Both Sides Criticize Fed Rate Hike...Trump Says "Below 1%", Gundlach Says "Should Have Raised by 0.5%P"

Trump: "Rates Should Be Lowered to 1% or Below"

"Bond King" Gundlach: "Fed Should Have Hiked by 0.50 Percentage Points"

Fed’s Dot Plot Signals Additional Rate Hike Possible This Year

The U.S. Federal Reserve (Fed), the country's central bank, increased its benchmark interest rate by 0.25 percentage points, prompting criticism from U.S. President Donald Trump and top Wall Street bond investor Jeffrey Gundlach, CEO of DoubleLine Capital, from completely opposing perspectives.

Donald Trump's Truth Social

President Trump argued that the U.S. benchmark interest rate should be lowered to below 1% per year, while CEO Gundlach pointed out that the Fed should have raised the rate by 0.50 percentage points in order to curb inflation. This is expected to further intensify the debate between the Trump administration and financial markets regarding the Fed’s future interest rate path.

On September 16 (local time), immediately after the Fed's rate hike, President Trump posted on Truth Social, stating, "U.S. rates should be at 1% or lower," and declared, "The United States is by far the most creditworthy country in the world."

He continued, "Our country is experiencing a boom thanks to new investments," and argued, "If we were to stop trading with every country with which we run a trade deficit – which is most countries – we would earn at least $1.5 trillion annually."

He added, "The word 'deficit' is just a polite way of saying loss," and insisted, "We are supporting almost every country in the world, and this situation cannot continue." He went on to urge, "Lower U.S. interest rates. Hurry."

However, President Trump did not specifically mention or criticize Fed Chair Kevin Warsh, whom he nominated. He has previously stated publicly that he expects Warsh to lower interest rates after taking office.

On the other hand, Gundlach, who is known as the “bond king” on Wall Street, criticized in a CNBC interview that the Fed failed to adequately reflect the seriousness of inflationary pressure.

CEO Gundlach argued that the Fed should have raised the benchmark rate by 0.50 percentage points, not just 0.25, and then observed subsequent economic indicators. He described this as a "stun and done" strategy.

He said, "They should have simply raised it by 50 basis points and watched how the data turned out," pointing out that the inflation problem is still "not being treated seriously enough." His argument is that one strong tightening move would have signaled the Fed's determination for price stability to the market and suppressed inflation expectations.

He also offered a critical assessment of Chair Warsh's press conference. CEO Gundlach said the press conference was "quite poor" and that Warsh's explanations were "opaque."

Meanwhile, at its regular Federal Open Market Committee (FOMC) meeting that day, the Fed raised its benchmark interest rate by 0.25 percentage points from a range of 3.50–3.75% per year to 3.75–4.00% per year. This was the first rate hike in over three years, since July 2023, and all 12 committee members voted in favor.

Chair Warsh explained, "Inflation is too high and has persisted at an elevated level for too long," and said that with this increase, "we are partially withdrawing our accommodative policy." The dot plot released by the Fed indicated the possibility of one more rate hike within the year.

This content was produced with the assistance of AI translation services.