Kevin Warsh hikes rates to 4% defying Trump
- Kevin Warsh led a unanimous Fed vote to raise interest rates to 4 percent.
- Soaring diesel prices from Middle East war disruptions forced the central bank's hand on inflation.
- Donald Trump targeted the broader Federal Reserve committee rather than criticizing Warsh directly.
The central bank chose fight over flight.
On September 17, 2026, Federal Reserve Chairman Kevin Warsh led a unanimous 12-0 vote to raise interest rates by a quarter point to between 3.75% and 4%. The decision marked the Fed's first rate increase since July 2023. Donald Trump spent months publicly demanding cheap credit, but Warsh pointed to strong domestic spending, steady productivity, and solid capital investment to justify tightening policy. On The Intelligence, Archie Hall noted that market skepticism following Warsh's initial press conferences forced the chairman to take a stand. By shortening his press briefing to under 30 minutes and laying the groundwork at Jackson Hole, Warsh restored institutional credibility before the upcoming midterm elections.
"Jackson Hole signaled orthodoxy; yesterday delivered it."
- Archie Hall, The Intelligence
Behind the vote lay a sharp geopolitical shock. On Breaking Points, Krystal Ball reported that ship transits through the Strait of Hormuz collapsed by 87% amid escalating conflict with Iran, driving California diesel prices above $8 a gallon. The spike in fuel costs immediately began squeezing transport companies and stalling housing construction, threatening to entrench high inflation well into next year. Host Saagar Enjeti highlighted that the decision caught Trump off guard, given that he appointed Warsh specifically expecting lower borrowing costs.
Trump avoided targeting his Fed chair directly, choosing instead to point out the unanimous nature of the vote across all 12 voting members. Yet the policy shift altered market expectations instantly. On Bitcoin And, analyst David Bennett pointed out that rising yields are deepening principal losses on $41 trillion in national debt and existing government bond portfolios. Following Warsh's hawkish tone, Goldman Sachs abandoned its expectation of a rate pause, revising its forecast to project another quarter-point hike in October.
By the following day, financial markets began digesting the long-term reality of higher borrowing costs. On Bankless, Haseeb Qureshi argued that Warsh’s ability to push through a rate hike despite political threats demonstrated the central bank's operational sovereignty. Surprisingly, crypto markets largely shrugged off the news, holding key price levels even as Congress killed major regulatory legislation during the same week.
"When prices rise or hold flat on double bad news, the bull market is underway."
- Ryan Sean Adams, Bankless
Warsh bought the Fed valuable credibility when it needed it most. Whether that credibility survives another round of fuel spikes and political pressure remains to be seen.
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ROLLUP: The Bull Market Test | Clarity Dies | SEC Opens the Door | Hyperliquid Comes Onshore • Sep 18
- Fed Chair Kevin Warsh led a unanimous 12 to 0 vote to raise interest rates to a target range of 3.75 percent to 4 percent. Haseeb Qureshi argues that the hike, which defied political pressure, demonstrates the central bank's sovereignty.
Also discussed on this episode: (9)
Markets (4)
- David Hoffman argues the market's positive price reaction despite double bearish news confirms crypto is in a bull market. Historically, insensitivity to negative events like rate hikes and legislative failures is a classic indicator of early cycle momentum.
- Zcash and Near Protocol are driving a middle-market recovery, which Ryan Sean Adams notes is abnormal for early bull phases. Near Protocol has seen significant adoption, with its confidential intents facilitating 30 billion dollars in cross-chain transactions.
- Tom Lee forecasts a major year-end stock market rally, predicting the S&P 500 could easily clear 8,200. Meanwhile, the bond market remains highly volatile as the US 10-year treasury yield surpassed 5 percent.
- Nick from Derive argues that on-chain options are gaining traction over perpetual swaps because they protect traders from volatility-induced liquidations. The Derive token reacted strongly to this trend, surging 150 percent over the past month.
BTC Markets (1)
- Michael Nadeau identifies a critical Bitcoin trading band between 69,900 and 80,400 dollars. Sustaining prices above the 50 week moving average of 80,400 dollars will provide decisive momentum confirmation that the market low occurred on June 30th.
Regulation (2)
- The Senate blocked the Clarity Act after a procedural vote fell 11 votes short of a supermajority. Ryan Sean Adams notes that Donald Trump's controversial history of family crypto dealings made the bill politically impossible for Democrats to support.
