Trump Demands 1% Rates After Fed Delivers First Hike in 3 Years

President Donald Trump renewed his demand for sharply lower interest rates on Wednesday, calling for U.S. borrowing costs to fall to 1% or less, hours after the Federal Reserve raised its benchmark rate for the first time in three years. The Fed’s move came as inflation remained elevated and higher energy prices added to pressure on the economy.

In a post on Truth Social, Trump wrote that U.S. interest rates “should be 1%, or less,” arguing that the country has the strongest credit standing in the world and is experiencing a boom in new investment. He also said the United States is “carrying” almost every country in the world and argued that the situation could not continue.

The president has repeatedly pushed for lower borrowing costs while also escalating trade tensions with Canada through reciprocal tariffs. His latest comments came shortly after the Federal Reserve increased its benchmark federal funds rate by a quarter percentage point.

Federal Reserve Chair Kevin Warsh, whom Trump nominated earlier this year amid expectations of a more dovish approach to monetary policy, joined all members of the Federal Open Market Committee in voting for Wednesday’s rate increase. The move came as annual inflation remained above the Fed’s 2% target, reaching 3.4% in August.

Trump emphasized his position again in a separate post, writing, “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”

The federal funds rate had previously climbed as high as 5.25%-5.5% in 2024 as the Fed aggressively tightened monetary policy from near-zero levels. The rate increases were aimed at countering inflation that surged during the economic recovery from the COVID-19 pandemic and amid the effects of Russia’s invasion of Ukraine. Inflation briefly exceeded 9% in mid-2022 before the Fed began reducing rates in 2024 as price pressures eased.

Wednesday’s increase followed a 9-3 vote at the Fed’s July meeting to keep rates unchanged. By August, consumer prices were up 3.4% from a year earlier, while core CPI, which excludes food and energy prices, increased 2.4%. Employers added 162,000 jobs during the month and the unemployment rate remained at 4.1%.

Trump has consistently advocated for lower interest rates and previously warned that he could restrict trade with countries running trade deficits with the United States if the Federal Reserve failed to reduce borrowing costs.