In a move seen as his first public pressure on the new Federal Reserve Chair, Donald Trump has openly called for interest rate cuts on the eve of Kevin Warsh's first monetary policy meeting.
In an interview on NBC's "Meet the Press" on Sunday, Trump was unequivocal: "There is no reason to raise rates." He stated, "We built this country by doing things right and keeping rates low. When they raise rates, they are trying to kill success. I don't want to kill success. We should actually be cutting rates."
While Trump gave superficial deference to Warsh, his comments carried a clear underlying message. "Kevin is excellent, and I want him to do what he thinks is right," he said. "But my feeling is that when a country is doing well, you shouldn't immediately punish it by raising rates; you should give it incentives."
Warsh, who was formally confirmed last month, is set to preside over his first Federal Open Market Committee (FOMC) meeting on June 16-17.
The timing of Trump's remarks is particularly sensitive. Just last Friday, a strong jobs report indicated a stabilizing U.S. labor market after a turbulent 2025, leading markets to increase bets that the Fed may be forced to raise rates this year to combat inflation.
Inflation Pressures Are Real, With Hawkish Tones Emerging at the Fed
The root of rising inflation is the conflict in the Middle East. Iran's initial blockade of the Strait of Hormuz at the war's outset caused a sharp spike in oil prices, and this inflationary pressure has now spread throughout the U.S. economy. In April, U.S. inflation climbed to 3.8%, a three-year high. According to a Bloomberg survey of economists, data for May, due this Wednesday, is expected to show a further rise to 4.2%.
Officials within the Fed have already begun voicing concerns. Cleveland Fed President and FOMC member Beth Hammack stated on Friday, "If recent trends persist, action may be needed soon." She noted that the latest jobs report shows the labor market is now "roughly balanced," and that "high inflation is the bigger concern."
Treasury Secretary Besant has taken a more moderate stance, suggesting it is reasonable for the Fed to wait for the war's impact on inflation to become "clearer" before considering further rate cuts.
Trump's Logic: A Strong Economy Should Not Be Punished
Faced with this situation, Trump's stance is clear: the better the economy performs, the less it should face rate hikes.
"We're doing great, but whenever you do great, they want to raise rates. It's not fair," he said. "It should be the opposite."
Trump has repeatedly called publicly for a significant reduction in the Fed's benchmark rate—currently in a range of 3.5% to 3.75%—down to 1% or even lower. He has also frequently criticized Warsh's predecessor, Jerome Powell, labeling him a "fool" and an "idiot" for not cutting rates quickly enough.
Regarding Warsh, Trump's comments, while superficially granting autonomy, carried a clear directive. "Kevin is excellent, I want him to do what he thinks is right. I don't want to put too much influence on him," he told NBC. "But my feeling is that when a country is doing well, you shouldn't immediately punish it by raising rates; you should give it incentives."
Warsh has previously indicated a preference for lowering borrowing costs. However, the surge in inflation following the outbreak of the Middle East conflict has led some FOMC members to begin discussing the possibility of rate hikes.
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