- The SEC issued its Innovation Exemption on September 17th, permitting whitelisted tokenized stocks with voting rights to trade on public blockchains. The exemption bypasses broker-dealer registration for decentralized exchanges but imposes a daily trading volume cap of 0.25 percent.
AI Infrastructure (1)
- Eric Voorhees highlighted massive growth on Venice, where daily AI token consumption has reached 250 billion. Venice uses 25 percent of its transaction fees to buy back its native VVV token, aligning value accrual with protocol utilization.
VC (1)
- S&P Global acquired smart contract security auditor OpenZeppelin. S&P Global is targeting Web3 infrastructure, directly absorbing a firm responsible for securing 37 trillion dollars in historically transferred blockchain value.
Warsh Cycle | Bitcoin Regulation • Sep 17
- The Federal Reserve unanimously raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4%. Fed Chair Kevin Warsh cited persistent inflation, signaling that the central bank intends to enact one more rate hike before the end of 2026.
- Goldman Sachs reversed its previous forecast of a rate pause, now projecting another Federal Reserve interest rate hike in October. David Bennett notes this shift followed Fed Chair Kevin Warsh's hawkish press conference indicating monetary policy remains insufficiently restrictive.
- David Bennett warns that US treasury bonds are increasingly risky assets due to widespread global and domestic selling pressure that erodes their principal face value. Bennett argues that rising yields fail to offset the underlying risk of holding sovereign debt.
Also discussed on this episode: (8)
Regulation (3)
- CFTC Chair Mike Selig announced the regulatory agency will issue new crypto market rules using existing statutory authority despite Congress blocking the Clarity Act. Selig stated the agency remains committed to building a crypto regulatory structure without legislative intervention.
- SEC Chair Paul Atkin unveiled a five-year conditional innovation exemption allowing tokenized security venues to run automated market makers. To qualify, platforms must offer tokens representing real underlying stock ownership with full dividend and voting rights.
- Representative Maxine Waters proposed an amendment to bar federal politicians, their spouses, and children from holding controlling interests in digital assets or receiving crypto-related compensation. The amendment failed to pass the House Financial Services Committee on a 28 to 21 vote.
Banking (1)
- Citi analysts project the global market for tokenized real-world assets could reach $5.5 trillion by 2030. Financial institutions are accelerating blockchain experiments to achieve faster settlement times, 24-hour trading windows, and reduced operational collateral requirements.
Stablecoins (1)
- Adrian Wall of the Digital Sovereignty Alliance claims senators from both parties are actively strategizing to advance the Clarity Act crypto bill during the post-election lame duck session. Wall describes the effort as a complex, long-shot legislative strategy.
Adoption (1)
- The House Financial Services Committee voted 28 to 21 along party lines to advance the American Reserve Modernization Act. The amended bill orders the Treasury to establish a strategic Bitcoin reserve and mandates a 20-year lockup on all held Bitcoin.
Privacy (1)
- Neo-bank Revolut faced competing public ransom demands following a customer database breach linked to a compromised Italian government email account. A hacking group named "I am not a villain" demanded 6,000 Monero, disputing a rival group's demand for 10,000 Bitcoin.
Philosophy (1)
- David Bennett challenges the traditional definition of wealth, arguing that luxury assets like real estate and sports cars act as illiquid financial liabilities. Bennett advises individuals to inventory their portfolios and explore permaculture's eight forms of capital.
9/17/26: Trump Panics As Fed Raises Rates, Gas Stations Out Of Diesel, Americans Say Shut Down AI • Sep 17
- The Federal Reserve unanimously raised the benchmark funds rate to a range of 3.75% to 4%, marking the first hike since 2023. Saagar Enjeti notes the decision shocked Donald Trump, who selected Kevin Warsh as chairman specifically to lower rates.
Also discussed on this episode: (12)
Macro (2)
- High interest rates are squeezing consumer borrowing and housing construction while fueling a surge in data center capital expenditures. Saagar Enjeti highlights that only massive tech firms can currently afford loans, prioritizing data centers over new housing inventory.
- Rising fuel costs and trade tensions dragged the University of Michigan's consumer sentiment index down to 47.8 in early September. Krystal Ball notes the drop fell well below the economist consensus forecast of 51 points.
War (2)
- The war in Iran has severely disrupted global shipping and energy markets since its February 27 baseline. Krystal Ball notes that daily ship transits through the Strait of Hormuz have fallen by 87 ships while Brent oil futures have jumped nearly 50%.
- Iranian drone strikes on Amazon Web Services data centers in Bahrain and the UAE permanently destroyed customer data. Saagar Enjeti highlights this incident as the first time a physical airstrike has caused irreversible cloud-hosted data loss.
