Bitcoin, ether swing after unanimous quarter-point Fed rate hike as Warsh takes aim at inflation

On Wednesday, the United States Federal Reserve increased interest rates by 25 basis points to combat persistently high inflation. The Federal Open Market Committee, responsible for this decision, unanimously voted to raise the target range to between 3.75 and 4.00 percent, citing elevated inflation and promising a timely return to its 2 percent inflation target. Fed Chair Kevin Warsh stated that the U.S. economy has shown growth since the last meeting, yet inflation trends have remained stagnant.

Inflation has been a persistent issue in the U.S., with prices surging due to various factors including Mr. Trump's trade policies, his Iran conflict, and the artificial intelligence boom. Prior to this increase, the Fed had not raised rates since 2023, as the central bank focused on addressing post-pandemic inflation.

Since last July, a quarter of the committee's voting members had opposed the decision to maintain rates, urging an immediate hike as inflation did not show significant improvement. Following the August consumer price index release, which came in at 3.4 percent, unchanged from the previous month but still significantly higher than the Fed's 2 percent target, the Summary of Economic Projections raised its inflation forecast for the Personal Consumption Expenditures price index to 3.7 percent by year-end.

The Fed's decision to raise rates comes amid international scrutiny, particularly from President Donald Trump, who has demanded lower interest rates to stimulate economic activity. Mr. Trump's administration has been vocal in its criticism of the Fed, including a criminal investigation against its previous chair, Jerome Powell, and efforts to remove Fed Governor Lisa Cook.

Despite this, key Trump economic advisor Kevin Hassett acknowledged the necessity of the decision, stating the White House would respect the Fed's judgment. President Trump has largely supported Mr. Warsh, accusing the board of being politically motivated.