The Fed raises interest rates for the first time in three years to combat inflation

The Federal Reserve raised interest rates by a quarter of a point in an effort to combat inflation that has been "too high for too long," in the words of its chairman, Kevin Warsh. This is the first hike since mid-2023, and rates now stand between 3.75% and 4%.

The decision, which had been anticipated by the markets, was described by the White House as "unfortunate." Speaking to Fox News, spokesperson Kush Desay stated that "today's rather unfortunate decision by the Federal Reserve to raise interest rates was not, from the government's perspective, supported by a particularly compelling economic argument,"

Warsh defends his independence against Trump and the markets

This is something Warsh himself vehemently denied: "Part of the Federal Reserve's independence is that we stick to our area of expertise," he said. "We let those who deal with trade policy and fiscal policy stick to theirs as well. That's how we can stand here and tell it like we see it."

Warsh emphasized that inflation is "too high for too long. Inflation risks are on the rise," Warsh stated, "while labor market risks are balanced," allowing the Fed to focus, for now, on rising prices.

The Fed expects another rate hike this year

Furthermore, the Fed estimates that another interest rate hike will likely be necessary between now and the end of the year to combat inflation.

This is reflected in the updated forecasts from U.S. monetary authorities.

According to the median of their projections, they expect the benchmark rates to stand between 4% and 4.25% by the end of the year—one notch above the level announced on Wednesday.