The US Federal Reserve raised its benchmark interest rate by 0.25 percentage points to a range of 3.75 to 4 percent. This is the first rate increase since July 2023. The decision was made during the third meeting of the board under the leadership of new chairman Kevin Warsh. The Guardian ↗
The Fed justified its decision by pointing to persistently high inflation. Price developments have also been affected by rising energy costs linked to tensions in the Middle East and the war in Iran. Market expectations did not change significantly, as the rate hike had been widely anticipated.
This put Warsh into conflict with President Donald Trump, who had demanded significantly lower interest rates. Trump argues that the United States should have the lowest interest rates in the world in order to support investment and economic growth. The rate hike therefore represents a decision that runs counter to his publicly stated demands. La Repubblica ↗
"Interest rates in the United States should be at one percent or lower, because we have by far the best credit standing in the world," Trump said. According to experts, however, the Fed's decision has so far helped preserve the central bank's credibility. BBC News ↗
Warsh also warned that rates could rise further in the coming months if price growth continues. Higher borrowing costs are meant to curb demand and help slow inflation. The Fed's next steps will depend mainly on how prices and energy costs develop.
Fed under Kevin Warsh's leadership raised interest rates
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This summary was generated by artificial intelligence. It may contain inaccuracies. Please verify information in the original sources below.
Sources (4)
La Fed augmente son taux d’intérêt directeur d’un quart de point
Le Figaro
| 20:07 16.09.
US interest rates raised for first time in three years
BBC News
| 23:02 16.09.
US raises interest rates for first time in three years
RTE News
| 20:36 16.09.
La Reserva Federal cede a la presión inflacionaria y sube los tipos un cuarto de punto
El Mundo
| 20:08 16.09.
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