# Warsh's Fed Raises Rates for the First Time Since 2023 and Signals Another Increase

The unanimous quarter-point move to a 3.75 to 4 percent target range pushed the Dow Jones Industrial Average down 631 points, and Goldman Sachs immediately moved its call to an October hike.

- Published: 2026-09-17T05:11:27.605Z
- Canonical: https://polylog.news/2026-09-17/warsh-s-fed-raises-rates-for-the-first-time-since-2023-and-s
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [Financial Times](https://www.ft.com/content/fb8e1037-8c48-49d2-809e-950472bcbae5?syn-25a6b1a6=1), [Globes (Hebrew)](https://www.globes.co.il/news/article.aspx?did=1001556735#utm_source=RSS), [CoinDesk](https://www.coindesk.com/markets/2026/09/17/goldman-expects-another-fed-rate-hike-in-october)

The Federal Reserve raised its benchmark interest rate by a quarter of a percentage point on Wednesday, lifting the target range to between 3.75 and 4 percent. It was the first increase since July 2023, and the Federal Open Market Committee approved it unanimously. Kevin Warsh, who took over as chair less than four months ago after President Donald Trump selected him, said the economy is strengthening, that financial conditions are not clearly restrictive, and that the central bank remains focused on returning inflation to its 2 percent target, [according to the decision coverage](https://www.cnbc.com/2026/09/16/fed-rate-decision-september-2026.html).

The [Financial Times framed the decision](https://www.ft.com/content/fb8e1037-8c48-49d2-809e-950472bcbae5?syn-25a6b1a6=1) as a defeat for Trump, who had pressed for cheaper money and whose own appointee has now led the central bank in the opposite direction. The committee's updated projections showed 16 of 18 participants expect one more increase before the end of the year.

Equities fell after Warsh spoke. The Dow Jones Industrial Average lost 631.21 points, or 1.21 percent, to 51,461.90, the S&P 500 fell 0.45 percent to 7,551.81 and the Nasdaq Composite finished close to unchanged at 25,978.42, [per the session tally](https://www.cnbc.com/2026/09/15/stock-market-today-live-updates.html). [Globes reported](https://www.globes.co.il/news/article.aspx?did=1001556735#utm_source=RSS) mixed Asian trading on Thursday morning and futures pointing to a partial recovery in New York.

Goldman Sachs [now forecasts a further 25 basis point increase in October](https://www.coindesk.com/markets/2026/09/17/goldman-expects-another-fed-rate-hike-in-october), citing the Fed's own near-term projections. Warsh's admission that policy is not clearly restrictive is the important part. A quarter-point increase withdraws very little credit from an economy where inflation has already accelerated since the start of the year, so whether this counts as real tightening will depend on the next few inflation readings, not on the decision announced Wednesday.

## What this means

A rising policy rate with inflation already climbing compresses valuations in long-duration equities and raises the cost of refinancing for leveraged borrowers, while a firmer dollar transfers the strain outward to countries with looser policy and dollar-denominated debt. The direct losers are rate-sensitive sectors and emerging-market borrowers. The gainers are holders of short-dated dollar paper and, if inflation keeps outrunning nominal rates, holders of monetary metals.

## What to watch

- Whether the October meeting delivers the second increase Goldman Sachs expects, which would confirm that the Fed treats this as a cycle rather than a single adjustment.
- The next United States consumer price report, because a further acceleration would mean the quarter-point move left real borrowing costs roughly where they were.
- Credit spreads on lower-rated corporate debt, which show whether tighter policy is reaching the borrowers who most depend on cheap refinancing.