US FED Reserve FOMC Meeting 2026: Trump hits Fed after rate hike, demands interest rates at 1% or less

US President Donald Trump has stepped up pressure on Federal Reserve Chair Kevin Warsh after the central bank raised interest rates, saying US borrowing costs should be cut to 1% or even lower.

"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR," Trump wrote on Truth Social.

"LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" he added.

Trump’s comments were his strongest criticism yet of Warsh, whom he personally picked to lead the Fed earlier this year. However, Trump later told reporters that he still had confidence in the Fed chief.

The comments came shortly after the Federal Reserve unanimously raised its benchmark interest rate by 25 basis points to 3.75%-4%. It was the first US rate hike in three years.

The Fed's latest economic projections show that 16 of its 18 policymakers expect at least one more 25-basis-point rate hike this year. Only two expect rates to remain at the current level.

Almost all Fed officials also said they see risks that inflation could rise further. This marks a shift from the earlier view that much of the inflation pressure was mainly linked to temporary supply shocks.

The Fed said inflation remains elevated and that Wednesday's rate hike would help bring inflation back towards its 2% target.

Higher bond yields mean the US government, households and businesses have to pay more to borrow money. This can slow spending and investment across the economy.

Higher yields can also make stocks less attractive to investors. When bonds offer better returns with lower risk, investors may be less willing to pay high prices for shares.

Desai said the inflation that remains in the US is mainly being driven by higher energy costs linked to the conflict in the Middle East.

“To the extent that we still do have inflation, as the president and others have noted, it’s entirely driven by an energy supply shock, by what’s going on with oil prices in the Middle East,” Desai said.

“These are things that have nothing to do with with interest rates and are not affected really by higher interest rates.”

Trump had made a different point two days earlier, saying rapidly rising global diesel prices were “mostly caused by the Russia/Ukraine War, not Iran.”

Desai also warned that higher borrowing costs could hurt the US economy at a time when the administration says economic growth has been improving under Trump.

“All higher interest rates are going to do right now is stymie the significant economic progress that the United States has made under this president,” Desai said.

Desai said he had not personally spoken with Trump about the Fed’s decision.

The White House has criticised the Federal Reserve’s decision to raise interest rates, saying the move is not justified by the current economic situation and will not tackle the main reason behind high inflation.

White House spokesman Kush Desai said the administration did not see a strong economic case for the rate hike.

“Today’s rather unfortunate decision by the Federal Reserve to hike interest rates was not, from the administration’s point of view, backed by a particularly compelling economic case,” Desai said in an interview with Fox News.

Warsh said the Fed’s decision was based on its assessment of the economy, employment and its outlook, rather than market expectations.

“We made this decision today based on our assessment of the situation, based on our assessment of the trajectory for employment, based on our judgment on the strength of the economy, sometimes the market tries to prejudge our outcomes. I’ll observe market prices and see what they have to say. But today was our decision,” Warsh said.

Federal Reserve Chair Kevin Warsh said he would not provide details on the FOMC’s future rate decisions after the central bank raised rates by 25 basis points.

“I’m not in the forward guidance business,” he told reporters. “The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my 110 or [120] days here.”

US Treasury yields have climbed sharply this year, with the 10-year yield crossing 5% earlier this week to its highest level since 2007. Fed Chair Kevin Warsh cited three factors behind the rise: a stronger economy, increased competition for capital and geopolitical tensions driving up commodity prices.

Warsh said competition for capital has increased, driven partly by major funding needs among AI hyperscalers.

"The economy has strengthened. Competition for capita has rushed upward, spurred in large part by the major capital needs of the AI hyperscalers that are "out in the market raising funding."

Warsh also linked higher yields to geopolitical tensions that have driven up commodity prices and increased costs for goods across the US economy.

Geopolitical tensions around the world have seen commodity prices surge, driving up the cost for "products that find their way into a stores across the country."

Asked about other central banks, Fed Chair Kevin Warsh said advanced economies are also dealing with inflationary pressures and that monetary policy decisions can have global spillover effects.

"When the Federal Reserve makes a policy choice, it matters not just to the U.S. economy, but it spills over to the rest of the world. To a lesser extent, that's true for them too," he said.

"When foreign central banks make decisions where they're confronted with higher prices and they choose consistent with their remit to raise rates, then they're helping to quash inflation in their countries and there's spillovers and spill backs in both directions."

Warsh declined to comment on what other central banks might do at upcoming policy meetings.

Asked about the Fed’s independence and his discussions with President Donald Trump, Fed Chair Kevin Warsh declined to comment.

"I don't have anything for you on discussions with the president," adding "I'm not a Wall Street newsletter."

"Part of the independence of the Federal Reserve is we stay in our lane," he said.

"Independence is a two-way street. We let people that do trade policy and fiscal policy stay in their lane too. That's how we can stand up here and call them the way we see them."

Warsh said stable prices and inflation consistent with the Fed’s 2% objective could help people increase their real take-home pay.

"Stable prices, an environment where inflation is running consistent with our 2% objective, offers good news because that way, when they get their wages, they can put their head above water and deliver real take-home pay increases," Warsh said.

