Fed Hikes Rates Amid 'Too High' Inflation Warning
The US Federal Reserve raised interest rates for the first time since 2023, defying President Donald Trump's demand for rate cuts. The Fed's Federal Open Market Committee voted unanimously to raise rates by 25 basis points to between 3.75% and 4.00%. Central bank chief Kevin Warsh stressed that inflation has been 'too high' for 'too long', citing the need to combat rising prices.
The decision was a 'serious' but necessary one, according to Warsh. The Fed's Summary of Economic Projections (SEP) indicates that at least one more rate hike is likely before the end of the year, with 12 of 18 policymakers expecting this outcome.
US households and businesses have been battered by years of higher-than-target inflation, exacerbated by Trump's war on Iran, his signature tariff policies, and the ongoing AI boom. The Fed has a dual mandate to deliver maximum employment while keeping inflation at its long-term 2% target.