The United States Federal Bank (Fed) decided to increase interest rates by a quarter of the unit, with the aim of controlling inflation, a measure expected from the financial markets but found US President Donald Trump opposite.
This is the first time since the summer of 2023 that the Fed has increased interest rates, which determine loan costs. They now range to 3.75-4%.
Following the Fed's decision to raise interest rates was at the close of the Wall Street meeting a sharp fall for shares in Dow Jones' main index;
The decision was unanimous and was also supported by new central banker Kevin Wars, who had been selected by Trump last spring with the expectation that it would reduce interest rates. According to the Reuters agency, unanimous decision is essentially an acceptance of the Trump administration's inability to control inflation.
The Fed also considers that a new increase in interest rates will undoubtedly be needed, at 4-4.25% by the end of the year to combat inflation.
After meeting for two days, closed doors, the board members revised their forecasts for the American economy. They now expect inflation at the end of the year to rise to 3.7%, instead of 3.6%, as predicted at their June meeting.
Trump requires lower interest rates «and directly.»
U.S. President Donald Trump called for interest rate cuts, a few hours after the Federal Reserve (Fed) first increased them three years ago. Donald Trump, however, avoided direct criticism of the head of the central bank, Kevin Wars.
«We support almost every country in the world and this cannot go on any longer. REDUCE INTEREST ON THE UNITED STATES OF AMERICA, AND MALISTA GRIGOR!» Trump wrote on his network, Truth Social.
White House: An unfortunate increase in interest rates
Already in the first reaction the White House by its representative Mr. Desai described Unfortunate Fed's decision to increase interest rates, despite the clear requirement of President Donald Trump to reduce them.
«The current, rather unfortunate decision of the Federal Reserve to increase interest rates was not supported by a particularly strong economic argument by the government.», Representative Kus Desai told Fox News.
Republican President Donald Trump had promised that during his days prices would fall, but the combined effects of customs duties on imported species, energy shock after the start of the US-Israeli war in Iran and capital investments associated with the explosion of Artificial Intelligence kept the inflationary pressures high, so much that the Fed considered the increase in the basic interest rate to be irrevocable by a quarter of the percentage point, within the range of 3.75–4%. According to its communication, this decision aims to bring inflation back to the desired limits faster.
Wars: The increase in interest rates was «Our decision» and not of markets
U.S. Federal Bank chief Kevin Wars stressed that the central bank’s decision to increase interest rates was not affected by the financial markets.
«We have taken today's decision based on our assessment of the situation», said Wars at a press conference. «I'll monitor market prices to see what they indicate. However, today's decision was ours».
For the independence of the Fed: We remain within the framework of our responsibilities
Kevin Wars also said that the independence of the central bank stems from commitment to its goals in statements coming amid political pressures for lower interest rates.
«Part of the federal bank's independence is that we remain in the field of our own competence.», said Wars.
«We also let those who shape trade and fiscal policy remain in their own field. So we can put ourselves in public and express our opinion exactly as we see it.».
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