The Federal Reserve raised its benchmark interest rate by a quarter point on Wednesday, its first hike since 2023, defying 
Donald Trump's demands for a cut. The unanimous decision lifted the target range to 3.75%-4% from 3.5%-3.75%.
How did the president respond? After the decision, Trump wrote on social media that rates "should be 1%, or less, because we are the Best Credit in the World — BY FAR," and demanded they be lowered "AND FAST!" He later praised Fed Chair Kevin Warsh and blamed the board, telling reporters in North Carolina that Warsh has "a board that was put there by a lot of other people," The Hill reported. Trump said, in remarks reported by the BBC, that he had told Warsh "you might as well vote with the board because it's not going to matter," calling the board "very hostile."
Why did the Fed raise rates? Warsh said at a press conference that "the plain fact is that inflation is too high and has been for too long," adding that the labor market was in good shape but inflation had run above the Fed's 2% target for more than five years. Average gas prices have risen more than 7% in a month amid disruptions from the Iran war, the Korea Times reported. Asked about the president's reaction, Warsh said: "I've got nothing for you on a discussion with the president."
What was the political reaction? Chuck Schumer, the top Democrat in the Senate, said in comments reported by the BBC that the increase was "going to make everything become more expensive," adding: "This is because Donald Trump does not know how to manage the economy." The hike, which Yonhap reported was a setback for Trump, followed his pressure on the Fed to cut rates ahead of the November midterm elections. Kevin Hassett, the president's top economic adviser, told Fox News on Sunday that Trump would "defend the independence of Kevin Warsh above all," the Korea Times reported.
What comes next? Most policymakers, the BBC reported, expect rates to rise again this year to between 4% and 4.25%, with a small majority seeing a further increase to 4.25%-4.5% next year before cuts begin in 2028. Major banks JP Morgan, KeyCorp and BNY raised their prime lending rate to 7% from 6.75% on Wednesday.
Figures referenced: Donald Trump. — JudgeMarket.
