Trump Calls Warsh “Fantastic” But Says “We Should Have the Lowest Interest Rate in the World” Ahead of Critical Fed Meeting

Quick Read

• Trump demanded the world’s lowest interest rates while markets price his desired cut at 0.20% odds and a hike at 24%.

• With CPI at 4.2% and energy costs surging 23.5%, Lorie Logan leads the hawkish push for further tightening.

• Warsh’s press conference marks his first major test navigating Trump’s rate-cut demands against a committee actively debating a hike.

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President Donald Trump escalated his public pressure on the Federal Reserve on July 27 ahead of today’s Federal Open Market Committee decision, telling reporters aboard Air Force One that “rates should be lowered” and that “we should have the lowest interest rate in the world, like it used to be 30 years ago.” He praised Fed Chair Kevin Warsh as “fantastic” but described other officials at the central bank as “very political” and said they “perhaps have bad intentions.”

The FOMC’s policy statement is due at 2:00 p.m. ET today, with Warsh’s press conference to follow at 2:30 p.m. ET. It is widely described as Warsh’s first major test as Fed Chair. The federal funds target range has sat at an upper bound of 3.75% since a cut on December 11, 2025, and the committee has held there for seven straight months.

Trump’s push for cuts conflicts with internal deliberations. Policymakers are roughly evenly divided between holding rates steady and raising them further before year-end, with inflation still running above the Fed’s 2% target. On Kalshi and Polymarket, traders have converged on the same view: the largest FOMC market on Polymarket puts no change at 76.05% and a 25 basis point increase at 24.00%, with combined odds of any cut at 0.20%.

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Dallas Fed President Lorie Logan has articulated the hawkish case most sharply, warning that inflation remains elevated and further tightening may be necessary. The core Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, reached 130.08 in May 2026, up 0.3% from the prior month. Headline Consumer Price Index inflation ran at 4.2% year-over-year in the May 2026 report, pushed higher by a 23.5% surge in energy costs tied to Middle East tensions. The unemployment rate stood at 4.2% in June, down from 4.5% in November 2025, signaling a labor market that has tightened.

Trump has floated growth targets well above recent output. He told reporters “this country could be at 8%, 9%, 10%, 12% [annualized growth of] GDP.” Real gross domestic product grew 2.1% in the first quarter of 2026, and the strongest reading in the past five years was 4.7% in the third quarter of 2023.

Warsh arrived at the Marriner S. Eccles Building under unusual circumstances. The Senate confirmed him 54 to 45 on May 13, 2026, described as the most divisive Fed chair vote in the institution’s history, with Sen. John Fetterman of Pennsylvania the only Democrat to cross over. He was sworn in on May 22, 2026, replacing Jerome Powell, whose term on the Board of Governors continues for roughly two more years. In Senate testimony, Warsh said he made no promises to the president: “My commitment to you is to follow the law and follow the data. Follow our very best judgment.” He has also acknowledged communicating “often” with the Trump administration.

The 10-year Treasury yield, the benchmark that sets mortgage and corporate borrowing costs, closed at 4.65% on July 27, up 27 basis points over the past month and near the top of its 12-month range. Today’s statement and Warsh’s tone at his 2:30 p.m. press conference will offer the first read on how the new chair intends to answer a president who wants the lowest rates in the world from a committee debating whether to raise them.

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