Media365
President Donald Trump threw his support behind Federal Reserve Chair Kevin Warsh, calling him a “brilliant guy” despite growing frustration that the US central bank has yet to deliver the interest rate cuts the president has repeatedly demanded.
Speaking to reporters in the Oval Office, Trump defended the Fed chief he handpicked to succeed Jerome Powell in May, arguing that Warsh was constrained by the central bank’s policymaking committee rather than acting alone.
“He’s a brilliant guy,” Trump said. “I know he’d love to see lower interest rates, but he’s got a board, and it’s a political board, and they want to keep rates up. But we fight through rates.”
Trump’s remarks came just hours after the Federal Reserve kept its benchmark
interest rate unchanged at 3.50-3.75 per cent for a second straight meeting under Warsh’s leadership, dashing hopes of an imminent easing cycle even as the White House continues to push for lower borrowing costs.
Warsh signals inflation remains the priority
Far from endorsing Trump’s calls for rate cuts, Warsh struck a distinctly hawkish tone during his post-meeting press conference, suggesting persistent inflation and a resilient labour market could instead justify tighter monetary policy.
“Any central banker, especially a central banker where the labour markets are more or less at equilibrium … when he or she sees underlying inflation moving higher, he or she is more inclined to tighten policy,” Warsh said.
He added that policymakers would only be more inclined to loosen policy if inflation showed convincing signs of easing while employment weakened.
The comments reinforced market expectations that the Fed is unlikely to cut rates anytime soon. In fact, futures markets now assign better than a 60 per cent probability that the central bank will raise rates by a quarter percentage point at its September meeting.
Rare dissent marks Warsh’s early tenure
Wednesday’s policy decision also highlighted growing divisions within the Federal Open Market Committee (FOMC).
Three Fed officials dissented from the decision to leave rates unchanged, arguing instead for an immediate rate increase. According to historical records maintained by the Federal Reserve Bank of St. Louis, no Fed chair since the 1970s has faced such significant opposition so early in their tenure.
Warsh has now overseen just two policy meetings since taking office, making the three dissents an unusually early test of his leadership.
The last comparable episode occurred under Arthur Burns, whose first policy meeting in 1970 also drew three dissenting votes. Paul Volcker faced two dissents at his first meeting in 1979, while Jerome Powell began his tenure with nearly unanimous support, not encountering his first dissent until his 11th meeting as Fed chair in 2019.
Trump softens criticism
Trump’s supportive remarks marked a notable shift in tone compared with his repeated public attacks on Powell, whom he frequently criticised for refusing to cut rates aggressively during his tenure.
Although Trump has continued pressing for lower interest rates to support economic growth, he stopped short of blaming Warsh for the Fed’s latest decision, instead suggesting the broader policymaking committee was responsible for holding rates steady.
For now, however, financial markets appear to be aligning more closely with Warsh’s inflation-focused stance than with Trump’s demands for monetary easing, leaving hopes for near-term rate cuts increasingly out of reach.
With inputs from agencies.
