Trump calls for Fed rate cuts as Treasury reports $40 trillion debt
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President Donald Trump urged the Federal Reserve to lower interest rates, questioning the political composition of the rate-setting committee, while the Fed is expected to keep rates steady at its September meeting.
President Donald Trump pressed the Federal Reserve on Tuesday to reduce its benchmark interest rate, describing current rates as "artificially high" during a press briefing with cryptocurrency executives at the White House. His comments came as the Treasury Department announced that the national debt has exceeded $40 trillion.
Trump praised Fed Chair Kevin Warsh, whom he nominated earlier this year, but suggested that other members of the Federal Open Market Committee may be influenced by politics. He said, "The problem is he has a board, and it’s a political board. People put in by Obama, Biden, and me, and there are quite a few members still left, as you understand, and so they vote to raise interest rates. I don’t know if they’re doing it because they think they’re doing a good thing or because they like the politics of it."
The committee has not raised the federal funds rate since July 2023 and has kept it unchanged at 3.5%-3.75% throughout 2026 after three cuts late last year. At the July meeting, three members dissented, favoring a quarter-point increase. Minutes released on Aug. 19 indicated that most participants expect inflation to ease later in the year, though many remain uncertain and see upside risks, especially from higher oil prices and AI-driven demand.
Recent data show consumer prices rose 0.1% in July, bringing the annual inflation rate down to 3.4% from 4.2% in May, still above the Fed’s 2% target. The labor market appears to be cooling, with employers shedding 23,000 jobs in July after a spring hiring surge.
Fed officials will review additional inflation and employment figures before their next policy meeting in September. Market participants, according to CME FedWatch, largely anticipate that the federal funds rate will remain unchanged, though some still forecast a possible hike.