Federal Reserve faces pressure to lower rates amid high inflation

WASHINGTON —

The Federal Reserve will announce new interest rates on Wednesday.

The central bank’s benchmark interest rate is currently 3.5% to 3.75%. Experts predict the Federal Reserve will likely keep interest rates unchanged. This rate impacts what consumers pay in interest for just about everything from credit cards to car loans.

For the first time in years, inflation fell nearly half a percent to 3.5% in June, largely due to falling gas prices compared to the previous few months. The decrease in energy prices, which started in May, coincided with a slowdown in Iran strikes. However, recent escalations have caused prices to rise again. According to AAA data compiled by the Get the Facts Data Team, average gas prices bottomed out in early July at $3.79 and rose to $4.10 by Tuesday.

Kevin Warsh, who became the head of the Federal Reserve in May, emphasized the central bank’s goal of reducing inflation to 2%, though he has not detailed how this will be achieved.

Warsh is facing pressure from President Donald Trump to lower interest rates, even though the Federal Reserve is meant to operate independently from political influence.

“He wants to do the right thing. I know what he wants to do. But you, you need the consent of some people that have perhaps bad intentions. Rates should be lowered,” Trump said earlier this week.

No matter what Warsh announces today, affordability remains a key concern for Republicans as the midterm elections approach, now less than 100 days away.

Americans feel the pinch of inflation

Pew Research surveyed voters this month and asked what issue was top of mind for them in the midterms this year. Nearly one-third of people said the economy.

New polling this week from CBS News finds more than half of people rate the economy as ‘fairly’ or ‘very bad,’ and about the same number say it’s getting worse.

That same poll showed broad majorities disapprove of how Trump is handling the economy and inflation.

When it comes to who voters trust on the economy, the latest Fox News poll gives Democrats a nine-point lead.

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