Kevin Warsh may be the adult in the room. But can he calm the US economy?
News Source
β’Sat, 19 Sep 2026 11:00:45 GMT
π° What Happened
The US Federal Reserve raised interest rates for the first time in three years. Chair Kevin Warsh led a decision that all members backed. He said the move shows the bank is serious about fighting inflation, which has stayed above its 2% target for more than five years.
The rate rise came weeks before elections that will decide who controls Congress. A White House adviser had warned that an independent Fed should stay out of election season.
President Donald Trump reacted angrily. He wrote that US rates should be 1% or less and told the Fed to cut fast. The decision also clashes with the government's own plans on spending and tariffs.
π The Backstory
Trump often attacked the previous Fed chair, Jerome Powell, over rates. He has not turned on Warsh in the same way yet. Inflation has stayed stubborn despite hopes it would fall.
Central banks raise rates to cool prices, but that makes borrowing dearer for homes, cars and business loans. Cutting rates does the opposite.
π― Why It Matters
US interest rates set the tone for borrowing costs worldwide, including in Australia. Higher rates mean pricier mortgages and loans, but they also help slow the rising cost of living.
The US Federal Reserve raised interest rates for the first time in three years. Chair Kevin Warsh led a decision that all members backed. He said the move shows the bank is serious about fighting inflation, which has stayed above its 2% target for more than five years.
The rate rise came weeks before elections that will decide who controls Congress. A White House adviser had warned that an independent Fed should stay out of election season.
President Donald Trump reacted angrily. He wrote that US rates should be 1% or less and told the Fed to cut fast. The decision also clashes with the government's own plans on spending and tariffs.
Trump often attacked the previous Fed chair, Jerome Powell, over rates. He has not turned on Warsh in the same way yet. Inflation has stayed stubborn despite hopes it would fall.
Central banks raise rates to cool prices, but that makes borrowing dearer for homes, cars and business loans. Cutting rates does the opposite.
US interest rates set the tone for borrowing costs worldwide, including in Australia. Higher rates mean pricier mortgages and loans, but they also help slow the rising cost of living.