The Federal Reserve raised its benchmark overnight rate by a quarter percentage point to a 3.75%–4.00% target range on Wednesday — the first hike since 2023 and the first policy shift under Chair Kevin Warsh — in a unanimous FOMC decision aimed at a “timelier” return of inflation to 2%, Reuters reported.
Updated projections showed 16 of 18 policymakers anticipating at least one more quarter-point increase by year-end, with the median path putting the policy rate in the 4.00%–4.25% range at the end of 2026 and holding there through 2027. Officials marked up PCE inflation to 3.7% for 2026 and do not project a return to the 2% target until 2029. Median real GDP was marked to 2.3% this year, with unemployment ending near 4.1%.
Warsh told reporters inflation “remains elevated” and said he would be “hard-pressed to describe broad financial conditions as restrictive,” framing the move as removing “a dose of accommodation.” President Trump repeated calls for rates near 1% on Truth Social after the decision; Warsh emphasized the committee’s inflation mandate. CME FedWatch showed markets pricing a high probability of another hike before year-end, Reuters said.
Sources: Reuters; Federal Reserve (Warsh opening statement); Bloomberg
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