Fed Raises Interest Rates, Iran War and Oil Prices, EU-Canada Alliance
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What is the Fed’s new interest‑rate decision and why does it matter?
President Trump's hand-picked Fed chair, Kevin Warsh, did the opposite of what Trump wanted him to do. He raised interest
rates. The president is not happy and pressed the Fed to reverse course and lower rates. How is the new chair reacting to the pressure?
I'm A. Martinez, that is Michelle Martin, and this is a burst from NPR News. From Syria to Portugal, people are protesting higher fuel prices, with the war in Iran showing no sign of ending. Countries are drawing from their oil reserves, and Saudi pipelines are under attack.
Canada's prime minister will address the European Parliament today after an invitation to become the EU's first associate member. Trump threatened more tariffs if he decides it's a hostile act. Stay with us. We'll give you news you need to start your day.
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How is the Fed’s rate hike expected to cool inflation and affect borrowers?
Interest rates are higher this morning after the Federal Reserve raised them for the first time in three years.
The vote on Wednesday was unanimous, and now the Fed's benchmark short-term interest rate is a quarter of a percentage point higher, which is exactly the opposite of what President Trump wanted when he chose a new Fed chair.
NPR's Alina Selyuk is here to walk us through the latest. Good morning. Hello, hello. Okay, so we know what happened. Let's talk about why and what it means that
the Fed has
raised the interest rate.
Well, it means the Federal Reserve is making the move to cool down inflation. I'll tell you my corny metaphor for this. You know how in a fire there's like a red box that says in case of emergency break glass? Yeah. Well, if you think of inflation as a fire, the rate hike is like the Fed saying emergency and breaking that glass to grab the extinguisher. But the Fed is also hoping they don't have to like blast away for a long time, which is to say the Fed's rate setting committee signaled one more rate hike this year. And that's
it. Not quite a dad joke, but we'll take it. I'll do my best. Let's get to the political drama here. Trump pressured the previous Fed chair, Jerome Powell, to lower interest rates. He even threatened to fire Powell over this. Not clear that he could, but he threatened it. So Powell's term as chair ended. Trump picked a replacement, Kevin Warsh. And now, pretty soon after Warsh took over, the Fed raised rates. So where does this leave the Fed chair now?
Yeah, last night, Trump again on social media pressed the Fed for lower rates. This dynamic came up a lot in Warsh's press conference yesterday. Like Powell, Warsh refused to engage. He kept saying the Fed is independent, the Fed should stay in its lane, and he has nothing to say about the president. Say more about the argument for raising rates. So fundamentally, the Fed has a certain credibility maintain and the data is the data, which is what Warsh essentially said. The inflation trends are simply not improving.
The plain fact is that inflation is too high and has been for too long.
Inflation has been above the Fed's goal for five years. And Warsh made the case that this is a strong economy to absorb this rate hike.
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Chapters
6 chapters
1
What is the Fed’s new interest‑rate decision and why does it matter?
0:02–1:56
2
How is the Fed’s rate hike expected to cool inflation and affect borrowers?
1:56–4:17
3
Why is the Fed Chair Kevin Warsh refusing President Trump’s pressure to cut rates?
4:17–8:09
4
How are Iran‑related wars and attacks on Saudi oil infrastructure driving global fuel‑price protests?
8:09–11:10
5
What are the humanitarian and economic impacts of the Saudi‑Houthis conflict on the Gulf region?
11:10–13:48
6
What does the EU’s “associate‑member” proposal mean for Canada’s trade and security ties?
13:48–15:17
Speakers
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