Fed hikes key rate for 1st time in 3 years, defying Trump demands for a cut
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 percent 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 percent. “Today’s policy action will support a timelier return” to the central bank’s 2 percent inflation goal, the Fed said in a statement. The move comes as Americans are already struggling with high costs for groceries, gas, and housing. Affordability has taken on a leading role in the upcoming midterm elections, just seven weeks away. In a press conference following the Fed's announcement, Fed Chair Kevin Warsh said that while the job market remains resilient, inflation has stubbornly remained above the Fed 2 percent target for years. "The pl
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