All 12 governors of the Federal Reserve Bank’s Federal Open Market Committee voted to raise their target lending rate by one-quarter of a percentage point to a range of 3.75% to 4%, its first interest rate hike since July 2023.

The move was predicted by most economists and telegraphed in earlier comments by committee chair Kevin Warsh, who presided over a split vote to hold the target rate at 3.5% to 3.75% in July and, a month earlier, a unanimous decision to hold rates in his first meeting after taking over from former chair Jerome Powell, who remains on the committee as a governor.

High inflation continues to raise the cost of energy, among other key metrics, and higher interest rates are designed to reduce spending and slow growth. The FOMC serves a dual mandate of maintaining a 2% rate of inflation and promoting a healthy job market.

“Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” an official statement reads, in part. “Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

Warsh echoed those sentiments in a press conference that followed the announcement, adding that several key indicators — including hiring, earnings and capital investment — point toward a “strengthening” economy.

“I would be hard-pressed to describe broad financial conditions as restrictive,” the chairman told reporters. “This view was widely shared by the committee.”

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