US Fed raises rates to tackle 'too high' inflation in move sure to rile Trump — SkimNews
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- Federal Reserve raised rates 25 basis points to 3.75-4.00% on September 16 — its first hike since January — with Chair Kevin Warsh calling inflation "too high" for "too long" and calling the decision "serious."
- Fed's Summary of Economic Projections showed at least 12 of 18 participating policymakers expect one more rate hike before year-end, with four expecting two more; PCE inflation forecast raised to 3.7% and GDP growth to 2.3%.
- August CPI came in at 3.4%, unchanged from July but well above the Fed's 2% target, ending the Fed's January holding pattern as it waited to gauge Iran war energy shocks and tariff impacts.
- White House spokesperson Kush Desai called the decision "rather unfortunate" and reiterated Trump's lower-rates demand; Trump has attempted to fire a Fed Governor and launched a criminal probe against Warsh's predecessor.
- Markets reacted with US stocks declining and 10-year Treasury yields surging past the 5% threshold on long-term inflation uncertainty.
- Kevin Warsh, appointed by Trump after a Senate confirmation where Democrats called him a "sock puppet" for Trump, withheld his SEP contribution — the projection included only 18 policymakers, suggesting he declined to participate again.
Why it matters: The Fed's first hike since 2023 directly contradicts Trump's public demands for cuts and his personal attacks on Fed independence, even though he appointed Warsh himself — putting the central bank in open conflict with the White House as Republicans face midterm elections where economic issues dominate voter concerns and borrowing costs tick up for households.
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