The Federal Reserve's rate-setting committee voted 12-0 on Wednesday to raise its benchmark interest rate a quarter point, to a range of 3.75% to 4.00%. It's the first rate hike since 2023, and the first rate decision of Kevin Warsh's tenure as Fed chair. The committee's new projections show one more hike likely this year and no cuts at all through 2027. President Trump reacted within hours, posting on Truth Social that rates "should be 1%, or less" and demanding the Fed "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" He'd previously called the committee "clowns" for backing a hike. Trump nominated Warsh in January 2026 after souring on former chair Jerome Powell for not cutting rates fast enough; the Senate confirmed Warsh 54-45, the tightest vote for a Fed chair in modern history.

Warsh says the data leaves no room to ease up, no matter who put him in the job.

Inflation has been too high for too long, Warsh says. "The plain fact is that inflation is too high and has been for too long," he told reporters after the vote. Inflation has stayed above the Fed's 2% target for five years, and August's CPI rose 0.4% — about four times July's pace.

He warned this exact outcome was coming. Warsh said in his August Jackson Hole speech that price readings "do not tell me that underlying trends have meaningfully improved," and that until they do, "we have work to do."

All 12 FOMC members backed the hike, no exceptions. The committee's new projections point to one more increase this year and no cuts through 2027. Warsh says he'd rather let incoming data decide than lock in a path. He wants a "good family fight" over the numbers, not a promise.

2. Trump Says His Own Pick Just Betrayed Him

Trump says the hike makes no economic sense and wants it undone immediately.

Trump wants rates at 1% or lower, full stop. Hours after the vote, he posted that the U.S. has "the Best Credit in the World – BY FAR" and that the economy would be "booming with new investment" at lower rates.

He put Warsh in the job to cut rates, not raise them. Trump has called the FOMC "clowns" for supporting a hike, despite choosing Warsh specifically expecting the lowest rates in the world. He pushed Jerome Powell out for the same reason — refusing to cut fast enough. The Senate confirmed Warsh 54-45 — the closest vote for a Fed chair in modern history. Only one Democrat, Sen. John Fetterman, crossed over to vote yes.

The White House says the economic case doesn't hold up. White House spokesman Kush Desai called the hike "a rather unfortunate decision" that wasn't "backed by a particularly compelling economic case." He argued that whatever inflation remains is "entirely driven by" Middle East oil prices — not something a rate hike fixes. Desai says Trump still respects the Fed's independence but has a "First Amendment right" to say so when he thinks things "go awry."

3. But Zandi Says the Real Damage Lands on Borrowers

Zandi says this isn't about Trump. He says the danger is what the hike does to people who already can't afford credit.

Zandi thinks the Fed might be getting this wrong anyway. Moody's Analytics chief economist Mark Zandi said "the odds of a serious Fed policy mistake are uncomfortably high and rising."

The people who'll feel it are already stretched thin. Zandi says credit card rates, already above 20%, will likely climb to record highs once the hike filters through. Wealthier households with fixed-rate mortgages and savings accounts will navigate it far better.

Where This Lands

Warsh's Fed says the inflation numbers left no other option. The vote was unanimous, including from the chair Trump picked to cut rates. Trump says he installed Warsh to bring rates down and got a hike instead, and he wants it reversed now. Zandi isn't taking a side on Fed independence at all. He's warning that the hike itself will hit borrowers carrying credit card debt the hardest.

Sources