Fed Raises Rates to 3.75%-4% as Trump Demands Cuts to 1% or Lower

The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4% in a unanimous vote, putting it on a direct collision course with President Donald Trump, who had repeatedly called for lower borrowing costs. Fed Chair Kevin Warsh, Trump's own hand-picked nominee, backed the hike and warned that inflation remains "too high" and that underlying trends have not improved. Sixteen of 18 policymakers signaled they see at least one additional rate increase before year-end.

Trump responded sharply on social media, demanding the Fed cut rates to 1% or lower. He directed his criticism at the broader Fed board, which he called "very hostile" and "very political," while stopping short of turning on Warsh directly, saying he still has confidence in the chair. Reuters described the attack as Trump's most pointed criticism yet of his hand-picked Fed chief, even if still indirect.

The confrontation revives a pressure campaign that had briefly subsided after Warsh succeeded Jerome Powell as chairman. Trump publicly stated that inflation is "too high" and said he wants Warsh to operate independently, a position that sits in tension with his simultaneous demands for dramatically lower rates.