Fed Defies Trump With Rate Raise

The Federal Reserve raised interest rates by 0.25 percent to between 3.75 and 4 percent yesterday, the first increase since 2023.

• The Federal Open Market Committee unanimously agreed on the decision.
• 10 of the committee’s 12 members anticipate another increase this year.
• The move is designed to lower inflation from 3.4 percent to 2 percent.

Federal Reserve Chairman Kevin Warsh attributed the decision to the U.S. economy strengthening since the July Fed meeting, while factoring in high inflation and geopolitical tension.

President Trump disagreed with the decision.

• He posted on social media yesterday that “interest rates in the United States should be 1 percent or less,” and “Lower the interest rates for the United States of America, and fast!”
• On September 4, he threatened that if rates don’t drop, he would cut trade with all nations the U.S. has a trade deficit with, which includes many major allies.

The markets didn’t like the decision either.

• The S&P 500 closed 0.4 percent lower.
• The Dow Jones Industrial Average fell by 1.2 percent.

The U.S. national debt has surpassed $40 trillion. Raising rates will make that debt more expensive. However, if rates aren’t raised, inflation, which is high partly because of the Iran war, will continue to rise. At the same time, markets are gambling trillions of dollars on speculative technologies that benefit from lower rates. The government has no solution.

This financial crisis is a curse because of America’s disobedience to God’s laws (Leviticus 26; Deuteronomy 28). America’s financial difficulties will persist until the nation suffers a financial meltdown.