Good morning. The Federal Open Market Committee voted unanimously on Wednesday to raise its benchmark rate a quarter point, to 3.75%-4%, the first hike since July 2023 and the first policy move of Chairman Kevin Warsh’s tenure. The decision put Warsh at odds with President Trump, who has publicly pushed for a rate cut.
The Fed’s updated projections show officials now see the median federal funds rate ending 2026 at 4.1%, up from 3.8% in June, pointing to another hike before year-end. Officials have cited tariffs, an energy shock, and surging AI-related capital spending as inflation drivers. Markets had largely priced in the Fed’s rate hike. Stocks initially reacted modestly but ended lower. Meanwhile, Treasury yields, already near multi-year highs, moved higher following the decision.
