Fed raises rates to 3.75%-4% in first hike under Chair Warsh

September 17, 2026 at 12:06 AM2 min

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The Federal Reserve raised its benchmark interest rate by a quarter point to a range of 3.75% to 4% on Wednesday, the first policy move under Chair Kevin Warsh. The Federal Open Market Committee voted unanimously, and new projections show 12 of 18 officials expect one more hike this year. The move comes as inflation remains above the Fed's 2% target and President Trump has demanded lower rates.

Key Facts

The Federal Open Market Committee voted unanimously to raise the federal funds rate target range to 3.75% to 4%.
Twelve of 18 Fed officials project one more rate hike this year, and four see two more hikes as likely.
Inflation was 3.3% in the 12 months through July by the core Personal Consumption Expenditures Price Index.
The rate hike is the first since 2023 and reverses a cut made last December.
President Trump has threatened to cut off trade ties unless interest rates are lowered.

The Rate Decision

The Federal Reserve raised its target range for the federal funds rate to between 3.75% and 4% on Wednesday. The Federal Open Market Committee voted unanimously for the quarter-point increase. The move reverses a rate cut that took place last December and is the first hike since 2023. Chair Kevin Warsh said the committee decided that the standard of confidence in underlying inflation had not been satisfied.

Inflation and Projections

Inflation was 3.3% in the 12 months ended in July by the Fed's preferred measure, the core Personal Consumption Expenditures Price Index. August inflation data released so far points to inflation remaining elevated through the summer. New projections show 12 of 18 top Fed officials anticipate one more rate hike this year. Another four officials see two more hikes as likely to be justified.

Political Pressure

President Trump has long demanded lower interest rates and criticized Warsh's predecessor for failing to deliver them. Trump threatened to cut off many trade ties unless interest rates are lowered. Warsh said the central bank's independence also means staying out of decisions made elsewhere in government. The rate hike could bolster Warsh's credibility as an inflation-fighter but risks putting him in the crosshairs of the president.