Fed Lifts Benchmark Rate, Defying Trump's Calls for Cuts
The Federal Reserve has raised its benchmark interest rate by one-quarter of a percentage point to a range of 3.75% to 4%. This move marks the Fed's first increase since 2023, despite President Donald Trump's calls for lower borrowing costs.
According to Fed Chair Kevin Warsh, 'the Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate.' The decision was unanimous, with all 12 members voting in favor of the increase.
The Fed's action comes after weeks of market expectations that Warsh and other policymakers would act to counter inflation. Despite Trump's pressure to cut rates or leave them unchanged, investors had anticipated an increase following Warsh's warning that inflation could require higher borrowing costs.