The Fed Finally Hiked — and the Unanimous Vote Mattered More Than the Quarter Point

After more than three years without a rate increase, the Federal Reserve raised rates by a quarter point in a unanimous vote — an outcome that was widely expected but still carried significant political and economic weight. The hike, the first since 2023, was an explicit attempt to cool inflation that has run above the Fed's 2% target for over five years. Fed Chair Kevin Warsh made clear in his remarks that this summer's inflation readings had not convinced him that "underlying trends have meaningfully improved." The 10-year Treasury yield hit a 52-week high, climbing back above 5%, and stocks fell. Bank stocks had their worst day since February on concerns that higher rates would slow lending growth.

The Unanimity Was a Political Signal, Not Just a Policy One

Robert Armstrong of the Financial Times, joining the show to discuss the decision, pointed to three things worth understanding about this hike. First, the vote put to rest the theory that Warsh is Donald Trump's "sock puppet." Armstrong had never bought that theory — "I don't see what's in it for Warsh playing the part of the sock puppet" — and the hike, delivered despite the president's threats and protestations, made that clear.