Donald Trump said on June 7 that he plans to defer to Federal Reserve Chair Kevin Warsh and does not want to have a big influence on him, even as he argued there is no reason to raise interest rates. The comments came in an NBC News Meet the Press interview and landed just after a stronger-than-expected jobs report rattled investors.
Trump framed the case as one of fairness, saying it is “unfair” to raise rates when the economy is performing well. Employers added 172,000 jobs in May, and the Labor Department revised previous months upward, a report that showed the labor market still holding up even as inflation remains elevated. Markets nonetheless tanked after the release, and traders have increasingly started to price in an interest-rate increase this year rather than a cut.
The president’s words were aimed at the same central bank he has tried to influence during his second term, making the vow to defer to Warsh a sharp contrast with his broader posture. Warsh, who was sworn in in late May, is now in the role Trump once criticized from the outside, with a fresh public signal from the White House that he should be left alone to act. Trump called him “fantastic” and said he wants him to do “whatever he wants,” adding that when a country is doing well, it should not be penalized by immediately raising rates.
That leaves the bigger question where markets have already moved it: whether Warsh will treat Trump’s praise as cover for lower rates or as noise to be ignored. Inflation has remained high and the economy continues to grow, and traders are watching for whether the Fed resists the pressure or moves in the direction the bond market is beginning to expect.
