United States

Washington, September 17, 2026. The Federal Reserve raised its benchmark interest rate by a quarter of a point on Wednesday, to a range of 3.75% to 4.00% — its first increase since July 2023. The vote by the Federal Open Market Committee (FOMC) was unanimous, twelve to zero, despite repeated pressure from Donald Trump and his administration to do the opposite. Federal Reserve Chairman Kevin Warsh, appointed by Trump in January after turning away from Jerome Powell, defended the decision as "sober, serious, responsible," stating that "inflation is too high and has been for too long." When asked about a message for the White House, he evaded: "I have nothing to say about a discussion with the president."

The reaction from Trump was not long in coming. On Truth Social, he wrote that "interest rates in the United States should be at 1%, or less, because we have the best credit in the world — by far." White House spokesperson Kush Desai called the decision "rather unfortunate," estimating that it was "not supported by a particularly convincing economic case." A few hours later, Trump nuanced his statement, sparing Warsh personally: "I count on Kevin, but he has a very difficult council [...] set up by many other people."

The episode is part of a long battle for control of the central bank: an attempt to remove Governor Lisa Cook, a criminal investigation by the Department of Justice against Powell — since abandoned. For part of the press, Warsh has just inflicted a direct rebuke on the person who appointed him.

The markets sanctioned the announcement: the Dow Jones lost 631 points, the yield on two-year Treasury bonds rose by more than 7 basis points. The committee anticipates another rate hike by the end of the year, to 4.00-4.25%, citing oil related to the war in Iran, tariffs, and investment in AI. For households, the rate hike immediately makes credit cards, car loans, and mortgages more expensive. The committee also cited investment in artificial intelligence as a driver of inflation; Warsh assured that the Fed "is very concerned" about these developments. The rate hike will almost immediately affect the bank's prime lending rate, making credit cards and car loans more expensive — a harder blow for indebted households than for wealthy families, who are already covered by fixed-rate mortgages.