Dive Brief:
- The Federal Reserve, in a widely expected decision, raised the benchmark interest rate by a quarter percentage point, pledging to curb stubborn inflation and achieve price stability.
- The Federal Open Market Committee in a unanimous decision increased the federal funds rate to a range between 3.75% and 4% in its first tightening in three years as tariffs and a war-induced surge in energy prices fuel inflation above the central bank’s 2% target. Most Fed officials forecast one more rate increase this year.
- “Inflation remains elevated,” the FOMC said in a statement after a two-day meeting. “Today’s policy action will support a timelier return to the committee’s 2% goal,” the FOMC said, adding “the committee will deliver price stability.”
Dive Insight:
The monetary tightening may spark criticism from President Donald Trump, who has repeatedly called on the central bank to cut the main interest rate regardless of price pressures.
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump said in a Sept. 4 Truth Social post.
Trump called on Fed policymakers to “BE PATRIOTS for a change,” adding “high interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”
This is a developing story. Please visit CFO Dive for updates.
