Trump: interest rates should come down with new Fed chair

Trump: interest rates should come down with new Fed chair

Trump: Interest Rates Should Come Down with New Fed Chair

U.S. President Donald Trump has repeatedly asserted that interest rates will decline following his nomination of Kevin Warsh as the next Federal Reserve chair, a role that carries significant influence over monetary policy but does not operate unilaterally. Trump stated during a January speech in Iowa, “You’ll see rates come down a lot,” and reiterated in an NBC interview that Warsh would align with his preference for lower rates, noting, “If he said [he wanted to raise rates], he wouldn’t have gotten the job” according to Reuters.

Warsh, a former Fed Board member and FOMC participant, has a mixed policy history. While he supported early rounds of quantitative easing during the 2008 crisis, he later became a vocal critic of expansive monetary policies, advocating for smaller balance sheets and inflation control as TD Securities reports. Analysts at TD Securities note that Warsh’s nomination introduces uncertainty, as his dovish alignment with Trump’s agenda may clash with his hawkish past. “He’s between a rock and a hard place,” said Gennadiy Goldberg, TD Securities’ U.S. rates strategist, emphasizing that Warsh will need to build credibility with the FOMC to push for rate cuts according to TD Securities analysis.

The Fed chair’s authority, however, is not absolute. The Federal Open Market Committee (FOMC), comprising 12 members, collectively decides interest rates. Historically, Fed chairs have rarely been outvoted, according to NPR analysis, but this reflects consensus-building rather than unilateral control. Alan Blinder, a former Fed vice chair, explained that chairs wield soft power through communication, agenda-setting, and institutional influence, not formal authority as NPR explains.

While Trump and Treasury Secretary Scott Bessent have prioritized lowering mortgage rates—partially achieved through Fannie Mae and Freddie Mac initiatives—experts caution that the Fed’s dual mandate of price stability and employment growth will ultimately shape policy. TD Securities projects three rate cuts in 2026, with 10-year Treasury yields potentially falling to 3.5% by year-end according to TD Securities projections.

The outcome hinges on Warsh’s ability to navigate FOMC dynamics, economic data, and Trump’s political pressures. As NPR noted, a Fed chair’s effectiveness depends on respect and consensus, not just presidential backing as NPR reports. For now, markets await clarity on whether Warsh’s tenure will align with Trump’s vision or reinforce the Fed’s independence.

(https://www.reuters.com/business/trump-predicts-interest-rates-will-come-down-after-he-announces-fed-chair-pick-2026-01-27/): Reuters, NBC News
(https://www.tdsecurities.com/ca/en/tdc-two-cents-what-a-new-fed-chair-may-mean): TD Securities
(https://www.npr.org/sections/planet-money/2026/02/10/g-s1-109375/how-much-power-does-the-fed-chair-really-have): NPR