Trump claims rate hike was aimed at him, not inflation; calls Fed board 'hostile' and 'political'

US President Donald Trump speaks during a dinner at the Rose Garden of the White House in Washington on Thursday (local time). [AP]
US President Donald Trump speaks during a dinner at the Rose Garden of the White House in Washington on Thursday (local time). [AP]

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US President Donald Trump said he told Federal Reserve Chair Kevin Warsh not to oppose the interest rate hike and that it would be better for him to vote in line with the board.

Speaking to reporters in Charlotte, North Carolina, on Wednesday (local time), shortly after the Fed raised its benchmark interest rate by 25 basis points for the first time in three years, Trump said he had told Warsh: "You'd be better off voting with the board on this — it's not going to matter anyway."

Asked whether he had tried to persuade Warsh, Trump said he had not. "I told him, 'Do whatever you want' — it doesn't matter because one vote can't change the outcome," he said, voluntarily disclosing the substance of a conversation he had with Warsh before the vote.

Trump described Warsh as "a good man" who "works hard," while turning his fire on the Fed board itself, calling it "very hostile, very political" and accusing it of "doing the wrong thing."

"They're politicians, or people put there by politicians," Trump said. "Raising rates to bring down prices? No — they're raising rates to make Trump look as bad as possible."

The New York Times reported that Trump, though angered by the Fed's unanimous rate hike, shielded Warsh — his own appointee — from criticism, a sharp contrast to the withering attacks he once directed at former Chair Jerome Powell.

Trump had launched punitive investigations targeting Powell and attempted to remove Fed Governor Lisa Cook, but the Supreme Court blocked that removal attempt on June 29.

The Times suggested Trump's softer tone toward Warsh reflected his awareness of the political backlash that could follow any move against the new Fed chief.

Still, Trump has not fully backed off his pressure on the Fed. He separately issued an ultimatum, threatening to cut off a significant portion of US trade unless the Fed slashes rates to below 1 percent.

With the Fed widely expected to raise rates more than once, experts are divided over how long the honeymoon between Trump and Warsh will last.

The dot plot released that day showed that most FOMC members anticipated at least one additional rate hike this year, with some projecting further increases next year as well.

With the door open to further rate hikes, the standoff between Trump and the Fed is expected to continue for now — though Warsh himself has been tight-lipped about his exchanges with the president.

At his post-FOMC news conference, Warsh sidestepped a related question, saying he had "nothing to share" about conversations with the president.

Asked whether he planned to explain the rate hike to Trump, Warsh deflected with a statement of principle: "Fed independence means we protect our own domain."

During his confirmation hearing, Warsh said Trump had never asked him to commit to a specific rate decision, adding that even if he had, "I would never have agreed."

Sarah Binder, a political science professor at George Washington University, said Trump "cannot escape the perception that he is still trying to interfere in Fed decisions," adding that "the very fact that the president feels entitled to direct the Fed is itself a political risk."


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