The US Federal Reserve (Fed), led by Fed Chair Kevin Warsh, raised interest rates for the first time since July 2023. The policy rate was raised by 25 basis points to a range of 3.75-4%, with the decision approved unanimously by all 12 members. Warsh said inflation had remained high for a long time, signaling a commitment to fighting it.
The decision came after Donald Trump had repeatedly called for rate cuts. Although Trump said interest rates should be 1%, he responded to the increase more moderately than expected; he said he trusted Warsh but argued that FOMC members were creating difficulties. Trump said before the decision that he had spoken with Warsh, while the Fed chair did not disclose details of the meeting and said the decision was based on economic assessments. Analysts said possible further increases could intensify pressure from Trump, while perceptions of political pressure could affect market confidence and inflation expectations.
Why it matters
The decision shows that the rationale of fighting inflation in monetary policy has been placed ahead of calls for rate cuts coming from the presidency. While this has brought the debate over the Fed’s independence in the face of political pressure back to the forefront, it leaves open the question of whether subsequent steps will be influenced not only by economic data but also by perceptions of pressure on the institution. From a market perspective, the key issue is whether the rate increase will contain inflation expectations and how the possibility of another increase will affect confidence. However, council notes state that the September 2026 timing in the article and the information concerning Kevin Warsh’s chairmanship conflict with historical events that have taken place; therefore, the chronology of the text requires separate verification.
Background
Trump is not a new name in the FikirPilot archive: over the past 90 days, we have published 20 articles mentioning this name; the most recent was dated September 18, 2026.
Term: inflation
Inflation is the continuous increase in the general price level and the decline in the purchasing power of money.