Fed Hikes Key Rate to 3.9%, Defies Trump — SkimNews
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- Federal Reserve raised its benchmark interest rate by a quarter-point on September 16, 2026 — its first hike since 2023 — lifting the key rate to about 3.9%, with quarterly projections signaling a second hike later this year to roughly 4.1%.
- Chair Kevin Warsh said 'the plain fact is that inflation is too high and has been for too long,' noting that renewed US-Iran combat driving up gas prices and similar moves by the European Central Bank (which raised its key rate last week) and the Bank of Japan (expected September 18) convinced officials to support hikes.
- President Trump reacted angrily on social media, renewing his call for the Fed to lower rates 'AND FAST,' continuing what the article calls an 'unprecedented assault on the Fed's independence' that included an attempt to fire a Fed Governor and a criminal probe against Warsh's predecessor.
- Warsh declined to discuss the president, saying 'I've got nothing for you on a discussion with the president'; the article notes he 'might also have a measure of protection' because his father-in-law is Ronald Lauder, a Trump friend and billionaire campaign donor.
- Most economists expect the Fed to hold rates unchanged at its late October meeting because it falls just a week before midterm elections, but Wall Street futures now price a December rate hike as a 'near certainty.'
- Unlike Trump's treatment of former Chair Jerome Powell, the Fed's statement refrained from insulting Warsh — and Morningstar's chief US economist said Warsh's 'tough talk' suggests he may push for higher rates in meetings to come.
Why it matters: The Fed's first hike in three years raises borrowing costs for mortgages, auto loans, and credit cards just seven weeks before midterm elections where affordability is already the leading issue — while Trump simultaneously escalates his unprecedented campaign against Fed independence through attempted firings and criminal probes.
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