For the first time in three years, the Federal Reserve has decided to raise interest rates, prompting a drop in the Dow Jones Industrial Average of just over 1.2%.
In a press conference after the Fed decision was announced, Chairman Kevin Warsh, who had earlier said he was determined to address inflation that for the last five years has run at 2%, said underlying trends prompted the decision.
“The plain fact is that inflation is too high and has been for too long,” Walsh remarked, adding that “this summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”
Looking at the most recent data, he added, showed that “too many categories are still posting increases above 3%, on both a six- and twelve-month basis.”
Warsh also said that “inflation remains elevated,” adding, “today’s policy action will support a timelier return to the committee’s 2% goal. This committee will deliver price stability.”
An official statement released by the Federal Reserve said its Open Market Committee “decided to raise the target range for the federal funds by ¼ percentage point to 3-3/4 % in support of the Federal Reserve’s dual mandate.”
The statement added that “the Committee is continuing its policy of maintaining ample reserves in the banking system.”
The Fed action may have caught President Trump by surprise – he has talked with Warsh about establishing an interest rate of 1%.
“He’s got, you know, a very tough board,” the President remarked to reporters in response to the Fed announcement, “he’s got a board that was put there by other people.”
Trump said he had earlier advised Warsh: “You might as well vote with the board. It’s not going to matter.” Four of the six-person board were appointed by either Presidents Obama or Biden.
Trump nominated Warsh earlier this year to head up the Fed board.
As an indication of White House displeasure with the rate hike announcement, Kush Desai, special assistant to the President, called it a “rather unfortunate decision” that was “not backed by a particularly compelling economic case.”
September 17, 2026
By Garry Boulard
Photo courtesy of the Federal Reserve
