President Trump Just Threw the Federal Reserve Under the Bus Yet Again Over Interest Rates

 President Trump Just Threw the Federal Reserve Under the Bus Yet Again Over Interest Rates

**Fed Chair Kevin Warsh and the FOMC are contending with elevated inflation—and two of the president's own policies are precisely why rates can't be lowered.**

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## The Irony of the "Rocket Fuel" Promise

Just months ago, President Donald Trump promised the American people that interest rates would plummet, acting as "Rocket Fuel!" for the economy . He appointed a new Fed Chair, Kevin Warsh, with the expectation that the central bank would finally deliver the cheap money he had been demanding since his second term began .

Instead, the exact opposite is happening. Rates on 30-year U.S. Treasury bonds have hit their highest levels in nearly two decades, surpassing what the president inherited when he returned to the White House . The 10-year Treasury note shot up above 4.7% on Friday . And the Federal Reserve just held rates steady for the fifth straight meeting, with three officials dissenting in favor of a hike .

But that hasn't stopped President Trump from blaming the very institution he appointed. Speaking to reporters on Air Force One, the president praised Warsh personally while throwing the rest of the Federal Open Market Committee (FOMC) under the bus :

> "Kevin's fantastic, but he's got a board, and the board members are very political.... You need the consent of some people that have perhaps bad intentions. Rates should be lowered. This country could be at 8%, 9%, 10%, 12% GDP. That's what it should be."

There's just one problem: **Two of Trump's own policies are precisely why the Fed can't lower rates** .

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## The Tariff Effect: A Self-Inflicted Price Shock

The first policy keeping inflation elevated is Trump's tariff and trade agenda . Although the U.S. Supreme Court struck down the president's sweeping global tariffs in February 2026, the administration has used different rules to reimpose duties on dozens of countries .

Adding tariffs to unfinished imported goods—such as steel and aluminum—increases production costs for American manufacturers. Those costs are then passed on to consumers in the form of higher prices .

The result? Inflation has consistently run above the Fed's 2% target, with the consumer price index spiking to a three-year high of 4.2% in May .

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## The Iran War: The Biggest Inflation Driver of All

The second, and far more impactful, policy is the Iran war . Not long after Trump approved attacks against Iran, the latter effectively closed the Strait of Hormuz to commercial vessels . This critical chokepoint handles approximately **one-fifth of the world's petroleum liquids** each day .

The largest energy supply disruption in modern history sent fuel prices soaring and pushed inflation to levels not seen since the post-pandemic era . And the inflationary effects are now "spilling over into the broader economy," meaning higher costs for everything from groceries to transportation .

The president seems to believe that a resolution in the Middle East will solve the problem. White House spokesman Kush Desai said: "Oil prices — and thus overall inflation — will plummet again when President Trump forces a successful resolution with Iran, further paving the way for additional interest rate cuts" .

But with no end to the conflict in sight, the Fed has little choice but to consider raising rates to stabilize prices . Market pricing in the CME FedWatch tool currently suggests Fed officials may vote to raise rates at their September meeting .

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## The Data Contradiction

Trump has largely ignored the jump in interest rates, portraying the economy as booming despite mixed signals . At a recent Cabinet meeting, he declared: "We have the most successful environment that we've ever had. There's never been anything like it from the standpoint of investment into our country" .

The data tells a more complicated story. The government recently reported that the annual growth rate for the prior three months was a sluggish **1.5%** . Meanwhile, the government has spent **$827 billion** so far this fiscal year to service the national debt—more than it has devoted to national defense .

The disconnect between Trump's rhetoric and economic reality could prove costly in the November midterm elections . Republicans had hoped to campaign on falling rates and improved housing affordability, but mortgage rates now average **6.66%**, essentially unchanged from a year ago . As Georgetown University economist Juan Felipe Riaño told the AP: "If prices and borrowing costs keep outrunning wages into the fall, the same logic [that cut against Democrats in 2024] points at Republicans now" .

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## What the Experts Are Saying

John Silvia, CEO of Dynamic Economic Strategy, noted that markets are merely reflecting the reality of higher inflation and policy uncertainty. "They are the product of events," he said .

Fed Chair Warsh has taken a hands-off approach, arguing that markets should do more of the work in setting rates. "Market participants are learning to play the ball, not the referee—and market prices will continue to respond in the direction and magnitude they see fit," Warsh said. "This is, in my view, a change for the better—and we are just getting started" .

But time might not be on the president's side. The Fed's next meeting concludes September 16, and markets currently expect officials to vote to raise rates in order to reduce inflationary pressures .

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## The Bottom Line

President Trump is learning a harsh lesson: **you can't blame the Fed for inflation when your own policies are the cause.**

The tariffs and the Iran war that Trump championed have created the very inflationary pressures that make rate cuts impossible. For American consumers, that means higher mortgage rates, costlier auto loans, and a more expensive cost of living—all while the president continues to promise that relief is just around the corner.

As the midterm elections approach, the gap between Trump's rhetoric and economic reality could become the defining issue of the campaign.

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## Disclaimer

**IMPORTANT:** This article is for informational and educational purposes only and does not constitute financial, investment, or professional advice. The information contained herein is based on publicly available sources and reflects the author's understanding as of the publication date. Economic conditions, interest rates, and market data are subject to rapid change. Past performance is not indicative of future results. You should consult with a qualified financial advisor or professional before making any decisions based on this information.