The Trump administration has launched an unusually broad public campaign urging the Federal Reserve not to raise interest rates ahead of its pivotal September 15-16 meeting.
President Donald Trump, Vice President JD Vance, Treasury Secretary Scott Bessent, and senior economic counselor Peter Navarro have all publicly called on the Fed to hold or cut rates within the past week.
Trump escalated the pressure Friday by threatening to halt trade with countries running trade surpluses with the US unless the Fed cuts interest rates, a threat he had never made before.
Senior economic counselor Peter Navarro warned in a Friday interview that a rate hike would be “careless” and “would hit precisely the sectors America needs to prosper most.”
Navarro called members of the rate-setting Federal Open Market Committee “clowns” and said Fed Chair Kevin Warsh is trying to “do the right thing.”
Vice President JD Vance stated plainly, “We believe that the Fed should be lowering interest rates,” adding that it “would be nice to have some help from the Federal Reserve.”
Treasury Secretary Scott Bessent noted in a CNBC interview that the Fed typically does not raise rates during a supply shock until second- or third-order inflationary effects materialise.
Markets have priced in roughly a 60% chance of a quarter-point rate hike at the September meeting, a probability bolstered by employers adding 162,000 jobs in August.
The September meeting falls just two months before November midterm elections, with polls showing widespread voter dissatisfaction over higher prices and interest rates.
Warsh has maintained that White House pressure has had no impact on his decisions, citing the Fed’s decision to hold rates steady in July as evidence of the central bank’s independence.
However, The Wall Street Journal reported last month that Trump spoke with Warsh repeatedly, a claim backed by several administration aides, though Trump himself said he had spoken to Warsh only once.
At Jackson Hole, Warsh stressed that the Fed’s focus must remain squarely on inflation, noting that 54% of the 199 components in the PCE price measure had risen more than 3% over the previous 12 months.
Three Fed officials, Beth Hammack, Neel Kashkari, and Lorie Logan, dissented in favour of a quarter-point hike at the July meeting, where rates were ultimately left unchanged.
The administration has highlighted the recent three-month annualised rate of core CPI running at 1.6%, though the Fed’s preferred core PCE measure sits at just over 3% on the same basis.
Average hourly earnings rose 0.3% in August and 3.1% from a year earlier, while the unemployment rate held steady at 4.1%, keeping inflation concerns from wages relatively contained for now.
A Friday CPI report is expected to serve as a critical gauge for Fed officials weighing whether inflation is easing or still accelerating ahead of the September decision.