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Federal Reserve raises benchmark rate for the first time in three years
The US central bank lifted its key rate by a quarter point and signaled that another increase could come before year’s end. The move runs against Donald Trump’s calls for lower borrowing costs.
The Federal Reserve on Wednesday raised its benchmark interest rate for the first time since 2023, aiming to curb inflation that remains above its target. According to The Associated Press, republished by Florida Politics, and also reported by France 24, the move went against Donald Trump’s repeated calls for rate cuts.
The quarter-point increase takes the Fed’s key rate to about 3.9%. In its quarterly projections, the central bank also indicated that policymakers see room for another increase later this year, which would bring the rate to 4.1%.
At a news conference, Fed Chair Kevin Warsh said inflation is still too high and has not shown enough progress toward the Fed’s 2% goal. He also said renewed fighting involving the United States and Iran, and the resulting increase in gasoline prices, helped convince officials to back higher rates.
AP reported that 16 of the 18 Fed policymakers who submitted forecasts now expect at least one more rate hike in 2025, while four support two additional increases. The next meeting is scheduled for late October, though Wall Street analysts now see a December move as nearly certain, according to that report.
The decision comes as Americans continue to face high costs for groceries, fuel and housing. AP also said retail sales rose 1.2% in August from the previous month, suggesting consumer spending remains resilient despite weak public sentiment about the economy.
Warsh was appointed to the post by Trump and had previously suggested the Fed could lower rates, echoing the president’s stance. Once in office, however, he said he would act independently. After the decision, Trump again called for lower interest rates on social media, though he did not directly address the Fed’s move, according to AP.
Sources
About this piece. Written by El Notero with AI assistance, from reporting published by the outlet cited above. El Notero did no original reporting on this story.
