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Trump calls for lowering rates to 1% following Fed hike
Economy
President Donald Trump stated on Wednesday that U.S. interest rates "should be 1% or lower"—just hours after the Federal Reserve raised rates for the first time in over three years.
The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate from 3.50%–3.75% to 3.75%–4.00%, tightening policy for the first time since July 2023. Additionally, the regulator's updated "dot plot" forecast showed that at least 12 FOMC members expect another rate hike this year, while four anticipate two additional increases.
"Interest rates in the United States should be 1% or lower because we are the best borrower in the world—by a wide margin. Our country is experiencing a boom in new investment!" Trump wrote on his social media platform, Truth Social.
"If we stopped trading with every country with which we have a deficit—and that’s most of them—we would make at least $1.5 trillion a year. The word 'deficit' is nothing more than a fancy word for a loss. We are 'carrying' almost the entire world, and this cannot go on," he added.
"LOWER INTEREST RATES FOR THE UNITED STATES OF AMERICA—AND IMMEDIATELY!" the president urged.
Earlier this month, Trump had already called on the Fed to lower rates following a strong U.S. jobs report, threatening otherwise to halt trade with countries that run a trade surplus with America. At the time, the president stated that the U.S. should have the lowest interest rates in the world. The United States has maintained a trade deficit for decades, running one with roughly half of its trading partners. According to the latest government data, the U.S. trade deficit in goods and services stood at $88.6 billion in July, an increase of $17.4 billion from June. Imports reached $399.3 billion in July, outpacing exports of $310.7 billion.
Earlier on Wednesday, Federal Reserve Governor Kevin Warsh stated at a press conference that the FOMC’s decision to raise interest rates was driven by the strengthening U.S. economy, a lack of progress in lowering inflation over the summer, and geopolitical factors. He noted that he and his fellow committee members agreed that overall financial conditions were not sufficiently restrictive.
Notably, Warsh stated: "The plain fact is that inflation is too high and has remained so for too long." Last month, the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) price index—showed a 3.7% year-over-year increase, well above the regulator's long-term 2% target. The PCE has remained above the 2% mark for 65 consecutive months.