The Federal Reserve unanimously raised interest rates on Wednesday for the first time in three years, with chair Kevin Warsh citing inflation that has stayed above target for over five years. Treasury yields jumped past 5% and the S&P 500 dipped, while President Trump renewed his demand for much lower rates.
Fed unanimously raises rates
The Federal Open Market Committee voted unanimously to raise interest rates on Wednesday, the first increase in three years. Warsh had unsettled markets at the previous meeting by declining to signal his plans on inflation, but this time led a united committee.
Warsh said in his post-meeting press conference that "today's action starts to show that we're serious about this," referring to inflation that has run above the Fed's 2% target for over five years. He raised rates just weeks before elections that will decide control of Congress.
Yields jump as stocks dip
The S&P 500 closed about 0.4% lower on Wednesday afternoon as investors priced in a likely December hike and two more increases in 2027.
Treasury yields also climbed, with the 10-year note rising sharply and surpassing 5% as investors weighed further tightening. Still, investors appear to have bought, for now at least, into the idea that monetary policy will remain comparatively sane whatever else the administration does.
Trump renews pressure for lower rates
President Trump called for interest rates of 1% or less, pointing to the country's credit standing. This comes despite recalcitrant inflation and a budget deficit likely to exceed $2tn this year. He again demanded officials move quickly to lower rates.
The central bankers' sparse comments at the press conference contrasted with more unhinged commentary from other members of the administration, including the president himself. Treasury Secretary Scott Bessent, meanwhile, has been buying bonds in an effort to pull long-term yields down even as the Fed moves the other way.
Source: The Guardian
Trading involves risk.
Risk Disclaimer
