Federal Reserve

Kevin Warsh has broken away from US President Donald Trump in his first Fed move, and he has done it with the entire committee behind him.

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The Federal Open Market Committee lifted rates on Wednesday after holding them at 3.5% to 3.75% since December, ending a pause that had grown harder to justify as energy costs pushed prices higher.

Not a single member dissented in a unanimous 12-0 vote.

That matters because the pressure ran in both directions as three regional presidents had voted for a hike in July, while the White House spent months demanding cuts.

Nobody voted for either extreme.

At the time of writing, the market reaction to the decision has been fairly muted likely due to the fact that the hike was widely expected.

A statement stripped to the bone

The Fed’s communication was as striking as its decision.

The statement ran to three short paragraphs, a fraction of the length markets are used to, with no forward guidance and no hedging.

“Inflation remains elevated,” it read, adding that “today’s policy action will support a timelier return to the Committee’s 2 percent goal.”

The word “timelier” carries an implicit admission that the return had been too slow.

Then a sentence the Fed almost never writes: “The Committee will deliver price stability.” Not seeks to, not is committed to. Will.

The economic assessment was also confident throughout.

Activity is “expanding at a solid pace”, domestic spending “has been resilient”, productivity growth is “strong” and capital investment “robust”, while job gains “have kept pace with the workforce”.

Uncertainty remains elevated, the Fed said, owing partly to “geopolitical developments”, its formulation for the Iran war.

By describing an economy in good health, the committee removed the argument that higher rates would damage growth, which is precisely the case US President Donald Trump has been making.

Boxed in by the data

The decision had been building for months.

Three regional Fed presidents dissented in July in favour of an increase, the most in one direction since 2016, and several others said afterwards they were ready to move unless inflation eased which it did not.

The Fed’s preferred gauge, the personal consumption expenditures index, ran at 3.7% in both June and July, with core inflation at 3.3%. Before the Iran war sent fuel prices climbing, core stood at 3%.

Consumer prices held at 3.4% in August, but the monthly increase of 0.4% was the sharpest since May, evidence the energy shock is feeding through. Inflation has now been above the 2% target for more than five years.

Warsh had effectively committed himself at Jackson Hole in August, telling the symposium he “would be hard pressed to describe broad financial conditions as restrictive” and warning that unless underlying inflation moved to target “clearly and at sufficient speed”, the Fed had “work to do”.

Markets took him at his word as the CME’s FedWatch tool put the probability of a rate hike above 90% before today’s decision.

Defying the president who chose him

US President Donald Trump had spent months demanding the opposite, insisting the country should have the lowest interest rates in the world and choosing Warsh partly on the expectation he would deliver them.

Warsh himself said while campaigning for the job that rates could come down.

The treatment of his predecessor sharpened the stakes as Jerome Powell was publicly attacked for moving too slowly, and the US Justice Department opened a criminal investigation into testimony he gave to Congress.

Today’s decision could also have a restoring effect on the perceived independence of the Federal Reserve as an institution.

The technical details point to a Fed settling in at the new level.

The interest rate on reserve balances rises to 3.90% from Thursday, the primary credit rate to 4%, and standing repurchase operations will run at 4%. Seven regional reserve banks requested the discount rate increase.

The Fed’s new dot plot shows 12 of 18 officials expect another 0.25% hike by year-end, taking rates to 4.125%, while four see rates reaching 4.375%.

The hawkish signal extends well beyond 2026 as 14 officials see rates ending 2027 above today’s level, while the 2028 median stands at 3.9% versus 3.4% expected.

The longer-run rate also rose to 3.2%, suggesting officials increasingly believe neutral rates have moved higher while economists also expect more to follow.

Published on
11/09/2026 – 15:25 GMT+2

The last major data point before the Fed meets has arrived, and it arrived while Americans were paying record prices at the pump.

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The US Bureau of Labor Statistics reported on Friday afternoon that the annual rate held steady, with core inflation, which strips out food and energy, easing to 2.4% from 2.5%.

Every figure matched the consensus of economists and the monthly number is where the pressure shows.

Prices rose 0.4% in August against 0.1% in July, a fourfold acceleration and the fastest pace in three months. The annual rate stayed flat only because it is measured against the strong summer of 2025.

What it means for the Fed meeting

Markets had largely made up their minds before the figures landed.

CME’s FedWatch tool put the probability of a quarter-point increase at the 16 September meeting at 67.4%, up sharply from around 40% before Chairman Warsh’s Jackson Hole address in late August.

