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Fed & Monetary Policy

Fed raises rates a quarter point in Warsh's first move, and Trump demands 1%

The Federal Reserve's first increase in three years was unanimous, and the new chairman hinted it may not be the last.

Assembled by Claude from 11 sources at 11 outlets · Thursday, September 17, 2026, Evening edition, 5:13 PM EDT · no human byline

Disclosure. This item was assembled by an AI from the RSS excerpts of the outlets tagged inline. No human wrote or checked it before publication. Feed selection and categories are editorial choices by Teresa Lo. Nothing here is investment advice.

What happened

The Federal Reserve raised interest rates by a quarter point on Wednesday, the first policy adjustment of Kevin Warsh's chairmanship axios.com. The 0.25% increase takes the target range to 3.75% to 4.00% bbc.co.ukseekingalpha.com. It is the first rise in three years semafor.com, and the decision was unanimous bloomberg.com.

Warsh framed the move as overdue. "Inflation is too high and has been for too long," he said as the decision was announced theguardian.com. The Fed also lifted its projection for growth by year-end to 2.3%, up 0.1 percentage points freemalaysiatoday.com, and its 2026 real growth forecast now stands at 2.3 percent while other projections were lowered moneycontrol.com. Axios reported that the statement hinted the quarter point would not be the end of it axios.com.

Why it matters to investors

The increase came despite fierce opposition from the president, who had spent a year calling for cuts bbc.co.uk. Within hours Trump was demanding rates of 1% or lower seekingalpha.com. He had told the Fed chief to "do what you want" before the meeting washingtonpost.com, and afterwards he attacked the central bank while sparing Warsh personally nytimes.com.

That distinction matters, because the pressure on the institution has not been rhetorical alone. The president has moved against a sitting governor, Lisa Cook, and endorsed a Justice Department criminal investigation of Warsh's predecessor, Jerome Powell; Warsh himself was Trump's pick, chosen in January washingtonpost.comtheguardian.com. A unanimous vote to tighten against the White House's stated wish is the cleanest evidence so far of where the committee sits bloomberg.com.

What to watch

The question now is whether this was a single move or the start of a cycle. Richard Clarida, a former Fed vice chairman, said the Fed may not be "one and done" and pointed to the shift from the July stance to a unanimous decision to raise bloomberg.com.

Watch the balance sheet as well as the policy rate. One of the central bank's new task forces will focus on the balance sheet, which Warsh has long criticised as too large reuters.com. That is a second lever, and it is one the new chairman has spent years arguing should be pulled.

And watch whether growth holds. One reading of the meeting is that the economy is resilient enough to absorb higher rates even with inflation still above comfort levels moneycontrol.com. The Fed's own revision points the same way, since the growth projection went up rather than down alongside the tightening freemalaysiatoday.com. If that view survives the next round of data, it is the case for further increases rather than against them, and it is why the press conference drew as much attention as the decision theguardian.com.

Sources

  1. reuters.com: Fed raises rates in first hike under Warsh amid inflation worries - as it happened | Reuters (2026-09-17)
  2. theguardian.com: 'Inflation is too high and has been for too long,' says Kevin Warsh as Fed announces rate hikes (2026-09-17)
  3. axios.com: Fed raises rates a quarter point in first move of Warsh era - Axios (2026-09-17)
  4. bbc.co.uk: Why Trump's hand-picked Fed chair defied him by raising interest rates (2026-09-17)
  5. nytimes.com: Trump Blasts the Fed But Spares Kevin Warsh After Interest Rate Hike - ny times (2026-09-17)
  6. seekingalpha.com: Trump calls for interest rates of 1% or lower, after Fed hikes to 3.75%-4.00% | Seeking Alpha (2026-09-17)
  7. freemalaysiatoday.com: US Fed raises rates to tackle 'too high' inflation, irking Trump - FMT (2026-09-17)
  8. moneycontrol.com: Fed tightens, but growth remains resilient, can absorb higher rates even as inflation remains ... (2026-09-17)
  9. washingtonpost.com: Trump says he told Fed chief to 'do what you want' ahead of interest rate hike (2026-09-17)
  10. semafor.com: Warsh breaks with Trump to raise rates (2026-09-16)
  11. bloomberg.com: Fed May Not Be 'One and Done,' Richard Clarida Says - Bloomberg (2026-09-17)