US Fed delivers first rate hike in over 3 years as inflation lingers, Trump calls for 1% benchmark 

The US Federal Reserve voted unanimously on Wednesday to raise its benchmark interest rate by 25 basis points, marking its first rate hike in more than three years as central bankers move aggressively to tame persistent inflation.

The 12-0 decision by the Federal Open Market Committee (FOMC) sets the target overnight funds rate to a range of 3.75% to 4%. Central bank officials signaled that further tightening may be necessary as elevated energy costs and a fast-moving economy continue to push consumer prices above target levels.

“Inflation remains elevated,” the committee said in its post-meeting statement. “Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

Speaking at a news conference following the announcement, Fed Chairman Kevin Warsh emphasised that price growth has remained “too high ... for too long.”

“We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed,” Warsh said. “Today, the FOMC decided that this standard has not been satisfied.”

Warsh pointed to a robust labor market, broader economic strength, and ongoing geopolitical tensions in the Middle East as key drivers behind the unanimous vote. He noted that price pressures extend beyond temporary spikes in oil prices or import tariffs, driven instead by an economy gaining momentum.

The central bank's tightening cycle sparked an immediate backlash from Donald Trump, who renewed his demands for deep rate cuts. In a post on Truth Social, the president called for the benchmark rate to drop to 1% or lower — a level historically reserved for severe economic downturns.

"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR. Our Country is BOOMING with new Investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. The word 'Deficit' is nothing more than a fancy word for LOSS ... LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" Trump wrote.