Fed Defies Trump, Hikes Interest Rates to 4% Amid Inflation Fears

The Federal Reserve raised interest rates to 4% in its first hike since 2023, defying pressure from President Trump and other high-ranking officials.

Markets had priced in only about 60% odds of a hike after the August jobs report came out. However, Fed Chair Kevin Warsh took the stage at Jackson Hole and warned that the central bank still had 'work to do' on inflation.

The timing could hardly be worse for the White House, as the 10-year Treasury yield touched its highest level since July 2007 at 5.01% just hours before the vote.

Nvidia and other AI-linked stocks are expected to be hurt first by the higher discount rate, which shrinks the present value of profits still years away.