The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point, the first increase in three years, as officials moved to contain persistent inflation under new Chairman Kevin Warsh.

The Federal Open Market Committee lifted the federal funds rate target range to 3.75%–4.00%. Officials said the action would support a more timely return of inflation to the central bank’s 2% goal. It marks the first rate hike since July 2023 and the first under Warsh, who took office in May after being nominated by President Donald Trump.

Warsh’s decision comes amid elevated price pressures linked to energy costs, tariffs, and other factors. The move may test the relationship between the new Fed chair and the White House, which has favored lower borrowing costs. Policymakers also signaled the possibility of further tightening later this year.

Markets had widely anticipated the increase. The decision was unanimous. Higher rates typically raise the cost of mortgages, credit cards, and business loans, though the full effects on households and the broader economy will unfold over time.