President Donald Trump is again pressuring the Federal Reserve to lower its benchmark for interest rates, even as most traders have begun to expect a hike at its next meeting this month. The Oval Office spectacle on Aug. 31 came with the usual top-down confidence: Trump said the U.S. economy could grow at a rate as high as 20%, then insisted that even a boom like that should not trigger a Fed hike. Ordinary people, meanwhile, are left to live under the decisions of a small committee that can raise borrowing costs, cool hiring, and decide whose pain counts as policy.
Trump told reporters, “We just announced great numbers, and so now they’re talking about raising interest rates. It’s ridiculous because success in growth does not cause inflation. Inflation’s caused for other reasons.” He also said he is “no fan of inflation” but that the United States should have “the lowest interest rates in the world.” The language is familiar: growth for whom, exactly, and at whose expense? The people who actually absorb higher prices, wages that lag, and the squeeze of debt don’t get a seat in the Oval Office.
Who Holds the Levers
The U.S. economy is growing at a fraction of the rate Trump described. Real gross domestic product, or GDP, increased 1.5% year over year in the second quarter of 2026, according to the latest estimate from the Bureau of Economic Analysis. The Federal Open Market Committee typically raises rates to help tame inflation, which rose faster than paychecks over the year in July and has remained above the Fed’s 2% target for five years. It lowers them to stimulate the job market, which Fed Chair Kevin Warsh described as “stable” on Aug. 28.
That’s the machinery: a central bank, a target range, a labor market described in polished language while inflation keeps chewing through paychecks. The committee has not voted to raise its target range for interest rates since July 2023. It voted to lower the range three times late last year and has left it unchanged so far in 2026. It stands at 3.5% to 3.75%.
At its most recent meeting in July, three members dissented from the decision to hold the rate steady. Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan preferred to raise the target range by a quarter-point. Although they did not dissent from the committee’s last decision, Fed Governors Christopher Waller and Lisa Cook both said in July it may soon need to raise the range if annual inflation does not appear to be on a path back to 2%.
What They Call Stability
Fed Governor Michael Barr became the latest committee member to publicly say he is considering a hike when speaking at a forum in Washington on Sept. 1. Barr said the Fed made “enormous progress” in bringing inflation down from more than 7% in 2022 to a bit higher than 2% in 2024, but that progress stalled last year. “A series of shocks – from tariffs and then the conflict in the Middle East, as well as from the rapid AI buildout – pushed us off course,” Barr said in prepared remarks. “If trends in the data give me some confidence that inflation is moderating on a path to 2 percent, then I think we can take a bit more time to assess our policy stance. However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates.”
The Fed’s preferred measure of inflation showed prices increased 3.7% over the year in July, and officials are still waiting to review inflation and employment numbers for August, which they will receive in the coming weeks and will help inform their next rate decision. With at least six of 12 voting members signaling potential support for a hike and after Warsh said Aug. 28 that policymakers' focus should be bringing down prices, most traders are betting the committee will raise its target for interest rates to a range of 3.75% to 4% on Sept. 16, according to CME FedWatch.
That’s the hierarchy in plain sight. A handful of officials, armed with models and mandates, decide whether the cost of money goes up or down for everyone else. The rest of the country gets to wait for the next announcement.
Markets, Sanctions, and the People Caught in Between
At the Group of 20 finance meeting in Asheville, North Carolina, Treasury Secretary Scott Bessent said the U.S. bond market has outperformed the rest of the world since President Donald Trump's return to office. He made the remarks during a “fireside chat” with a Fox Business host. Bessent said, “It's been the best-performing bond market among major countries in the world.” He also told CNBC's Sara Eisen on Monday that the benchmark 10-year yield is “flat since President Trump came in,” adding, “But we are the best-performing market.”
The comments came as 10-year Treasury yields rose to their highest level in nearly 20 months amid a global bond sell-off that has raised fears about a repeat of the 1997 Asian financial crisis. Bessent said on Tuesday that “what happens over a month doesn't matter.” He also said, “If there were a problem in the U.S. bond market ... then people would be selling U.S. bonds and buying other countries' bonds.”
Bessent has made similar comments throughout the two-day G20 gathering, where he and Federal Reserve Chairman Kevin Warsh have focused heavily on finding ways to spur economic growth. He said the shift in the U.S. 10-year yield is smaller than what other top economies, including the members of the G7 alliance, have experienced since January 2025. CNBC said U.S. bond yields had already been on the rise before the 2024 election, with the 10-year Treasury rising by nearly a full percentage point from a low in mid-September 2024 until Inauguration Day as traders priced in the possibility of faster growth, rising inflation and more debt. One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.
Uncertainty over the Fed's policy direction dovetailed with increased geopolitical turmoil, especially in Iran, where U.S. military strikes around the Strait of Hormuz recently resumed after a hiatus. The conflict has raised oil prices, stoking inflation concerns and adding upward pressure on bond yields. Asked during a press gaggle later Tuesday morning about a spike in Japan's 10-year yield, Bessent said it is “difficult to deconstruct all the aspects that are behind any financial market move, since it's such a multivariable market.” He added, “We have seen kind of global the yield rise,” and said he had spoken with Japanese finance officials in recent days, adding, “I think that the Japanese are taking the right steps.” Bessent did not respond to a shouted question about the rise in the U.S. 10-year yield.
Bessent also said at the G20 that U.S. allies support an economic pressure campaign against Iran, including sanctions on banks used to facilitate Iran's economy. He said efforts are also under way to seize assets abroad belonging to Iranian leaders. The language of pressure campaigns and asset seizures sits neatly beside the talk of growth, as if the same apparatus can tighten the screws abroad while promising stability at home.