What the Fed’s interest rate hike reveals about Warsh, Trump and inflation

September 17, 2026 / 2:12 PM EDT / CBS News

The Federal Reserve did what investors expected on Wednesday by raising interest rates for the first time in three years. Then Chairman Kevin Warsh delivered a surprise — a decidedly hawkish message that opened the door to additional rate hikes as the central bank looks to snuff out stubbornly high inflation.

The Fed on Wednesday delivered a widely anticipated quarter-point interest rate hike, a modest increase that will make credit cards and other loans incrementally more expensive. Yet stocks tumbled, with the Dow Jones Industrial Average shedding 631 points, or 1.2%.

What unsettled investors was the gap between the Fed's economic forecasts and Warsh's remarks. Policymakers projected one additional hike in 2026 and none in 2027, but Warsh signaled a willingness to further raise rates if that's what is required to finally bring inflation under control.

"In this press conference, Warsh revealed his true inner hawk and a willingness to lead in that direction," Tim Duy, chief U.S. economist at SGH Macro Advisors, told clients in a research note.

Here are three key takeaways from the Fed meeting.

Warsh, who was named by President Trump to succeed longtime Fed Chair…

Original source: https://www.cbsnews.com/moneywatch/