Federal Reserve Raises Rates by Quarter Point to 3.75%-4% in First Hike Since 2023

The Federal Reserve raised its benchmark interest rate by 25 basis points on September 16, bringing the federal funds rate to a target range of 3.75%-4%. The Federal Open Market Committee voted 12-0 in favor of the increase, its first rate hike in three years, citing persistently elevated inflation. The committee's post-meeting statement said "inflation remains elevated" and that the move would "support a timelier return to the Committee's 2 percent goal."

Fed Chairman Kevin Warsh held a news conference following the decision to explain the rationale, which the Zero Hedge headline characterized as hiking "into stagflation," reflecting ongoing concern that tighter policy is being applied even as growth faces headwinds. The 10-year Treasury yield had already scaled to its highest level since 2007 ahead of the meeting, hitting 5.041% earlier in the week, as markets priced in higher-for-longer inflation driven in part by elevated energy prices.

The decision came despite public pressure from the White House. President Trump and Treasury Secretary Bessent had voiced opposition to rate increases, with Trump going so far as to threaten trade measures tied to Fed policy. The Fed's quarterly Summary of Economic Projections indicated officials see at least one additional quarter-point hike as likely before year-end.