Donald Trump battled to remake the Federal Reserve in is own image, even installing his hand-picked Fed Chairman, all to no avail.
The Federal Reserve, led by Chairman Kevin Warsh, voted unanimously today (Sept. 16) to raise the overnight funds rate to a target range of 3.75%-4%, a 0.25% hike. Another rate hike is expected before the end of the year.
“Inflation remains elevated,” the committee said in a statement. “Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”
Banks typically pass on the cost of rate hikes, which means consumers will bear the brunt of today’s actions through higher prices, mortgage rates, auto loans and credit card interest.
Trump has waged a social media campaign for a signficant rate cut to the extent he threatened to stop trading with countries maintaining trade surpluses with the nation.
Trump expected to hear the same message from his administration and Treasury Secretary Scott Bessent quickly fell in line.
The Fed action is designed to cool inflation and bring it down to the Fed’s 2% guideline, but Bessent has argued that recent inflation reflects a temporary supply shock from higher oil prices and tariffs.
The markets have shown little reaction so far in today’s tading. The Fed’s Open Market Committee vote, 12-0, to raise rates was widely anticipated. The S&P 500 gave up gains; the Dow is in the red and the tech-heavy Nasdaq Index has also turned red.
The move was the first rate hike in more than three years and is sure to infuriate Trump. He has yet to respond, but this story will be updated with his response.
Most recently, Trump has lashed out at Supreme Court Justices for rulings against his policies.
Trump blasted the Supreme Court in a series of Truth Social reports for blocking the use of the U.S. Postal Service rule on mail-in ballots in the upcoming midterm elections, according to media reports. The court acted in a Monday night emergency ruling.
As he often does, Trump took the loss personally. He characterized the decision as a personal betrayal and zereoed in on the three hand-picked conservative justices he appointed during his first term—Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett.
“These are not the people I interviewed to serve on the United States Supreme Court, they are merely a shell of their original selves,” he wrote.
Based on his recent posts, economists and political analysts anticipate a sharp public rebuke not only of the Fed, but also Chairman Warsh.
On the eve of the Fed’s vote, Trump declared that the nation should have “the lowest interest rate in the world.” He called for rates to be slashed to 1% or 0.5% to ease the burden of national debt payments, which now stands at $40 trillion.
Trump administration spending across two administrations is responsible for 28.7% of the country’s total accumulated gross federal debt or an estimated $11.5 trillion.
During a news conference, Warsh said that inflation is “too high and has been for too long.”
“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed,” he said. “Today, the FOMC decided that this standard has not been satisfied.”
Inflation spiked higher following Trump’s illegal attack on Iran, which created oil supply disruptions and caused rising gas prices that have rippled through the economy. Diesel fuel topped $6 a gallon, the highest in history.
A 30-year fixed rate mortgage now averages 7.19%, up more than a full percentage point from a year ago, according to Mortgage News Daily.
In the wake of the decision, Treasury yields were lower, a signal that investors were encouraged by the central bank’s attempt to tamp down inflation, CNBC reported.
Keith Girard has four decades of experience as an award-winning reporter, editor-in-chief, and senior media executive. Keith’s career began in Washington, D.C., where he was a reporter for The Washington Post and a contributing editor for Regardie’s and Washingtonian magazines. He also worked as a writer/producer in CNN’s Washington Bureau and has written non-fiction books on the U.S. Marines in the Gulf War and Donald Trump and two novels, “The Heidelberg Conundrum” and “The Curse of Northam Bay.”