President Trump addresses Federal Reserve rate hike amid inflation concerns

WASHINGTON —

The Federal Reserve raised interest rates Wednesday for the first time in more than three years, prompting President Donald Trump to again argue that borrowing costs are already too high.

Shortly after the decision, President Donald Trump criticized the move on Truth Social, saying U.S. interest rates should be 1% or lower and calling for them to be reduced “FAST!”

Speaking on the tarmac in Gastonia, North Carolina, Trump said he spoke with Federal Reserve Chair Kevin Warsh before Wednesday’s vote.

“I talked to Kevin. And I said you might as well vote with the board because it’s not going to matter. The board is very hostile,” Trump said.

When White House Correspondent Christopher Salas asked President Trump whether that conversation influenced Warsh’s decision, Trump said he did not believe it had.

“No, I don’t think so. I want him to be independent. But it’s my opinion — I’m very good at this stuff. Interest rates are too high. We should have the lowest interest rate anywhere in the world,” Trump said.

Warsh declined to disclose details of conversations with the president and emphasized the Federal Reserve’s independence and its responsibility to bring inflation under control.

The Fed is structured to make monetary policy decisions independently of the White House so interest rates can be based on economic conditions rather than short-term political considerations. Congress sets the central bank’s goals and maintains oversight of the Fed.

“The plain fact is that inflation is too high and has been for too long,” Warsh said.

Warsh pointed to renewed fighting between the United States and Iran as one factor adding to inflation pressure, with the conflict pushing fuel prices higher. AP reports average gasoline prices have climbed more than 7% in the past month.

Those higher fuel costs are already hitting household budgets.

Brown University’s Climate Solutions Lab estimates the average U.S. household has spent more than $825 extra on gasoline and diesel since the war began Feb. 28 compared with what researchers estimate households would have spent without the conflict.

The researchers arrived at that figure by comparing actual fuel prices with an estimated path for prices had the war not occurred and combining that difference with fuel consumption and Census household data.

Higher interest rates are the Fed’s tool for trying to bring inflation down by discouraging borrowing and spending. The downside for consumers is that credit cards and auto loans can become more expensive, while mortgage rates can also be affected by broader changes in financial markets.

The Fed’s preferred inflation measure was up 3.7% from a year earlier in July. Excluding volatile food and energy prices, inflation was 3.3%. Both remain above the Fed’s 2% goal.