Fed Hikes Rates to Combat 'Too High' Inflation Amid Trump Backlash

The US Federal Reserve raised interest rates for the first time since 2023, despite President Donald Trump's demand for cuts. Central bank chief Kevin Warsh stressed that inflation has been 'too high' and 'has been for too long.' The Fed's decision was unanimous, with a rate hike of 25 basis points to between 3.75 and 4.00 percent.

The move may not be the last, as the vast majority of Fed policymakers indicated that at least one more rate hike is necessary before the end of the year. This decision aims to combat inflation, which has surged due to Trump's war on Iran, his signature tariff policies, and the ongoing AI boom.

President Trump reacted angrily to the decision, calling it a 'raise against Trump' and accusing the Fed's rate-setting committee of making decisions for political reasons. The president 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.