Energy (3)
- A shutdown of the Saudi East-West pipeline following attacks on its pumping stations is currently keeping 4% of the global oil supply offline. Saagar Enjeti reports that European customers have been notified of canceled oil shipments for consecutive months.
- Diesel fuel prices have surged over 70% from last year, reaching an all-time high national average of $6.31 per gallon. Krystal Ball reports that the shock is forcing trucking companies to halt fleets because operations are no longer profitable.
- Chinese oil prices reached record highs on the Shanghai Stock Exchange as Beijing ended its six-month freeze on refined product imports. Saagar Enjeti explains that no economy can sustain a prolonged halt on gasoline imports without exhausting strategic reserves.
Diplomacy (1)
- The United States reportedly reached a clandestine handshake agreement with Houthi forces during secret meetings in Oman. Saagar Enjeti notes the deal permits the Houthis to blockade Saudi Arabia provided they do not target American or non-Saudi vessels.
Agents (1)
- Existing laws like the Computer Fraud and Abuse Act are insufficient to regulate AI. Derek Thompson argues the law requires proof of human intentionality, which fails when autonomous agents act on unprogrammed behaviors.
Safety (3)
- Derek Thompson argues that frontier AI labs are locked in a prisoner's dilemma where unilateral pauses are rejected due to competition and fear of China. He suggests American labs should pre-commit to safety limits to establish moral authority.
- China's Ministry of State Security identified AI as a direct threat to Communist Party control. Saagar Enjeti notes China has historically slowed down advanced technologies, such as CRISPR and high-speed rail, when safety protocols were compromised.
- Public anxiety over AI is exceptionally high, with only 7% of Americans believing there is zero risk of AI destroying humanity. Krystal Ball notes that 80% of voters expect widespread job losses from AI within five to ten years.
Rise and shine: Warsh’s Fed rate test • Sep 17
- Federal Reserve Chairman Kevin Warsh announced a quarter percentage point interest rate increase, raising the target range to three and three quarters to four percent. This represents the central bank's first rate hike since July of 2023.
- Archie Hall notes that Kevin Warsh justified the rate hike by highlighting strong economic growth, high productivity, and robust capital investment rather than focusing solely on inflation. Warsh also shortened his press conference to under half an hour.
- Archie Hall argues that Kevin Warsh was pressured into the rate hike by markets following a poorly received second press conference. Warsh subsequently teed up the increase during his Jackson Hole speech to align market expectations.
- Donald Trump responded to the rate hike by pointing out it was a unanimous decision among all 12 voting Fed members. Archie Hall suggests this diplomatic response indicates Warsh is maintaining institutional independence rather than acting as a political puppet.
- Archie Hall claims the Fed's decision to hike rates ahead of the midterms was driven by a need to restore institutional credibility. Hall doubts the quarter-point move will significantly affect household finances or sway the upcoming election.
Also discussed on this episode: (7)
Elections (3)
- Koja Gentile won Okinawa’s gubernatorial election on September 13th, securing a historic landslide of over 400,000 votes. He defeated popular two-term incumbent Tamaki Deni to become the prefecture’s youngest-ever governor at age 42.
- The election of Koja Gentile signals a policy shift for the controversial Henoko Project, which relocates the Futenma Air Base to reclaimed land on Okinawa's east coast. Former governor Tamaki Deni legally fought the project, but Gentile campaigned in support of it.
- Moeka Iida attributes Tamaki Deni's defeat to voter fatigue over futile legal battles against the central government. Residents pivoted toward economic issues, as Okinawa suffers from low average incomes and high child poverty rates.
Diplomacy (1)
- Moeka Iida explains that Okinawa's location in the first island chain makes it critical for US and Japanese efforts to deter China. Gentile’s victory boosts the central Japanese government’s plans to deploy weapons and use civilian infrastructure for military purposes.
Climate (3)
- Andy Miller outlines how climate change is pathologically expanding summer. Projections estimate that by the year 2100, rising global temperatures will stretch the season to last six months in the Northern Hemisphere.
- European Commission research indicates that extreme heat will shift Mediterranean travel from high summer to April and October. Traditional summer destinations will struggle with droughts and wildfires, pushing tourists toward cooler regions like New England and Scandinavia.
- Extreme heat is forcing school administrators to alter academic calendars, potentially shortening summer breaks in favor of longer spring and autumn vacations. Andy Miller notes that rising temperatures will drive leisure activities indoors, altering traditional summer culture.