Trump disclosed, "I talked to Kevin. I said, 'You'd better vote with the committee; the result won't be any different anyway.'" He told Walsh, "Do what you want to do," "I trust Walsh, but he is facing a very tough committee." However, Trump also publicly called for interest rates to be lowered to 1%.

Written by: Long Yue, Wall Street Insights

U.S. President Trump stated that before the Federal Reserve's decision to raise interest rates, he had a phone conversation with Federal Reserve Chair Walsh and told him, "Do what you want to do."

On September 16, local time, according to the Wall Street Journal, Trump said on Wednesday when asked if he trusts Walsh, "I trust Kevin. But he is facing a very tough committee," "I talked to Kevin. I said, 'You'd better vote with the committee; the result won't be any different anyway.'" Trump added, "I said, 'Do what you want to do.'"

The Federal Reserve voted unanimously on Wednesday to raise the target range for the federal funds rate by 25 basis points to 3.75% to 4%. This is the first rate hike in three years and partially reverses last year's rate cuts, indirectly opposing the White House's position of "not being worried about inflation." Reports indicate that since Walsh has taken over as Federal Reserve Chair, Trump has spoken with Walsh multiple times.

Walsh: Independence is Two-Way

In response to outside doubts about his relationship with the president, Walsh directly addressed the issue at a news conference on Wednesday.

Part of the Federal Reserve's independence is maintaining our own boundaries… Independence is two-way. We keep trade policy and fiscal policy people in their own boundaries, so that we can stand here and speak according to our own judgment.

Trump also stated that he hopes Walsh remains independent.

But at the same time, Trump still insists that interest rates should be lowered. He posted on Truth Social:

Interest rates in the U.S. should be 1%.

Comparison with the Powell Era

Trump's frequent communication with Walsh sharply contrasts with his attitude toward former Chair Powell, whom he publicly criticized multiple times and even considered firing.

Since Walsh took office, Trump has spoken with him several times.

At Walsh's inauguration, Trump clearly stated:

I want Kevin to be completely independent. Don’t look at me, don’t look at anyone. Do it your own way and do a good job.

But less than six months after Walsh's inauguration, Trump proactively made a phone call before the rate hike and publicly shared the contents of the conversation with reporters.

Historical Precedents for White House and Federal Reserve Communication

Contact between the president and the Federal Reserve Chair is not without precedent, but in recent decades, such exchanges have typically been more formal and intentionally kept low-key to avoid the public's perception of presidential intervention in interest rate decisions.

Reports indicate that Trump tends to bypass regular communication channels, using personal phones to keep in touch with various parties, including foreign leaders, corporate executives, and members of Congress.

In the 1960s, contact between the White House and the Federal Reserve was relatively frequent. Afterward, Nixon pressured then-Chair Arthur Burns, leading to the inflation of the 1970s, which prompted both sides to significantly narrow direct contact. By the 1980s, communication with the Federal Reserve Chair was mainly conducted through the Treasury Secretary.

Trump himself stated in a December interview with the Wall Street Journal that he hopes the Federal Reserve Chair consults him when setting interest rates. "I am a smart voice that should be heard," he said.