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Kevin Warsh, the man U.S. President Donald Trump tapped to lower interest rates, on Wednesday presided over a unanimous decision to hike U.S. borrowing costs for the first time in three years due to concern over rising inflation.

Most officials at the U.S. Federal Reserve also signaled that rates are likely to keep creeping upward, with at least one more rate hike later this year and more to follow in 2027.

Kevin Warsh, the man U.S. President Donald Trump tapped to lower interest rates, on Wednesday presided over a unanimous decision to hike U.S. borrowing costs for the first time in three years due to concern over rising inflation.

Most officials at the U.S. Federal Reserve also signaled that rates are likely to keep creeping upward, with at least one more rate hike later this year and more to follow in 2027.

“The plain fact is that inflation is too high and has been for too long,” Warsh, who assumed the role of Fed chair in May, said at a press conference after the Wednesday meeting.

The decision to raise interest rates by one-quarter point was widely anticipated by markets in the wake of Warsh’s speech last month at a major conference; anything less than a modest rate hike would have unleashed a brutal response from investors. Yet Warsh may still face a nasty rebuke from Trump, who has demanded lower rates to kick-start the economy. 

But the decision is a reflection that the ongoing costs of the war in Iran, as well as Trump’s trade wars, are carrying real consequences for a U.S. economy already strained by mounting debt and unchecked fiscal profligacy.

Warsh highlighted “geopolitics” as one of the things that had changed since the Fed held rates steady in its last meeting. “There’s no hiding from hot spots around the world,” he said.

Warsh, who has struggled to convince investors and global markets with his spare communication style that he understands the traditional role of the Fed to be a reliable thermostat for the global economy, again refused to offer much guidance on........

© Foreign Policy