U.S. President Donald Trump said the Federal Reserve’s decision to raise interest rates was wrong, as Kevin Warsh, whom he nominated to lead the Fed, is about to chair his first Federal Reserve policy meeting.
Trump attempted to shift market sentiment during an interview on NBC’s “Meet the Press,” following a strong U.S. jobs report in May that led markets to bet on the Federal Reserve’s next move being a rate hike to control inflation.
Trump said, “Now, when economic reports are positive, the stock market actually falls because investors believe the government will raise interest rates. But there’s no reason to raise them at all. Increasing the benchmark rate is the wrong approach; we should actually lower interest rates.” “
After Trump repeatedly publicly urged the Federal Reserve to lower borrowing costs, he nominated Wash as Fed chair, although he later said he hoped Wash would “do things his own way.”
Trump hinted at feeling somewhat frustrated in an interview with NBC.
“I live with Kevin,” Trump said. “I respect him, but I believe that when a country’s economy is doing well, interest rates shouldn’t be raised immediately to punish it.”
“You know, we have debts and other things to deal with,” he added. “We have a lot of issues that need to be resolved. I want to increase our military investment.”
The sell-off in the bond market and a shift in bets on the Federal Reserve reflect growing confidence that the Fed under Waller will need to raise borrowing costs to bring inflation down from above-target levels.
Goldman Sachs economists on Friday withdrew their earlier forecast of a Federal Reserve rate cut in December 2026, which had been based on stronger-than-expected U.S. labor market data. They still expect two rate cuts of 25 basis points each, but have pushed the timing back to June and December 2027.
U.S. labor market data released on Friday showed nonfarm payrolls increased by 172,000 last month, with upward revisions to the previous two months’ figures, further reinforcing market expectations for a rate hike. The U.S. unemployment rate remained unchanged at 4.3%.
Trump’s approval ratings have declined due to public concerns over war in Iran, poor economic management, and high oil prices. He believes that employment and economic growth alone can help control inflation.
