Trump Calls Rate Hikes “Ridiculous” After Warsh’s Hawkish Remarks

Following Kevin Warshs hawkish remarks last Friday, U.S. President Donald Trump called the prospect of raising interest rates “ridiculous,” while adding that Warsh would “do what he has to do.”

Speaking on Monday, Trump said he has “a lot of respect” for Warsh and that “he will do what he has to do.” Trump added, “In my view, we should be paying interest rates far below those anywhere else in the world. Raising rates is ridiculous.”

Warshs hawkish comments at the Jackson Hole symposium last Friday prompted markets to raise the implied probability of a September rate hike to roughly 60%. Barclays now expects the Federal Reserve to raise rates twice this year, in September and December, reversing its previous forecast that the Fed would deliver no further rate hikes this year.

Speaking at a G20 meeting on Monday, Warsh said the global economy is entering a period of surging investment that could provide fresh momentum for economic growth. He noted that discussions among policymakers had long centered on the idea of a “global savings glut,” but argued that the situation has now reversed.

Warsh also said that his previous working relationship with Treasury Secretary Scott Bessent had proven productive. Bessent, speaking the same day, said that he and Warsh were aligned in their views on the bond market, while declining to speculate on what the Federal Reserve might do next.

Bessent also signaled that the United States would continue to exert pressure on Iran, while arguing that U.S. Treasuries remain the worlds best-performing sovereign bonds and reiterating that he and Warsh are “on the same page.” He also pushed back against criticism from his former mentor, Stanley Druckenmiller.

Bessent said the objective of maintaining pressure on Iran is to bring Tehran back to the negotiating table, adding that Iran‘s economy “does not have to collapse.” He argued that stronger economic growth is ultimately the fundamental solution to the world’s heavy debt burden and declined to speculate on the Federal Reserves next policy move.

Bessent also disclosed that he had discussed the bond market with Druckenmiller, saying the veteran investor frequently changes his views and “doesnt like losing money.” He suggested that Druckenmiller may have been facing losses on the day he published a critical article, while emphasizing that “markets cannot dictate policy.”

Bessent further said that the Treasury‘s buybacks of longer-dated debt were intended to “send a signal” to the market. He indicated that the administration’s fiscal consolidation plan could be delayed by several weeks or months and expressed confidence that the Japanese government would take steps to support a stronger yen.

Warsh‘s hawkish stance has pushed market expectations toward further monetary tightening, while Trump’s public opposition to higher interest rates highlights the growing policy tension between the administration and the Federal Reserve.

Warshs argument that a global investment boom is replacing the long-standing savings glut, combined with his alignment with Bessent on bond-market and fiscal issues, suggests there may still be room for coordination on certain policy priorities.

Meanwhile, Bessent‘s continued economic pressure on Iran and the Treasury’s signaling through long-duration bond buybacks reflect a dual-track strategy of maintaining negotiating leverage while seeking to stabilize government financing costs.

In the near term, market sentiment is likely to be driven by expectations surrounding the September FOMC meeting and developments in negotiations with Iran. Over the medium to longer term, the balance among the interest-rate path, implementation of fiscal consolidation, and geopolitical risks remains a key source of uncertainty. Investors should closely monitor shifts in policy communication and incoming economic data for further signals on the direction of markets.

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