• President Donald Trump said he still has confidence in Fed Chair Kevin Warsh but blamed a "hostile" and "political" Fed board for the September 16 rate increase, according to TIME.
  • The Federal Open Market Committee voted unanimously to raise the target federal-funds rate by 25 basis points to 3.75%–4.00%, its first hike since 2023.
  • Warsh supported the decision, citing inflation that "is too high and has been for too long," while Trump continued to demand rates of 1% or below.

Trump Criticizes Fed Board, Not Warsh

President Donald Trump said he does not blame Federal Reserve Chair Kevin Warsh for the central bank's decision to raise interest rates last week, instead faulting what he called a "hostile" and "political" Fed board. In an interview with TIME, Trump maintained confidence in Warsh, his own appointee to lead the Fed, but alleged that other policymakers were acting out of political motivation rather than economic necessity.

"It's not Kevin's fault," Trump said, according to TIME. "The board is hostile, and they're playing politics." The president added that he had advised Warsh that voting with the board "is not going to matter," though he later clarified that he did not believe Warsh acted because of that advice.

Unanimous Vote, But Not the End

The Federal Open Market Committee voted unanimously on September 16 to increase the target federal-funds rate by 25 basis points to 3.75%–4.00%, the first rate hike since 2023. Warsh supported the decision, stating that inflation "is too high and has been for too long." The Fed's updated projections showed that 16 of 18 policymakers expected at least one additional 25-basis-point increase by year-end, signaling that the tightening cycle may not be over.

Trump has repeatedly demanded that rates be cut to 1% or below, arguing that lower borrowing costs are needed to support economic growth and address trade deficits. However, the Fed's mandate is to ensure price stability and maximum employment, and it has cited persistently elevated inflation as the primary reason for its restrictive stance. Annual inflation stood at 3.4% in August, up from 2.4% in February, and the Fed's median projection for its preferred inflation measure is 3.7% for 2026, with a return to the 2% target not expected until 2029.

Economic and Political Stakes

The rate increase comes less than two months before midterm elections, when elevated prices and debt-servicing costs are already salient political issues. Higher policy rates typically translate into higher costs for variable-rate debt, including credit cards, auto loans, and some mortgages. Total U.S. credit-card balances reached $1.26 trillion in the second quarter, making households with revolving balances particularly sensitive to further increases.

Warsh has emphasized the importance of Fed independence, saying that each side should "stay in [its] lane." His stance marks a contrast with Trump's previous public clashes with former Chair Jerome Powell, whom Trump frequently criticized for not cutting rates aggressively enough. Warsh's appointment was initially seen as potentially reducing tensions between the White House and the central bank, but the latest hike—and Trump's comments—suggest that pressure remains.

Market Implications

Financial markets will closely watch forthcoming inflation, employment, and energy-price data to gauge whether the Fed will follow through with another hike. The conflict involving Iran and disruptions around the Strait of Hormuz and Red Sea have contributed to higher energy costs, feeding into gasoline, transport, and broader consumer prices. Trump has also tied his rate demands to U.S. trade deficits, though Reuters (TRI) noted that trade balances and the Fed's borrowing-cost decisions are largely unrelated.

A single 25-basis-point increase is modest in isolation, but a sequence of hikes could have a more meaningful cumulative effect on business investment, commercial real estate, and merger-and-acquisition activity. For now, the immediate impact on households will be incremental, but the political battle over monetary policy shows no signs of cooling.

Clarification: This article has been updated to reflect that Warsh became Fed chair in 2026 and that Powell remains on the Board of Governors.