Following the inflation data release, those odds moved to 91.6%.

Warsh’s first keynote as chair was the turning point as he argued the American economy had strengthened rather than weakened, that the labour market was consistent with full employment, and that he “would be hard pressed to describe broad financial conditions as restrictive.”

On inflation Warsh was blunt by stating that “we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

By that test, Friday’s numbers are ambiguous.

Core inflation has now fallen for a second month and sits within half a point of the 2% target, which is underlying inflation moving in the right direction. The monthly acceleration points the other way.

Warsh also refused to say what would trigger a move, rejecting forward guidance as a practice that “has overstayed its welcome”. The Fed has held its benchmark rate at 3.50% to 3.75% since December, though three regional presidents dissented in July in favour of an increase, the most in one direction since 2016.

A fuel shock with no obvious end

The pressure is coming from energy, and it is intensifying.

US crude futures topped $100 a barrel this week as fighting between American and Iranian forces escalated around the Strait of Hormuz, with Washington striking five Iranian tankers after attempted missile attacks on a US Navy warship.

Diesel is where it bites hardest.

The US national average crossed $6 a gallon on Friday for the first time in the country’s history, at least in nominal terms, according to the American Automobile Association, and leaving truckers and farmers paying around 63% more than a year ago.

In California the average is close to $8. As for petrol, it is averaging $4.22 nationwide, against $2.98 before the war began.

Ukraine’s strikes on Russian refineries prompted Moscow to ban diesel exports, removing roughly 800,000 barrels a day, while disruption around Hormuz has cost another 1.2 million.

Refineries representing about 5 million barrels a day of capacity have been shut by the two wars, and close to 8% of global diesel supply is currently disrupted.

Some retailers have already added delivery surcharges, and the effect on grocery prices tends to arrive with a lag, which means the energy shock in Friday’s numbers may not yet be the whole of it.

Aug. 31 (UPI) — Finance ministers and other officials from the Group of 20 nations, as well as many CEOs, met Monday in Asheville, N.C., at a summit in which U.S. leaders intended to focus on growth and Iran — but also drew protests from other leaders for the inclusion of the Russian minister.

U.S. Treasury Secretary Scott Bessent told officials that the United States wants to focus on the mission of accelerating growth and said the countries need to work together

“The world is awash in debt, and the only way for us to get out of this is to grow our way out of this,” Bessent said, CNBC reported.

He also said a “durable” global economy” cannot rest on “beggar-thy-neighbor acts that stifle fair, market-based competition,” The New York Times said.

In introductory comments, U.S. Federal Reserve Chairman Kevin Warsh also focused on growth, saying the time is one of “secular growth.”

“If I were to try to characterize this moment, it would be one of a global investment surge,” he said.

Bessent said earlier Monday in a CNBC interview that the U.S. plan to pressure and isolate Iran through its economy can work without China, which opposes the sanctions. He is expected to ask the other finance ministers to join in those sanctions.

Russian Finance Minister Anton Siluanov was at the meeting — at the invitation of the Trump administration — for the first time since Russia’s invasion of Ukraine in 2022.

This drew protests from other European ministers, who have issued their own sanctions against Russia for that war. Finance Minister Lars Klingbeil told The Times that he scolded Siluanov over the war and said the European ministers demanded the Russian minister be left out of a traditional group photo. It was eventually taken without Siluanov.

“Receiving the Russian finance minister here sends a signal I find troubling,” he told reporters. “I would have preferred clear positioning from the U.S. side that he not be received like a regular guest.”

Ukraine’s finance minister was not present in person at the meeting.

In addition, European ministers protested that the United States did not invite representatives from South Africa, a G20 country, to the meeting. Trump administration officials also invited many U.S. business executives but denied requests to include business leaders from other G20 countries.

Marking his 100th day in the job, Federal Reserve Chair Kevin Warsh told the Kansas City Fed’s symposium in Wyoming that the US economy has strengthened rather than weakened under recent shocks, that the labour market is consistent with full employment, and that inflation remains the central bank’s dominant concern.

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Warsh declined to say what he would do next month, but he removed most of the arguments against acting and bolstered the ones in favour of a rate hike.

“For my part, today I am impressed by the overall performance of the economy, which appears to have strengthened,” Warsh stated.

“One indicator of strength is how well an economy holds up to shocks. On that score, both Main Street and Wall Street have been remarkably resilient,” he added.

