Trump Warns Fed: Lower Interest Rates Now or Risk Economic Slowdown
US President Donald Trump called for lower interest rates in the US, saying they should be at 1% or less. He argued that the country is a 'best credit' with booming investments and should not have high interest rates. This came after the Federal Reserve hiked its target range for federal funds rate by 25 basis points to 3.75% to 4%, marking the first increase since 2023.
The median expectations in the Summary of Economic Projections (SEP) indicate a further rate hike this year and upward revision to inflation expectations for 2026, with PCE inflation unlikely to fall to the 2% target until 2029. The unemployment rate is expected to end 2026 at 4.1% and remain there for the next few years.
Trump also claimed that ending trade deficits could net the US $1.5 trillion annually, urging a quick lowering of interest rates. However, Fed chair Kevin Warsh said inflation remains elevated due to strong labor markets, which prompted the FOMC to act.