🇺🇸The Federal Reserve raised its benchmark target range 25 basis points to 3.75%–4.00%, its first increase since July 2023.

The Federal Open Market Committee (FOMC) approved the increase unanimously, 12–0, according to the supplied reports. The decision also raised the interest rate on reserves to 3.9% and the discount rate to 4%.

Chair Kevin Warsh emphasized that inflation remained too high and that summer data had not demonstrated meaningful improvement. He said too many price categories were recording increases above 3% over both six- and twelve-month periods, while the committee lacked confidence that underlying inflation was moving toward its 2% target promptly.

The reported projections showed 12 of 18 submitting officials anticipating one additional quarter-point increase during 2026, four anticipating two, and two anticipating none. These are officials’ projections, not adopted future decisions; Warsh separately declined to prejudge subsequent policy actions.

For compute-infrastructure context, Warsh explicitly identified competition for capital and a surge in capital expenditure among the reasons bond yields had risen, alongside economic strength and geopolitics. He also said the Fed was closely following AI and that its task force should report by year-end, without announcing an AI-specific monetary-policy measure.