Key facts
- A senior White House official stated the administration will respect the Federal Reserve's process and decisions regarding interest rates.
- President Trump has frequently called for the Fed to lower rates since returning to office in January 2025.
- The Fed is meeting to decide whether to raise borrowing costs.
- Inflation has been driven higher by oil prices and strong consumer spending.
- Investors are largely expecting a rate hike from the central bank.
- Long-term Treasury yields have risen to near two-decade highs.
A senior White House official indicated that the administration will respect the Federal Reserve's decision on interest rates, a notable shift from President Trump's consistent calls for rate reductions. Hassett, a top White House aide, stated that whatever the Fed decides, "we’re going to respect the process and understand that he is doing what he and the committee think is correct." This comes as the Fed begins a two-day meeting to determine whether to increase borrowing costs.
President Trump has frequently urged the Fed to lower rates to stimulate the economy, often criticizing former Fed Chair Jerome Powell. However, Hassett's recent comments suggest a softening in the administration's stance, with the aide telling CNN the administration would "100% support" the Fed and that Trump "will defend the independence" of Fed officials. The Fed's decision is anticipated amid rising inflation, influenced by oil prices and robust consumer spending. Investors are widely expecting a rate hike, and any deviation could lead to further volatility in bond markets, where yields have already climbed significantly.