The U.S. Federal Reserve on Wednesday raised its target range for the federal funds rate by 25 basis points to 3.75%-4.00%. All 12 voting members supported the move—its first adjustment since Kevin Warsh took over. The statement stressed that inflation remains too high, with the goal of getting prices back to 2% in a "more timely" manner.
The 25-basis-point hike had already been fully priced in by the market. The real surprise came from the dot plot: the median rate at the end of 2026 and 2027 was both raised to 4.1%. Based on the current range, most officials expect at least another 25-basis-point increase this year; the median at the end of 2027 was raised by 50 basis points versus the June projection (3.6%).
Warsh said financial conditions are hard to call restrictive. Yields on short-term U.S. Treasuries rose in tandem with the U.S. dollar, while bitcoin has been almost flat after the fact. Compared with bitcoin, what really matters isn’t these 25 basis points, but the Fed’s message that "higher interest rates may be maintained for longer."
The 25-basis-point hike had already been fully priced in by the market. The real surprise came from the dot plot: the median rate at the end of 2026 and 2027 was both raised to 4.1%. Based on the current range, most officials expect at least another 25-basis-point increase this year; the median at the end of 2027 was raised by 50 basis points versus the June projection (3.6%).
Warsh said financial conditions are hard to call restrictive. Yields on short-term U.S. Treasuries rose in tandem with the U.S. dollar, while bitcoin has been almost flat after the fact. Compared with bitcoin, what really matters isn’t these 25 basis points, but the Fed’s message that "higher interest rates may be maintained for longer."