Fed raises rates in search of 'timelier' drop in inflation, sees more tightening ahead

Trump reacted quickly, repeating what has been a standing call since returning to office in January 2025 that interest rates in the U.S. should be slashed to perhaps 1%, a level usually associated with Fed efforts to boost the economy out of a crisis and something that would likely be inflationary in normal times.

"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR. 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 ... LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" Trump said on his Truth Social platform in comments that, while not mentioning Warsh by name, were reminiscent of the sorts of barbs the president launched routinely at former Fed Chair Jerome Powell.

The president's reaction highlighted the significance of the Fed's move under Warsh on Wednesday. In a truncated press conference, roughly 15 minutes shorter than what was typical under his predecessors, Warsh focused on the emerging evidence that convinced him inflation would not improve at an adequate pace without tighter monetary policy — a direct counter to administration officials' comments that inflation was no longer a problem or would fall on its own over time.