Key Takeaways
- Trump is pushing for lower interest rates, but Warsh has stayed firm through the last two FOMC meetings.
- After Warsh’s Jackson Hole speech, CME FedWatch now puts the chances of a September rate hike at 66.4%.
- Bitcoin dropped nearly 1% to around $77,778 as concerns over Fed rates also put pressure on Wall Street.
Trump Wants Cheaper Money as Warsh Weighs a Rate Hike
In the Oval Office on Monday, Trump was asked whether he opposed Warsh considering a rate increase. The President told the reporter he has not spoken with Fed Chair Kevin Warsh about the rate and he would not try to talk him out of one. “I have a lot of respect for him, and he’ll do what he has to do,” Trump told the press. On the other hand, Trump then said that the United States “should have the lowest interest rates in the world,” and when the U.S. economy is doing well, the central bank should cut borrowing costs.
Trump’s message has been consistent with his message since his statements against former Fed Chair Jerome Powell, calling him “too late.” With Warsh, the comments are a bit different than Powell’s, with praise first and a push for cheaper money after the fact. In mid-August, Trump said the federal funds rate was “artificially high” and shared his opinion that the central bank should cut rates as soon as possible.
Warsh Holds the Line, Jackson Hole Keynote Sends Rate-Hike Odds Climbing
So far, Warsh is not following the advice. During the newly appointed Fed Chair’s FOMC meetings in June and July, Warsh and the board left the rate unchanged. Three of the board members wanted a quarter-point hike. Warsh has also removed forward guidance from the Fed’s playbook and stressed that markets should read the economy instead of waiting every month to see what the central bank plans to do. Even before Warsh took his position, the market considered him hawkish, and his first Jackson Hole speech cemented that perspective even further.
Warsh stressed that inflation prints were higher than what the central bank wants, but he also noted that they “do not tell me that underlying trends have meaningfully improved.” Warsh insists that “the Fed’s predominant focus right now should be on prices.” One hour after the speech, markets took a dip, and CME’s Fedwatch tool, which aggregates futures markets based on the federal fund rate expectations, signaled a hike could be in the cards.
Fedwatch Odds Hit 66% as Cramer Sounds the ‘Unholy Developments’ Alarm
Chances rose to 57% and by Tuesday, Sept. 1, 2026, odds stand at a 66.4% chance the Fed will increase the rate by a quarter-point. Prediction marketplace bets also show the same sentiment.
CNBC Mad Money host Jim Cramer explained on X that he does not see how interest rates can fall now that Warsh is Fed chair. “I don’t see how rates can go down now that we see Warsh as a serious practitioner, the president unable to stop the war, the allies in the region depending almost entirely on us, and oil stocks headed back up quickly. Unholy developments,” Cramer wrote on the social media platform.
Wall Street, Gold, and Bitcoin Sink as Macro and Rate Fears Bite
Meanwhile, Wall Street woke up on Tuesday in a bad mood, with the Dow Jones Industrial Average dropping 374.09 points. The NYSE Composite followed with a decrease of 123.23 points. The tech-heavy Nasdaq Composite took a smaller hit with a 31.54 loss, and the Standard & Poor’s 500 index slid by roughly 25.62 points. Precious metals like gold and silver are down on Tuesday too, as gold has lost 2.44% over the last 24 hours, trading for $4,339 per ounce. As far as digital gold is concerned, bitcoin’s price is also down at the start of Wall Street’s open, losing nearly a percentage point at $77,778 per coin.
