The U.S. Federal Reserve raised interest rates by 25 basis points to a range of 3.75% to 4% in a decision unanimously adopted by the Federal Open Market Committee last Wednesday, while President Donald Trump criticized the move but reaffirmed his continued confidence in Fed Chair Kevin Warsh.
The committee said inflation remained "elevated" and that tighter monetary policy would help bring it back more quickly to its 2% inflation target. The quarterly report of projections by committee members and the presidents of the regional Federal Reserve banks showed that 16 of the 18 participants involved in preparing the estimates saw a possibility of another rate hike during 2026.
Inflation remains elevated, and today’s policy action will help support a more rapid return to the committee’s 2% target rate.
Trump reaffirms confidence in Warsh and criticizes decision
Trump said he still relies on Warsh, whom he nominated to head the Federal Reserve, but said the Fed chair faced "a very difficult board." He wrote on his Truth Social platform: "Interest rates in the United States should be 1% or lower, because we are by far the best credit in the world."
Trump said he had urged Warsh to vote with the rest of the committee, arguing that a dissenting vote would not change the decision. He described the Federal Reserve as extremely hostile and strongly political in its orientation. Nevertheless, the president and his aides avoided directly attacking Warsh despite their insistence that rates should be cut.
White House spokesman Kush Desai said Trump still believed "categorically" in the Federal Reserve’s independence, adding that this did not diminish the president’s right under the First Amendment to express his views "when things go wrong." Desai said the rate increase was not based on convincing economic grounds.
Criticism from administration advisers
Peter Navarro, one of Trump’s close economic advisers, criticized the rate increase and described it as "a dagger in the heart of Main Street," while calling Warsh’s move "the wrong decision." Navarro said: "They want to hurt Trump by hurting America," arguing that raising rates again before the election would be political in nature.
By contrast, Michelle Raneri, head of U.S. research and consulting at TransUnion in Chicago, said the decision reflected the Federal Reserve’s continued focus on addressing inflation. She added that although inflation had fallen from its peak levels, it remained high enough to warrant additional action by the Federal Open Market Committee.
Dispute over monetary policy expected to intensify
Political economy expert Zian Zwaneh predicted that Trump would not launch an attack on Warsh in the coming weeks, citing the approaching midterm elections and the fact that the Fed chair was Trump’s personal choice. He expected the dispute to begin with limited criticism and escalate if inflation failed to decline or Republicans lost the election.
Zwaneh said the rate increase would not bring down inflation, attributing price pressures mainly to geopolitical tensions in the Strait of Hormuz, the Bab el-Mandeb Strait and Ukraine, which had driven up oil and gas prices and disrupted supply chains, as well as the limited flexibility of the refining industry in the United States and worldwide.
According to Zwaneh’s assessment, the move could affect mortgage rates, auto loans and the cost of servicing U.S. debt. He also expected the combination of tighter monetary policy and the U.S. Treasury secretary’s intervention in the bond market to increase volatility in the U.S. and global economies.
Economic analyst Gabriel Rubin said Trump could not directly intervene in the structure of the Federal Reserve because there were no vacancies currently or in the near future, strengthening the central bank’s ability to manage monetary policy away from political pressure.
