The midterm elections that could change the balance of power in Congress are now less than 50 days away. House and Senate candidates may be the ones with names on the ballot, but Trump and the economy are also present and could influence which party prevails in the election.

Last week, Trump, who made the economy and affordability a key part of his 2024 reelection message, told voters: "Pretend, please, that I'm on the ballot."

Today's rate hike is "terrible news" but Angie Wong, Miami Republican Committeewoman, says it is unlikely to move the needle before most voters head to the polls.

"Even with the [rate] hike of 25 base points, you are not going to see all that much difference over the next five to six weeks left of the election campaigning season," Wong tells the BBC. "I don't know if this is really going to make or break the election."

But Johanna Maska, former aide to President Barack Obama, says voters are already paying attention to the economic health of the country under Trump.

"It was going to be an issue no matter what the Fed did today," she says. "But moving forward, the Democrats need to have an answer to what we are going to do."

The US dollar is currently strengthening against major currencies, including the pound and euro.

The pound was down 0.67% at $1.34. The euro weakened 0.61% against the US dollar to $1.147.

The dollar index, which measures the greenback against a basket of currencies including the pound and euro, rose 0.66% to 100.27 - its highest level since the beginning of August.

Francisco Velasquez
Business reporter

The US central bank raised interest rates today to fight inflation, which is viewed as a huge risk in the US economy, but stock markets dropped anyway. When the decision was first announced, share prices largely held steady, but then they began falling as Wall Street digested the news.

Why the sour mood? Investors worry the Fed is moving too slowly, pushing borrowing costs to 17-year highs.

What does it mean for you?

• Pensions and savings: When markets dip, your long-term savings take a hit.
• Loans and mortgages: US trends trickle everywhere, keeping borrowing pricey.

The big picture? Expect higher borrowing costs to stick around a bit longer.

We just heard from the White House's Senior Deputy Press Secretary Kush Desai, who spoke on Fox News about the Federal Reserve's interest rate increase.

The Fed's decision was "unfortunate", Desai said, and it was "not, from the administration's point of view, backed by a compelling economic case".

"All higher interest rates will do now is stymie the economic progress that the United States has made under this president and administration," he said. "It will raise mortgage rates for every American and punish businesses trying to expand and grow and again."

"None of that gets the core of the issue here, which are energy prices," he added.

But when asked if President Donald Trump still believed in the traditional independence of the Federal Reserve from the White House, Desai said "absolutely".

He added that Trump "has a First Amendment right as an American citizen and as a duty as our commander in chief to voice his opinions when things go awry," he said.

We are still waiting to hear from Trump himself.

Image source, EPA

After the Fed announces its first rate hike in three years, we are seeing reactions from Democratic lawmakers.

One of the top Democrats in Congress, Chuck Schumer, says while speaking on Capitol Hill: "Make no mistake about it. This is going to make everything become more expensive."

"This is because Donald Trump does not know how to manage the economy," the Senate minority leader goes on. "Americans pay more for Trump's incompetence."

Brendan Boyle, the most powerful Democrat on the House Budget Committee, says in a statement: "Donald Trump will undoubtedly try to blame anyone but himself for this rate hike.

"But if he wants to know who caused it, he should look in the mirror."

Meanwhile, House Democrats have published a post on social media: "Because of Trump's war with Iran and sky-high inflation, interest rates are going to be even HIGHER.

"That means loans for cars, homes and credit cards will be even more expensive and more Americans will go into debt."

Michael Race
Business and economics reporter

The Federal Reserve isn't the only central bank grappling to control rising prices - the oil price shock is being felt across the world.

The US central bank also isn't the first to raise rates. Last week, the European Central Bank hiked its main interest rate to 2.5%.

All eyes now turn to the Bank of England, which will decide dates tomorrow - though a hold in the UK is widely anticipated.

Central banks are always weighing up the impact of increasing, holding or lowering interest rates - it's a balancing act, as I noted earlier.

While higher rates can ease inflation, they can also discourage businesses from investing, hiring people or creating jobs - all this can have an impact on economic growth. Not wanting to cut off any growth shoots in the UK might be behind the expectations the Bank of England will hold rates tomorrow.

The BBC took a longer look at what the Fed and Bank of England are up against here.

Each time the Fed announces an interest-rate decision it puts out a brief statement on how it came that decision.

Now that the press conference is over, we've looked at how today's statement differs from the one released in July.

Here are the three biggest changes we noticed.

"Geopolitical developments" vs "Middle East"

• Today: While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient...
• July:Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East...

Capital investment is "robust" vs "strong"

• Today: Productivity growth is strong, and capital investment is robust
• July:Productivity growth and capital investment are strong...

"Timelier return to 2 percent goal"vs"supply shocks"

• Today: Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal...
• July: Inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy...

Image source, Reuters

The last question to Warsh was about labour markets - particularly how higher rates might harm them.

"I don't believe we need to do harm to the labour market to achieve our objectives," he says, adding that the Fed's two mandates (price stability and full employment) can work alongside each other.