On inflation, Warsh noted that the PCE index stood at 3.7% over twelve months and 4.1% over six, and 54% of the basket’s components rose by more than 3% over the past year, against 32% in the two decades before the pandemic.

Summer readings that beat expectations “do not tell me that underlying trends have meaningfully improved,” Warsh stated.

The Federal Reserve Chair’s conclusion was blunt: “the Fed’s predominant focus right now should be on prices.”

The standard set was equally direct. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do,” Warsh declared.

That assessment matters because it eliminates the case for supporting growth with further stimulus and potentially opens the door for restrictive measures as markets moved in response.

At the time of writing, the 10-year Treasury yield has fallen 0.5% from its Friday high to 4.67% and the 30-year dropped around 0.9% to 5.16%, while the dollar index rose 0.4% from the intraday low to roughly 99.4 points.

Traders raised the implied probability of a 0.25% hike at the 15 and 16 September Fed meeting to 55%, from around 35% before Warsh’s speech.

Performance of the US economy

Warsh opened his speech with what he called a hinge point in history, arguing that artificial intelligence has advanced faster than even its advocates predicted.

Annualised AI token sales at the two leading labs alone exceed $100 billion, he said, up more than 500% in a year.

AI is “a new variable, potentially a new factor of production,” raising questions the Fed cannot answer yet such as whether it will lift productivity and when, whether it complements or replaces labour, and where the returns will ultimately land.

A new Federal Reserve task force on productivity and jobs is examining it, though he stressed its recommendations will have no bearing on current policy decisions.

Warsh then listed extensive evidence for his positive outlook on the US economy.

Business investment in equipment and intangibles growing at around 9%, its fastest since 2021, with more than half of this year’s capital expenditure growth attributable to the AI buildout.

S&P 500 profits went up more than 20% over the year, credit spreads are near historic lows and banks are easing lending standards. Housing and agriculture are strained, Warsh acknowledged, but on balance he “would be hard pressed to describe broad financial conditions as restrictive.”

Unemployment at 4.1% is low by historical standards, with jobless claims near their lowest in decades, leaving inflation as the outlier.

No forward guidance

The Federal Reserve Chair devoted a substantial section to defending his refusal to signal future moves, a stance that has drawn criticism since he took office in May.

Forward guidance was adopted during the 2008 crisis by colleagues including himself, he said, and was essential then, but “the practice has overstayed its welcome” and now “risks creating ambiguity in the name of clarity.”

Warsh warned of a hall-of-mirrors problem in which markets read the Fed while the Fed reads markets, leaving both blind to new developments.

“We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” he said, adding that the costs of such errors fall not on “financial high-fliers” but on households facing high inflation or insecure jobs.

Warsh also rejected calls to publish an explicit reaction function, arguing economic knowledge does not permit a mechanical rule.

Instead he set out six principles: interrogate incoming data rather than trust stale figures, accept that judging supply against demand is imprecise; treat the 2% PCE target as firm and fixed; pursue both mandates without treating them as a trade-off; rely on short-term rates rather than unconventional tools; and remember that money itself matters.

“I stand here today committed to a discipline, not to a decision,” Warsh said in closing.

The decision comes on 16 September at the next Fed meeting.

Aug. 28 (UPI) — Economists and financial markets will be watching closely on Friday when the Federal Reserve Chairman Kevin Warsh delivers a keynote address at the central bank’s annual symposium in Jackson Hole, Wyo.

Federal Reserve chairmen often use the speech to discuss monetary policy initiatives on a broad level, including offering insight into future interest rate plans. Since being appointed chairman in May, Warsh has been scant with details on future policy decisions and Friday’s address is expected to be more of the same.

The U.S. economy continues to face inflation pressures with inflation rates well above the Federal Reserve’s 2% annual target. Under Warsh, inflation markers have moved higher yet while the Federal Open Market Committee has maintained its benchmark interest rates at 3.5% to 3.75%.

Some members in the central bank are calling for another hike in interest rates, which would be a first since July 2023.

“If I had to guess, I would say that he’s going to give a very high-level, broad look at the work of the task forces and how he thinks the Fed should operate, as opposed to a nuts-and-bolts assessment of the economy and expectations for policy,” Luke Tilley, chief economist at M&T Bank and Wilmington Trust Investment Advisors, told CNBC.

