US Fed raises rates to tackle 'too high' inflation, irking Trump
WASHINGTON: 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 US Federal Reserve abruptly raised interest rates on Wednesday for the first time since 2023, ignoring President Donald Trump's call for rate cuts. Federal Reserve Chair Kevin Warsh emphasized the urgent need to tackle inflation, which has been "too high" and "for too long." The Fed's decision was unanimous, with most policymakers indicating an additional rate hike before the year's end.
Trump, who has frequently clashed with the Fed, labeled the decision a "raise against Trump" and accused the committee of acting politically. The US president has been attempting to fire Fed governors and investigate the previous chair's predecessor in an effort to lower rates and spur economic activity. The Fed's decision comes amid growing calls for a rate increase, as energy prices remain elevated due to the ongoing Iran war.
The Consumer Price Index for August came in at 3.4%, unchanged from July but still well above the Fed's two-percent target. Analysts noted that inflation has forced the Fed's hand, as price pressures remain too elevated and persistent for policymakers to ignore. Meanwhile, US stock markets largely anticipated the rate hike but saw a decline in response, reflecting normal adjustments by investors.
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