The U.S. Federal Reserve plans to raise the discount rate despite Donald Trump’s demands that it be lowered.
At its first meeting under new Chair Kevin Warsh, the Fed left the rate unchanged at 3.75%. It has been at that level since December 11, 2025. However, the regulator forecasts that by the end of 2026 the rate will be raised to 3.8%.
The discount rate is the interest rate at which the Federal Reserve lends to U.S. banks. In effect, it is the “cost of money,” influencing minimum interest rates on loans for businesses and individuals. The lower the rate, the easier and cheaper it is to obtain credit, which usually supports economic growth. The downside is the risk of accelerating inflation. That is why, when authorities and regulators are concerned about rising prices, the rate is usually raised, even if this slows the economy.
Trump had previously criticized former Fed chair Jerome Powell for refusing to lower the rate. That makes Kevin Warsh’s decision, after being appointed with Trump’s support, to keep it unchanged look unexpected.
The Fed’s position, however, is explained by inflation. In May 2026, prices rose by 4.6% year on year, significantly above previous readings: annual inflation stood at 2.6% at the end of 2025. The Fed expects inflation to slow to 3.6% by the end of the year, but that is still well above the regulator’s long-term target of 2%.
In such a situation, lowering the rate could further increase inflationary pressure, so for the Fed such a move would be illogical.
Trump himself has not yet commented on the Federal Reserve’s decision and forecasts.
Senate Confirms Kevin Warsh as Fed Chair After the Most Politicized Vote in History
Trump Launches a Direct Attack on the Fed’s Independence
By the End of 2025, the U.S. Economy Sharply Slowed, GDP Growth Fell, and Inflation Accelerated
The U.S. Is Losing Investor Confidence—But the Dollar Remains Irreplaceable