The Federal Reserve unanimously raised the overnight interest rate by 25 basis points to a 3.75% 4% range on Sept. 16. This 12-0 vote marked the first rate increase since July 2023 and is intended to support a timelier return to the central bank's 2% inflation goal. Following the decision, the 10 year Treasury yield climbed above 5%, its highest level since 2007, while 30 year mortgage rates reached 6.95%, a 19 month high.

Fed Chair Kevin Warsh defended the bank's independence from political pressure after President Donald Trump criticized the move and demanded rates be cut to 1% or lower. Despite the disagreement, Trump stated he maintains confidence in Warsh and acknowledges that inflation is too high. Most Fed officials project one additional rate hike before the end of 2026, and Goldman Sachs has revised its outlook to forecast another 25 basis point increase in October.