Fed hikes key interest rate, drawing Trump ire

What happened

The Federal Reserve Wednesday raised its benchmark interest rate for the first time in more than three years. The unanimous vote to raise rates by a quarter-point, to about 3.9%, was “aimed at combating inflation brought on by spiraling oil prices and other factors,” including AI spending and tariffs, CNBC said. The “vast majority” of the Fed policymakers also “penciled in one more hike this year,” The Wall Street Journal said, “implicitly” undercutting “the White House’s insistence that inflation isn’t a concern.”

Who said what

The “American economy appears to be strengthening,” but “inflation is too high and has been for too long,” Fed Chair Kevin Warsh told reporters after Wednesday’s vote. President Donald Trump, who made clear he wanted rate cuts when selecting Warsh, broadcast his displeasure. “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” he wrote on social media. Rates “should be 1%, or less.”

Warsh told reporters he had “nothing for you on a discussion with the president.” But Trump said at a campaign stop in North Carolina that he’d told Warsh beforehand that he “might as well vote with the board because it’s just not going to matter.” He said he had faith in Warsh, but the rest of the board are “very hostile” and “very political,” and “they’re raising the rates to make Trump do as bad as they can possibly can do.”

What next?

Most economists expected the Fed to hold rates steady at its October meeting, “because it is just a week before the midterm elections,” The Associated Press said. But “Wall Street analysts now see a rate hike by December as a near certainty.”

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