Federal Reserve raises interest rates by a quarter point despite Trump's calls for cuts, markets rise in response
The Federal Reserve's Federal Open Market Committee voted unanimously on Wednesday to raise its benchmark interest rate by 0.25 percentage points, bringing it to a range of 3.75% to 4% — the first increase in more than three years. The decision came despite repeated calls from President Trump to lower rates. Fed Chair Kevin Warsh, Trump's own nominee to lead the central bank, voted in favor of the hike along with the rest of the committee.
The FOMC cited stubborn inflation, elevated energy prices tied to the war in Iran, and an economy still running above its 2% inflation target as the basis for Wednesday's rate increase. Fed projections, as reported by the Washington Examiner and Fox News, indicated that another rate hike could come before the end of the year if inflation remains elevated. Warsh said at a post-meeting press conference that the Fed acted based on its assessment of employment, economic strength, and the inflation outlook.
The rate hike puts upward pressure on borrowing costs for American households. Fox News reported that the increase could add hundreds of dollars to monthly mortgage and car-loan payments even when underlying asset prices have not changed, directly complicating affordability for consumers. NPR noted that workers' paychecks have been losing purchasing power for months, and that the Fed does not control key inflation drivers such as tariff policy or wages.
Trump did not direct his criticism at Warsh personally following the decision. The Washington Examiner reported that Trump, who repeatedly attacked predecessor Jerome Powell — branding him "Too Late" and calling him a "fool" — conspicuously shielded his own nominee, instead blaming what he called a "hostile" Fed board. On social media, Trump posted "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" without naming Warsh. Ahead of the meeting, Trump had threatened to alter U.S. trade policy unless the Fed cut rates, saying he would cut off trade to countries with which the U.S. runs a deficit.