US Fed raises rates to tackle ‘too high’ inflation in move sure to rile Trump
WASHINGTON, United States: The US Federal Reserve on Wednesday raised interest rates for the first time since 2023, defying President Donald Trump’s demand for cuts, as central bank chief Kevin Warsh stressed the need to combat inflation that has been “too high” for “too long.”
The Fed’s Federal Open Market Committee voted unanimously to raise rates by 25 basis points to between 3.75 and 4.00 percent, saying the rate hike would support a “timelier return” to its two-percent target for inflation.
Warsh, appointed by Trump, said the decision was a “serious” one, but needed to be taken.
“The plain fact is that inflation is too high, and has been for too long,” he told a press conference.
And Wednesday’s rate hike may not be the last — the vast majority of Fed policymakers indicated that at least one more rate hike was likely necessary before the end of the year, according to their Summary of Economic Projections.
US households and businesses have been battered by years of higher-than-target inflation, and prices have surged in the wake of Trump’s war on Iran, his signature tariff policies and the ongoing AI boom.
Trump has launched an unprecedented assault on the Fed’s independence since taking office, attempting to fire a Fed Governor and launching a criminal probe against Warsh’s predecessor in his quest for lower rates to spur economic activity.
The president’s Republican Party faces a stern test in upcoming midterm elections, with rival Democrats seeking to wrest control of both houses of Congress and economic issues front-and-center for voters.
