Trump hits out at US central bank's decision to hike interest rates - follow live

BBC News  |  Michael Race, Francisco Velasquez

The Federal Reserve unanimously raised US interest rates on September 16, 2026, to a range of 3.75%–4% from 3.5%–3.75%, marking the central bank's first rate increase in over three years. Fed Chair Kevin Warsh cited elevated inflation fueled by surging global oil prices amidst the US-Israel war with Iran as the core driver for the decision.

The monetary tightening occurred despite fierce public resistance from President Donald Trump, who demanded borrowing costs be slashed to 1% or lower to stimulate domestic economic growth. Consequently, the US dollar index surged to 100.27—its highest level since August—while major stock market indexes declined as investors anticipated prolonged high interest rates. Democratic lawmakers, including Senate Minority Leader Chuck Schumer, criticized the rate hike as proof of economic mismanagement, framing rising consumer costs as a pivotal issue for upcoming congressional midterm elections. Further analysis on the political fallout and macroeconomic trajectory remains available here.

Comment

The inflationary shock originating from kinetic operations during the US-Israel war with Iran demonstrates how operational escalation in major oil-producing regions rapidly translates into systemic monetary pressure for belligerent states. Sustained energy supply disruptions force central banks to choose between curbing conflict-induced inflation through interest rate hikes and preserving domestic credit conditions necessary for wartime economic growth. This monetary tightening exposes the underlying fiscal friction created when geopolitical conflict simultaneously drives up defence expenditures and consumer energy costs.

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