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Welcome to The Logoff: President Donald Trump’s Fed gambit has officially failed.
What happened? On Wednesday, the Federal Reserve voted to raise interest rates by a quarter of a percent, citing ongoing inflation. The rate hike was widely expected, and normally it would be largely unremarkable (at least for this newsletter, which doesn’t generally cover monetary policy).
In this case, however, it’s also a direct rebuke to Trump, who has spent the last year-and-a-half-plus demanding rate cuts — and plotting a Fed takeover to get them.
How has Trump gone after the Fed? It’s a long list, but the two most significant episodes are Trump’s efforts to force Fed governor Lisa Cook from her seat to stack the Fed board in his favor (still ongoing) and the Justice Department’s coercive criminal investigation against former Fed chair Jerome Powell (since ended).
Neither succeeded, but Trump likely thought his goal was in reach when the Senate confirmed his nominee for Fed chair, Kevin Warsh, in May. On Wednesday, however, Warsh — several months into a four-year term as Fed chair — bucked Trump’s persistent demands by voting for the rate hike.
Why does this matter? Trump successfully exerting political control over the Fed would be extremely bad news for just about everyone. Lowering interest rates is a great way to juice the economy in the short term — exactly what he might want as his party faces down a potential midterm wipeout. But it could seriously damage the economy’s long-term health too, which is why the Fed is designed — successfully, as it turns out — to be insulated from partisan politics.
What else should I know? So far, Trump’s response to the hike has been muted, at least by his standards.
He’s threatened to take more drastic action, however: Earlier this month, he said he would suspend trade relations “WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT” if the Fed went through with its rate hike.
It’s not clear whether he’ll make good on that threat — but one way or another, we likely haven’t heard the last of Trump’s Fed vendetta.
And with that, it’s time to log off…
Here’s a small bit of good news from New York: After an announcement by Mayor Zohran Mamdani earlier this year, the city is rolling out new, free public restrooms this week as part of a pilot program to address a longstanding complaint by New Yorkers.
Have a great evening and we’ll see you back here tomorrow!
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