The US Federal Reserve, led by Kevin Warsh, has raised interest rates by 25 basis points, or a quarter of a percentage point. This unanimous decision on Wednesday marks the first such increase since 2023.
The move comes despite President Donald Trump's calls for looser monetary policy, with Warsh stating that "inflation is too high and has been for too long." The Federal Reserve's 'dot plot' tool indicates that members anticipate another 25 basis point rate hike at one of the next two meetings this year.
President Trump reacted to the decision on social media, arguing that interest rates should be one per cent or lower. Analysts had largely anticipated a rate hike due to early indications that higher energy and fuel prices were contributing to inflation in the US economy.
August inflation in the US held steady at 3.4 per cent, which is above the Federal Reserve's two per cent target. This occurred even as prices at the pump saw a 27 per cent increase.