Fed Delivers First Rate Hike in Years With Unanimous Vote

WASHINGTON—The Federal Reserve raised interest rates Wednesday for the first time in three years, a sharp reversal that began taking back cuts it made last year and implicitly undercut the White House’s insistence that inflation isn’t a concern.

The increase, approved unanimously, will raise the benchmark federal-funds rate range by a quarter point to between 3.75% and 4%. The vast majority of officials penciled in one more hike this year in interest-rate projections released after their meeting.

Chairman Kevin Warsh vowed shortly after taking office in May to end an overshoot of the Fed’s 2% target now in its sixth year and followed through with an increase that had been widely anticipated in recent days.

“Today’s action starts to show that we’re serious about this,” Warsh said at a news conference. The Fed’s policy statement said its action would support a “timelier” return to the inflation goal.

The rate hike scrambled an account the White House had offered of the man tapped by President Trump for the job in January. Trump and his allies had cast pressure to raise rates as coming from a committee hostile to Warsh, who last year said he would have cut rates sooner than the Fed ultimately did. 

It also followed a lost year in the Fed’s inflation fight. The central bank has made no progress toward its 2% goal since mid-2025, including after cutting rates three times late last year to guard against a labor-market slowdown. Instead, the Iran war has lifted energy prices, and the AI boom has driven an investment surge that has buoyed the economy and markets.