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Fed raises rates for first time since 2023, defying Trump

Washington, District of ColumbiaPublished 16 Sep 2026

Federal Reserve Chair Kevin Warsh at the White House on May 22, 2026.
Federal Reserve Chair Kevin Warsh at the White House on May 22, 2026.

The White House / Wikimedia Commons, Public domain · source

The FOMC voted 12-0 to lift the federal funds rate to 3.75–4%, Chair Kevin Warsh’s first hike, as inflation stays above 2%.

The Federal Reserve on Sept. 16, 2026, raised its benchmark rate a quarter point to a 3.75–4% range, the first increase since July 2023. All 12 FOMC voters, including Trump-appointed Chair Kevin Warsh, backed the move. Officials signaled another hike this year is likely. President Trump has pressed for cuts and posted that rates should be 1% or less. Warsh said inflation is too high and has been for too long.

Shared facts

The Federal Reserve raised its benchmark interest rate by a quarter of a percentage point.

The federal funds target range is now 3.75% to 4%.

The FOMC voted 12-0 to raise rates.

It was the Fed's first rate increase since July 2023.

The Fed had left rates unchanged at its first five meetings of 2026.

Warsh took over as Fed chair in May.

The FOMC said inflation remains elevated.

The Fed said the hike will support a timelier return to its 2% inflation goal.

The committee said it will deliver price stability.

The Fed said economic activity is expanding at a solid pace.

The Fed said uncertainty remains elevated owing in part to geopolitical developments.

The Fed said domestic spending has been resilient.

Warsh said inflation is too high and has been for too long.

Trump's tariffs and AI capital spending have also pressed prices.

Warsh said inflation has been running above the Fed's target for more than five years.

Warsh said the Fed's predominant focus is on the price-stability side of its mandate.

Warsh said the FOMC decided underlying inflation is not moving to the 2% objective clearly and at sufficient speed.

Warsh said the American economy appears to be strengthening.

Fed officials' projections signal another rate increase this year.

Four officials saw two more rate increases as possible this year.

Two officials expected the committee to stop at this one hike.

Warsh did not submit a rate projection.

Annual CPI inflation was 3.4% in August.

Consumer prices rose 0.4% in August from July.

Officials see headline PCE inflation at 3.7% this year.

Trump repeatedly berated predecessor Jerome Powell for not lowering rates.

The Iran war has pushed up energy prices and inflation.

AAA said diesel averaged a record $6.31 a gallon.

The 10-year Treasury yield topped 5%.

President Trump has repeatedly pressed the Fed to lower rates.

After the decision Trump posted that U.S. interest rates should be 1% or less.

Trump posted that rates should be lowered fast.

Trump did not name Warsh in that post.

Markets had priced about a 90% or greater chance of a hike.

The Dow Jones Industrial Average fell about 1.2%.

The Nasdaq ended little changed.

The government launched a criminal probe into Jerome Powell.

Warsh declined to discuss a conversation with the president.

Warsh has discouraged forward guidance on the rate path.

Disputed facts

Sources disagree on whether Fed officials expect rates to stay unchanged through 2027.

Sources disagree on whether the S&P 500 rose or fell after the decision.

Sources disagree on the date of the Fed's next meeting in late October.

Al Jazeera

US Fed raises interest rates as inflation weighs on economy

Megha Bahree

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

The decision comes just weeks before the US midterm elections.

A week earlier that forecast was a 40% chance of a quarter-point increase.

The job market remains healthy.

Brent crude hovered near $109 a barrel on Tuesday.

AAA said the average gasoline price is $4.36 a gallon, up 14 cents in the past week.

Klein said there has been a lot of pressure on Warsh to raise rates because inflation came in high.

Michael Klein said the economy is in an unusual place.

The White House did not immediately respond to Al Jazeera's request for comment.

Trump said the country is booming with new investment.

Powell said the probe was a pretext to undermine Fed independence.

Opinion

Klein said higher rates tend to weaken the economy but a priced-in hike will not be news.

CBS News

Federal Reserve raises interest rates for the first time since 2023

Aimee Picchi

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

The latest hike marks an about-face from the start of the year, when many economists expected rate cuts through 2026.

The Fed raised rates 11 times starting in 2022.

Financial experts said banks are likely to raise credit-card and lending rates, though a single 0.25-point increase might not raise costs much.

Heather Boushey said consumer sentiment is 13% below a year ago.

Opinion

CBS said the move does not appear to signal an aggressive rate-hiking campaign.

Michael Pearce said this is not the beginning of another major tightening cycle.

CBS said policymakers are brandishing their most potent weapon to curb prices.

Heather Long said hiking was the right move and restores Fed credibility to curb inflation no matter what the White House says.

Long said Warsh was hawkish today.

Long said further hikes likely depend on the Iran war and the data-center boom.

Boushey said the hike will make it harder for families to borrow.

