The Fed Hiked — But These Words Mattered More

The Fed just raised rates a quarter point — against the president's wishes. Here's what it means for you. The Federal Reserve hiked interest rates for the first time since 2023, and it did it even though the president who handpicked the new Fed chair had been loudly demanding cuts. In this episode of Diving In, Justin Wolfers unpacks the surprise: all 12 voting members of the FOMC backed the move unanimously, markets had priced a 92% chance it was coming — so the real news wasn't the hike, it was what it told us about new chair Kevin Warsh. Justin walks through "the tale of three Kevins" — is Warsh a sock puppet who does the president's bidding, a boring beige economist, or a genuine inflation hawk? The Fed's decision ruled out sock puppet Kevin. Then his 2:30pm press conference sent stocks sharply lower and long-term bond yields up, hinting he's both hawkish and convinced R-star, the neutral rate, sits higher than everyone assumed. Why should you care? Because this shapes your mortgage, your job, and your savings. Federal funds futures now put a roughly 90% chance on at least one more rate rise by year-end — possibly two — so the interest rate on your next loan is likely heading up, not down. Justin also tackles the elephant not in the room: the president's threat to slap tariffs on other countries if the Fed hiked, and why those two things have nothing to do with each other. Subscribe — it's the one rate that only ever moves in your favor: on YouTube 👉    / platypuseconomics   on Substack 👉 https://newsletter.platypuseconomics.com the Podcast 👉 https://platypuseconomics.com/podcast Follow on Social Media @PlatypusEconomics and @JustinWolfers