The US Federal Reserve raised interest rates by 25 basis points to between 3.75% and 4%, aiming to curb high inflation that has persisted despite previous efforts. This decision follows a unanimous vote by the Federal Open Market Committee on Wednesday and is expected to lead to at least one more rate hike this year, according to Fed policymakers’ projections. The move is likely to anger President Donald Trump, who has repeatedly demanded lower interest rates to stimulate economic growth.
Written by the local model on 2026-09-17,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
In short:
The US Federal Reserve has raised interest rates by 25 basis points in order to tackle inflation.
asserted
Reserve → raise → inflation
A majority of Fed policymakers expect at least one more rate hike to be necessary before the end of the year.
asserted
hike → expect → year
The Fed last raised rates in 2023, when the central bank was still battling post-pandemic inflation.
asserted
bank → raise → inflation
The US Federal Reserve has raised interest rates in the world's largest economy by 25 basis points to tackle stubbornly high inflation, a move sure to anger President Donald Trump, who has demanded lower rates.
asserted
who → raise → rates
The Fed's Federal Open Market Committee voted unanimously on Wednesday, local time, to raise rates to between 3.75 and 4.00 per cent, citing "elevated" inflation and adding that the rate hike would support a "timelier return" to its 2 per cent target for the metric.
asserted
hike → vote → metric
A majority of Fed policymakers expect at least one more rate hike to be necessary before the end of the year, according to the central bank's Summary of Economic Projections, also published Wednesday.
uncertain
hike → expect → Projections
Fed Chair Kevin Warsh was set to address a press conference following the announcement.
asserted
Warsh → set → announcement
The US economy has been dealing with years of higher-than-target inflation, and prices have surged in the wake of Mr Trump's war on Iran, his signature tariff policies and the ongoing AI boom.
asserted
prices → deal → Iran
The Fed has held rates steady since January, choosing to wait to gauge the effects of energy price shocks and to let the impact of tariffs on prices ripple through the economy.
asserted
impact → hold → economy
At its last meeting in July, however, a quarter of the committee's voting members dissented from the decision to hold pat, calling for an immediate hike.
asserted
quarter → vote → hike
Since then, other policymakers — including Mr Warsh — have hinted that if inflation did not meaningfully slow, the Fed may need to intervene.
uncertain
Fed → include → Warsh
On Friday, August's consumer price index came in at 3.4 per cent — unchanged from the month before, but still well above the Fed's long-term 2 per cent target.
asserted
index → come → target
The Summary of Economic Projections (SEP) raised its forecast for its preferred gauge of inflation — the Personal Consumption Expenditures (PCE) price index — by 0.1 percentage points to 3.7 per cent by year-end.
asserted
Summary → raise → end
Inflation "has spread across the economy and is becoming embedded in consumer and firm behavior — exactly what the Fed must prevent," said Diane Swonk, chief economist at KPMG, in a note before the Fed's decision was announced.
asserted
decision → spread → note
The Fed also raised its projection for GDP growth by year-end to 2.3 per cent, up 0.1 percentage point.
asserted
Fed → raise → cent
Political implications
The Fed last raised rates in 2023, when the central bank was still battling post-pandemic inflation.
asserted
bank → raise → inflation
The fresh hike will be sure to anger Mr Trump, who has launched an unprecedented campaign to pressure the independent central bank to lower rates in order to spur economic activity.
asserted
who → anger → activity
The Trump administration launched a criminal probe against Mr Warsh's predecessor Jerome Powell — whom the president regularly insulted and berated — and is still trying to fire Fed Governor Lisa Cook.
asserted
president → launch → Cook
On Tuesday, key Trump economic advisor Kevin Hassett advocated against a rate hike but said the White House would "understand and respect the decision".
asserted
House → advocate → decision
Mr Warsh was named to his position after a contentious Senate confirmation process, where Democratic lawmakers accused him of being a "sock puppet" for Mr Trump, which he denied.
asserted
he → name → which
So far, Mr Trump has supported Mr Warsh, claiming that the Fed chair wants lower rates and accusing the board of being "political".
asserted
chair → support → board
The Fed has a dual mandate to deliver maximum employment while keeping inflation to its long-term 2 per cent target.
asserted
Fed → have → target
It mainly achieves these goals by setting the key US interest rate — lower rates tend to spur economic activity but fuel inflation, and hiking them cools both activity and prices.
asserted
hiking → achieve → activity
The Fed's SEP showed that at least 12 of 18 policymakers who participated in the projection expected one more rate hike would be required before the end of the year.
asserted
hike → show → year
Four policymakers expect two more rate hikes to be required.
asserted
hikes → expect → ?
Mr Warsh has criticised the Fed's policy of offering such projections in the past and did not participate in the previous iteration in June.
asserted
Warsh → criticise → June
This projection also included only 18 policymakers, suggesting he had once again withheld his contribution.
asserted
he → include → contribution
The Aporia
