--- title: "As Fed rolls out its first interest-rate hike in 3 years, market braces for more increases" type: "News" locale: "en" url: "https://longbridge.com/en/news/299241050.md" description: "The Federal Reserve, led by Chairman Kevin Warsh, unanimously raised interest rates by 25 basis points, marking its first hike in three years. While the Fed signaled only one additional increase is likely, markets priced in more hikes, pushing Treasury yields up and stocks down. The decision aims to combat persistent inflation driven by tariffs and geopolitical conflicts, despite pressure from President Trump for lower rates." datetime: "2026-09-16T22:25:13.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/299241050.md) - [en](https://longbridge.com/en/news/299241050.md) - [zh-HK](https://longbridge.com/zh-HK/news/299241050.md) generator: "portal-rs" --- # As Fed rolls out its first interest-rate hike in 3 years, market braces for more increases By Victor Reklaitis and Greg Robb The Fed's policy-making committee signals only one more hike, but market thinks more are coming Federal Reserve Chairman Kevin Warsh and his colleagues have rolled out their latest decision on interest rates as they deal with persistent inflation. The Federal Reserve on Wednesday increased its benchmark interest rate by 25 basis points, matching expectations, while signaling that just one additional rate hike is likely to come in the months ahead. The Fed's policy-making committee was unanimous in its decision to hike on Wednesday, and 16 of the 19 members expect another increase at either their October or December meeting. George Goncalves, head of U.S. Macro Strategy at MUFG Securities Americas, said Warsh stressed at his press conference that he was following inflation trends, sending a signal the Fed would likely skip October and hike again in December. There will be only one month's worth of data before the Oct. 27-28 meeting, not enough for a "trend" to emerge. Fed officials were more divided about the rate outlook in 2027, with 10 officials signaling they see no more moves, but eight officials are penciling in another quarter-point increase. The Fed - helmed since May by Chairman Kevin Warsh - is under pressure to get inflation closer to its target level of 2% by raising rates. But it quickly drew flak from President Donald Trump, who is pushing for the independent institution to lower borrowing costs. In a social-media post, Trump again called for lower interest rates, but did not explicitly criticize the Fed or Warsh. Wednesday's hike, the first since July 2023, marks a remarkable shift for the U.S. central bank. After racing to lift interest rates to combat the inflation that emerged following the COVID-19 pandemic, the Fed started to cut rates in September 2024. It was trying to engineer a "soft landing," whereby the U.S. economy could continue to grow while rates were high enough to allow inflation to gradually ease. Many Fed officials think the Fed cut rates too far, especially the three rate cuts in 2025. The conventional view among economists is that the Fed will reverse those three cuts fully before pausing to gauge inflation. Critics of the Fed's hike Wednesday say it raises the risk of a "hard landing" for the economy. But Warsh suggested the economy was strong enough to handle higher rates. Inflation spiked this year after the start of the war with Iran. Fed officials said they wanted to "look through" this inflation, believing it won't last. But more officials have lost patience with high inflation, which has persisted for more than five years and worsened this summer due to tariffs and the war with Iran. In their statement, Fed officials said this rate hike "will support a timlier return to the FOMC's 2% goal." Recap: MarketWatch's live coverage of the Federal Reserve's interest-rate decision After the Fed's decision, there was a surprisingly sharp adjustment in the short end of the curve. Analysts said traders were pricing in more rate hikes than they had previously expected by pushing up the yields on 2-year Treasury notes BX:TMUBMUSD02Y to their highest since July 2024. This move dragged stocks down. "The market seems to be thinking even more than what the dots suggest and what Warsh seems currently willing to do," said Ira Jersey, senior U.S. rates strategist for Bloomberg Intelligence. The benchmark S&P 500 stock index SPX turned negative, after initially staying up following the Fed's move. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was rising, topping the 5% level. One key in the Fed's latest decision was that it was unanimous, said Vincent Ahn, president and portfolio manager at SLW Investments. The decision was always going to be in large part about restoring the Fed's credibility, and "a credibility move only works if the room believes it," Ahn told MarketWatch in an email. "A split hike says the Fed is still debating the problem. A unanimous hike says the debate is over." Jersey said this was Warsh's best public speech since he took the helm of the Fed in May. "He was clear, stayed on message and did not confuse the markets with task forces," he said. His simple message was "we have a 2% inflation target and growth is pretty good," Jersey added. Joy Wiltermuth contributed. -Victor Reklaitis -Greg Robb This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 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