President Donald Trump has again criticized the Federal Open Market Committee, accusing board members of having bad intentions and preventing Chair Kevin Warsh from lowering interest rates. The Powell-led FOMC lowered the federal funds target rate on six occasions from September 2024 to December 2025, to its current range of 3.5% to 3.75%, but Trump insists rates should be cut to 1% or lower. However, two of Trump's own policies are driving inflation well above the Fed's 2% target: sweeping tariffs reimposed on dozens of countries after the Supreme Court struck down earlier measures in February 2026, and the Iran war that closed the Strait of Hormuz, sending trailing 12-month inflation to a three-year high of 4.2% in May. With inflation persisting, Warsh and the FOMC are now considering rate hikes, which could threaten the AI-fueled stock market rally by raising corporate borrowing costs.
Article discusses Fed rate policy; potential rate hikes would raise the policy rate, so the effective federal funds rate is expected to rise.
Potential rate hikes and inflation concerns would likely push 10-year yields up.