The Federal Reserve announced an interest rate hike of 0.25 percentage points Wednesday as a way to battle inflation. The question remains whether the move is actually able to make a dent since it’s widely understood that the biggest drivers of inflation are President Donald Trump’s tariffs and the war in Iran. But Trump is not happy about it.
“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World – BY FAR,” Trump wrote Wednesday afternoon on Truth Social.
Trump went on to insist that the country would be “booming with new investment” if interest rates were lowered. He also claimed that if the U.S. stopped trading with any country with which we had a deficit, it would make “at least $1.5 trillion a year.”
Needless to say, stopping trade with most other countries in the world would not help the U.S. economy.
“The word ‘Deficit’ is nothing more than a fancy word for LOSS,” continued Trump. “We are ‘carrying’ almost every country in the World, and that cannot go on any longer. LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”
Many tech VCs had hoped that interest rates would be lowered after President Trump returned to power in 2025. Trump pushed former Fed chairman Jerome Powell out of the role after he refused to lower interest rates and installed Warsh, who he clearly believed would lower rates.
“The plain fact is that inflation is too high and has been for too long,” Fed chairman Kevin Warsh said during a press conference Wednesday.
Warsh voted to raise rates along with all the other members of the Federal Reserve board in a unanimous decision. Warsh’s insubordination has clearly disappointed Trump, though he didn’t name Warsh specifically in his post. Some of the biggest names in tech investing were oddly quiet on X in the wake of Warsh’s announcement, perhaps waiting for a signal from the president.
Consumer prices rose 3.4% year over year in August, while average wages rose $3.1%, according to CNBC. With inflation outpacing inflation, consumers are hurting with no relief in sight. The markets didn’t appear to like Warsh’s move very much, with the Dow slipping 1.5% before recovering a bit and closing down 619 points or 1.1%.
The war in Iran has driven a steady rise in inflation since President Donald Trump decided to start bombing the country along with Israel on Feb. 28. Roughly 20% of the world’s oil is shipped through the Strait of Hormuz. Diesel has hit an all-time high, with the U.S. average at $6.31 according to AAA. The average a year ago was $3.70. The high price of diesel has been rippling through the economy from the cost of groceries to electronics.
A reporter with CBS News opened his question to Warsh on Wednesday by pointing out that an interest rate hike doesn’t reopen the Strait of Hormuz. Warsh responded with, “What we can do and will do is ensure that any change in relative prices don’t broaden out, don’t have second and third-order effects in the economy.”
CBS News’ @RichardEscobedo: “A quarter-point rate hike does not reopen the Strait of Hormuz. And so, I wonder how you think the smaller rate hikes will be effective when it can’t necessarily address the energy supply side of inflationary pressures?”
Fed Chair Kevin Warsh… pic.twitter.com/9GYaFdchBr
— CBS News (@CBSNews) September 16, 2026
The U.S. has essentially lost the war against Iran, since the U.S. military is unable to leave the region without surrendering a new toll regime to Iran for tankers transiting the area. Major U.S. bases in the Middle East have been decimated, according to new reporting from CBS News.
Fox News reporter Trey Yingst reported Wednesday that a “U.S.-contracted vessel” was hit in the Strait of Hormuz earlier this week. Four Iranian drones and at least one missile struck the vessel and “U.S. personnel” were involved, according to Yingst, and an unknown number of people on the vessel are being treated for injuries.
Airfares in the U.S. have climbed substantially in the past year, according to Kayak’s air travel data dashboard. The average domestic airline ticket costs $397 according to the latest data, while it was just $288 a year ago. And just about everything else in the country is more expensive.
The Fed signaled potentially 2 or 3 rate hikes in the future, with a prediction of at least one more hike before the year is done, according to Heather Long, chief economist at Navy Federal Credit Union.
It seems unlikely that Warsh will help lower interest rates anytime soon, as Trump wants. But it remains to be seen what Trump will actually do about it. Stopping trade with the rest of the world is a completely unhinged idea. But so was knocking down a third of the White House and renaming Lake Ontario as Lake America.
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