Warsh Defies Trump with Surprise Interest Rate Hike

Kevin Warsh, the newly appointed Federal Reserve chair, defied President Donald Trump's expectations by raising interest rates for the first time since 2023. The decision comes as inflation remains a concern due to sharp price rises triggered by the Middle East conflict and a rush for AI components.

The Fed raised borrowing costs from a 2-2.25 per cent range to a 3.75-4 per cent range, with Warsh signalling that further steps may be taken if necessary to curb inflation. Trump had previously expressed his desire for lower interest rates, stating that the US is 'the Best Credit in the World, BY FAR' and suggesting that rates should be '1%, or less'. However, he later maintained confidence in Warsh and blamed the rest of the Fed's board for the decision.

According to a Brown University tracker, the rise in petrol and diesel prices paid on US forecourts has cost voters an extra $107bn and counting. This inflation driver has been a major concern since Warsh's nomination in January.