Fed Raises Rates to 3.75%-4.00% Despite Trump’s Call for 1%

The Federal Reserve raised its benchmark interest rate on Wednesday, increasing the federal funds target range by 25 basis points to 3.75%-4.00%, despite President Donald Trump’s call for rates of 1% or lower.

The US Federal Reserve raised its benchmark interest rate by 25 basis points on Sept. 16, 2026. [Photo: Federal Reserve]

The increase was the Fed’s first since July 2023. Fed Chair Kevin Warsh said persistent inflation warranted the move, while policymakers signaled that another increase could come later in the year.

Sixteen of the 18 Fed policymakers projected at least one additional rate increase in 2026.

Trump had called for the federal funds rate to be reduced to 1% or lower in comments on Sept. 16.

He criticized the Fed’s decision after the rate increase but also said he had confidence in Warsh, whom he appointed to succeed Jerome Powell.

The rate decision came during a politically difficult week for the administration. On Sept. 15, the Supreme Court declined to allow a Trump administration rule imposing additional restrictions on mail-in ballots.

On the same day, the House passed a war-powers resolution by a 220-204 vote that sought to limit the president’s authority to continue military operations against Iran without congressional authorization.

Seven Republicans joined Democrats in supporting the measure.

The House also recessed early on Sept. 16, preventing an immediate vote on a privileged impeachment resolution filed by Republican Rep. Thomas Massie seeking to impeach Defense Secretary Pete Hegseth.

Speaker Mike Johnson defended the early recess, while Massie criticized the decision.

A separate dispute continued over the Kennedy Center, where a federal judge ordered the Trump administration to clarify whether plans to close the performing arts center for up to two years for renovations comply with an earlier court order.