Fed Chair Implies Trump Is Only Half Right on the Economy Following Rate Hike

In brief

• The Fed raised its benchmark rate 25 basis points to a 3.75%-4.00% range in a unanimous vote, its first hike since 2023.
• Warsh said the economy "has indeed strengthened" but called inflation "the problem," and declined to comment on Trump's reaction.
• Bitcoin briefly spiked but then stabilized near $75,500, as the hike had already been priced in by markets.

The Federal Reserve raised interest rates on Wednesday for the first time since 2023, lifting its benchmark range to 3.75%-4.00% in a unanimous vote. It's the clearest signal yet that Chair Kevin Warsh's inflation talk was never just talk.

"The economy has indeed strengthened," Warsh told reporters at his post-meeting press conference. "Inflation is the problem."

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It's a tidy summary of the bind Warsh finds himself in: agree with President Donald Trump on growth, then hike rates anyway, the opposite of what Trump has been demanding for months. Economic growth isn’t enough to justify a drop in the interest rates, the board has evidently decided.

Higher rates make borrowing more expensive, which slows spending and, in theory, limits the inflation that goes along with that. But higher interest rates also generally hurt assets that thrive on cheaper investments, like stocks and Bitcoin. It also makes safe government bonds pay better, pulling cash out of riskier bets.

Asked directly about Trump's reaction to the decision, or what the president expects next, Warsh declined to comment. He fell back on the same line he used at his Jackson Hole keynote in August: "We will deliver price stability. We're committed to a discipline, not a decision."

Markets had already done the math. a 25-basis-point move for weeks, and Bitcoin—though following the news—in the end barely flinched, , down about half a percent on the day.