President Donald Trump wants interest rates at “1%, or less.” Yet he says he told Federal Reserve Chair Kevin Warsh, his own pick for the job, to go along with a rate hike: “You might as well vote with the board because it’s not going to matter.”
In other words, the increase had the votes to pass, and a no from Warsh would not have stopped it.
Presidents traditionally avoid discussing upcoming rate decisions with the Fed chair, and Warsh declined to say whether they discussed it.
On Sept. 16, Warsh and the rest of the Federal Open Market Committee voted 12-0 to lift the committee’s target range by a quarter point to 3.75% to 4%, the first increase since 2023. The committee’s statement said inflation “remains elevated.”
What a 1% rate would mean for savers
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, rose 3.4% over the 12 months ending in August. Excluding food and energy, it rose 3.0%.
Put those numbers next to the president’s target. A savings account yielding 1% while prices climb 3.4% loses about 2.4 percentage points of buying power a year. On $50,000, that is roughly $1,200.
The Fed doesn’t set deposit rates directly, but banks tend to move savings and certificate-of-deposit yields in the same direction as the Fed’s benchmark.
Older savers are already feeling the pressure. A LiveCareer survey of workers 50 and older found that 91% say inflation or tariffs have affected their retirement plans or outlook, and 61% are regularly withdrawing from retirement accounts.
The case on the other side
Lower rates would help borrowers. Credit cards, home equity lines of credit and other variable-rate debt would likely cost less, and Trump has argued the United States “should be paying the lowest interest rate in the world.”
The Fed’s reasoning runs the other way: Its statement said the increase “will support a timelier return to the Committee’s 2 percent goal.” Tariffs have been a source of price pressure, complicating the central bank’s job.
Fed officials’ median projection points to one more quarter-point increase before the end of 2026. The next decisions come Oct. 27-28 and Dec. 8-9. If the Fed holds to that path, savings yields could stay well above 1%. If the White House prevails, they probably would not.
Where savers can look now
Savers who want to keep pace have options worth comparing. Switching to a better bank account is one of the easiest ways to gain an edge. If you’re still at a traditional brick-and-mortar bank, you may be paying monthly checking fees while earning almost nothing on your savings.
SoFi offers a combined checking-and-savings account with no account fees. With eligible direct deposit or $5,000+ in qualifying deposits every 31 days, you can earn 3.30% APY on savings — many times the national average — plus a boost of 0.90% APY for up to six months. (APYs are variable and can change at any time.)
New members who set up qualifying direct deposit may also be eligible for a cash bonus of up to $400, based on the amount deposited. Terms apply — see details.
Earn up to 3.80% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.10% APY as of 5/28/26) for up to 6 months. Open your first SoFi Checking and Savings account between 3/31/26 and 12/31/26, then within 60 days of account opening receive an eligible direct deposit OR $5,000 or more in qualifying deposits. You must maintain eligible direct deposit or $5,000 in qualifying deposits every 31 days to keep the Boost, for up to 6 months. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
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