Federal Reserve defies Trump’s calls for cut, raises interest rates for first time in three years

The Federal Reserve raised its benchmark interest rate Wednesday for the first time since 2023, defying President Donald Trump’s calls for a cut, according to The Associated Press.

The quarter-point increase lifts the Fed’s key rate to about 3.9%, with officials signaling a second hike later this year to 4.1%. The move, aimed at curbing persistent inflation, marks a surprising shift for Fed Chair Kevin Warsh, a Trump appointee who previously suggested he favored lower rates.

Inflation stood at 3.7% in July, well above the Fed’s 2% target, with disruptions from the Iran war pushing gas prices up over 7% in a month. Retail sales rose 1.2% in August, reflecting resilient consumer spending.