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Trump says he ‘100% respects’ Kevin Warsh’s Fed independence as rate decision nears
Trump’s administration says the president “100% respects” Fed Chair Kevin Warsh’s independence and will support whatever the central bank decides, according to the Wall Street Journal. A potential rate hike could test the new relationship between Trump and the Fed.
US President Donald Trump’s administration is signalling that the Federal Reserve will have room to make its own interest-rate decision, even as the White House continues to favour lower borrowing costs.
Kevin Hassett, director of the White House National Economic Council, said on television Sunday that inflation is improving and the Fed does not need to raise interest rates. He also said Trump “100% respects the independence of Kevin Warsh” and would “100% support” whatever the central bank decides, according to a Wall Street Journal report.
The comments come ahead of the Fed’s latest policy meeting, where investors are expecting Warsh to potentially raise interest rates. A rate hike would put the Fed chair in a delicate position because Trump has previously pushed the central bank for lower rates.
According to the Wall Street Journal, Trump spent much of last year demanding rate cuts from the Federal Reserve. Warsh, who took over as Fed chair in May, now faces expectations that the central bank could reverse course and begin raising rates.
The economic backdrop has also changed since Warsh took charge. The WSJ reported that the prolonged war with Iran has pushed energy prices higher, while new tariffs and rising demand linked to the AI build-out have added to inflationary pressures and supply constraints.
That has created a difficult policy choice for the Fed. A rate increase would mean tighter monetary policy at a time when the White House has been advocating lower rates.
Hassett's comments are significant because they represent an attempt to separate Trump's preference for lower rates from the Fed's policy decisions.
“He said Trump ‘100% respects the independence of Kevin Warsh’ and would ‘100% support’ whatever the central bank decides,” the Wall Street Journal reported.
However, Hassett also acknowledged that Trump would not be “super happy” if the Fed raised rates, according to the report. He also argued that the central bank could face questions about its reputation for staying out of politics if it changes rates close to an election.
The WSJ noted that the political pressure can cut both ways. If Warsh keeps rates unchanged despite market expectations of an increase, that could raise questions about whether the Fed is responding to the administration's preference for lower rates.
Warsh's appointment initially appeared to ease Trump's confrontation with the Federal Reserve. The WSJ reported that Trump has repeatedly said he trusts Warsh to “do the right thing”, a stance that has spared the new Fed chair the kind of criticism directed at his predecessor, Jerome Powell.
A rate increase before the US midterm elections would therefore provide a significant test of that relationship.
For investors, the immediate issue is not only the rate decision itself but also what Warsh signals about future monetary policy. A decision to raise rates could indicate that the Fed is prioritising inflation concerns despite the administration's preference for lower borrowing costs.
The Wall Street Journal's report frames the upcoming decision as a test of whether the truce between Trump and the Federal Reserve can survive a policy choice that the president may not favour.
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
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