Senate Democratic Leader Chuck Schumer is blaming President Donald Trump's tariffs and the war with Iran for renewed inflation pressure after the Federal Reserve raised its benchmark interest-rate target for the first time in three years.
The Federal Open Market Committee voted unanimously Wednesday to increase its target range by a quarter percentage point, bringing it to 3.75% to 4%. The central bank said inflation remains elevated and that the move would support a return to its 2% goal.
Fed cites inflation and geopolitical uncertainty
The Fed said the economy continues to expand at a solid pace, with resilient consumer spending, strong productivity growth and little change in unemployment. It also said uncertainty remains elevated in part because of geopolitical developments.
The central bank did not assign responsibility for inflation to the White House, tariffs or the Iran conflict in its policy statement. Schumer made that connection in remarks on the Senate floor, describing the rate increase as a response to what he called the administration's economic policies.
Higher federal funds rates can filter through to borrowing costs for consumers and businesses, including rates on credit cards, auto loans and some mortgages. The effects vary by lender and financial product and are not necessarily immediate.
Schumer renews tariff criticism
Schumer also criticized Senate Republicans for blocking his effort to end the administration's latest tariffs. FingerLakes1.com reported Thursday that a Republican senator objected to Schumer's bid to pass the measure by unanimous consent, preventing it from advancing through that expedited process.
The New York senator said the tariffs are raising costs for families and argued that the rate increase would add pressure for borrowers. He also accused Trump of attacking the Federal Reserve while demanding lower interest rates.
The White House did not provide a response in the Senate Democrats' release. The Fed, which sets monetary policy independently, said it will continue to evaluate economic data and risks as it considers future changes to interest rates.
The new target range took effect Thursday. The central bank also raised the rate paid on reserve balances to 3.9% and increased its primary credit rate to 4% as part of implementing the policy decision.
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