U.S. President Donald Trump has again urged the Federal Reserve to cut its benchmark interest rate. With U.S. employment data coming in stronger than expected and the possibility of a rate hike this year gaining attention in the market, Trump is publicly pressuring Chairman Kevin Warsh ahead of his first Federal Open Market Committee (FOMC) meeting next week.
In an interview with NBC's "Meet the Press" on Sunday, Trump said, "We should not penalize the country by raising rates," adding, "There is no reason whatsoever to raise rates." He argued, "We have grown the economy in a low-rate environment, and raising rates would be tantamount to undermining that success," saying, "Since the economy is doing well, we should instead be lowering rates."
This is not the first time Trump has demanded that the Fed cut rates. However, this remark draws attention because it comes at a time when inflation concerns stemming from the Iran war are growing and employment data have far exceeded expectations, fueling talk of a rate hike this year. Earlier, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 172,000 in May from the previous month. This far exceeded the market forecast of 80,000.
Wall Street forecasts are also being revised. Goldman Sachs predicted there would be no Fed rate cut this year, citing factors such as labor market strength. The firm pushed back its expected timing for the first rate cut from December 2026 and March 2027 to June and December 2027, respectively.
The remark drew particular interest because it came just before Warsh chairs an FOMC meeting for the first time since taking office. On this matter, Trump said, "Kevin is a great person, and I want to let him make his own judgment. I don't want to influence him excessively," while stressing, "We should not penalize the country with a rate hike when the national economy is doing well. We should instead support growth."
Trump also reaffirmed his existing position that rate cuts should be used to reduce the government's interest burden and secure fiscal room. "The United States has enormous debt and many challenges to address," Trump said. "I want to invest more in the defense sector."
Within the Fed, by contrast, more voices are citing the need for tightening following the Iran war. Cleveland Federal Reserve Bank President Beth Hammack said on Thursday, "If recent trends continue, it may soon be necessary to take policy action." She noted, "According to the latest employment report, the labor market is currently in rough balance, but high inflation is the greater concern."