Fed Chair Kevin Warsh said the "least well off" Americans could be the biggest beneficiaries in the long run if the Fed succeeds in bringing inflation down.

"Those who are least well off have the most to gain from a durable expansion, a solid labor market, and stable prices," Warsh said.

Warsh said the "least well off" Americans tend to be people who do not own financial assets or have equity in their homes. Many are living paycheck to paycheck, he said.

"The thing that we can do consistent with our mandate is two things: Ask ourselves, is the country running more or less at full employment? And we've done that. That doesn't mean that individuals aren't searching for a job, but in aggregate, we're running more or less at full employment. If so, we can then look at the other side of our mandate and let that be our focus."

“Given the elevated inflation, the FOMC hikes rates by 25 bps and guided for one more hike in CY 2026. This will help in bringing down inflation to 2% goal and restore the FOMC credibility. In FOMC assessment economic activity is expanding at solid pace driven by productivity gains, robust capital investment and strong job gains. Based on Fed Dot plot, Fed is likely to stay on hold through 2027 with likely easing in 2028. Given FOMC commitment to bring down the inflation to 2%, shall support the long term bond yields. Rising crude and inflation along with increasing global rates may also guide the India MPC to raise rates by 50 bps.”

— Deepak Agrawal, CIO – Debt & Head Products, Kotak Mutual Fund

Warsh said stubborn inflation readings and changing geopolitical conditions also shaped the Fed’s decision to raise rates.

"Summer trends weren't passing the test. I've seen very little information since that would make me reverse that decision. So I've stuck with it."

"And our judgment about what is the most likely or least likely of the geopolitical situation has changed," he said.

"All three of those things lend themselves to, a firm unanimous decision today."

Fed Chair Kevin Warsh said data since the July rate decision showed a strengthening US economy, including improvements in the labour market. "There's been a pretty wide ranging set of data, including the labor markets, that the economy has strengthened ... It's a judgment that I have and the committee has."

Fed Chair Kevin Warsh described Wednesday’s rate hike as a "sober," "serious," and "responsible" decision, but declined to provide guidance on future moves. "I'm not going to prejudge any future decisions we make," he said. "I committed to a discipline, a set of principles ... That's what we did today."

Asked about his message to President Donald Trump, who has repeatedly called for lower interest rates, Fed Chair Kevin Warsh said: "I've got nothing for you on a discussion with the president."

Warsh said the rate hike was the "right decision to deliver on the remit that Congress gave us to ensure stable prices."

Fed Chair Kevin Warsh said policymakers remain concerned about the pace of inflation, noting that recent data have not shown enough improvement.

“Our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high, and has been for too long,” he said.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved,” Warsh said, pointing to multiple categories in recent CPI and PPI data that continue to show increases above 3%.

Warsh said the Federal Open Market Committee’s purpose centres on full employment and price stability, alongside a strong US economy. “The Federal Open Market Committee has a “vital and straightforward purpose: full employment and price stability, and a thriving American economy that sets the standard for the world.””

Warsh said the Fed’s role is to ensure changes in relative prices do not spread across the wider economy or trigger broader inflationary effects. "But what we can do and will do is ensure that any change in relative prices don't broaden out, don't have second and third order effects in the economy. That's what we're tasked to do, and that's what we will do," he continued.

Asked whether smaller rate hikes could address inflationary pressures from energy supply shocks, Warsh said the Fed cannot directly influence individual prices such as oil or food. "We cannot affect any individual price, whether it be oil prices, whether it be foodstuffs at the grocery store."

Federal Reserve Chair Kevin Warsh confirmed he did not submit his own projections for the FOMC’s Summary of Economic Projections, which includes the so-called dot plot showing policymakers’ outlook for interest rates.

"This afternoon, you also received the summary of economic projections — it reflects the views of my colleagues on the committee," Warsh said. "But as in June, I've not offered a projection of my own. But like in June, I said I would faithfully discharge the summary of their projections."

Warsh said the labour market side of the Fed’s mandate is in "good shape", but inflation remains elevated. "For more than five years, inflation has been running above target. So our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high and has been for too long."

"Our decision comes at a time when the American economy appears to be strengthening," Warsh said. "New hiring, private sector earnings, business capital investment – each of these markers has improved in recent months and is pointing in a good direction."

Federal Reserve Chair Kevin Warsh said the central bank is not yet confident that underlying inflation is moving toward its 2% target quickly enough. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," Warsh said in his opening remarks. "Today, the FOMC decided that this standard has not been satisfied."

The Federal Reserve unanimously voted 12-0 to raise interest rates by 25 basis points to 3.75%-4%, marking the first rate hike of the Kevin Warsh era.

Fed projections show 12 of 18 officials see one more 25-basis-point rate hike this year, four see two hikes, and two see no more hikes.

The latest actions set out the operational tools the New York Fed will use to implement the FOMC’s monetary policy stance, including open-market operations, repo and reverse repo facilities and securities purchases.

The Board approved requests to establish the 4% primary credit rate submitted by the Federal Reserve Banks of Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Kansas City and Dallas.

The Federal Reserve Board unanimously approved a 25-basis-point increase in the primary credit rate to 4%, effective September 17, 2026.