President Donald Trump renewed his criticism of the Federal Reserve on Wednesday, arguing that strong economic data shouldn't stop the central bank from cutting interest rates further. He praised Chairman Kevin Warsh while blaming other board members for the pace of cuts, and pointed to Switzerland's far lower rate as proof the U.S. is paying too much.
Trump told reporters that positive economic numbers shouldn't be a reason for the Fed to hold off on easing policy, reviving a long-running feud with the central bank even as he spared its new chairman from criticism.
Trump excludes Warsh, blames the board
Trump accused Fed officials of having political motives, as he has done before, but excluded Warsh, whom he nominated to the top job earlier this year. Warsh took over in May, succeeding Jerome Powell, who stayed on the Fed's board as a governor.
According to CNBC: "The problem is he has a board, and it's a political board." Trump said members appointed by Obama, Biden and himself still vote to raise rates.
Cuts have trailed Trump's demands
The Fed hasn't voted to raise its benchmark rate in more than three years; in 2025 the FOMC cut three times late in the year, following three reductions the year before. Still, the pace hasn't satisfied Trump, who argues cuts are needed to keep the economy growing and ease the burden of the nation's nearly $40 trillion debt.
Trump argued that decades ago, strong economic data used to push interest rates down, while now good numbers seem to work against rate cuts.
Minutes show internal caution on inflation
Trump's remarks came the same day the FOMC released minutes from its July meeting, which showed that many officials expected higher rates would be necessary unless inflation shows more progress. Since that meeting, inflation data has been generally positive. Still, the annual rate remains well above the Fed's 2% target. The U.S. economy grew at just a 1.5% annualized rate in the second quarter, below the 2.1% pace in the first three months of the year.
Switzerland comparison and the Treasury's buyback
Trump also compared the U.S. unfavorably to other countries, citing Switzerland's benchmark rate of around half a percent against the roughly 3.5% the U.S. pays. He said he doesn't believe the U.S. has a bond market problem, despite what he considers unfairly high rates. Earlier the same day, the Treasury Department announced it was stepping up its bond buyback program targeting debt with maturities of at least 10 years, following a surge in longer-maturity debt.
Source: CNBC
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