Federal Reserve raises key rate by 0.25 percentage point to 4.0 percent amid persistent inflation, defying Trump's demand for lower rates. The move aims to bring inflation back to 2 percent, as the Fed insists prices remain too high.
The decision, made by all 12 FOMC members, comes as inflation hits 3.4 percent, driven by tariffs, war in Iran, and AI spending. Fed Chair Kevin Warsh emphasized the need for higher rates to meet the 2 percent target, noting inflation has been too high for too long.
The rate hike could raise borrowing costs for mortgages, auto loans, and credit cards, impacting consumers and businesses. It also comes at an inopportune time for Trump, with midterm elections approaching, as voters may target him for economic frustrations.