Fed Raises Rates Again to Tame 'Stubborn' Inflation

The Federal Reserve has raised its benchmark interest rate for the first time since 2023 in an effort to quell stubbornly high inflation. The quarter-point increase lifts the Fed's key rate to about 3.9% and could result in higher borrowing costs for mortgages, auto loans, and credit cards.

The move comes as Americans are already struggling with high costs for groceries, gas, and housing. Affordability has taken on a leading role in the upcoming midterm elections, just seven weeks away.

President Donald Trump blasted the decision Wednesday and accused the Fed's top policymakers of trying to hurt him politically. Chair Kevin Warsh emphasized that the economy has shown signs of gathering speed since the central bank decided to keep rates unchanged in late July. Inflation has remained stubbornly above the Fed's 2% target, and he noted there is little sign it is cooling.

'The plain fact is that inflation is too high and has been for too long,' Warsh said. 'We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.'

The Fed next meets in late October, but most economists expect officials will keep rates unchanged then due to the upcoming midterm elections. However, Wall Street analysts now see a rate hike by December as a near certainty.