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    "original_url": "https:\/\/www.nytimes.com\/2026\/09\/16\/business\/economy\/federal-reserve-interest-rates-warsh.html?emc=edit_nn_20260917&nl=the-morning&segment_id=226633",
    "parsed_content": "U.S. EconomyFed MeetingInterest Rates RisePoverty RateKey Borrowing RateElevated InflationGas PricesAdvertisementSKIP ADVERTISEMENTSupported bySKIP ADVERTISEMENTFed Raises Rates in First Major Step by Warsh to Contain InflationThe Federal Reserve\u2019s first increase to interest rates since July 2023 comes less than two months before the midterm elections.Share full articleKevin Warch, the Federal Reserve chairman, after Wednesday\u2019s announcement that the central bank would raise interest rates for the first time in more than three years. Credit...Saul Loeb\/Agence France-Presse \u2014 Getty ImagesBy Colby SmithPublished Sept. 16, 2026Updated Sept. 17, 2026, 9:31 a.m. ETSee more of our coverage in your search results.Encuentra m\u00e1s de nuestra cobertura en los resultados de b\u00fasqueda. Add The New York Times on GoogleAgrega The New York Times en Google The Federal Reserve raised interest rates by a quarter of a percentage point on Wednesday, the first increase in more than three years and a significant step by Kevin M. Warsh, the central bank\u2019s chairman, to combat elevated inflation.The decision, which lifts rates to a new range of 3.75 to 4 percent, was supported by all 12 members of the Federal Open Market Committee.\u201cThe plain fact is that inflation is too high and has been for too long,\u201d Mr. Warsh said at a news conference after the decision was announced. He added that the U.S. economy remained strong and unemployment was low, justifying the Fed removing what he described as a \u201cdose of accommodation.\u201dIn a statement accompanying the rate decision, the Fed said Wednesday\u2019s increase \u201cwill support a timelier return to the committee\u2019s 2 percent goal.\u201dAdvertisementSKIP ADVERTISEMENTMr. Warsh steered clear of providing any guidance about the path forward for rates after Wednesday\u2019s move, however, saying that he did not want to \u201cprejudge any future decisions we make.\u201dBut in new forecasts, policymakers indicated that there would likely be additional increases. According to the latest \u201cdot plot,\u201d which tracks what officials think will happen to borrowing costs over the coming years, the vast majority of policymakers who submitted projections expect at least one more quarter-point move by the end of the year. Four officials thought rates would need to rise half a percentage point from here this year.Stocks closed lower for the day, with the S&P 500 off 0.4 percent, the Nasdaq Composite inching lower and the Dow Jones industrial average down more than 1 percent.Investors now anticipate three additional quarter-point interest rate increases through 2027. The two-year Treasury yield, which is sensitive to changes in interest rates, rose 0.06 percentage points to 4.7 percent. The 10-year Treasury yield steadied around 5 percent, while the 30-year Treasury yield nudged lower to 5.35 percent.Wednesday\u2019s decision is a momentous one for Mr. Warsh, who was selected by President Trump to lead the Fed and took over the top job just four months ago. During the selection process, Mr. Trump said he would only choose someone who supported lower borrowing costs, although he vowed during the swearing-in ceremony that he would respect Mr. Warsh\u2019s independence.AdvertisementSKIP ADVERTISEMENTLater on Wednesday, Mr. Trump reiterated that U.S. rates should 1 percent or less, \u201cbecause we are the \u201cBest Credit in the World \u2014 BY FAR.\u201d He alluded to his early threat to cut off a broad swath of U.S. trade if the Fed did not soon reduce borrowing costs.\u201cLOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!\u201d he said.However, he did not publicly castigate Mr. Warsh for the decision to raise rates, a notable change from his approach to the previous chair, Jerome H. Powell, whom he repeatedly attacked for not complying with his demands.Mr. Trump later suggested to reporters that he had spoken to Mr. Warsh, casting the blame on the other six members of the Board of Governors, some of whom were appointed by Mr. Trump in his first term.The president said he told Mr. Warsh that he \u201cmight as well vote with the board because it\u2019s just not going to matter. The board is very hostile. They\u2019re very political. They\u2019re doing the wrong thing.\u201dAsked repeatedly about Mr. Trump\u2019s demand for lower rates, Mr. Warsh said the Fed\u2019s job was to \u201cstay in our lane.\u201dAdvertisementSKIP ADVERTISEMENT\u201cIndependence is a two-way street,\u201d he added. \u201cWe let people that do trade policy and fiscal policy stay in their lane too.