President Donald Trump blindsided many of his closest advisers with a secret phone call to the nation’s top central banker, insiders have claimed.
Earlier in his second term, Trump spent months publicly bashing then-Federal Reserve chair Jerome Powell for refusing to slash interest rates. So when his successor, Trump ally Kevin Warsh, raised them for the first time in three years on Wednesday, many expected a bloodbath.
But no. A more level-headed Trump prevailed—if only after a customary Truth Social crashout. “I talked to Kevin, and I said, ‘You might as well vote with the board because it’s not going to matter,’” Trump told reporters Wednesday evening, signaling that he had spoken to Powell’s replacement ahead of the decision.
News of this phone call, however, surprised some of his closest aides, according to the Wall Street Journal, which cited “people familiar with the matter.”
These sources told the Journal that many of these close advisers only learned of the call when Trump told reporters before a rally in North Carolina.
He appeared to protect Warsh, suggesting that he is bound by an overtly political Federal Open Market Committee, the 12-member policymaking board.
“I’m relying on Kevin, but he’s got, you know, a very tough board. He’s got a board that was put there by a lot of other people, and the interest rates are too high. They’re not appropriate, and I told, I talked to Kevin and I said you might as well vote with the board because it’s not going to matter,” he said.
“The board is very hostile. They’re very political. They’re doing the wrong thing. They’re a bunch of politicians or are people put on by politicians and it’s a shame because it’s too high an interest rate.”
“They’re raising the rates to make Trump do as bad as he can possibly do,” he said. “The problem they have is that we have the greatest economy in history.”
One top economist said Trump was trying to save face with his excuse. Michael Strain, an economist at the American Enterprise Institute, called the suggestion that Warsh is not leading his own committee “both outrageous and false.”
Earlier Wednesday, Warsh and the other 11 members voted unanimously to raise rates. “The plain fact is that inflation is too high and has been for too long,” Trump’s handpicked chairman said at a press conference. “The committee’s unanimous vote shows our resolve to achieve price stability on a timelier basis.”
Asked by a reporter whether he had spoken with the president, Warsh declined to say. And when pressed on the Fed’s independence, he offered another weak defense.
“Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street,” he said, responding to a question about Trump’s threat to cut trade ties with countries if the Fed raised rates.
“We let people that do trade policy and fiscal policy stay in their lane, too,” Warsh said.
One senior White House official told the Journal that Warsh and Trump spoke days before the board met. They added that there had been anxiety about how the president might react to a rate increase.
In fact, such was the anxiety that senior officials huddled around and watched Trump’s remarks to reporters as they relaxed in Ned’s, a private members’ club in D.C. There was a sense of relief, people who were there said.
Warsh appears to have passed the first test. However, if he decides to raise rates again in October, right before the midterm elections, he could face Trump’s ire, a senior administration official said.
He is already getting the Powell treatment from some quarters. On Thursday, White House senior counselor Peter Navarro said that the move risks “a recession or worse,” and name-checked Warsh.
Navarro said previous Fed chairs had refrained from raising interest rates because they understood that an energy shock was “contractionary by its very nature.”
He cited an energy shock during Alan Greenspan’s tenure around the 1990-91 Gulf War and another in 2007-08 under Ben Bernanke, saying both chairs held rates steady rather than raising them.
“For me, it’s inexplicable that the Fed and Kevin Warsh do not understand that history,” Navarro said. “What it’s doing is ahistorical and bad economics.”
Trump had long sought Powell’s ouster so that he could bring someone in who would fall in line with his desires, despite the Fed’s independence from the White House.
The president announced Warsh as his pick in January to replace Powell after his term ended in May, promising that the former Fed governor would make a great Fed chair—“maybe the best.”
“On top of everything else, he is central casting, and he will never let you down,” Trump wrote on Truth Social.
Warsh was working for Morgan Stanley in Times Square when the Sept. 11, 2001, terror attacks rocked New York City. He said the experience pushed him to pursue a career in government.
In April 2002, President George W. Bush named Warsh as a special assistant to the president for economic policy. He served in a variety of White House positions and, by 2006, was on the Federal Reserve Board of Governors.
At just 35, he was the youngest ever governor in the Fed’s history.
Some grumbled that he was too young and too inexperienced, and that his mega-rich in-laws, the Lauders, boosted his career.
He met Jane Lauder, granddaughter of cosmetics mogul Estée Lauder, at Stanford in the early ’90s before he went on to earn his JD at Harvard. They married in 2002, the same year he joined Bush’s inner circle of economic-policy advisers.
His father-in-law, Ronald Lauder, was a major Republican donor before he cooled on MAGA to focus on philanthropic efforts, at the behest of his children.
The 82-year-old, who has an estimated net worth of around $4.9 billion, had donated $5 million to MAGA Inc., a super PAC backing Trump, in March 2025. He previously handed $200,000 to Trump’s 2024 presidential campaign.
He also donated another $1 million to a super PAC opposing Democratic socialist Zohran Mamdani’s mayoral campaign. Lauder’s ties to Trump date back decades, and he is credited with putting the idea in the president’s head to try to purchase Greenland back in 2018.
