From BBC News · · 1m 50s
Fed raises rates despite Trump's fierce opposition
The Federal Reserve hiked interest rates to fight inflation, defying the president's demands for cuts.
In brief
The Federal Reserve hiked interest rates to fight inflation, defying the president's demands for cuts. The Fed raised rates to 3.75-4% to combat inflation that has stayed above 2% for over five years, making borrowing more expensive despite Trump's opposition. Originally reported by BBC News.
Fed raises rates despite Trump
The Federal Reserve raised interest rates to 3.75-4% from 3.5-3.75%, the first hike in over three years. Trump had demanded cuts instead.
Inflation too high for too long
Fed Chair Kevin Warsh said inflation has been above the 2% target for more than five years. He called the rate hike a "sober" and "responsible decision".
“inflation is too high and has been for too long”
Trump blames hostile board
Trump expressed support for Warsh but said the Fed board was "hostile" and "very political". He told reporters interest rates are too high and not appropriate.
“The board is very hostile, they're very political”
War drives up fuel costs
Fuel prices have surged since the US-Israel war with Iran began, driving up costs across the economy. Affordability is now a top concern for American voters.
What higher rates mean for you
Higher rates make borrowing more expensive for loans, mortgages, and credit cards. Major banks raised their prime lending rate to 7% from 6.75% on Wednesday.
Mortgage rates climb higher
A 30-year fixed mortgage now averages 6.76%, while a 15-year deal is 6.09%. Higher rates will mainly affect those seeking new mortgages or refinancing.
More hikes likely this year
Most Fed policymakers expect another rate increase before year's end, to 4-4.25%. A small majority see further hikes in 2028 before cuts begin.
Global inflation fight continues
The European Central Bank raised rates last week amid rising inflation from the Iran war. The Bank of England is set to decide on rates Thursday.
At a glance
The Fed raised rates to 3.75-4% to combat inflation that has stayed above 2% for over five years, making borrowing more expensive despite Trump's opposition.
