Fed hikes rates, sees more tightening in search of 'timelier' drop in inflation

The Fed's new policy statement and economic projections, to the contrary, show a central bank opening the door on tighter monetary policy through next year, with the policy rate rising to the 4.00%-4.25% range by the end of this year and ending 2027 at the same level.

"Today's policy action will support a timelier return to the Committee's 2% goal," the central bank said in its policy statement after the end of a two-day meeting.

While the statement withheld any forward guidance about coming policy decisions, as is Warsh's preference, the decision is likely to ease doubts that the Fed chief would hold off on tighter policy out of deference to Trump, a lingering question during his first months in office.

The statement dropped a previous reference attributing current elevated inflation to "supply shocks" particularly in the energy sector, a nod to concerns among policymakers, including Warsh, that price pressures were too broad for comfort.