The Federal Reserve delivered a major jolt to financial markets Wednesday, raising its benchmark interest rate by a quarter percentage point as policymakers confront inflation that remains stubbornly above their 2% objective.
The unanimous September 16 decision moved the federal funds target range to 3.75% to 4%, marking the first rate increase since 2023 and the first major interest-rate decision under newly installed Fed Chairman Kevin Warsh.
The move puts renewed attention on the relationship between the central bank and President Donald Trump, who selected Warsh to lead the Federal Reserve after repeatedly calling for lower borrowing costs. Instead, Warsh’s first major rate-setting decision has gone in the opposite direction.
All 12 voting members of the Federal Open Market Committee supported the increase. The Fed said the action was necessary to help bring inflation back toward its 2% objective while maintaining what officials described as an economy with solid underlying momentum.
