Federal Reserve Chairman Kevin Warsh voted with a unanimous FOMC to raise interest rates by a quarter-point, defying weeks of pressure from President Trump to cut. The decision reignites the fight over the Fed's independence from the White House, with Trump still holding several levers he could pull against the central bank.
Federal Reserve Chairman Kevin Warsh voted with a unanimous Federal Open Market Committee on Wednesday to raise interest rates by a quarter-point, defying repeated calls from President Donald Trump and his administration to cut rates or at least hold them steady. Those warnings continued even as the FOMC met on Wednesday.
Warsh points to inflation, not politics
Warsh made no reference to politics in his press conference, saying instead that he was worried about inflation that remained stuck above the Fed's 2% target. Asked by a reporter if he had a message for Trump, Warsh chuckled and declined to answer: "I've got nothing for you on a discussion with the president."
White House calls the vote unfortunate
White House spokesman Kush Desai said on Fox News after the press conference that he hadn't spoken to Trump but that the president's desire for rate cuts was clear. Trump later addressed the decision in a Truth Social post that didn't name Warsh, arguing that interest rates should be far lower given the country's credit standing.
A relationship tested since January
Trump picked Warsh to lead the Fed in January after souring on former Chair Jerome Powell, whom he had appointed in his first term. Trump was angered by Powell's half-point rate cut in September 2024, which he believed was meant to help the incumbent Democratic administration in that November's election. Before Wednesday, Trump had dismissed Warsh's decisions to hold rates steady in June and July as the result of other Fed voters acting politically. That argument is harder to sustain now that Warsh has voted to raise rates himself.
Administration officials have argued that the Fed should avoid acting ahead of the midterm elections, citing a tradition of Fed non-intervention before votes. That claim doesn't hold up well against the historical record: since 1994, the Fed has changed rates with equal or less lead time before an election in five separate years — 1998, 2004, 2008, 2018, and 2022.
Tools Trump could still use
Trump attempted to fire Fed Governor Lisa Cook in 2025, but the Supreme Court blocked the move for not following proper process. Last month, Trump restarted that process, and Cook has since responded to the administration's letter. The Department of Justice also opened and closed an investigation into Powell tied to a Fed inspector general inquiry into building renovation costs, and it has said it could reopen that investigation once the inspector general's report is issued. A consultant is separately reviewing the Fed's oversight of Silicon Valley Bank's 2023 collapse, an inquiry some analysts believe could give the administration a path to remove Michael Barr, the Fed official who oversaw bank supervision at the time and still holds a board seat.
Source: CNBC
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