White House Criticizes Fed's Interest Rate Hike Decision as "Quite Regrettable," Trump Urges Rates Be Cut Below 1%

After the Federal Reserve announced an increase in the benchmark interest rate, both the White House and Trump himself issued strong responses almost simultaneously. The White House directly called the decision "rather unfortunate," while Trump once again urged the Federal Reserve to cut rates quickly.

On September 16th, White House spokesperson Kush Desai said in an interview with Fox News that President Trump's stance on the direction of interest rates "could not be clearer," and in the view of the White House, the Fed’s latest rate hike "lacks particularly convincing economic justification."

Desai also stated that the current inflation is entirely due to energy supply shocks caused by war in the Middle East, "unrelated to interest rates." Higher rates will drive up mortgage costs, create direct pressure on U.S. consumers, and could restrict business investment and economic expansion.

Trump stated on social media that U.S. interest rates should be reduced to 1% or even lower, and once again urged the Federal Reserve to cut rates quickly.

Wallstreet News mentioned that at this meeting, the Fed unanimously voted to raise the benchmark interest rate by 25 basis points, and the dot plot signals one more hike later this year.

Desai directly questioned the necessity of this rate hike.

He pointed out that since the last Federal Open Market Committee meeting, almost all indicators show inflation has come down, while current price pressures are mainly from Middle East geopolitical tensions causing energy supply shocks rather than overheated demand.

Desai also made a comparison with the Biden administration era, emphasizing:

This is not the Biden era. The President and Republicans have not spent trillions on COVID stimulus like the Democrats and Biden did. We do not have runaway aggregate demand that needs to be suppressed with high rates.

The White House further warned that ongoing monetary tightening could threaten the economic progress achieved during Trump’s administration. Desai stated:

Higher interest rates right now would only hamper the major progress made by America during the President's term.

Desai specifically noted that rising mortgage rates would have a direct impact on ordinary American consumers.

When asked whether President Trump still trusts the independence of the Federal Reserve Chair, Desai replied:

Of course.

On social media, Trump further detailed his call for rate cuts, demanding rates of 1% or lower. He cited as reasons that the U.S. has the strongest credit in the world and the current economy is attracting substantial new investment.

Trump also tied his rate cut proposal to his trade stance, stating that if the U.S. stopped trading with countries with which it runs trade deficits, it could gain at least $1.5 trillion per year, and noted that a "deficit" essentially means a "loss," and that America cannot continue to shoulder the costs of global trade indefinitely.

He believes that lowering borrowing costs will help the U.S. economy develop.

Following the Fed’s rate decision, the yield on the 10-year U.S. Treasury once again rose above 5%, hovering near its highest level since 2007.

Surging government bond yields are pushing up the cost of credit for the U.S. economy and may affect the Fed’s policy considerations, but analysts believe the Fed is unlikely to respond to any explicit market rescue calls from the Trump administration.

Wrightson ICAP Chief Economist Lou Crandall said that Federal Reserve Chair Walsh "cares greatly about the Fed’s credibility and his own reputation," and that market interventions by the Treasury Department have already hurt its own credibility; Walsh "would not want the Fed to get dragged in, as its risk exposure is even higher than the Treasury's."

OMFIF U.S. Chair, and former Treasury official under both Republican and Democratic administrations, Mark Sobel, said that while the U.S. government "in theory could push for some form of quantitative easing or yield curve control from the Fed, which would effectively seek cheap fiscal financing and financial repression," he also believes Walsh would resist this.

U.S. Treasury Secretary Bessent previously took a rare proactive intervention stance, aiming to curb what she deemed inconsistent increases in yields with the U.S. economic outlook, including last week’s expansion of a key debt buyback operation.

However, the effectiveness of these measures has been limited. At a congressional hearing on Tuesday, Bessent attributed the rise in yields to "global factors," and described the expanded buyback operation as a "success."