Federal Reserve hikes US interest rates in defiance of Trump
Wall Street shares fell sharply as - despite the rate rise being widely expected
2024-07-07 14:46:05

The Federal Reserve has raised interest rates again, in spite of warnings from Donald Trump against the move.
Wall Street shares fell sharply as - despite the rate rise being widely expected - investors had been hoping for a more "dovish" forecast about future rises.
America's central bank resisted pressure from the US president - who has tweeted repeatedly about his opposition to the rise - as it lifted its benchmark rate to a range of 2.25% to 2.5%.
It comes after the US president on Tuesday warned the Fed against making "yet another mistake" in raising rates, urging it instead to "feel the market".
He also urged the bank not to wind down a multi-billion dollar stimulus programme brought in after the financial crisis.
Trump - who appointed the Fed's chairman, Jerome Powell - has repeatedly blamed the central bank for unsettled markets and dismissed analysts who cite other factors, such as rising trade tariffs.
But his remarks have put pressure on the Fed, as presidents generally avoid criticising the bank publicly, for fear of politicising the institution.
Fed chairman Jerome Powell - who was picked by Mr Trump for the role at the start of this year - said politics "play no role whatsoever" in the bank's decision making.
The hike will mean higher borrowing costs for many consumers and businesses.
But the Fed signalled just two more next year, down from a previous forecast pencilling in three - as policy makers weigh the impact of financial market volatility and slowing global growth.
It is now forecasting US economic growth of 2.3% next year, down from an earlier estimate of 2.5%, and also sees the unemployment rate rising slightly more quickly.
Ultra-low rates were used by central banks across the world during the crisis to try to aid economic recovery but policy makers in the US are returning them to a more normal level as they focus on keeping a lid on inflationary pressures.
The Fed said on Wednesday that the US economy has been growing at a strong rate and the jobs market had continued to improve.
However, there are fears that conditions could turn tougher next year as the fiscal boost from Trump's spending and tax cut package fades and the global economy slows.
Monika Walker is an experienced journalist specializing in global political developments and international relations. With a keen eye for accuracy and analysis, Monika has been reporting for over a decade, bringing stories to light that matter to readers around the world. She holds a degree in International Journalism and is passionate about giving a voice to underrepresented communities through factual reporting.
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