Fed rate increase takes effect as Trump calls for a cut

The quarter-point increase decided by the Federal Reserve on Wednesday takes effect Thursday, September 17. The target range for the federal funds rate rises to 3.75%–4%. The official statement records a unanimous vote of 12 to zero. [1]

Monetary action faces political criticism

The central bank cites a solid economy and persistent inflation. Its goal remains to bring inflation back to 2%. The decision describes the action taken at this meeting; it guarantees neither a timetable for reaching that goal nor the rate level at the next meeting. [1]

Axios reports that Donald Trump called for rates of 1% or less and a rapid reduction after the announcement. This is the president’s position, not a change in monetary policy. [4]

What the implementation note specifies

Associated Press notes that the increase is the first since 2023 and discusses the possibility of another rise this year. A future possibility is not a decision already taken. [3]

The Fed’s note sets September 17 as the effective date and interest on bank reserve balances at 3.90%. That operating rate and the target range serve different purposes; their values do not contradict each other. [2]

These parameters do not directly set the rate on every loan. They cannot, on their own, determine a household’s next monthly payment or establish that all borrowing costs will increase by the same amount. [2]