Warsh has established five task forces that are reviewing how the Federal Reserve approaches its policy decisions, including its use of data, technology including artificial intelligence, and its balance sheet.

The Federal Open Market Committee did not meet in August. Its next meeting is on Sept. 15 and 16, during which it will decide whether to hold interest rates firm or make adjustments.

After Warsh’s address following last month’s FOMC meeting, yields for long-term bonds rose. This happens when bond traders are skeptical that the central bank will cool inflation.

Aug. 26 (UPI) — The Justice Department and FBI announced Wednesday that they seized two platforms used to target U.S. critical infrastructure and other sensitive networks.

The seizures were of two hacking platforms called QScan and QTRouter, which were used to hack U.S. infrastructure sites, the press release said. The affidavit described a Chinese state-sponsored group known as QTFY whose members are employed by China-based Nanjing Xinjiuwei Network Technology Company that has hacked into NASA, the Federal Reserve, the Department of Energy, Department of Justice, Department of Health and Human Services, National Institutes of Health, and the U.S. Senate.

“Federal law enforcement investigated and disabled [China’s] malicious software, the latest in a series of technical operations to dismantle indiscriminate hacking activities sponsored by the People’s Republic of China,” Attorney General Todd Blanche said in a statement.

“These court-authorized seizures deny [China]-linked hackers access to tools they use to mount online attacks against our Nation’s critical infrastructure,” said Assistant Attorney General for National Security John A. Eisenberg in a statement.

According to court documents, QTFY offers computer hacking services to its paying customers, including China’s army and Ministry of State Security. These computer hacking services include QScan and QTRouter, which work in conjunction, the press release said.

QScan scans and automatically infects thousands of internet-of-things devices worldwide, which are then added to the QTRouter network of QTFY-controlled devices. QTRouter consists of these compromised IoT devices, as well as commercial proxy service devices and leased virtual private servers. QTRouter then serves as an obfuscation network — meaning it allows QTFY and other malicious cyber actors to conceal the China-origin of their computer intrusion activities because the malicious communications appear to originate from computers that are outside of China and may even be local to the targeted networks.

Because the seized domains were hard-coded into the QScan and QTRouter malware and used for essential tasks such as communication and authentication, the court-authorized seizures made QScan and QTRouter inoperable.

Aug. 19 (UPI) — The U.S. Treasury Department announced Wednesday that it will buy back about twice the usual amount of its bonds in a move to prevent rising interest rates on mortgages and consumer loans.

The department, which is led by Secretary Scott Bessent, said it will target the 10- to 20-year and 20- to 30-year portion of the market. Those bonds have faced a buyers’ strike since late June, CNBC reported.

Treasury said it will at least double the maximum size of its usual buyback, from $2 billion to “at least” $4 billion, an announcement from the department said. The buyback operation will be from Sept. 9 through Nov. 4.

The yields on longer-term debt have been at their highest levels since 2007, pushed up by war with Iran and other concerns, such as growing competition for financing with borrowers and growing federal deficits, Politico reported.

After the announcement, yields plummeted, while stock market futures spiked, CNBC reported.

The 10-year note dropped 6 basis points to 4.647% and the 30-year bond plunged 9 basis points to 5.196%. A basis point equals 0.01%. Yields and prices move in opposite directions.

It’s the latest move by Bessent to affect treasury yields.

The department conducted a joint operation with Japan to boost the yen, which was trading at its weakest against the dollar in about 40 years. He had warned in January that Japanese government bonds were causing issues in the U.S. treasury market.

The department also recently alluded to possibly issuing less longer-term debt in the future, Politico reported.

“This increase in buyback operation sizes reflects Treasury’s desire to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants, as evidenced by the significant volume of high-quality offers Treasury routinely receives in longer-dated buyback operations,” the department’s press release said.

The move “can help crowd in potential buyers tempted by the prior run-up in yields and force some near-term short-covering, while discouraging investors from going max short in the future for fear of being ambushed again,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client note, CNBC reported.

“But the operation changes almost nothing in terms of the fundamentals, in particular the unchanged need to finance the tidal wave of hyperscaler debt in addition to very large government deficits,” Guha added.

It could actually end up making the Federal Reserve‘s job of getting inflation back to 2% more difficult, said RSM Chief Economist Joe Brusuelas.

The buyback could artificially suppress yields and make controlling inflation more challenging.

“Bessent is a political actor. His interest is purely short-term and is organized around the upcoming election and not a return to price stability,” Brusuelas wrote.