The Federal Reserve is now projected to raise interest rates by 25 basis points this month after August’s jobs report nearly tripled expectations, adding 162,000 jobs against the 53,000 forecast. Fed Governor Michael Barr indicated support for a rate hike unless inflation shows convincing signs of easing. The current federal funds rate is between 3.50% and 3.75%. President Donald Trump has publicly called on the Fed to lower rates, threatening trade action. Analysts now await the next inflation report, which will be the ultimate decider for the Fed’s policy path.
The Federal Reserve is now projected to raise interest rates by 25 basis points this month. This follows an August jobs report from the Bureau of Labor Statistics that nearly tripled expectations.
U.S. employers added 162,000 jobs last month against the 53,000 that economists anticipated. According to Fed Governor Michael Barr, he and the Fed would back a rate hike unless inflation shows convincing signs of easing soon.
The current federal funds rate target range is 3.50% to 3.75%. Benchmark 30-year fixed mortgage rates average approximately 6.66% to 6.68%.
Last week, Fed Chair Kevin Warsh told the Jackson Hole symposium that policymakers would “have work to do” if they lacked confidence inflation was returning to the 2% target. This was his clearest signal yet that further rate hikes may be needed.
Amid fresh worries over the US-Iran war, yields jumped again Tuesday. The benchmark 10-year note hit its highest level since January 2025.
President Donald Trump is again threatening the Fed to cut rates after the jobs report, contrary to projections. He touted the jobs numbers before quickly turning his attention to the central bank.
“Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” he wrote on Truth Social. He added, “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
While Trump often pressured former Chair Jerome Powell, the current Fed Chair is backed by Trump. This could change how the Fed maneuvers its upcoming meeting.
The upcoming inflation report will be the ultimate decider for the Fed’s interest rate decision.
