President Trump-splains economy to Fed in rant after first interest rate hike in 3 years
"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR," Trump wrote. "Our Country is BOOMING with new Investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. The word 'Deficit' is nothing more than a fancy word for LOSS. We are 'carrying' almost every country in the World, and that cannot go on any longer. LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"
The president appeared to erroneously conflate the federal funds rate, which the Fed raises or lowers to manage inflation and employment across the entire economy, with the interest rate an individual borrower actually pays based on that borrower's own credit history — the kind of rate a bank quotes a homebuyer or a credit-card company quotes a customer, not something the government sets by decree because the country's credit is good.
And despite the president’s boast that the United States has the "Best Credit in the World," bond investors demand to hold U.S. government debt is going the opposite direction Trump wants, with the yield on 10-year Treasurys topping 5 percent this week.
Trump’s post came as Trump was leaving to campaign in North Carolina for Senate candidate Michael Whatley, just hours after the Federal Open Market Committee voted Wednesday to raise its target rate by a quarter point, to a range of 3.75 percent to 4 percent — the first increase, rather than cut, in the federal funds rate since 2023.
The move was engineered not by one of the Fed governors Trump has spent years attacking as "boneheads," but by Kevin Warsh, the chairman Trump elevated to the job in May after months of bullying his predecessor, Jerome Powell, over interest rates that he considered to be too high.
The committee's statement gave little comfort to a president demanding rate cuts. "Inflation remains elevated," the Fed said, adding that "today's policy action will support a timelier return to the Committee's 2% goal."
Projections released alongside the decision showed policymakers expect, on average, one more quarter-point increase before the end of the year, and none in 2027.
Warsh, who has said the Fed bears responsibility for "65 months of sustained, elevated inflation" and warned in an August speech that "we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed" before easing up, offered no forecast of his own at Wednesday's press conference — an omission NPR attributed to his general reluctance to hand markets forward guidance that could "tie the Fed's hands."
The backdrop Trump did not mention in his post is a re-acceleration of inflation rather than the "BOOMING" economy he described. Consumer prices rose 3.4 percent over the year through August, driven in part by a surge in gasoline prices that the government has linked to the fallout from the U.S. war with Iran. Diesel hit an all-time high of $6.31 a gallon on Wednesday, according to AAA, and wages have trailed price growth since April.
Wednesday's post is only the latest entry in a fight Trump has picked with the Fed for years. He spent much of his first term demanding rate cuts from Jerome Powell, the chairman he himself had nominated, at one point complaining the Fed had gone "loco" and dismissing its rate-setters as "boneheads" for not cutting fast enough, and mused openly to aides about whether he had the legal authority to fire Powell outright.
The attacks on Powell went nowhere, with the now-former Fed chair stating publicly he would not resign if asked, and Trump's first-term attempts to stack the Fed's board with loyalists, including Stephen Moore and Herman Cain, both collapsed before confirmation.
He revived the pressure campaign in his second term, reviving the "Too Late" nickname for Powell, pushing a Justice Department investigation into cost overruns on the Fed's headquarters renovation that prosecutors ultimately dropped, and installing his own CEA chairman, Stephen Miran, on the Fed's board while he searched for a permanent successor. Warsh, the chairman he found, told senators at his confirmation hearing he would be "strictly independent" and would not cut rates simply because the president demanded it.
