With the midterms looming, President Donald Trump wants lower interest rates to ease the squeeze on American families.Instead, the Federal Reserve raised rates on Wednesday.The decision is aimed at combating stubborn inflation, but it will make borrowing more expensive for voters and delivers a big hit to Trump's economic promises with less than two months until Americans cast their ballots and determine which party will control Congress.The Fed does not set the prices of groceries, cars or homes.
But its decisions affect how much Americans pay to borrow money, especially when they buy a house or car.Higher rates can add hundreds of dollars to monthly payments, even when the price of the home or vehicle has not changed.ONE LITTLE-KNOWN MEETING HELPS DECIDE WHAT AMERICANS CAN AFFORD — AND WHAT THEY CAN’TThe Federal Reserve sets the nation’s interest-rate policy, influencing borrowing costs for households and businesses.
(Alex Wong/Getty Images)The Federal Open Market Committee, or FOMC, raised the federal funds rate by a quarter of a percentage point Wednesday, bringing it to a range of 3.75% to 4%.The increase — the Fed’s first in three years — was aimed at slowing inflation, which remains above the central bank’s 2% goal.
Higher energy prices and tariffs have added to pressure on household budgets, and the Fed’s projections indicate that another rate increase could come later this year if inflation remains elevated.The rate hike puts Kevin Warsh, Trump’s pick to lead the world’s most powerful central bank, at odds with the president’s push for lower borrowing costs.The decision could strain their relationship and revive memories of Trump’s repeated clashes with former Fed Chair Jerome Powell.TRUMP DANGLES $5,000 CHECKS AS DEBT SURGES — BUT ONLY IF GOP CAN CLEAR MAJOR MIDTERM HURDLEThe rate hike also puts Federal Reserve Chair Kevin Warsh in the spotlight.(Brendan Smialowski/AFP/Getty Images)Although the president appoints members of th...