By Patti Mohr, writer and editor-at-large
September 16, 2026—Citing geopolitical shocks and elevated inflation, the Federal Reserve Board voted unanimously to raise federal funds interest rates by 0.25 percent to 4 percent. It was the first time the Fed raised interest rates in three years. It comes under the new leadership of Federal Reserve Chair Kevin Warsh.
It comes as the inflation rate ticked up in August to 0.4 percent and the government projected a Consumer Price Index of 3.4 percent, driven largely by the rising cost of fuel.
“The decision we made today was a sober decision, a serious decision, [and] responsible decision,” said Fed Chair Kevin Warsh, adding that he wouldn’t “prejudge” future Fed decisions.
The board cited economic growth of 2.3 percent, strong productivity, resilient domestic spending, and robust capital investment.https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm
White House Pressure
What’s significant is that today’s decision shows the independence by the central bank, despite an atmosphere of political pressure by the White House. While financial markets had expected a hike and responded accordingly, President Donald Trump lashed out. Posting on his platform, Trump insisted the U.S. federal funds rate should be 1 percent.
Declining to comment on Trump’s viewpoints, Warsh said price stability benefits those who are least well off. Geopolitics–wars in Europe and the Middle East–and rising fuel prices are the main drivers of the change.
“I said in Jackson Hole, trends matter,” Warsh said. “The third thing that’s changed in seven weeks is geopolitics. There’s no hiding from hotspots around the world.”
Warsh declined to comment on fiscal policy or emerging AI. “Independence at the Federal Reserve is about staying in our lane,” he said.
