US Fed raises rates to tackle ‘too high’ inflation, irking Trump

The US Federal Reserve raised interest rates on Wednesday for the first time since 2023, despite President Donald Trump's call for rate cuts. Federal Reserve Chairman Kevin Warsh, appointed by Trump, stated that the decision was necessary to combat inflation that has been "too high" for "too long." The Fed's Federal Open Market Committee unanimously voted to increase rates by 25 basis points, bringing the range to between 3.75% and 4.00%.

Warsh indicated that this may not be the only rate hike this year, as the majority of policymakers believe at least one more increase is needed by the end of the year. Trump reacted angrily to the decision, demanding the Fed lower rates "FAST" in a social media post. The Republican Party faces a crucial midterm election, with economic issues like inflation taking center stage.

The Fed has been holding rates steady since January, but recent calls for a hike have grown as the Iran war continues and prices remain elevated. Analysts argue that inflation has forced the Fed's hand, as price pressures remain too high and persistent for policymakers to ignore. The Fed also raised its projections for inflation and GDP growth, though the decision has had mixed reactions in the stock market.