The Federal Reserve raised its benchmark interest rates for the first time since 2023 on Wednesday, aiming for a timelier return to the central bank’s 2% goal. This increase raises the central bank’s target by a quarter percentage point, to a range of 3.75% to 4.00%. 

The hike comes in response to continually elevated inflation rates, with higher energy prices adding to price pressures amid geopolitical tensions surrounding the war in Iran.

The decision was unanimous among the Fed’s rate-setting members. Fed Chair Kevin Warsh cited elevated uncertainty and inflation while noting that job gains had kept pace with the workforce and unemployment saw little change. 

The unanimous decision is at odds with President Donald Trump’s calls for lower interest rates. Trump has repeatedly urged the Federal Reserve to cut rates, arguing that lower borrowing costs would support economic growth. 

The Fed, however, operates independently from the White House, established with a dual mandate to maximize both employment and stable prices. The higher federal funds rate is intended to put upward pressure on borrowing costs across the economy, potentially reducing consumer and business spending and easing price pressures. 

Fed policymakers also signaled that another increase could come before the end of the year. 16 of 18 officials projected at least one additional rate increase in 2026, according to the Fed’s latest projections.