Warsh Stands Firm: Fed Raises Interest Rates, Defying Trump's Demands

The Federal Reserve's decision to raise interest rates to 4% has been met with criticism from President Donald Trump, who has demanded that borrowing costs be cut. However, the Fed Chair Kevin Warsh and his committee have remained committed to their mission of controlling inflation by managing monetary policy.

Last week, the FOMC raised the key interest rate for the first time in three years, boosting the federal funds rate by 0.25 percentage points from 3.75% to 4%. This decision was made despite Trump's threats to cut off trade with countries that have a trade deficit if interest rates aren't cut.

Warsh and the Fed have been true to their duty, taking the long-term view of the country's economic stability rather than catering to the whims of the White House. The FOMC has set the price of money, and when prices are rising too fast, they slow things down by ratcheting up rates.

The Fed is meant to be independent of the political branches of government, and Trump's attempts to interfere with their decisions have been met with resistance. The president has even gone so far as to try to fire a Fed governor, but this has been blocked by the U.S. Supreme Court.