Federal Reserve Defies Trump with Rate Hike Amid High Inflation

The U.S. Federal Reserve defied President Trump by hiking its key interest rate for the first time in three years, aiming to curb stubbornly high inflation.

The quarter-point increase lifts the Fed's key rate to about 3.9 per cent and could result in higher borrowing costs for mortgages, auto loans, and credit cards.

Fed Chair Kevin Warsh said that while the job market remains resilient, inflation has stubbornly remained above the Fed's two per cent target for years.

The rate hike marks a turnaround for Warsh, who was appointed by Trump and took over the top job in May. Warsh often suggested last year when under consideration by Trump that the Fed could reduce its key rate, echoing the president's call for lower borrowing costs.