Story perspectives

Fed Raises Rates 25 Bps to 3.75–4.00%

By Drooid · Sep 25, 2026, 3:11 PM UTC · How we work

Summary

Warsh Raises Rates

Fed Chair Kevin Warsh led a 12-0 vote to raise the federal funds rate 25 basis points to 3.75-4.00%.
The September 2026 hike was the Federal Reserve's first rate increase since 2023.
Warsh eliminated forward-looking guidance at the June 2026 FOMC meeting.
He said the Fed cut its $6.7 trillion balance sheet but delayed cuts because inflation stays high.
Warsh noted the 10-year Treasury yield topped 5%, pushing mortgage rates higher.

Summary

Barr Signals Hike

President Donald Trump called the Federal Reserve (Fed) “a bunch of politicians” and praised Chair Kevin Warsh “good man”.
Governor Michael Barr told a Chicago summit that inflation exceeds the 2 % target and policy adjustments are likely.
CME FedWatch traders raised probability of a rate hike to 70 % after Barr’s remarks, up 14 points.
Oren Klachkin warned that persistent oil and tariff shocks limit the Fed’s reliance on temporary inflation.

History

Historical Context

In October 1979, Federal Reserve Chairman Paul Volcker dramatically raised the federal funds rate to 20%, sparking a severe recession. Volcker’s plan, supported by Michael Blumenthal and Jimmy Carter, cut inflation from 13.5% in 1980 to 5.6% by 1983, trimming Fed’s balance sheet by $200 billion. Similarly, in September 2026 Fed Chair Kevin Warsh lifted rates 25 basis points to a 3.75-4.00% range amid stubborn inflation, echoing Volcker’s aggressive stance. Both episodes illustrate how decisive rate hikes can curb price pressures but risk higher borrowing costs, prompting markets to price steep policy shifts.

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Warsh Raises Rates

Fed Chair Kevin Warsh led a 12-0 vote to raise the federal funds rate 25 basis points to 3.75-4.00%.
The September 2026 hike was the Federal Reserve's first rate increase since 2023.
Warsh eliminated forward-looking guidance at the June 2026 FOMC meeting.
He said the Fed cut its $6.7 trillion balance sheet but delayed cuts because inflation stays high.
Warsh noted the 10-year Treasury yield topped 5%, pushing mortgage rates higher.

1 / 3