Trump demands '1%, or less' as Bessent intervenes to lower yields

Hassett says the Fed should stay out of elections

President Donald Trump demanded interest rates of “1%, or less” on social media after the Federal Reserve’s first rate increase in three years, while Treasury Secretary Scott Bessent separately told market participants they could bet against his effort to bring down long-term Treasury yields, the Guardian reported.

The Fed’s rate hike came as inflation has remained above the central bank’s 2% target for over five years and followed repeated public calls from Trump and his economic advisers for the central bank to cut borrowing costs.

After Wednesday’s announcement, Trump wrote on social media that “Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World.” He again demanded officials “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”

The Federal Open Market Committee approved the rate increase unanimously on Wednesday, with Fed Chair Kevin Warsh presiding. “Today’s action starts to show that we’re serious about this,” Warsh said at his post-meeting press conference, referring to inflation.

Trump’s pressure on the central bank has escalated in recent weeks. Earlier in September, Trump highlighted U.S. labor-market resilience and threatened to “STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT” unless the Fed cut rates, the Guardian reported. The Guardian also reported that Trump has made a “promise” of “$5,000 a head if he wins the midterms.” On Wednesday, Trump again threatened to stop trading with countries with which the US has a trade surplus, the Guardian reported. Trump has yet to publicly criticize Warsh in the way he attacked his predecessor, Jerome “numbskull” Powell.

White House economic adviser Kevin Hassett addressed the rate decision on Fox News, telling viewers that “if you want an independent Fed, then one thing the Fed does is it stays out of the way of elections.” The rate hike came weeks before midterm elections that will determine whether Republicans retain control of Congress.

Bessent’s parallel effort to push long-term yields lower marks a reversal from his earlier profile in financial markets. Bessent built his reputation in 1996 as part of the team built by George Soros and Stanley Druckenmiller that pushed the British pound out of the European Exchange Rate Mechanism, the Guardian reported. That earlier trade profited when British ministers could not overcome a market determined to sell. On Wednesday, Bessent took the opposite side of that earlier trade, working to buy enough Treasuries to bring long-term interest rates down.

Financial markets reacted to the Fed’s decision. The S&P 500 index closed 0.4% lower on Wednesday afternoon as investors priced in expectations that the Fed would raise rates again in December and twice in 2027, the Guardian reported. The yield on the 10-year Treasury bond rose sharply on Wednesday, surpassing 5%, the Guardian reported. Federal Reserve Economic Data recorded the 10-year yield at 4.94% as of September 19.

The federal budget deficit is likely to exceed $2 trillion this year, the Guardian reported. The Fed’s rate hike contrasted with other Trump administration initiatives, including broad tariffs on imported goods and an ongoing war involving Iran that has affected energy markets, the Guardian reported.