Kevin Warsh prioritizes market stability over Trump’s preferences

Kevin Warsh had a choice: keep the president happy or keep the bond market from losing its mind. He picked the bond market. On September 16, 2026, the Federal Open Market Committee voted unanimously to raise the federal funds rate by 25 basis points to a target range of 3.75% to 4%. It was the first rate hike since 2023, and it landed like a controlled demolition on Donald Trump’s publicly stated preference for rates at “1% or less.” Warsh, who took over as Fed Chair in May 2026, has spent his first months in the role doing something Trump almost certainly did not anticipate when he nominated him: acting like an independent central banker. The Jackson Hole setup The groundwork for the September hike was laid weeks earlier at the Jackson Hole Economic Symposium on August 28–29. Warsh used the annual gathering of central bankers to deliver a message that left little room for interpretation. He called the Fed’s 2% inflation target “firm” and “fixed,” adding that “we have work to do” if inflation doesn’t show clear signs of improvement. Inflation had hit 4.2% earlier in 2026, more than double the Fed’s target. The 2% goal has now been missed for over five years running. Trump’s reactio...