Kalshi traders are pricing an increased chance that President Donald Trump will publicly criticize Federal Reserve Chair Kevin Warsh following the central bank's latest interest-rate decision.
The market prices a 62% chance of Trump publicly criticizing Warsh before 2027. The Sept. 18 price is 28%.
For informational purposes only. Not trading advice. See full disclaimer below.
Fed interest rates
The Federal Reserve raised its benchmark interest rate by a quarter percentage point Wednesday, its first increase since 2023, as policymakers moved to confront inflation that remains above the central bank's 2% target. The unanimous vote pushes the federal funds rate to a range of 3.75% to 4%. Kalshi traders had priced an 88% chance of the increase ahead of Wednesday's announcement. The move runs counter to Trump's repeated calls for lower interest rates.
Earlier this month, President Trump posted a call for lower interest rates on his Truth Social account following the release of a jobs report showing the economy added 162,000 jobs in August.
“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” President Trump wrote. “A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT…Very simple! We should have the LOWEST rate of any country in the World, like ‘the old days.’”
President Trump has also intensified his pressure on the central bank in recent weeks. The New York Times reported that President Trump recently posted an ultimatum on his social media account to “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
President Trump and Jerome Powell
President Trump repeatedly criticized former Fed Chair Jerome Powell over interest-rate policy.
The BBC reported in April on Trump's repeated criticism of Powell shortly before Powell left the chairmanship.
President Trump repeatedly attacked Powell personally, calling him a “terrible Fed chair,” a “numbskull” and a “moron,” while criticizing his handling of interest rates.
“Jerome ‘Too Late’ Powell has done it again!!! He is TOO LATE, and actually, TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair…He is costing our Country TRILLIONS OF DOLLARS, in addition to one of the most incompetent, or corrupt, renovations of a building(s) in the history of construction! Put another way, ‘Too late’ is a TOTAL LOSER, and our Country is paying the price!”
President Trump has also blamed former President Joe Biden for Powell's appointment, although Trump originally nominated Powell as Fed chair in 2017 during his first term.
Kevin Warsh’s credibility
The decision has also raised questions about Warsh's credibility and the Fed's independence.
CNBC’s Steve Liesman reported that the Fed’s decision on interest rates could also affect his credibility as Fed Chair.
“By calling so publicly for rate cuts and picking a Fed chairman whom he suggested was on board, the president undermined his own chair’s credibility from day one,” Liesman wrote. “The proof of this came from Warsh’s first congressional testimony where he said a sign of his independence came in his failure so far to cut rates as the president has desired.”
Wednesday's decision provided an early test of how Warsh balances inflation concerns with political pressure for lower rates.
“Warsh would be unlikely to hike solely because of the credibility issue,” Liesman wrote. “But it could play a factor if it’s a close call, where the new chairman and the Fed would have more to lose by not hiking.”
The takeaway:
Kalshi traders now predict
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