President Donald Trump has demanded that the Federal Reserve cut interest rates to 1% “or less,” reacting just hours after the central bank announced its first rate hike since 2023, according to CNBC.
The intervention marks a sharp public clash between the president and the Fed, which had moved in the opposite direction to what Trump is now calling for. The rate hike was the central bank’s first since 2023, according to CNBC.
Despite the disagreement over policy, Trump said he still has confidence in Fed Chair Warsh, CNBC reported. The president’s comments came in two updates from the outlet on the same day.
Trump has previously used trade as leverage in his push for lower rates. According to CNBC, he had threatened to cut off trade with countries that run trade surpluses with the United States if the Fed does not cut interest rates.
The demand for a rate of 1% or lower represents a significant departure from the Fed’s latest action, underscoring the gap between the president’s preferred policy and the central bank’s decision to raise borrowing costs.
Why it matters
Interest rate decisions affect the cost of mortgages, loans and credit for households and businesses across the country. A public standoff between the president and the Federal Reserve raises questions about the central bank's independence and the direction of U.S. economic policy.