The Fed unanimously agrees to hike interest rates for the first time since 2023, despite Trump’s call for the ‘lowest rates’ in the world

The Federal Reserve raised its benchmark rate by 25 basis points on Wednesday, increasing the benchmark federal funds rate to a range of 3.75% to 4%.

It was the first increase since 2023 and the first thing Kevin Warsh has done to interest rates since President Donald Trump handed him the chair role.

The vote was unanimous.

Trump picked Warsh to deliver the “lowest rates” in the world, and Warsh has now delivered the first hike of Trump’s second term.

Between Warsh’s nomination and Wednesday’s vote, the President called the committee “clowns” for wanting the hike.

But the data left officials little choice; after five years of above-2% inflation, dour consumer sentiment, a war in Iran and strong jobs reports, the Fed needed to hike to support a “timelier” return to 2% inflation.

August CPI was the nail in the coffin, rising 0.4% on the month, quadruple the pace of July.

By Tuesday, futures put the odds of a hike at 93%—at this point, it would have been more surprising for the Federal Reserve to decide against raising rates.

The statement didn’t provide any hints about forward guidance.

“Inflation remains elevated,” it said.

“Today’s policy action will support a timelier return to the Committee’s 2 percent goal.

The Committee will deliver price stability.” It also described productivity growth as strong and capital investment as robust.

Warsh’s own dissenters got there first.

Beth Hammack, Neel Kashkari, and Lorie Logan voted for a hike in July and lost 9–3.