Ensuring price stability will help economic growth and help those who are the least well off, he says.

With that, the press conference ends.

Image source, Getty Images

A CNN journalist asks Warsh about AI and whether it could cause damage that affects the economy.

Warsh says he has spent a lot of time thinking about this.

The Fed cares about AI and its implications for demand and supply in the job market and the whole economy, he says.

The chairman says the institution has established a task force that should report by the end of the year, to help it consider AI's implications for future policy.

But policy decisions, he adds, are made by other parts of the government.

"I'm going to leave it to them to make those political decisions," Warsh says, while the Fed focuses on the implications of those decisions that affect its work.

Image source, EPA

Asked about rate hikes by the European Central Bank, the Fed chairman says he won't prejudge the decisions of the Frankfurt-based bank.

He says in meetings with central bank leaders around the world, he has heard they are dealing with price pressures as well and those decisions affect the US, albeit to a lesser extent.

"When foreign central banks make decisions... they are helping to squash inflation in their countries and there is spill over and spill backs in both directions," he notes.

This was a pretty straight-forward decision in Warsh's eyespublished at 20:01 BST

20:01 BST

Michael Race
Business and economics reporter

Image source, Reuters

"The plain fact is inflation is too high and has been for too long," Warsh told the press conference.

That sentence neatly summarised the rationale behind the Federal Reserve's decision to raise interest rates.

It's clear that Warsh sees easing price rises - restoring what he calls "price stability" for Americans - as his priority. He's happy with how the jobs market is looking and how the wider economy is holding up, despite the US-Iran war pushing up prices.

Notably, Warsh chuckled in response to questions regarding what message this sent to President Trump, who called for rates to be cut.

"I have got nothing for you on a discussion with the president," he said, and went on bat away similar questions.

When it came to future rate decisions, Warsh revealed he had declined to offer his own projection.

"I'm not in the forward guidance business," he said.

There was a sober tone to his answers during this press conference. He has been clear that tackling inflation is the top priority of the Fed, and Trump, despite his objections, won't get in the way of that.

A reporter asks how the least well-off Americans will be affected by a higher interest rate.

The least well-off are those who don't own financial assets, he says, describing them as less than 50% of the country and living off their paychecks. Rising interest rates could potentially squeeze business owners, home buyers and bond holders.

The Fed's job is to "ask ourselves if the country is running more or less at full employment", which he says they have done, and keeping prices stable so people can have real take-home pay.

Image source, Reuters

Warsh is asked again about Trump.

"When was the last time you spoke with the president? Do you anticipate a post-decision meeting?" a journalist asks.

Warsh laughs.

"I don't have anything for you on discussions with the president, and I'm not a Wall Street newsletter," he says.

"Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street. We'll let people that do trade policy and fiscal policy stay in their lane too.

"That's how we can stand up here and call them the way we see them," he says.

Image source, Getty Images

Warsh says he "wasn't waiting breathlessly" on any data to make his decision referring to regularly scheduled government reports on the US economy, including one on retail sales posted this morning and the much-watched CPI report.

"Trends matter, data points are noisy," he says. "Data point dependence is a dangerous preoccupation."

This morning's report showed US shoppers are spending more, with retail sales rising 1.2% in August.

Warsh is asked what has changed since the last rate decision in July - when the committee chose to hold the interest rate.

He lays out three points that informed the decision this time:

1. A stronger economy: Data and labour markets show that the economy has strengthened, Warsh says
2. Inflation trends: Summer inflation trends were "not passing the test", he notes
3. And geopolitics: "There's no hiding from hotspots around the world," he says

Warsh was asked what his message was to Donald Trump, who has repeatedly called for interest rates to be cut, not raised.

"I've got nothing for you on a discussion with the president," he replies.

He reiterates that the least well-off have the most to gain from stable prices, and that today's rate rise will "ensure stable prices".

As a reminder: Trump has pushed for lower interest rates since beginning his second term, which led to a major, public dispute with Warsh's predecessor.

Warsh says the rate hike today was based on the Fed's assessment of the strength of the economy and was not led to it based on the market forces.

Most of those in financial markets had treated an increase as a nailed-on certainty, which was reflected in stock prices and bond yields this week.

The decision to raise interest rates has been a possibility for months, since the beginning of his term, Warsh says.

"The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my 120 days here," he says.

He adds that he's not going to prejudge decisions about future rate hikes.

After his statement, Warsh begins taking questions from the media.

He's first asked if he thinks rate rises can address the supply-side of inflationary pressures, namely the rising price of oil due to disruption in the Strait of Hormuz.

Warsh says: "We cannot affect any individual price, whether it be oil prices, whether it be foodstuffs at the grocery store."

"But what we can do and will do is ensure that any change in relative prices don't broaden out," he adds.

Image source, Reuters

The Fed has role in stabilising prices, Warsh says referring to one of the central bank's dual mandates.

"Those who are least well off have the most to gain from a durable expansion, a solid labour market, and stable prices," he adds.

And with that he opens the floor for questions.