President Donald Trump lashed out at the Federal Reserve on Wednesday after it raised its benchmark interest rate for the first time in more than three years, but he pointedly declined to direct any of that fire at the man he installed to run the central bank: Fed Chairman Kevin Warsh.
In a post on Truth Social, Trump argued that U.S. borrowing costs should be dramatically lower and demanded the Fed move quickly in the opposite direction.
“Interest rates in the United States should be 1%, or less, because we are the best credit in the world β by far,” Trump wrote, per The Daily Wire. “Lower the interest rates for the United States of America, and fast!”
The Fed, however, went the other way. Its policy-setting committee voted unanimously to lift the target rate by 25 basis points, bringing it to a range of 3.75% to 4.0%. Officials said inflation remained elevated and described the increase as a step toward returning price growth to the central bank’s 2% goal.
Warsh defends the vote
Speaking after the decision, Warsh β whom Trump nominated to lead the Fed β offered a blunt defense of the rate hike.
“The plain fact is that inflation is too high and had been for too long,” Warsh said, according to The Daily Wire.
That put the chairman at odds with the president on policy, but Trump told reporters before boarding Air Force One on Wednesday that the two men remained on the same page despite the vote.
“I’m aligned with Kevin,” Trump said. “He’s got a very tough board… The board is hostile and political.”
Trump went further, saying he had personally advised Warsh to vote with the majority because breaking with the rest of the committee would have accomplished nothing.
“I talked to Kevin, and I said, you might as well vote with the Board because it’s not gonna matter,” the president said.
The decision to raise rates marked the first increase of its kind in more than three years, a notable shift in the posture of a central bank that had spent recent years on the opposite footing.
A chairman Trump keeps praising
Warsh has so far enjoyed a warmth from Trump that his predecessor did not. Trump described the pick as “central casting” when he announced the nomination, and predicted at the time that Warsh could become the finest leader the institution has ever had.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the great Fed Chairmen, maybe the best,” Trump said, per The Daily Wire. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
The dynamic stands in sharp contrast to Trump’s relationship with Jerome Powell. Trump nominated Powell to chair the Fed in 2017 and spoke about him in glowing terms at the time.
Powell is “strong, he’s committed, he’s smart,” Trump said then, adding that if confirmed by the Senate, Powell would “put his considerable talents and experience to work leading our Nation’s independent central bank.”
That reverence did not last. Trump eventually turned on Powell over interest rates, branding him “a real dummy” and “stupid man” and maintaining that the Powell-led Fed was “costing our country a fortune.”
Powell’s Fed was also defined in Trump’s crosshairs by its rate posture, and the episode offers a cautionary precedent: a nominee praised in near-identical terms, later made a political target the moment monetary policy and presidential preferences diverged.
Whether Warsh’s honeymoon lasts through the coming round of Fed meetings is an open question. For now, Trump is expressing no regrets about the man he installed at the helm β even as he publicly demands the institution he leads reverse course immediately.
Warren softens, but only slightly
Warsh’s vote drew an unexpected, if partial, acknowledgment from an unlikely corner: Sen. Elizabeth Warren (D-MA), one of the sharpest critics of his nomination.
During Warsh’s confirmation process, Warren labeled him a “sock puppet” for Trump, contending that he lacked the independence to stand up to the president and would instead execute the White House’s wishes rather than the Fed’s dual mandate.
Wednesday’s rate increase led Warren to offer a notably different assessment, telling reporters that the move signaled to Wall Street that Warsh “is committed to bringing inflation under control.”
But Warren made clear she was not prepared to declare the chairman rehabilitated.
“It takes a long time, more than one action, to rebuild a reputation,” she said, per The Daily Wire.
The comment captures the narrow path Warsh appears to be walking β one that requires demonstrating independence from the president who elevated him while managing a board the president has described as “hostile and political.” Trump’s own account of their pre-vote conversation, in which he said he counseled Warsh toward alignment, could complicate that effort with lawmakers already skeptical of the chairman’s independence.
Wednesday’s rate decision, the first increase in over three years, and the reaction that followed amount to an early stress test on a relationship Trump once promised would produce a historic chairmanship.
Source: www.dailywire.com β https://www.dailywire.com/news/trump-rips-fed-rate-hike-but-gives-kevin-warsh-a-pass