Fed Proves Independence with Rate Hike Under New Chairman Warsh

The Federal Reserve's recent rate hike has been seen as a test of its independence under new Chairman Kevin Warsh. The decision to raise rates by a quarter percentage point was widely expected, but what's more significant is that it shows the Fed is not beholden to politics.

Warsh's appointment had raised concerns about his influence being swayed by President Trump, who has been vocal about keeping interest rates low. However, the unanimous decision of the Fed's governors and Warsh's press conference statements indicate that the Fed remains independent and unbiased.

The rate hike was necessary due to a strong labor market and inflation above the 2% target. The decision has been seen as a relief by investors who were worried about a politicized financial system.