In a drastic shift from his original stance, US President Donald Trump has not only backed Federal Reserve’s decision to hold key lending rates on Wednesday, but also hinted that he was okay with the prospect of a rate hike in the future under Kevin Warsh.
Trump, who is currently attending the G7 summit happening in France, said that the Federal Reserve System’s decision to hold interest rates steady was “alright,” despite his rather aggressive calls for rate cuts in the past. Addressing concerns related to nine of the FOMC members projecting a rate hike in 2026, Trump said, “it could happen.”
During Jerome Powell’s tenure, the Republican President left no ounce of ambiguity in expressing his support for rate cuts by the central bank.
ALSO READ: Donald Trump vs Jerome Powell: Timeline Of Events That Escalated Into Ugly Battle
The two were involved in a rather heated, ugly and public display of disagreements during the time that Powell was chair, with Trump repeatedly pushing for key lending rates to be slashed.
“He should cut interest rates. He should cut them right now,” Trump had said in March, calling on the Federal Reserve to convene a special meeting to reduce borrowing costs.
The simmering feud reached a boiling point after a criminal investigation was launched by the Department of Justice against the Fed Chair.
However, DOJ decided to close the probe in the backdrop of Powell claiming that he will not step away from Fed unless the investigation is fully and fairly over.
Besides more rate cuts, Trump had urged for Jerome Powell’s ouster as the Federal Reserve Chair, and would deliver long tirades against him labelling Powell as “incompetent” or “crooked”.
In a barrage of criticism, the President had described the Federal Reserve as “crazy” and “loco,” accusing the central bank of having “gone wild” with its interest-rate increases. In 2019, Trump went as far as to ask, “who is our bigger enemy, Jay Powell or Chairman Xi?”
ALSO READ: Warsh Era Begins: Fed Keeps Rates On Hold, Hints At Hawkish Tilt With Possible 2026 Hike
FOMC Decision
The US Federal Reserve has decided to keep the benchmark lending rates on hold for the fourth time in a row, in view of the uptick in inflation driven by global headwinds.
The Federal Open Market Committee (FOMC), led by new Chair Kevin Warsh, unanimously decided to keep rates steady in the 3.5%-3.75% target range. The decision to keep rates on hold was unanimous, as FOMC members voted 12-0 in favour of the decision.
Moreover, nine out of 18 participants at the Federal Open Market Committee projected at least one interest rate hike in 2026, indicating a divided outlook on the future path of monetary policy.
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