News Digest: Fed Raises Rates for First Time Since 2023, Citing Inflation Risks from Iran War
September 18, 2026
The Federal Reserve raised its benchmark interest rate by a quarter point on Wednesday, lifting it to a range of 3.75%-4% in its first hike since 2023. The unanimous decision, backed by Fed Chairman Kevin Warsh, marks a renewed push against inflation that has climbed since early in the year amid the ongoing war involving Iran.
Source: CNN
In the post-meeting press conference, Warsh pointed to three developments since the Fed’s July meeting that drove the decision: a strengthening economy, inflation that failed to ease, and worsening geopolitical tensions. He emphasized that price stability remains the central bank’s foremost concern, even as officials penciled in one more rate increase before year’s end and none in 2027.
On the Iran conflict, Warsh acknowledged that global instability is shaping the Fed’s outlook, noting that disruptions to oil, gas, and shipping routes are contributing to inflationary pressure. The Congressional Budget Office recently estimated the war could push inflation up by about half a percentage point early next year.
Warsh sidestepped the question but stressed the Fed’s independence from political influence, saying the central bank stays focused on its own mandate while leaving trade and fiscal policy to others. Trump, who selected Warsh for the role, posted on social media after the announcement urging lower rates, though he avoided directly criticizing the chairman.
Warsh also addressed the economic impact of artificial intelligence, noting that AI-driven business investment has been strong and confirming a Fed task force is studying its implications for future policy. Meanwhile, Treasury yields climbed to their highest level since 2007, which Warsh attributed to economic strength, geopolitical uncertainty, and heavy competition for capital from major tech firms.
Overall, Warsh framed the hike as a sign of confidence in the economy’s ability to withstand tighter policy while the Fed keeps its attention on curbing inflation
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