Trump Demands Lower Rates Even as Hike Odds Rise: Is He Worried About the Midterms?

President Donald Trump said on Sunday that the United States should pay the world’s lowest interest rates, no matter the data, days before the Federal Reserve’s Wednesday meeting.

Fresh Consumer Price Index figures posted their largest increase in four months. That has pushed traders to raise their bets on a rate hike this week.

Hike Odds Climb as Trump Pushes the Other Way

Markets now assign roughly an 86% probability that the Fed lifts its benchmark rate from 3.5% to 3.75%. That would mark the first increase in three years.

Inflation has also been fueled by tariffs and rising energy costs tied to the war in Iran.

Trump made the remarks at the Irish Open golf tournament in Ireland. He spoke even as his own pick for Fed chair, Kevin Warsh, faces mounting pressure to tighten policy.

“I know more about formulas than anybody, and with the best credit in the world, we make other countries rich.”

Two weeks ago, Trump escalated his pressure campaign in public, threatening to halt trade with deficit countries unless rates come down.

Midterms Add Political Weight to the Decision

The Fed’s meeting lands weeks before midterm elections that could decide control of Congress. A hike risks deepening voter frustration over affordability.

Jeremy Siegel says Trump’s midterm pressure campaign is one of the few forces still blocking a hike. That is despite hike odds going over 850 as of last week’s inflation print.

National Economic Council Director Kevin Hassett said Trump would defend Warsh’s independence regardless of the outcome. He added Trump would not be pleased if rates rise anyway.

Whether the Fed hikes Wednesday may depend less on Trump’s demands than on Warsh’s political room to maneuver.