A rebellion just kicked off in the heart of Donald Trump’s empire, launched by the small gang of finance nerds running the Federal Reserve.
President Donald Trump has left his mark on Washington D.C. — literally. He has plastered his face around the nation’s capital, designed monuments in his honor, demolished part of the White House, and
hijackedindependent government agencies. But today, Trump officially failed to conquer the institution that he’s arguably most obsessed with: the Federal Reserve. The finance geeks, it turns out, may be the most ferocious rebels of Trump’s second term.
Fed Chair Kevin Warsh defied Trump’s demands to lower interest rates today, deciding to
raiserates for the first time in three years by a quarter of a percentage point. The decision, though widely expected, marks a stunning rebuke of the president by a man that he hand-picked to do his bidding. “We should be paying the lowest interest rate in the world,” Trump recentlytold reporters.
Warsh doesn’t agree. “The plain fact is that inflation is too high, and has been for too long,” he said during a press conference today.
Data shows that this was an obvious choice: The U.S. needs to tackle stubborn inflation, which has largely been driven by Trump’s war in Iran. Raising rates deters spending, which brings inflation down. There’s less risk in pushing rates up right now, since the job market remains relatively strong. What’s more, Warsh would’ve lost his credibility to shepherd the world’s largest economy if he didn’t defy Trump.
Warsh effectively boxed himself in,
according to experts, after declaring last month that inflation had been high for 65 months straight — and that the Fed has a responsibility to do something about it.
“Warsh is a man of his word,”
𝕏tweetedfinancial expert Joseph Wang.
Trump reacted as you’d expect: with a temper tantrum
Trump’s obsession with lowering interest rates is all about politics. When the Fed lowers rates, the stock market and economy usually get a near-term boost. Politicians always want lower rates, especially right before elections. Trump has been hoping to show off booming growth to argue Americans should vote for him because he’s making them richer.
To get there, Trump has been demanding lower rates. He wants them so badly, in fact, that he tried (
and failed) to fire a member of the Fed’s board of governors whilefalsely accusingher of mortgage fraud. He even threatened former Fed Chair Jerome Powell withbogus criminal charges.
“Interest Rates in the United States should be 1%,” Trump ranted on social media after the decision. “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”
Hate to break it to you, but that ain’t happening anytime soon.
There’s a deep irony here: Trump forced Warsh’s hand. The president’s ill-advised war in Iran resulted in higher oil prices, which are making everything more expensive. Great work, Mr. President!
“Donald Trump will undoubtedly try to blame anyone but himself for this rate hike,” Rep. Brendan Boyle (D-PA), the top Democrat on the House Budget Committee,
said in a statement. “But if he wants to know who caused it, he should look in the mirror.”
As one Trump ally told the
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