The Federal Reserve raised rates for the first time since 2023, as chair Kevin Warsh defies Donald Trump’s calls for lower borrowing costs to curb inflation sparked by the Iran war. The FOMC voted unanimously to increase the benchmark rate by a quarter point to 3.75% to 4%, meeting Wall Street expectations.

The FOMC said the rise "will support a timelier return" of inflation to its 2% target, missed for five and a half years. Warsh aims to prevent Middle East conflict energy price spikes from causing a broader inflation crisis, just months before midterm elections where affordability is key.

Investors had priced over a 90% chance of a hike after August CPI stalled progress. "Inflation is too high and has been for too long," Warsh said. The rise comes despite Trump calling elevated rates "ridiculous."

New projections show most officials expect another quarter-point rise by end of 2026. The FOMC noted job gains kept pace with the workforce and unemployment changed little.