\"The case for cutting rates evaporated long before Mr. Warsh took the helm of the Fed in May. Mr. Trump\u2019s war with Iran, which began in February and immediately sparked a surge in energy prices, upended the outlook for inflation and forced a rethink among officials at the central bank about their policy settings.In the months since, growth has held up well, the unemployment rate has stayed low and consumers have continued to spend, suggesting that rates were not inflicting that much restraint on the economy and in turn, inflation. Financial markets have also undergone a rapid reset, with yields on longer-dated U.S. government bonds now trading at multiyear highs, raising borrowing costs across the economy.That shift prompted Treasury Secretary Scott Bessent over the past month to embark on a series of interventions to force down borrowing costs. So far, those efforts have proven futile, with 10-year Treasury yields now trading around 5 percent.Mr. Warsh ascribed the rise in longer-term borrowing costs to three factors. The first was higher growth prospects; the second, competition for capital as technology companies borrow heavily to finance the expansion of their artificial intelligence capabilities; and the third was geopolitics, or higher oil prices caused by the Iran war.AdvertisementSKIP ADVERTISEMENTImportantly, he did not convey that concerns about the Fed\u2019s credibility in fighting inflation or about the long-term fiscal sustainability of the U.S. government were behind the recent moves.This backdrop, coupled with minimal signs that inflation was progressing steadily to the 2 percent target, gave the Fed limited latitude to do anything but raise rates on Wednesday.Mr. Warsh\u2019s decision to stake his reputation as chairman on getting inflation down also bolstered the case. Mr. Warsh reinforced his commitment as recently as last month, stating in a closely watched speech at the central bank\u2019s annual conference in Jackson, Wyo., that the Fed \u201cmust be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.\u201dMr. Warsh on Wednesday said that he was most focused on the trends in inflation rather than specific data points, which he described as \u201cnoisy.\u201d\u201cData point dependence is a dangerous preoccupation,\u201d he added. \u201cIt\u2019s not something that concerns me. Markets over time will come to understand how this Fed makes its decisions, what\u2019s relevant and not.\u201dAdvertisementSKIP ADVERTISEMENTMost officials see inflation, as measured by the Personal Consumption Expenditures price index, ending the year at 3.7 percent, slightly higher than officials thought just three months ago. They also revised up their estimates for \u201ccore\u201d inflation, which strips out volatile food and energy items, to 3.4 percent.As of the latest data in July, overall inflation stood at 3.7 percent compared with the same time last year. Core inflation was up 3.3 percent from a year earlier. The 2 percent target is not expected to be reached until 2029.In 2027, the median estimate for rates stood at 4 percent to 4.25 percent, although there was a range of views. Eight policymakers forecast that rates would end the year a quarter of a percentage point higher than that, while four expected rates to be no higher than 3.5 percent to 3.75 percent.Policymakers remained upbeat about the trajectory for growth and the labor market over this time period, projecting that the economy would expand 2.3 percent in 2026 and 2.4 percent in 2027. They see the unemployment rate slightly lower, at 4.1 percent, compared to three months ago, in line with today\u2019s level.The dot plot once again had fewer entries, with not all 19 policymakers submitting projections. Mr. Warsh in June declined to do so, reflecting his opposition to providing forecasts that he argues box the Fed in. One official submitted forecasts, but only through 2027.The dot plot, along with other communication tools at the Fed\u2019s disposal, is the focal point of one of five task forces Mr. Warsh created to look into issues that are central to the Fed. The other groups are looking into the Fed\u2019s $6.7 trillion portfolio of government debt and mortgage-backed securities; the data sources the central bank prioritizes; productivity trends and jobs; and the models and measures officials use to understand inflation.AdvertisementSKIP ADVERTISEMENT",
    "published_at": "2026-09-16T09:04:03+00:00",
    "author_name": "Colby Smith",
    "site_name": "The New York Times",
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    "ai_headline": "Fed Raises Rates in First Major Step by Warsh to Contain Inflation",
    "ai_simplified_title": "Warsh Fed Raises Rates to Contain Inflation",
    "ai_excerpt": "The Federal Reserve, under Chairman Kevin M. Warsh, raised interest rates by a quarter of a percentage point, the first increase in over three years, to combat elevated inflation. This decision, supported by all 12 FOMC members, lifts rates to a new range of 3.75 to 4 percent.",
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