Warsh's Fed Hikes for the First Time Since 2023 — and Signals More
The Federal Reserve raised rates a quarter-point to 3.75–4% — unanimous, the first rise in over three years, and the first act of Kevin Warsh’s chairmanship: “The plain fact is that inflation is too high and has been for too long… This committee will deliver price stability.” The projections pencil one more rise this year; inflation is not seen back at 2% until 2029. Mr Trump erupted — “Interest Rates in the United States should be 1%… LOWER THE INTEREST RATES… AND FAST!” — while claiming he told his chairman the board is “very hostile”.
The unanimity is the message: a committee spanning doves to hawks voting 12-0 to hike into a president’s explicit fury — two months before midterms, with mortgages near 7% — is the institution staking its independence on the one ground where it cannot be outflanked, the inflation number itself. Mr Warsh’s performance deserves study: no dot submitted, guidance disavowed (“I’m not in the forward guidance business”), independence framed as reciprocal (“a two-way street”) — a chairman husbanding optionality in both directions, against markets and against the man who appointed him. The statement’s deletion of “supply shocks” as inflation’s explanation is the technical tell: the Fed now believes the war’s prices are breeding. Watch the October meeting odds — and every presidential post between now and then.