Federal Reserve raises rates for first time since 2023 as Chair Warsh fights for credibility

The Federal Reserve just did something it hasn’t done in over three years: it raised interest rates. The FOMC voted unanimously to increase the federal funds rate by 25 basis points on September 16, setting a new target range of 3.75%-4% and marking the first hike since July 2023. For Fed Chair Kevin Warsh, the move was less about economics and more about survival. Jane Foley, Head of FX Strategy at Rabobank, put it bluntly during her appearance on Bloomberg Brief with Guy Johnson: Warsh “had to win his credibility.” Why Warsh was cornered Warsh, who took the helm of the Federal Reserve in 2026, walked into a job that was already on fire. Inflation has stubbornly remained above the Fed’s 2% target, fueled by a cocktail of geopolitical disruptions and tariffs that have kept price pressures elevated well beyond what most policymakers anticipated. The July FOMC meeting was supposed to be his moment to act. It wasn’t. Warsh held rates steady, and three FOMC members dissented at that meeting, a level of internal disagreement that signaled real fractures within the committee about how seriously the Fed was taking inflation. By the time Warsh arrived at the Jackson Hole symposium in Augus...