The US Federal Reserve raised its benchmark interest rate on Wednesday for the first time in more than three years, drawing an immediate demand from President Donald Trump that borrowing costs be slashed to 1 percent “or less.”
The 12-member Federal Open Market Committee voted unanimously to lift the target range by a quarter of a percentage point to between 3.75 percent and 4 percent. Updated projections show a majority of officials expect another quarter-point increase this year, with rates then held through 2027.
Fed Chair Kevin Warsh defended the move. “The plain fact is that inflation is too high and has been for too long,” he told reporters. Consumer prices hit 3.4 percent last month, above the central bank’s 2 percent target.
Nearly three hours after the decision, Trump responded on his Truth Social platform. “Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR,” he wrote, adding: “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!”
Speaking to reporters before a campaign trip to North Carolina, Trump said he still had confidence in Warsh, whom he nominated as chair, but blamed the wider board. “The board is very hostile. They’re very political. They’re doing the wrong thing,” he said. Asked whether he believed Warsh had decided based on his input, Trump replied, “No, I don’t think so.”
Warsh, who succeeded Jerome Powell in May, declined to engage with the president’s demands. Asked what his message for Trump was, he said, “I’ve got nothing for you on a discussion with the president.”
The increase raises costs for consumers carrying credit card debt and those borrowing for homes and vehicles. US banks borrowing from the Fed begin paying the higher rate immediately, and holders of variable-rate credit cards and mortgages could see payments rise within a month.
White House spokesman Kush Desai told Fox News that Trump “absolutely” still believes in the Fed’s independence.