The Fed Raises Interest Rates For the First Time in Three Years

September 16, 2026

AI Summary

5 min read

The Fed Raises Interest Rates for the First Time in Three Years

For the first time since 2023, the Federal Reserve raised interest rates by a quarter percentage point on Wednesday, a move that was widely expected by markets but still sent stocks tumbling after Fed Chairman Kevin Warsh's press conference. The decision came as inflation has remained above the Fed's 2% target for five years, and officials' patience had simply worn out. "The plain fact is that inflation is too high and has been for too long," Warsh said.

The Fed Decision and Its Implications

The rate increase was approved unanimously by the Fed's governors. WSJ economics reporter Matt Grossman explained that over the summer, Fed officials had wanted to see inflation making more progress toward their target, but the latest data earlier this month showed no evidence of that. The move was particularly notable because President Trump had specifically brought Warsh in as chairman to lower interest rates. A White House spokesman called the decision "unfortunate," and stocks turned lower after the press conference — something Grossman noted Trump would not like.

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What you'll learn

1 (01:16) **Fed Raises Rates for First Time Since 2023** - The Federal Reserve unanimously approved a quarter-point rate hike, citing persistent inflation and a strong labor market.
2 (03:36) **Market Reaction and Dot Plot Projections** - Stocks fell sharply after Warsh's press conference, and the Fed's dot plot signaled at least one more rate hike this year.
3 (05:27) **Business Leaders Push Back on Trump's AI Regulation Stance** - At an invitation-only Washington gathering, 93% of executives disagreed with Trump's dismissal of AI dangers as a hoax.
4 (06:26) **States Unable to Obtain COVID-19 Shots for Children** - The CDC has not distributed COVID-19 vaccines to states, delaying federal program distribution to millions of children.
5 (06:52) **U.S. Plans $2.8 Billion Heavy Bomb Sale to Israel** - The proposed deal includes 40,000 2,000-pound bombs and 20,000 bunker-busting warheads, despite tensions between Trump and Netanyahu.
6 (07:43) **Houthi Rebels Seize Key Oil Chokepoint and Down Saudi Jet** - The Houthis launched a lightning offensive to control the Bab el-Mandeb strait, disrupting global oil shipping.
7 (09:24) **Houthis' Tactical Advantage and Impact on Oil Prices** - The rebels use a "scoot and shoot" guerrilla strategy, making them difficult to target despite past U.S. and Saudi campaigns.

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Guests on this episode

Matt Grossman

Show Notes

P.M. Edition for Sept. 16. The Federal Reserve unanimously decided to raise interest rates a quarter percentage point today, its first rate hike in three years. WSJ economics reporter Matt Grossman discusses what went into that decision, what it means for the Fed’s relationship with President Trump and what to expect from the Fed’s future meetings this year. Plus, Yemen’s Tehran-backed Houthi rebels claimed they shot down a Saudi fighter jet. We hear from the Journal’s deputy Middle East bureau chief Jon Gambrell about how the Houthis recently seized Bab al-Mandeb Strait, a crucial oil chokepoint, after sitting out months of the Iran war. And business leaders are taking sides in the debate around AI regulation—mostly in opposition to President Trump. Alex Ossola hosts.

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