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

The Federal Reserve raised its key interest rate by 25 basis points on Wednesday, bringing the federal funds target to a 3.75%–4.00% range. The unanimous decision is the central bank’s first rate increase since 2023 and underscores officials’ focus on reining in inflation even as economic indicators show improvement.

At the post-meeting press conference, Fed Chair Kevin Warsh said the economy "has indeed strengthened" but added that inflation remains the primary challenge. When asked about President Donald Trump’s reaction and his calls for rate cuts, Warsh declined to comment, repeating the Fed’s emphasis on delivering price stability and describing the institution’s approach as a commitment to discipline rather than to any single decision.

Markets had largely expected the 25-basis-point move, and much of the adjustment was already reflected in prices. Wall Street had priced in the hike for weeks, and cryptocurrency markets only briefly reacted: bitcoin spiked momentarily after the announcement but settled near $75,500, finishing the day down roughly half a percent.

Warsh also addressed the Fed’s stance on artificial intelligence, saying the central bank will focus on the economic implications of AI decisions made by other parts of government rather than on AI policy itself. That approach aligns with the set of task forces the Fed established earlier in the year, including one dedicated to studying AI’s effects on productivity and labor demand.

The Fed’s updated projections indicate the possibility of one more rate increase before the end of the year, suggesting that Wednesday’s hike may not be the last. If officials follow through, markets and risk assets could face further adjustments as investors continue to price in tighter monetary policy.