Federal Reserve Chair Kevin Warsh warned that inflation remains stubbornly high, explaining why policymakers raised interest rates even as President Donald Trump pushed for cuts.
The Fed voted 12–0 on September 16 to increase its benchmark rate by 0.25 percentage points to 3.75%–4.00%, according to its official statement.
Related: Fed Raises Rates for the First Time Since 2023 as Inflation Persists
“Inflation Is Too High”
At his press conference, Warsh delivered a clear explanation for the decision:
“The plain fact is that inflation is too high and has been for too long.”
Warsh said the summer’s inflation figures had not shown sufficient improvement, the Financial Times reported.
His message was that the Fed still sees a need to restrain price pressures, despite political demands for cheaper borrowing.
A Strong Economy Gives the Fed Room to Act
Warsh described the increase as removing:
“A dose of accommodation.”
In plain language, the Fed is making borrowing conditions less supportive of spending. Warsh pointed to strength in employment, business performance and investment, while warning that too many price categories were still rising above 3%, according to Barron’s.
Related: CPI Report: August Inflation Stays High, Putting Fed Rate Hike in Focus
More Hikes Remain Possible
The Fed’s statement reinforced its priority:
“The Committee will deliver price stability.”
However, Warsh did not commit to a specific sequence of further increases. Twelve of 18 officials projected another hike by year-end, according to The Wall Street Journal.
Markets remained uneasy. The Dow closed down 631 points, while the 10-year Treasury yield reached 5.003%.
Warsh’s message gives borrowers little reason to expect immediate relief. The Fed is prepared to keep pressure on inflation, but the timing and scale of further increases remain unsettled.
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