President Donald Trump on Wednesday evening said he counseled Federal Reserve Chair Kevin Warsh to vote for an interest rate hike because other Fed officials were expected to vote that way anyway.
“I said do what you want because it doesn’t matter because he doesn’t have the votes,” Trump said to reporters as he was traveling in North Carolina to campaign for a Senate candidate.
“I told Kevin, I said, ‘You might as well vote with the board because it’s just not going to matter. … The board is very hostile,” Trump said. “They’re very political. They’re doing the wrong thing. They’re a bunch of politicians. They are people put on by politicians.”
In the same interview with reporters, Trump also suggested that he doesn’t expect Warsh to follow his directions, saying he wanted the Fed “to be independent.”
The comments came after Federal Reserve officials voted unanimously to increase interest rates by a quarter point for the first time in three years, a move Trump decried on social media hours after the announcement.
Trump’s account that he counseled the Fed chair on his vote was not confirmed by Warsh or other evidence. Asked at a news conference about Trump’s repeated demands that Fed officials lower rates, Warsh declined to comment.
“I’ve got nothing for you on the discussion with the president,” Warsh said, moving on to say the decision to raise rates was in fulfillment of the Fed’s duty to the American people.
The Fed is designed to operate independently of the White House, setting interest rates based on its own best assessment of the economy rather than short-term political pressure. That independence has long been considered a cornerstone of the central bank’s credibility – and a source of tension with some presidents, especially Trump, who wants dramatically lower borrowing costs.
Over the years, Trump has made clear he wants a central bank more responsive to his political agenda, pressing for steep rate cuts to ease the cost of financing swelling deficits and exploring options to oust board members appointed by Democrats.
Past administrations have also pressured the central bank, whose independence rests both on federal law and on norms that most recent presidents have been reluctant to test. Top aides to President George H.W. Bush publicly pushed Fed Chair Alan Greenspan to cut rates before the 1992 election. President Joe Biden met with Fed Chair Jerome H. Powell in the White House in May 2022 to show concern about inflation (though Biden stressed that he respected the Fed’s independence).
While it’s not unusual for presidents to meet with Fed chiefs from time to time, Trump’s comments suggested a closer relationship.
A Fed spokesperson did not immediately return a request seeking comment about the conversation between Trump and Warsh.
Warsh, a Fed governor from 2006 to 2011, returned to the central bank in May, after a year in which Trump pressured the Fed in ways without modern precedent. Trump repeatedly criticized Powell, Warsh’s predecessor, for refusing to bring rates down; he tried to remove Fed governor Lisa Cook; and he endorsed a Justice Department criminal investigation of Powell. Trump in January chose Warsh to fill the chairman’s seat occupied by Powell, who has stayed on at the Fed as a governor. The Justice Department probe was closed.
The Fed’s move Wednesday was seen by analysts as bolstering the central bank’s credibility after concern that Warsh, who was nominated to the position by Trump, would not do what it took to get inflation under control.
Trump said the Fed board raised interest rates out of hostility toward him.
“They’re raising the rates to make Trump do as bad as he can possibly do,” the president said. “The problem they have is that we have the greatest economy in history.”
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