‘We’re going to respect the process’: Top White House official softens on Fed rate hike
Por Victoria Guida — POLITICO – TOP Stories
Markets are expecting the Federal Reserve to raise interest rates on Wednesday to fight inflation, a move that would defy President Donald Trump’s demands for lower borrowing costs.
The White House, for now, is playing nice.
National Economic Council Director Kevin Hassett told CNBC on Tuesday that he and the president would respect Fed Chair Kevin Warsh regardless of what the central bank decides to do with rates.
“We have very high regard for Kevin Warsh,” Hassett said. “Both the president and I have known him forever.”
“Whatever he does tomorrow, we’re going to respect the process and understand that he is doing what he and the committee think is correct,” said Hassett, who was also in the running to become Fed chair earlier this year before Trump chose Warsh.
His comments are noteworthy because Trump has broken with precedent by repeatedly and forcefully calling on the Fed to lower interest rates to boost the economy since he returned to office in January 2025. His strongest attacks were aimed at former Fed Chair Jerome Powell, who stepped down from the top post in May but remains on the Fed board. Trump often mused about firing Powell as chair but never followed through on that.
The president reiterated over the weekend that he wants to see the Fed lower rates. The central bank is kicking off two days of meetings in Washington to decide on whether to raise borrowing costs.
Yet Hassett’s comments are the latest instance over the past couple of days where he has signaled a softening in the administration’s call for lower rates, though the president has made clear that he still wants to see borrowing costs go down. The senior White House aide told CNN on Sunday that the administration would “100% support” the Fed in whatever it does and told Fox News that Trump “will defend the independence” of Warsh “above all.”
The Fed meetings come as inflation has been pushed higher by oil prices and robust consumer spending. Investors are overwhelmingly pricing in a rate hike, and if the central bank does not follow through, it could trigger further turmoil in bond markets, where long-term yields have already risen to nearly two-decade highs.
Trump, for his part, has also underscored his respect for Warsh, a marked shift in tone from his often personal attacks on Powell.
“He’ll do what he has to do,” he told reporters in late August after Warsh signaled a rate hike was possible.
Still, any moves to raise rates, particularly just weeks out from midterm elections, will likely frustrate the president, as Hassett has acknowledged, and test the implicit truce with the Fed that has persisted since Warsh took office in late May.
One close Trump ally, when asked if the president would be OK with a rate hike, said, sarcastically, by text: “Sure he’ll be thrilled.”
Fonte: POLITICO – TOP Stories
