President Donald Trump speaks with new Federal Reserve Chairman Kevin Warsh after the swearing-in ceremony in the East Room of the White House in Washington, May 22, 2026.
Anna Moneymaker | Getty Images
Ten days before the Fed is likely to consider raising interest rates, the Trump administration appears to be pressing the entire court to halt the hike.
Over the past week, the president, vice president, treasury secretary and one of the president’s senior economic advisers have urged the Fed not to raise rates, or even to cut them, in an unusually wide-ranging public pressure campaign even by the standards of President Trump’s longstanding criticism of the central bank.
President Donald Trump, like his predecessor, Jay Powell, has avoided directly criticizing new Federal Reserve Chairman Kevin Warsh, but he escalated the pressure on Friday by threatening to cut off trade with countries with trade surpluses with the United States unless the Fed lowers interest rates. Trump has never directly threatened to impose tariffs if the Fed doesn’t cut interest rates.
Following the president’s post, senior economic adviser Peter Navarro warned Trump’s former adviser Steve Bannon in an interview on Friday that the rate hike was “inadvertent” and would “hit exactly the sectors that America needs to thrive the most.”
He called members of the Federal Open Market Committee, which sets interest rates, “clowns” and said Warsh was trying to “do the right thing.”
Earlier this week, Deputy Governor J.D. Vance said, “I think the Fed should lower interest rates.” “We’re doing a lot to keep rates down, and it would be great to get some support from the Federal Reserve,” he added.
Additionally, Treasury Secretary Scott Bessent said in an interview with CNBC that the Fed typically does not raise rates during supply shocks until the second- and third-order inflationary effects are felt.
The administration’s pressure comes at a difficult time for Warsh.
Markets are barely pricing in a rate hike at the September 15-16 meeting with a probability of about 60%, buoyed by some support from Friday’s strong jobs report. The meeting comes just two months before midterm elections in November, with opinion polls showing the administration faces widespread voter dissatisfaction with rising prices and interest rates.
But questions remain about the impact of the Trump administration’s pressure campaign on Mr. Warsh. The Wall Street Journal reported last month that Mr. Trump had repeatedly spoken to Mr. Warsh, a report that several of his aides publicly supported. However, the president himself denied this, saying he had only spoken to Mr. Warsh once while in office.
Mr. Warsh himself has said that the president has no influence on his decisions, and in July testimony to Congress he cited the Fed’s ability to keep interest rates unchanged and not cut rates as evidence of the Fed’s independence. At the same time, Warsh said the president and other politicians have a right to comment on Fed policy.
In May 2019, during Trump’s first term, Vice President Mike Pence, Treasury Secretary Steve Mnuchin, and economic advisor Larry Kudlow all spoke out about the need for the Fed to consider lowering interest rates. The Fed did not respond immediately to the pressure, but eventually cut interest rates two months later.
The administration’s argument was similar, that growth itself does not cause inflation, and that adding to the supply side of the economy through tax cuts and strong capital investment would expand the economy’s ability to grow without causing inflation.
On Friday, President Trump said in a post on Truth Social that the U.S. should have the lowest interest rates in the world because the economy is growing so much.
Administration officials emphasized that the COR Consumer Price Index (CPI) has trended at an annualized rate of 1.6% over the past three months. By comparison, the core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure, has a three-month annualized rate of just over 3%.
But several Fed officials have expressed concern that inflation has been well above the Fed’s 2% target for the past five years and that there are signs of inflation exceeding the rise in energy costs caused by President Trump’s tariffs and the U.S. war with Iran. Beth Hammack, Neel Kashkari and Rory Logan voted against the measure, supporting a quarter-point rate hike with interest rates unchanged at the July meeting.
In his speech in Jackson Hole, Warsh said the Fed needs to focus squarely on inflation, noting that 54% of the 199 components of the PCE price index have risen more than 3% in the past 12 months.
By denying the relationship between growth and inflation, the administration is challenging a central concept in economics: that when an economy grows beyond its productive capacity, it risks causing inflation. The most famous of these ideas, the Phillips Curve, considers tight labor markets and rising wages to be the main conduits for inflation. This may be why markets have increased the odds of a Fed rate hike after Friday’s strong jobs report. But wages were well included in the report, with average hourly wages rising 0.3% in August and 3.1% from a year earlier, while the unemployment rate remained at 4.1%.
While the administration’s argument that expanding the supply side of the economy will increase productive capacity and offset inflationary pressures may be accurate, there is a timing issue. A flood of investment in artificial intelligence is predicted to ultimately improve productivity. However, current data shows that demand for the equipment needed to build AI infrastructure is driving up prices.
Market attention will be focused on Friday’s Consumer Price Index (CPI) report, which Fed officials say will be a key indicator of whether inflation is easing or still accelerating, and could determine whether the Fed raises or leaves interest rates unchanged. No FOMC members have publicly discussed rate cuts recently.
