The Federal Reserve held interest rates steady Wednesday, with three dissenting officials pushing not for the cuts President Donald Trump wants, but for an increase.
The decision keeps borrowing costs elevated for mortgages, car loans and credit cards heading into the fall. It also holds up one of the government’s fastest-growing expenses: interest on the national debt.
Net interest on the debt has already topped $827 billion this fiscal year, according to the Treasury Department. That works out to about $5,080 per individual income tax return, based on the 162.8 million returns the IRS processed in fiscal 2025.
The Federal Open Market Committee voted 9-3 to keep its benchmark rate in a range of 3.5% to 3.75%. In a statement, the committee said inflation “remains elevated” and pledged to “deliver price stability.”
Chairman Kevin Warsh, who took office in May, said the Fed did not need to raise rates because financial markets already had. He pointed to a sharp rise in Treasury yields since the last meeting and said markets, not the central bank, should lead.
The three who dissented – Beth Hammack, Neel Kashkari and Lorie Logan – favored a quarter-point increase, according to the statement. Warsh characterized the split as a “real family fight” he had encouraged, saying it reflected a robust debate rather than division and that a “large majority” backed the hold.
Warsh listed “substantial increases in tariff rates” among the shocks buffeting the economy, alongside energy disruptions and pandemic-era supply chains, while insisting the Fed would not use them as an excuse for missing its inflation target.
The hold marked the opening act of a chairman Trump chose to deliver lower rates. Trump spent 2025 pressuring the Fed to cut and repeatedly attacking former Chairman Jerome Powell before picking Warsh to succeed him.
Speaking to reporters en route to Michigan two days before the decision, Trump again called for lower rates and described the Fed’s board as “very political,” saying some members had “perhaps bad intentions.”
The committee moved the other way, holding steady while three members pushed to raise rates.
Warsh signaled a break from his predecessor’s approach, saying the Fed would pull back from the detailed forward guidance markets had come to expect and let investors respond to incoming data. He rejected the idea that the hold amounted to a pause.
For taxpayers, the stakes run through the federal budget. Net interest on the debt has climbed 13% this fiscal year as elevated rates compound on a growing balance.
