Fed Hikes. Trump Says: Cut Rates to 1%!

The Fed just raised rates.

Trump was not impressed.

On Wednesday, the Federal Reserve raised interest rates by 25 basis points to 3.75%–4.00%, its first hike in three years. The move was aimed at fighting stubborn inflation, with the Fed leaving the door open to another hike later this year.

Then came Trump's response.

His message was anything but subtle:

“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World - BY FAR.”

And he was not finished.

“LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”

That puts the Fed in a rather awkward position.

The central bank is tightening because inflation remains too high. Trump, meanwhile, wants borrowing costs dramatically lower — potentially taking rates from nearly 4% all the way down to 1% or less.

And there is an extra twist: Fed Chair Kevin Warsh was appointed by Trump himself.

Yet Warsh backed the rate hike, arguing that inflation remains elevated and the decision was the right one.

So now the market has two very different messages coming from Washington.

The Fed says: inflation first.

Trump says: rates down, and fast.

That clash could become increasingly important for markets.

A more hawkish Fed could keep the U.S. dollar and Treasury yields supported, while putting pressure on gold and risk assets.

But if Trump succeeds in pushing expectations toward lower rates, the dollar could face a very different story.

For traders, the question is no longer simply “What will the Fed do next?”

It may be:

Who wins the argument — the Fed, or Trump?