Trump Suffers Blow as Fed Blows Off Interest Rate Cut
The president will not get the rate decrease he wanted before the midterms.
Photo Illustration by Victoria Sunday/The Daily Beast/Reuters
The Federal Reserve on Wednesday kept interest rates steady at its final meeting before next week’s midterm elections.
Donald Trump has demanded that the central bank lower rates but has been repeatedly rebuffed by the Federal Reserve, including its handpicked chairman, Kevin Warsh, as inflation persists.
The committee chose to keep the federal funds rate between 3.75 and four percent on Wednesday after it voted to hike the rate at the previous meeting in September.
Among those who backed keeping the rate steady in October was Warsh, despite Trump previously blaming the rate not coming down on other Federal Reserve voting members.
Fed Chair Kevin Warsh, pictured with President Donald Trump in May, was among the members who backed keeping interest rates steady in October.
Jonathan Ernst/REUTERS
Two members, Fed governor Lisa Cook and Cleveland Fed President Beth Hammack, actually backed raising the interest rate by a quarter of a percentage point at the meeting.
While the Federal Reserve kept the federal funds rate steady this month, acknowledging that inflation “remains elevated,” the central bank previously indicated it could raise rates again by the end of the year. Its final meeting of 2026 takes place December 8 and 9.
September’s hike was the Fed’s first since 2023, as costs have soared due to Trump’s war in Iran and tariff policy.
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Warsh said on Wednesday that last month’s rise is only beginning to affect the economy, as inflation remains above the Fed’s two percent target. As he put it, the central bank is “working on it.”
Inflation rose 3.7 percent in September from a year ago, the latest Consumer Price Index (CPI) showed earlier this month, above economists’ expectations.
Price increases also accelerated last month, up 0.6 percent from 0.4 percent in August. The final CPI before the election also showed Americans’ wages were not keeping up with inflation.
At a press conference on Wednesday afternoon, the chairman was also asked about Trump’s remarks earlier this month, when he blamed other members of the Fed for not cutting rates and accused them of wanting the country to do badly.
“I’m not going to be responding to quotes from public officials,” Warsh said.
“I think we came to the right policy decision for this moment,” the Fed chair said of Wednesday’s decision. “I’m honored to be here and honored to be the chairman of this group.”
The Daily Beast asked the White House for its response to the Federal Reserve holding rates steady.
“Today’s decision does nothing to change President Trump’s commitment to making life more affordable for the American people,” said spokesman Matthew Middleton in a statement.
He argued that as the Iran conflict “comes to an end and global disruptions ease, pressures on prices, from gas to groceries, will subside as well.”
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