Trump Says He Talked to Warsh. What Does That Mean for Fed Independence?
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Did President Trump really discuss the Fed rate hike with Chairman Powell?
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Mm.
Mm-hmm. President Trump said he talked to Walsh before yesterday's rate decision, raising new questions about the Fed's independence. Plus, House lawmakers head home ahead of the elections. Some critics say they should be passing more bills.
There have been around 104 laws that have been enacted in the current Congress, which is putting it at pace for fewer than any past Congresses since the Civil War.
And the UK's King Charles wades into the AI safety debate. It's Thursday, September 17th. I'm Alex Ossola for the Wall Street Journal. This is the PM edition of What's News? The top headlines and business stories that move the world today.
Today, investors are still processing the Fed's latest rate decision and Chairman Kevin Walsh's press conference. One closely watched aspect was what it meant for Walsh's relationship with Trump. And whether the Fed can withstand pressure from the president.
What does the Trump‑Powell conversation mean for the Fed’s independence?
During the press conference following the decision announcement, Walsh repeatedly told reporters that he didn't quote have anything for you on discussions with Trump, but he reiterated the Fed's independence.
Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two way street. We let people that do trade policy and fiscal policy stay in their lane too. That's how we can stand up here and call him the way we see him.
But then Trump complicated this picture. Yesterday evening, Trump told reporters that he had talked to Warsh about this decision before it was announced.
And I said you might as well vote with the board because it's not gonna matter. Uh the board is very hostile. They're very political, they're doing the wrong thing. They're a bunch of politicians or people put on by politicians.
For more, I'm joined now by WSJ Washington Bureau Chief Damien Paletta. Damien, we just heard President Trump's comments. What do we know about this conversation between him and Warsh?
Now, this is only President Trump's version of the conversation. We don't know whether the conversation happened the day they decided to raise rates, or perhaps earlier, maybe the day before or a week before. All we know is that President Trump said they talked about this interest rate decision. So just what President Trump said, if true, would be an incredible conversation and potentially a breach of this independence that has built up between the Fed and the White House for Many decades, but right now we only have the White House's version of this conversation. The Fed has not weighed in to either confirm this or give an alternate version of the conversation.
Some investors interpreted yesterday's decision as a sort of reassertion of the Fed's independence because it goes against President Trump's previous statements. Does this conversation now call that into question?
Why did House Speaker Mike Johnson send lawmakers home early before the election?
What's really interesting is this was this a one-off? Was this just Kevin Walsh saying, Hey, listen, I gotta raise interest rates. I just want you to understand where I'm coming from so that President Trump doesn't attack the Fed, which the President did not attack the Fed, you know, to Kevin Walsh's credit. However, is this gonna happen every time there's a Fed meeting? The Fed chair, Kevin Walsh, is gonna call the White House and either explain his decision or ask the White House's input on the decision. That That's a real slippery slope for two reasons. One, it gives the president, in this case President Trump, the idea that he has some say in interest rate policies.
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Chapters
8 chapters
1
Did President Trump really discuss the Fed rate hike with Chairman Powell?
0:00–1:30
2
What does the Trump‑Powell conversation mean for the Fed’s independence?
1:30–3:11
3
Why did House Speaker Mike Johnson send lawmakers home early before the election?
3:11–5:01
4
How many bills has the current Congress actually passed and why does it matter?
5:01–6:54
5
What are businesses doing about rising energy costs and price‑raising pressures?
6:54–8:48
6
How is King Charles influencing the global debate on AI safety?
8:48–10:50
7
Why is Mastercard rolling out an AI‑powered shopping bot now?
10:50–12:56
8
What’s the significance of GM supplying parts for Lockheed Martin’s Patriot missiles?
12:56–15:03