CNBC

Fed approves interest rate hike, signals one more to come this year

Jeff Cox

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

Sixteen of 18 participants expected another rate increase.

Officials see core PCE at 3.4%, both 0.1 point higher than June.

The Fed does not expect to reach its inflation target until 2029.

Officials penciled in no increases after this year, with a cut indicated for 2028 and at least one for 2029.

The Fed sees headline PCE at 2.3% and core at 2.5% in 2027.

The committee lowered its unemployment outlook to 4.1%, down 0.2 point from June.

Officials have weighed the cost of looking through price increases given a stabilizing labor market.

In July three FOMC members voted against a hold, preferring a quarter-point hike.

Mortgage News Daily said a 30-year fixed mortgage had soared to 7.19%.

Fed officials once thought the Covid supply-and-demand shock would fade.

The 10-year note has risen about a quarter point since Warsh's Aug. 28 Jackson Hole remarks.

Inflation readings hit 40-year highs before the Fed decided to act.

The 2-year note has seen even sharper gains.

Treasury yields were lower after the decision.

Opinion

CNBC said the worry is that lasting energy prices could raise inflation expectations.

CNBC said the rationale behind the hike was unusual.

Brad Conger said today's FOMC could mark the moment the committee regained a measure of spine.

Conger said the committee sided with main street.

CNBC said that was a signal investors were encouraged by the attempt to tamp down inflation.

Conger said the move might be a glimpse of Volckerian decisiveness versus Powell-era sycophancy.

Conger said inflation is a pervasive concern impeding business decision-making.

Fox News

Federal Reserve hikes interest rates for first time since 2023 amid stubborn inflation

Eric Revell

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

The prior target range was 3.5% to 3.75%.

Warsh said this summer's inflation readings do not show underlying trends have meaningfully improved.

Warsh said he would be hard-pressed to describe broad financial conditions as restrictive.

The Fed said productivity growth is strong and capital investment is robust.

The Fed said job gains have kept pace with the workforce and unemployment has changed little.

Warsh said unemployment remains low at around 4.1%.

Warsh said August PCE was likely around 3.6%, well above the 2% target.

Warsh said the labor side of the Fed's remit is in good shape.

Warsh said economic strength, private capital spending, and geopolitics have pushed Treasury yields higher.

Warsh said sometimes the market tries to prejudge outcomes, but today was the Fed's decision.

Warsh pointed to three things that prompted the move after a hold seven weeks ago.

Warsh said the first reason is economic strength.

Warsh said the second reason is competition for capital.

Warsh said the third reason is geopolitics.

Warsh called the 10-year Treasury the risk-free asset affecting virtually every asset price.

CME FedWatch showed a 51% chance of another 25-basis-point hike at the next meeting and 49% of a hold.

The subsequent meeting is December 8-9.

Opinion

Kay Haigh said the Fed has signaled it does not envisage an aggressive tightening cycle.

Seema Shah said the Fed has begun its hiking cycle and the debate shifts to how many hikes lie ahead.

Shah said the unanimous vote shows doves are on board, making a one-and-done move highly unlikely.

Haigh said the Fed will likely skip October's meeting given its proximity to the midterms.

Haigh's base case is one more hike in December, contingent on CPI and energy prices.

Shah said policymakers will probably need at least one more hike to safeguard credibility.

NPR

The Fed raises interest rates for the first time in over three years

Scott Horsley

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

At Jackson Hole, Warsh said responsibility for 65 months of elevated inflation sits with the central bank.

Since April, prices have been climbing faster than average wages.

The 10-year yield helps set rates for mortgages and car loans.

Opinion

NPR said the hike was a show of determination to attack stubborn inflation.

Hepp said the bigger question is whether the Fed risks fighting the wrong inflation battle.

Selma Hepp said the decision reinforces the Fed's commitment to price stability and addresses credibility concerns.

NPR said diesel has the potential to raise the cost of goods moved by truck or train.

New York Post

Fed hikes interest rates for first time since 2023 in bid to tamp down inflation

Taylor Herzlich

Published 16 Sep 2026 accessed 16 Sep 2026

Facts

It was the first rate move under Warsh.

Trump hand-picked Warsh after lambasting predecessor Jerome Powell for not lowering rates fast enough.

Warsh said those least well off have the most to gain from a durable expansion, a solid labor market and stable prices.

Warsh called for a good family fight over policy decisions after taking the helm.

Opinion

The New York Post said the hike drew a muted rebuke from President Trump as the midterms approach.

The Post said Warsh tried to counter criticism that rate hikes could hurt lower-income Americans.

Christian Hoffmann said he worries the move neither tames inflation nor fully restores credibility.

Hoffmann said the decision and projections read as moderately more hawkish than expected.

Alex Guiliano warned that dropping forward guidance could lead to more stock-market volatility.

The Post said a second hike just before the November midterms could invite backlash from Trump.