Fed Raises Interest Rates for First Time in Three Years

The US Federal Reserve raised its key interest rate by 25 basis points on Wednesday, aiming to curb persistently high inflation in the world's largest economy.

The decision is likely to draw criticism from President Donald Trump, who has repeatedly called for lower rates and recently put forward Kevin Warsh as his nominee for Federal Reserve Chair.

Speaking at a press conference, Warsh, who has held the Fed Chair position since May, said the central bank's main focus remained price stability, noting that inflation had stayed too high for too long. He said the latest policy move would help bring inflation back toward the Fed's 2% target more quickly. During his earlier confirmation process, Warsh had told Congress that the central bank would not tolerate continued high inflation.

The rate hike lifts the Fed's target range to between 3.75% and 4.00%.

Trump had pledged during his 2024 campaign to bring down prices, but conditions have shifted since he took office. The US economy is now dealing with the combined effects of Trump's global tariffs on imports, an energy shock stemming from the US-Israeli conflict with Iran, and heavy investment tied to the artificial intelligence boom.

Following the rate announcement, Trump said interest rates should be at 1% or lower and called for rapid cuts.