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Sunday, May 10, 2026
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Trump's Hand-Picked Fed Chair Just Hiked Rates on Every America

Kevin Warsh stood at the podium Wednesday and told the country that inflation is "too high and has been for too long." Then he raised interest rates by a quarter point — unanimously, with every single member of the Federal Open Market Committee voting yes — to a range of 3.75% to 4%. The first rate hike in three years.

The man Donald Trump personally selected to deliver the "lowest rates" in the world just delivered the opposite.

Warsh was supposed to be the fix. Trump nominated him in January to replace Jerome Powell, the Fed chair who spent four years ignoring the administration's economic agenda. The whole point was to install someone who understood the assignment. Instead, Warsh walked into his first major policy decision and told reporters, "Today, the FOMC decided that this standard has not been satisfied" — meaning inflation hadn't cooled enough to justify holding rates steady. When a journalist asked about Trump's position on the hike, Warsh's answer was five words: "I've got nothing for you on a discussion with the president."

That's Washington-speak for "I don't work for you."

The numbers behind the decision tell a specific story. August inflation came in at 3.4%. Consumer prices rose 0.4% in a single month — quadruple July's pace. Warsh cited a statistic that should make every household wince: 54% of the 199 components in the PCE price index had risen more than 3% over the prior twelve months. Core PCE is running just above 3%, still well north of the Fed's 2% target — a target we haven't hit in five years. Gas prices are up more than 45% since the Iran conflict began on February 28.

All but two FOMC members are now projecting another rate increase before the end of 2026. The median forecast has the federal funds rate ending the year at 4.1%, with no cuts anticipated through 2027. That's not a pause. That's a plan.

Trump responded the way you'd expect. He demanded the Fed "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" and insisted the rate "should be 1% or less" because America has the "Best Credit in the World." He called the committee members "clowns." He also claimed he told Warsh to vote for the hike along with the rest of the board because "it's not going to matter" — a face-saving maneuver that fooled exactly nobody.

The S&P downgraded America's credit standing years ago. Canada, Australia, and Germany all carry higher ratings.

Markets weren't impressed with the hike or the drama. The Dow dropped 630 points. The S&P 500 fell 0.4%. The Nasdaq barely moved. Ten-year Treasury yields pushed near their highest levels since 2007. The bond market is pricing in exactly what Warsh telegraphed at Jackson Hole in August: this Fed is going to keep tightening whether the White House likes it or not.

Warsh removed what he called "a dose of accommodation so that financial and credit conditions would be more consistent with our ultimate objectives." Translation: money was too loose, borrowing was too cheap, and the inflation everyone can feel at the grocery store wasn't going to fix itself. He needed confidence inflation was moving toward 2% "clearly and at sufficient speed." He didn't have it.

Seventy-five million people voted for an economic agenda built on growth, low rates, and cheap energy. The unelected board that controls the price of money just told those voters that their priorities come second to a spreadsheet. Warsh had one job. The rate sits at 3.75% to 4%, headed higher, with no relief on the calendar through 2027.

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