The Federal Reserve voted to raise interest rates by 25 basis points on Wednesday amid persistently high inflation. The decision was unanimous.
The median Fed official expects one more rate hike this year, according to the central bank’s Summary of Economic Projections, also known as the dot plot.
The move was the Fed’s first increase in the fed funds rate since 2023, when the Jerome Powell-led central bank concluded its post-pandemic hiking campaign. It was also largely priced in by the market, even as Federal Reserve Chairman Kevin Warsh has been adamant about not providing markets with forward guidance.
In response to the announcement, the tech-laden Nasdaq and other major indexes initially saw gains, despite sectors like energy experiencing declines due to sliding crude prices. Investors await further insights from Warsh on the central bank’s future plans.
Markets will closely scrutinize Warsh’s press conference at 2:30 p.m. ET for hints about his thinking on inflation and monetary policy in the next few years.
Most FOMC members see the need for one more 25 basis point rate hike to come this year, as 12 out of 18 members that submitted projections peg their view of appropriate monetary policy in 2026 at an average of 4.125%.
Four members see 50 more basis points’ worth of rate hikes in 2026 as appropriate, while only two members see no more hikes this year — suggesting that the new effective target rate of 3.75% to 4% is adequate.
