, or 25 basis points.

“Inflation remains elevated,” the committee said in a brief statement. “Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

During the post-meeting news conference, Chairman Kevin Warsh said inflation has been “too high ... for too long.” He added, “we must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.” Today, “the FOMC decided that this standard has not been satisfied.”

However this did nor prevent Trumpo from insisting that the US central bank must “slash interest rates to 1%”

“The board is very hostile. They’re very political. They’re doing the wrong thing,” Trump said. “They’re raising the rates to make Trump do as bad as they can possibly can do,” the president said before heading to a campaign event for a Republican Senate candidate.

Trump who has relentlessly pressured the Fed to drastically lower borrowing costs, insisted in his Truth Social post that rates in the U.S. “should be 1%, or less, because we are the Best Credit in the World — BY FAR.”

“Our Country is BOOMING with new Investment!” wrote Trump, who has repeatedly claimed that the U.S. has raked in as much as US$ 20 trillion or more during his second term”. White House supported the statement a week ago arguing that Trump has secured “more than US$11 trillion in new U.S. Investment.”

The irony is that for years Trump applied pressire against the Fed, which lessened after Warsh succeeded Jerome Powell as chairman. And so far Trump and his aides have refrained from attacking Warsh directly.

White House spokesman Kush Desai told Fox News on Wednesday that Trump “absolutely” still believes in the independence of the Fed, “but that doesn’t change the fact that the president of the United States has a First Amendment right” to speak out “when things go awry.”

The fact is that FOMC, in a statement after the rate hike, said, “Inflation remains elevated.” And updated projections show a strong majority of Fed officials expect another rate increase could be on the way, before the end of 2026.