Chairman Kevin Warsh’s quarter-point rate increase sends an unambiguous message to President Donald Trump: hands off the Federal Reserve.
Warsh on Wednesday voted with a unanimous Federal Open Market Committee to raise interest rates by a quarter point, despite repeated urgings by Trump and his administration to cut or at least not hike. Those warnings continued even as the FOMC convened Wednesday. Yet Warsh reviewed the economy and made up his own mind that interest rates needed to rise, despite the potential political consequences.
Warsh made no reference to politics in his news conference but said he was worried about inflation that remained stuck above the Fed’s 2% target.
Warsh chuckled when asked by a reporter if he had a message for Trump and politely declined to answer. “I’ve got nothing for you on a discussion with the president.”
Trump told reporters after the Fed decision that he still had confidence in Warsh. “He’s a good man, Kevin Warsh,” Trump said. “But no matter how good a job, he’s got a hostile board.”
Trump said he believed interest rates should be 1%. The Fed’s decision Wednesday raised them to a range of 3.75%-4%.
Warsh described the rate increase as a “responsible decision.” Asked about that, Trump said he didn’t know what Warsh was referring to.
Trump selected Warsh to run the Fed in January after souring on former Chair Jerome Powell, whom Trump appointed in his first term. Trump was furious at Powell for, among other things, voting to cut interest rates by a half-point in September 2024. Trump thought that decision was an attempt throw the election to the incumbent Democratic administration in the November presidential election. Powell then, like Warsh now, said he looked only at the economy in making his decisions.
People in the Trump administration have argued the Fed ought not to intervene in the economy now, saying there is a tradition of the central bank not intervening ahead of midterm elections. That idea isn’t well supported by the historical record.
Since 1994, when the Fed began making same-day announcements of shifts in its interest rate policies, the Fed has changed rates with as much or less time on the calendar in advance of an election as there is now in five election years: 1998, 2004, 2008, 2018 and 2022.
Some Democrats have bitterly complained since Warsh’s nomination that he won’t be independent of the president who chose him. Wednesday’s rate decision suggests they may have been too early to judge him.
Trump and Warsh have a long-standing relationship, and the two men have spoken directly since Warsh took office, the president has said. Warsh also meets often with Treasury Secretary Scott Bessent, and the two men are friends.
If Trump doesn’t like what Warsh is doing, there is much he can do beyond merely telling Warsh through one of those channels.
Trump in 2025 attempted to fire Fed Governor Lisa Cook. The Supreme Court blocked that action, saying Trump hadn’t followed the appropriate process. “At minimum, Cook was entitled to some explanation of the evidence at issue, some avenue for a response, and a deadline by which a response would be due,” the Supreme Court wrote.
Last month, Trump restarted the process of firing Cook. The administration sent the Fed governor a letter saying Trump was considering firing her and demanded a response by Aug. 26. She sent that response, and now the ball is in the administration’s court.
Federal Reserve Chair Kevin Warsh speaks during a news conference following Federal Open Market Committee meetings at Federal Reserve Headquarters on Sept. 16, 2026 in Washington, DC.
Andrew Harnik | Getty Images
Trump could fire Cook again at any time. That decision would likely need to be reviewed by the courts.
Trump’s Department of Justice also opened and then closed an investigation into Powell pending a separate inquiry by the Fed’s inspector general into cost overruns in building renovations. The DOJ has said it reserves the right to reopen that investigation once the IG issues its report, which could come at any time.
A consultant is looking on behalf of the Fed into the 2023 failure of Silicon Valley Bank, an institution overseen by the Fed. Some analysts believe the investigation could give the administration a pretext to fire Michael Barr, the Fed official who was in charge of bank supervision in 2023. Barr stepped down from that regulatory job but still has a seat on the Fed’s board.
If Trump takes any of those actions, it will end the administration’s tacit truce on the Fed that has held since he picked Warsh.
But if there’s anyone who’s surprised by Warsh, it shouldn’t be the president. He liked all the candidates he was considering for the Fed, he said back in January, before picking Warsh.
“Problem is they change once they get the job,” Trump said. “Sort of disloyalty, but they got to do what they think is right.”