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 0.25 percentage points on September 16, 2026, lifting the key rate to about 3.9%, with quarterly projections signalling a second hike to 4.1% later this year.
- Kevin Warsh, Fed Chair, declared "the plain fact is that inflation is too high and has been for too long," adding that the economy had gathered speed since July's hold and that "there's no hiding from hotspots around the world" — a nod to renewed U.S.-Iran combat pushing up gas prices.
- Warsh pointed to global alignment behind the hike, noting the European Central Bank raised its key rate last week and the Bank of Japan is expected to do the same on September 18.
- Trump reacted angrily on social media, renewing his call for the Fed to lower rates "AND FAST," as part of an unprecedented pressure campaign that included attempting to fire a Fed Governor and launching a criminal probe against Warsh's predecessor.
- The Fed statement notably avoided directly insulting Warsh, unlike Trump's treatment of former Chair Jerome Powell; Warsh may enjoy insulation through his father-in-law Ronald Lauder, a Trump friend and billionaire campaign donor.
- Wall Street futures now price a December hike as a near certainty, though most economists expect the Fed to hold rates at its late October meeting — one week before midterm elections where affordability is already the leading voter issue.
Why it matters: Americans already squeezed by grocery, gas, and housing costs now face higher borrowing costs on mortgages, auto loans, and credit cards just seven weeks before midterm elections dominated by affordability concerns. The Fed's choice to hike directly defied Trump's public pressure campaign — and by signalling a likely pre-election pause, the committee preserves some political cover while locking in more tightening before year-end.
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