On Wednesday (September 16), the Federal Reserve decided at its policy meeting to raise interest rates by 25 basis points to 3.75%-4%, increase the reserve requirement ratio to 3.9%, and raise the discount rate to 4%. This is the Fed's first rate hike since July 2023. The Federal Open Market Committee approved the decision by a vote of 12-0. A White House deputy press secretary stated that the Federal Reserve's rate hike was "quite regrettable." This came days after President Trump expressed dissatisfaction with recent interest rate movements and explicitly stated his desire for the Fed to act swiftly to lower borrowing costs. Some traders are betting that Trump will soon put pressure on Fed Chairman Warsh. Currently, a forecasting market shows a 44% probability that Trump will publicly humiliate Warsh before the end of the year, more than double the figure a month ago. According to CME's "FedWatch," after the Fed's expected rate hike in September, the probability of the Fed maintaining the rate at 3.75%-4.00% at its October meeting is 59.5%, the probability of a 25 basis point hike is 40.1%, and the probability of a 50 basis point hike is 0.5%. The probability of the Fed maintaining the rate at 3.75%-4.00% by December is 16.7%, the probability of a cumulative 25 basis point hike is 54.0%, the probability of a cumulative 50 basis point hike is 28.9%, and the probability of a cumulative 75 basis point hike is 0.3%. During Warsh's speech, spot gold was trading at $4266.74 per ounce, down 0.60%. The yield on the two-year U.S. Treasury note surged to 4.728%, its highest level since July 2024. The U.S. dollar index was at 100.1969, up 0.58%, its highest level since July 31. The yield on the 10-year U.S. Treasury note fell below 5%, down 0.18%, while the yield on long-term U.S. Treasury bonds was at 5.338%, down 0.56%. The dot plot showed that 16 officials expect another rate hike in 2026. The Federal Reserve's latest dot plot shows that 18 of the 19 officials submitted their dot plot projections (consistent with June), with 16 of them believing that interest rates should be raised again this year. Specifically, 4 officials believe that there should be a cumulative rate hike of 75 basis points by 2026 (1 in June), 12 officials believe that there should be a cumulative rate hike of 50 basis points (5 in June), 2 officials believe that there should be a cumulative rate hike of 25 basis points (3 in June), 0 officials believe that the interest rate should remain unchanged at 3.5%-3.75% this year (8 in June), and 0 officials believe that there should be a cumulative rate cut of 25 basis points (1 in June). Federal Reserve Chairman Kevin Warsh continued his previous practice and did not submit his personal projections. Deutsche Bank's chief U.S. economist stated, "The dot plot was slightly hawkish than the market expected. We believe the Fed has begun a period of moderate tightening." Economic Forecasts The summary of economic forecasts shows that real GDP growth is projected to be 2.3%, 2.4%, 2.2%, and 2.1% for 2026, 2027, 2028, and 2029 respectively, a slight upward revision from the June forecast, with a long-term growth rate of 2.0%. The unemployment rate is projected to remain at 4.1% from 2026 to 2029, lower than the June forecast, with a long-term rate of 4.2%. Regarding inflation, PCE inflation is projected to gradually decline from 3.7% in 2026 to 2.0% in 2029, while core PCE inflation is projected to decline from 3.4% to 2.0%, with recent inflation forecasts slightly upward revised from June. At the same time, the appropriate monetary policy path has also shifted significantly upward, with the federal funds rate projected at 4.1% in 2026, 4.1% in 2027, 3.9% in 2028, and 3.6% in 2029, and a long-term level of 3.2%. This reflects the possibility that policy rates may rise slightly in the event of stronger economic growth, lower unemployment, and slightly higher inflationary pressures. Expert opinion: Alex Giuliano, Chief Investment Officer of Resonate Wealth, stated that although this Fed rate hike was already anticipated by the market, it may still help stabilize the bond market. Giuliano said that this action "marks a clear shift by the Fed from sending hawkish signals on inflation to taking concrete action." He added, "While we wouldn't be surprised by another rate hike this year, the Fed doesn't like to reveal its hand prematurely. Premature revelations could only increase market expectations ahead of future Fed meetings, leading to increased stock market volatility." Ryan Detrick, chief market strategist at Carson Group in Omaha, said, "A few weeks ago, Fed Chairman Warsh somewhat backed himself up after his hawkish comments at Jackson Hole. The unanimous approval is somewhat surprising, but it also shows how seriously the Fed is taking our current escalating inflation situation."