Overview
- The Federal Open Market Committee voted unanimously on Wednesday to raise the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%, the first increase since 2023.
- Chair Kevin Warsh said the boost reflects concern that inflation will not cool on its own and pointed to changing geopolitical risks as a factor in price pressures.
- President Trump publicly expressed confidence in Warsh while attacking the Fed board as 'hostile' and renewed calls on social media for rates to be cut to about 1 percent.
- Economists and Fed officials say cutting rates to the level the president seeks would normally require a severe economic downturn, and higher energy prices from the U.S.-Iran war and tariff policy have complicated the inflation outlook.
- The unanimous vote underscores a collective Fed resolve that could intensify White House-Fed tensions after the administration tried to remove Governor Lisa Cook, a move the Supreme Court has blocked.