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Trump makes it clear he wants Warsh to lower rate as Fed rate-hike fears rise

By Mary Helen Gillespie TheStreet

Updated June 9, 2026 9:36 AM

The White House is rapidly pushing forward with its longtime campaign for drastically lower interest rates to ensure Fed Chair Kevin Warsh gets the message as his first policymaking meeting looms.

President Donald Trump, in an oft-confrontational interview with NBC News' "Meet the Press," blasted the growing consensus from Main Street to Wall Street that the Federal Reserve will begin to raise the benchmark federal funds rate later this year to offset risks to the inflation side of the Fed's mandate.

Some Fed officials and many analysts are forecasting that the policy-making Federal Open Market Committee will raise interest rates as soon as the end of the year if not sooner due to increasing price pressures.

Trump said while he wants Warsh "to do whatever he wants," he also added that "There's no reason to raise interest rates."

Trump's comments came the same day as another major bank -- Goldman Sachs -- sent a note to clients backing off a rate cut later this year and stock indices suffered the worst drop in months after the May jobs report was a markedly more robust read than expected and the jobless rate held steady at 4.3%.

The strong jobs numbers also prompted a June 5 selloff in Treasuries and caused traders to pencil in a quarter-point increase in the Fed's key rate by year-end.

Uncertainity mounts over Fed interest-rate bets

According to Collin Martin at the Schwab Center for Financial Research, his base case is for an "extended pause" at the central bank amid a lot of uncertainty.

"If we look at it strictly in a vacuum, the case can be made for a hike right now," Martin, the head of fixed income research and strategy at the Schwab Center, said June 8 on Bloomberg Television.

"We have inflation that's been high for five years and counting and moving in the wrong direction," Martin said.

The Fed's own target rate for annual inflation is 2%.

The June FOMC meeting will be Kevin Warsh's first as the Chair of the Federal Reserve.

Anna Moneymaker / Getty Images

White House pushes for lower interest rates

The president isn't flexing into the hawkish fever picking up steam.

"Kevin is fantastic, and I … don't want to have a big influence on him,'' Trump said. "But we had a great report. We're doing great, and it's unfair that whenever you do great, they want to raise interest rates."

The president's comments come just days before the June 16-17 FOMC meeting where divisive debates are expected to mark Warsh's debut as Chair.

"Nowadays when you have good reports, the market goes down because they think they're going to raise interest rates," Trump said.

Fed's mandate requires a tricky balance

The Fed's dual mandate from Congress requires maximum employment and stable prices.

Lower interest rates support hiring but can fuel inflation. This risks fueling further inflation, potentially leading to an inflationary spiral.
Higher rates cool prices but can weaken the job market. This increases the cost of borrowing and further stifles economic activity.

Rate-cut bets for this year are off the table

Warsh took over the Chair role on May 22 - the same day the Dow closed at another record high.

But bond yields continue to rattle upwards and inflation forecasts are fluctuating due to surging oil prices and the dragging Iran War peace process.

This is definitely not what Trump was expecting when he nominated Warsh in January after a months-long campaign to find whom the president defined as a "loyal" Fed Chair who would follow his monetary policy agenda which included slashing the benchmark federal funds rate to 1% or less.

Warsh, a former Fed governor, has long been critical of the central bank and had called for lower interest rates as well as a smaller balance sheet and reduced communications strategy.

But he silenced some critics concerned about Fed independence from political and partisan interference by saying he had not discussed interest rates with Trump during the Chair interview process or afterwards.

April FOMC meeting held interest rates steady

The FOMC, in a decisive 8-4 vote on April 29, held the benchmark federal funds rate at 3.50% to 3.75%.

It was the first time in more than 30 years the FOMC vote reflected four dissents.

It was the FOMC's third pause after cutting rates by 75 basis points during its last three meetings of 2025 to boost a weakening labor market.

Three of those dissents were by regional bank presidents -- Cleveland Fed President Beth M. Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie K. Logan -- because the post-meeting's statement did not have language that supported "inclusion of an easing bias in the statement at this time."

Fed April FOMC minutes show strong hawkish rate shift

While the Fed chair sits on the 12-person FOMC, policy decisions come from the majority votes of the committee.

The minutes of the April FOMC meeting, released May 20, showed an even more hawkish shift from policy markers with increasing interest in possible easing due to inflation risk.

"A majority of participants" highlighted…that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%.
As a result, "many participants indicated" that they would have preferred removing the language from the postmeeting statement that suggested an easing bias regarding the likely direction of the committee's future interest-rate decisions.

Iran War key to future Fed rate cuts

Martin said an initial step later this month could be for the FOMC to shift its so-called bias to neutral from easing. But he added that a prolonged Iran War could push the committee still further to hike rates.

"If we continue to see the conflict go on, which is inflationary, and if we see this labor market strength continue, I think that shift to neutral could become a shift to hawkish," he said. "But I wouldn't expect that next week."

Hawkish trend picks up speed over interest-rate bets

Even economists who spent last year urging the Fed to cut are moving in a more hawkish direction, The Wall Street Journal reported June 5.

"The U.S. labor market has kicked into a higher gear," said Neil Dutta of Renaissance Macro Research in a June 5 note to clients.

The Fed could move at its July meeting to signal the possibility that its next move will be a hike, Dutta said.

And if the Fed hikes interest rates, Dutta said it won't make just one move.

The CME Group FedWatch Tool shows a near 100% probability that the FOMC will hold rates steady this month roughly an 85% chance it will do the same at its July meeting.

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This story was originally published June 9, 2026 at 9:17 AM.