Trump Says U.S. Interest Rates Should Be 1% or Lower, Accuses Fed of Hikes for Political Reasons

▲ U.S. President Donald Trump

U.S. President Donald Trump criticized the Federal Reserve's decision to raise interest rates on the 16th (local time), stating that "U.S. interest rates should be 1% or even lower."

President Trump posted the remarks on his social media platform (Truth Social), writing, "We are by far the country with the best credit rating in the world."

He claimed, "The United States is booming with new investments," adding, "If we stopped trading with every country with which we run a trade deficit—which is most countries—we would make at least $1.5 trillion a year."

He went on to say, "The term 'deficit' is merely an elegant word for 'loss,'" and asserted, "We are 'carrying' almost every country in the world, and this situation can no longer continue."

This is interpreted as an emphasis on the need for rate cuts, based on the logic that since the U.S. is supporting other nations' economies while absorbing massive trade deficits, the U.S. should not bear high interest rates as well.

President Trump urged, "Lower U.S. interest rates. Hurry up!"

After posting the social media message, President Trump visited North Carolina. Upon stepping off Air Force One, he met with reporters and reiterated that interest rates are "too high," arguing that the U.S. "should have the lowest interest rates in the entire world."

Criticizing the Federal Reserve Board, he called it "very hostile and very political," accusing the Fed of raising rates solely for political reasons targeting him.

However, regarding Federal Reserve Chair Kevin Warsh, whom he personally appointed, Trump said, "I trust Kevin, but he has a very difficult board," adding, "I told Kevin, 'It's no use anyway, so you might as well just vote with the board (on the rate hike).'"

Defending Warsh personally, he stated, "No matter how well Chair Warsh does his job, he has a hostile board."

The Fed raised its benchmark interest rate by 0.25 percentage points that day.

This marks the first monetary tightening measure in three years and two months, since July 2023.

It drew particular attention as it was the Fed's first rate hike since the inauguration of Chair Warsh, who was appointed by President Trump.

Ahead of the November midterm elections, President Trump has continuously demanded rate cuts from the Fed and has publicly expressed expectations that Chair Warsh, whom he nominated, would lower rates.

However, judging that inflation remains at a high level, the Fed decided on the rate hike with a unanimous vote from all 12 FOMC members (Fed governors and regional Federal Reserve Bank presidents) holding voting rights that day.

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