Trump and the Federal Reserve are on a collision course over interest rates

Live updates

1. 1h ago

   Federal Reserve Hikes Interest Rates Defying Trump

   The US Federal Reserve raised the benchmark interest rate by 0.25 percentage points to a range of 3.75% to 4%, marking the first increase in more than three years. This decision puts Fed Chairman Kevin Warsh on a collision course with President Donald Trump, who has used Truth Social to attack the central bank and urge lower rates. The move ends a period of relative peace between the administration and the Fed, testing the truce established upon Warsh's arrival.

   Why it matters

   The Federal Reserve operates as an independent central bank, but its rate decisions directly impact economic growth and inflation. Trump has historically pressured the Fed to maintain lower rates to stimulate the economy. This hike represents the first tightening of monetary policy since 2023.

   What is confirmed

   • The Federal Reserve raised the benchmark interest rate for the first time in over three years.
   • The rate increase was 0.25 percentage points, moving the range to 3.75% to 4%.
   • President Donald Trump attacked the Federal Reserve's decision on Truth Social.
   • Kevin Warsh serves as the Chairman of the Federal Reserve.

   Still unconfirmed

   • Kevin Warsh is likely to side with financial markets over Trump regarding rate hikes.
   • The Fed's July communications were described as a mess.
   • Billionaire investor David Rubenstein believes it is too early to judge Kevin Warsh's communication style.

   What to watch next

   • Further public statements from the Trump administration regarding Fed independence
   • Future rate decision meetings by the Federal Reserve
   • Official responses from Chairman Kevin Warsh regarding the administration's attacks
   Sources used for this update (15)

   1. axios.com — How Warsh can avoid a repeat of July's communications mess
   2. finance.yahoo.com — Too early to judge Fed Chairman Kevin Warsh's communication style, billionaire investor David Rubenstein says
   3. WSJ — Warsh’s Arrival Ended Trump’s War With the Fed. A Rate Hike Would Test the Truce.
   4. NBC News — Trump and the Federal Reserve are on a collision course over interest rates
   5. PBS — WATCH LIVE: Warsh holds briefing after Fed meeting as interest rates expected to rise
   6. Morningstar — Warsh’s Communications Policy Faces Its First Big Test
   7. 10TV — Warsh likely to side with financial markets over Trump as Fed rate hike expected
   8. The Economist — The case for tightening in America
   9. Reuters — Morning Bid: Warsh on collision course with Trump administration
   10. WSJ — Nick Timiraos | Kevin Warsh Brought Peace With Trump. A Rate Hike Would Test It.
   11. Bloomberg.com — Fed Seen Hiking Interest Rates in Defiance of Trump
   12. finance.yahoo.com — Fed raises US rates for first time in three years
   confidence 95%