‘1% or less’: Trump calls for rate cuts after US Fed raises rates for first time since 2023 | Today’s news
US President Donald Trump called for a dramatic cut in interest rates hours after the Federal Reserve raised borrowing costs for the first time in more than three years.
In a social media post on Wednesday, Trump said U.S. interest rates should be “1% or less,” arguing that the U.S. economy is attracting new investment and has a strong credit record. He followed it up with a demand for “quick rate cuts”.
The note comes after the Fed Reserve raised the benchmark
Trump’s remarks came shortly after the U.S. central bank raised its benchmark federal funds rate by 25 basis points to a range of 3.75% to 4%. The decision was unanimous and marked the first rate hike since July 2023, Bloomberg reported.
The move puts the central bank at odds with Trump’s repeated calls for cheaper loans. There is also renewed focus on his relationship with Fed Chairman Kevin Warsh, whom Trump appointed earlier this year.
Warsh defended the decision, pointing to persistent inflationary pressures. The Fed indicated that price growth remained too high, while economic activity and the labor market remained relatively resilient. Officials have also signaled that another increase could come later this year, Bloomberg reported.
The background has become more complicated for American politicians. Higher energy prices linked to the ongoing US-Israeli conflict with Iran added to inflationary pressures, while Trump’s tariff policies also added to uncertainty about the price outlook. Reuters said tariffs, an energy shock and high capital spending linked to the artificial intelligence boom kept price pressures elevated, the Bloomberg report further said.
Warsh also emphasized the importance of maintaining the Federal Reserve’s independence. His support for a rate hike is significant because Trump has repeatedly criticized his predecessor, Jerome Powell, for not cutting rates aggressively enough.
Trump’s latest comments did not directly attack Warsh by name. But the stark difference between the president’s preferred policy and the Fed’s latest decision underscores the pressure the central bank faces as it tries to get inflation under control, according to a Bloomberg report.
For American households, higher interest rates can ultimately translate into more expensive borrowing, including mortgages, car loans and credit cards. At the same time, savers can benefit from higher returns on some deposits and fixed income instruments.
