President Donald Trump called on the US central bank to cut interest rates to 1% or lower, after the Fed's monetary policy committee voted unanimously 12-0 to raise short-term rates by 0.25% to a range of 3.75-4.00%, the first increase since 2023. Speaking to reporters, Trump said he still has confidence in Fed Chair Kevin Warsh, whom he appointed, but criticized the Fed board as unfriendly and political, saying this rate hike was designed to make him look as bad as possible. Warsh explained that the Fed changed course and raised rates because inflation remains too high and has stayed elevated for too long, driven by strong economic data, especially in the labor market, inflation that stayed above the 2% target throughout the summer, and geopolitical factors. The Dot Plot report indicated that 16 of the Fed's 18 officials expect one more rate hike this year. After the decision was announced, Trump posted on Truth Social urging the Fed to cut rates urgently.
Fed raised the federal funds rate by 0.25% to 3.75-4.00%, the first hike since 2023, with 16 of 18 officials expecting another hike this year.
The Fed's rate hike and hawkish dot plot signaling further tightening push Treasury yields higher.
