Federal Reserve hikes key rate to tackle ‘too high’ inflation, defying Trump demands for cut — SkimNews
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- Federal Reserve raised its benchmark rate by a quarter point on September 16, 2026 — the first increase since 2023 — lifting the key rate to about 3.9% and signaling a second hike to 4.1% later this year in quarterly projections.
- Chair Kevin Warsh declared 'the plain fact is that inflation is too high and has been for too long,' saying the FOMC found underlying inflation was not moving toward its 2% target 'at sufficient speed.'
- Warsh linked the decision to renewed U.S.-Iran combat driving up gas prices, saying 'there's no hiding from hotspots around the world,' and noted the European Central Bank and Bank of Japan are also hiking rates in response to global turmoil.
- President Trump reacted angrily on social media, renewing his call for the Fed to lower rates 'AND FAST,' though the Fed's statement notably avoided direct criticism of Warsh — unlike past attacks on former Chair Jerome Powell.
- Trump has waged an 'unprecedented assault on the Fed's independence' since taking office, attempting to fire a Fed Governor and launching a criminal probe against Warsh's predecessor; Warsh may have insulation through his father-in-law Ronald Lauder, a Trump friend and billionaire donor.
- Most economists expect the Fed to hold rates unchanged at its late October meeting — just one week before midterm elections — while Wall Street futures now price a December hike as a near certainty.
Why it matters: The hike will raise borrowing costs on mortgages, auto loans, and credit cards for Americans already struggling with grocery, gas, and housing expenses as affordability dominates the midterm conversation seven weeks out. The Fed's signal of a second hike to 4.1% this year, despite Trump's public demands for cuts, puts the central bank on a collision course with a president who has already tried to fire a sitting governor.
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