US Federal Reserve raises rates, defying Trump's expectations for cuts
The Federal Reserve raised rates to 3.75-4.00 per cent and signalled further increases, defying Trump's calls for cuts.
The Federal Reserve raised its benchmark interest rate by 0.25 per cent on Wednesday, putting it at 3.75 to 4.00 per cent. New Fed chief Kevin Warsh approved the hike unanimously with other policymakers.
The move defies President Trump's expectation that the Fed would cut rates under his administration. Inflation remains stubbornly high due to Trump's global import tariffs, an energy shock from the US-Israeli war with Iran, and spending on artificial intelligence.
Policy projections showed 16 of 18 Fed officials expect at least one more quarter-point hike by year's end. The Fed dropped previous language blaming supply shocks for inflation, signalling broad price pressures across the economy remain a concern.
Mortgage rates are approaching 7 per cent, adding pressure on voters ahead of midterm elections.
- 0.25 per cent
- Rate increase
- 3.75-4.00 per cent
- New range
- 16 of 18
- Fed officials expecting another hike
- Kevin Warsh, took office late May
- Fed chief
Why it mattersInterest rates slow economic growth but aim to bring inflation back to the Fed's 2 per cent target, reducing long-term price pressures for consumers.
AustraliaRising US rates strengthen the US dollar against the Australian dollar, making imports more expensive for Australian businesses and potentially keeping Australian interest rates higher than they might otherwise be.
✓ Claims checked against the source. checked 8 d ago
