Fed rate hike expected Wednesday under Kevin Warsh

Fed rate hike expected Wednesday under Kevin Warsh Fed rate hike expected Wednesday under Kevin Warsh · Quartz · Andrew Harnik / Getty Images Cris Tolomia Tue, September 15, 2026 at 9:09 PM GMT+9 3 min read The Federal Reserve is expected to raise its benchmark interest rate by a quarter of a percentage point on Wednesday, a move that would mark the first increase since July 2023 and put Fed Chair Kevin Warsh in direct conflict with President Donald Trump.

Futures traders have assigned better than a 92% chance to a rate increase at this week's Federal Open Market Committee meeting, according to CNBC. A move would lift the federal funds rate from its current target range of 3.5% to 3.75%. Odds of a follow-up move in December stand above 75%, according to CNBC.

The Fed has held rates steady across its past several meetings even as inflation has continued to run above the central bank's 2% target. August's consumer price index showed headline inflation at 3.4%, with core inflation — which excludes food and energy — at 2.4%. At last month's annual conference in Jackson Hole, Wyoming, Warsh indicated the Fed would move on rates absent more convincing evidence that inflation was retreating toward its 2% goal.

Failing to follow through on those comments now would damage Warsh's credibility, former New York Fed President Bill Dudley told CNBC. "With the market priced this way, it would be shocking if he came in and did nothing," Dudley said.

A rate increase would directly contradict Trump, who has pressed the Fed to lower borrowing costs in the weeks before midterm elections. As Trump accused the Fed's board of governors of keeping rates high for political reasons last month, he spared Warsh from criticism, saying the chair is doing a "great job." Joseph Lavorgna, chief economist at SMBC Nikko Securities America and a former Treasury Department adviser, said Warsh "needs to do what he believes is in the best interest of the Federal Reserve, and right now inflation is a problem."

The internal dynamics of the vote remain uncertain. At the July meeting, the FOMC voted 9-3 to hold, with regional presidents Beth Hammack of the Cleveland Fed, Neel Kashkari of the Minneapolis Fed, and Lorie Logan of the Dallas Fed dissenting in favor of a hike. For Wednesday's decision to go in favor of a hike, at least four other members would need to cross over from their July positions, according to CNBC.

Governor Christopher Waller, speaking publicly on September 3, questioned what a single 25-basis-point move would actually accomplish for inflation and said the situation called for waiting rather than acting hastily. New York Fed President John Williams, whose role as vice chair of the FOMC places him among the most influential voices on the committee, also conveyed little urgency to move.

Goldman Sachs economist David Mericle said in a client note that the firm does not see a strong economic case for raising rates, attributing the inflation overshoot to one-time factors. Even so, Goldman revised its forecast to a hike, concluding that the weight of market pricing would leave the Fed little choice but to move.

Along with the rate decision, the Fed will release an updated dot plot on Wednesday showing policymakers' individual rate projections. The June projections showed nine officials favoring at least one rate increase before year-end. Warsh did not submit his own projections in June.