Trump, Federal Reserve on collision course over interest rates
President Trump is pressuring Federal Reserve Chairman Kevin Warsh to lower interest rates despite rising inflation. The Fed faces a difficult decision on whether to raise rates to combat inflation or maintain them to avoid political friction with the administration.
Why it matters
The tension between the White House and the Federal Reserve impacts global market stability and the cost of borrowing for consumers.
President Donald Trump berated Jerome Powell for years as he sought to pressure Powell, then the Federal Reserve chairman, to cut interest rates. So far, he has given a pass to the new Fed chief, Kevin Warsh, whom he nominated this year. Now, not even four months into Warsh’s tenure, the honeymoon might be over. Trump has ratcheted up his calls for an interest rate cut in recent weeks, setting the stage for a potential showdown after Wednesday’s decision from Fed policymakers. Warsh faces a “time to choose,” as economists at UBS put it: Will the Fed hold its key rate steady yet again in the face of rising inflation, or will it increase the rate to battle stubbornly high prices — and potentially enrage Trump?
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in