Trump demands interest rates be lowered 'fast' after Fed announces first hike in three years

The US Federal Reserve has hiked interest rates for the first time in three years, prompting Donald Trump to furiously demand they be lowered.

Mr Trump said that the benchmark interest rate should be lowered to "1% or less because we are the Best Credit in the World - BY FAR".

The Federal Reserve raised its benchmark interest rate by a quarter-point on Wednesday in a bid to tame high inflation.

The decision lifts the Fed's key rate to about 3.9% and, over time, could raise borrowing costs for mortgages, loans and credit cards.

In a post on Truth Social, Mr Trump demanded that interest rates be lowered "fast".

"Our Country is BOOMING with new investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year," he said.

"The word 'Deficit' is nothing more than a fancy word for LOSS. We are 'carrying' almost every country in the World, and that cannot go on any longer."

Americans are struggling with a high cost of living, including groceries, petrol and housing, with the issue becoming a focus of the upcoming midterm elections.

In its quarterly projections, the Fed also signalled that its rate-setting committee expects to hike rates a second time to 4.1%.

Following the decision, the prime rate of JPMorgan, Bank of America, Citigroup, Wells Fargo, KeyCorp, Huntington Bancshares, Fifth ​Third Bancorp and Truist Financial will rise ‌to 7% from 6.75% on Thursday.

In a press conference following the Fed's announcement, Chair Kevin Warsh said the economy was showing signs of gathering speed since the central bank decided to keep rates unchanged in late July.

Read more from Sky News:
US travel bans for South African officials
Support artists quit Ed Sheeran tour

Inflation has also remained stubbornly above the Fed's 2% target and he noted that there was little sign it is easing.

"The plain fact is that inflation is too high and has been for too long," he said.

"We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed."

Mr Warsh noted that other central banks around the world are hiking interest rates in response to global turmoil and higher oil prices.

The European Central Bank raised its key rate last week, and the Bank of Japan is expected to do the same on 18 September.

The Fed next meets in late October and most economists expect officials will keep rates unchanged then because it is just a week before the midterm elections.

But Wall Street analysts now see a rate hike by December as a near certainty, according to futures prices.

(c) Sky News 2026: Trump demands interest rates be lowered 'fast' after Fed announces first hike in three years