White House trade adviser Peter Navarro on Wednesday sharply criticized the Federal Reserve's decision to raise its benchmark interest rate, calling the move "a bad decision" and questioning the central bank's timing.
The Federal Open Market Committee, led by Fed Chair Kevin Warsh, voted unanimously to increase the federal funds rate to a range of 3.75% to 4%. In a statement, Warsh said the hike would "support a timelier return" to the Fed's 2% inflation target.
Navarro, in an interview with NewsNation's Blake Burman on "The Hill," said Warsh had previously assured him he would not raise rates. He also accused the Fed of becoming politicized under Warsh's predecessor, Jerome Powell.
"I didn't think Kevin Warsh was the right guy," Navarro said. "And I was certainly in the minority there. But that's a bad decision. And if they raise rates like five days before the election, you know it's political. Shame on them."
The adviser argued the hike would take "money out of your pocket," leading to reduced consumer spending and an economic slowdown.
Burman referenced a Sept. 4 Truth Social post in which President Trump threatened to cut off trade with countries where the U.S. runs a deficit. Navarro sidestepped the question, saying the president speaks "for himself." He added, "But what I can tell you is two things: One, it was a very bad decision by the Fed. Two, we have trade deficits with a whole bunch of people that cheat us, and we are cracking down on that. And that's good for America."
Navarro reiterated the administration's message that the U.S. is experiencing a "manufacturing boom," and claimed working-class Americans "are better off under Trump" than they would be if Democrats gained control of either chamber of Congress after the November midterms.
Meanwhile, President Trump took to Truth Social just two hours after the Fed's announcement, demanding that interest rates be kept at 1%. He wrote: "If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. The word 'Deficit' is nothing more than a fancy word for LOSS. 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!"
The rate hike was widely anticipated by markets as a measure to combat inflation, which remains above the Fed's target amid the ongoing war with Iran. This decision comes amid heightened pressure from the White House for rate cuts, and underscores the tensions between the administration and the central bank.
Navarro's comments also highlight the broader debate over the Fed's independence, a topic that has been central to Warsh's defiance of Trump's demands. The political fallout from the rate hike is likely to continue as the election approaches, with Navarro and other officials framing the Fed's actions as detrimental to American workers.
As the administration pushes its economic agenda, Navarro's remarks reflect a growing divide over monetary policy, with implications for the upcoming midterms and beyond.
