Fed Raises Rates to Tackle Stubborn Inflation, Trump Fumes

The US Federal Reserve raised interest rates for the first time since 2023 to tackle stubbornly high inflation, defying President Donald Trump's demand for cuts. The Fed's decision was unanimous and raised rates by 25 basis points to between 3.75% and 4.00%. Fed Chairman Kevin Warsh stressed that the rate hike is necessary to combat inflation that has been 'too high' for 'too long.'

The move may not be the last, with a majority of Fed policymakers indicating at least one more rate hike before the end of the year. The US economy has been battered by years of higher-than-target inflation, and prices have surged due to Trump's war on Iran, his signature tariff policies, and the ongoing AI boom.

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. He 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.

Fed economists raised their forecast for inflation, predicting it will reach 3.7% by year-end, while also increasing GDP growth projections to 2.3%. The move was welcomed by some economists who saw it as necessary to tackle inflation, but others warned that it could dampen economic activity.