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US President Donald Trump on Wednesday expressed confidence in Federal Reserve Chair Kevin Warsh after the central bank left interest rates unchanged at his first policy-setting meeting, signalling a markedly different tone from the White House’s often combative relationship with former Fed chief Jerome Powell.
Speaking during a visit to France, Trump shrugged off the Federal Reserve’s decision to keep its benchmark
interest rate in the 3.5-3.75 per cent range, even as policymakers signalled that higher borrowing costs could still be on the table later this year.
“It’s all right. Whatever,” Trump said when asked about the Fed’s decision.
The comments stand in sharp contrast to Trump’s repeated attacks on Powell during his tenure as Fed chair. Trump had frequently criticised Powell for failing to cut rates, at times calling him a “moron” and a “knucklehead”, while arguing that lower borrowing costs would boost economic growth, support the housing market and reduce the government’s financing costs.
Trump signals trust in Warsh
While Trump reiterated his preference for lower interest rates, he indicated that he was prepared to defer to Warsh’s judgement.
“It could happen,” Trump said when asked about the possibility of a rate hike. “It’s hard to believe. It just keeps the country down and it’s so unusual. But we have a very good guy over there right now so I’m guided by what he wants.”
The remarks came after the Federal Open Market Committee (FOMC) voted unanimously to keep rates unchanged. However, the Fed’s closely watched “dot plot” projections revealed that policymakers remain divided on the path ahead.
The projections showed the committee split between those expecting rates to stay steady or move lower and those anticipating at least one increase this year. The median projection pointed to a quarter-percentage-point rate hike before the end of 2026, underscoring the central bank’s continued focus on inflation risks.
Warsh avoids rate guidance
At a press conference following the decision, Warsh declined to offer any indication of where interest rates may head next.
The new Fed chair also confirmed that he had not submitted his own interest-rate forecast in the central bank’s Summary of Economic Projections, arguing that policymakers should retain flexibility rather than lock themselves into specific future paths.
Warsh has previously criticised the Fed’s use of extensive forward guidance, and his first meeting appeared to reinforce that approach.
Investors interpreted the overall message as relatively hawkish, with Treasury yields rising and equity markets falling after the announcement.
Silence on conversations with Trump
Warsh also avoided discussing his interactions with the president, declining to say whether he had spoken with Trump since taking over as Fed chair last month.
“On the president, I don’t have anything for you,” Warsh told reporters.
He was more forthcoming about his relationship with Treasury Secretary Scott Bessent, confirming that the pair had met several times and were continuing the long-standing practice of regular meetings between the Treasury secretary and Fed chair.
“With respect to the Treasury secretary, he has been posting pictures of our breakfast,” Warsh joked. “I don’t think I can deny that the long tradition at the central bank is that the Fed chairman and the Treasury secretary meet weekly.”
Warsh added that they had already held three such meetings since he assumed office, with Bessent’s overseas travel preventing another meeting this week.
Balancing cooperation and independence
During his Senate confirmation hearing, Warsh pledged to work closely with the administration on issues outside monetary policy while maintaining the Federal Reserve’s independence on interest-rate decisions.
His first meeting as chair suggested he intends to preserve that distinction.
The Fed not only left rates unchanged but also signalled a strong commitment to restoring price stability, with Warsh repeatedly emphasising inflation control during his press conference. He also announced a series of task forces aimed at reviewing Fed communications, balance-sheet policy, economic data, productivity trends and the impact of artificial intelligence on the economy.
With inputs from agencies.
