Federal Reserve hikes key rate for 1st time in 3 years, defying Trump demands for a cut
To stream WUSA9 on your phone, you need the WUSA9 app. Example video title will go here for this video WASHINGTON — The Federal Reserve raised its benchmark interest rate Wednesday for the first time since 2023 in an effort to quell stubbornly-high inflation , a move that could spur a sharp response from the White House. The quarter-point increase lifts the Fed’s key rate to about 3.9% and, over time, could result in higher borrowing costs for mortgages, auto loans, and credit cards. In a set of quarterly projections, the Fed also signaled that its rate-setting committee expects to hike rates a second time later this year to 4.1%. “Today’s policy action will support a timelier return” to the central bank’s 2% inflation goal, the Fed said in a statement. The move comes as Americans are already struggling with high costs for groceries , gas , and housing.
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This week, the rate on the 10-year Treasury bond reached 5% for the first time in three years. Warsh, economists say, has largely boxed himself into a rate hike after delivering a high-profile speech in August, warning that inflation remains too far above the Fed's 2% target and might require higher borrowing costs to bring it down.
