The Fed's policy-making committee was unanimous in its decision to hike, but forward guidance was split

Federal Reserve Chairman Kevin Warsh and his colleagues have rolled out their latest decision on interest rates as they deal with persistent inflation.

The Federal Reserve on Wednesday increased its benchmark interest rate by 25 basis points, matching expectations, while signaling that just one additional rate hike is likely to come in the months ahead.

The Fed's policy-making committee was unanimous in its decision to hike on Wednesday, but Fed officials were more divided on what's ahead.

Sixteen of 19 officials expect another increase at either their October or December meeting. For next year, 10 officials signaled they see no more moves, but eight officials are penciling in another quarter-point increase.

The Fed - helmed since May by Chairman Kevin Warsh - is under pressure to get inflation closer to its target level of 2% by raising rates, but it also has been drawing flak from President Donald Trump, who is pushing for the independent institution to lower borrowing costs.

Wednesday's hike, the first since July 2023, marks a remarkable shift for the U.S. central bank.

After racing to lift rates to combat inflation that emerged following the COVID-19 pandemic, the Fed started to cut rates in September 2024, trying to engineer a "soft landing" where the U.S. economy could continue to grow while rates were high enough to allow inflation to gradually ease.

Critics of hiking now say it raises the risk of a "hard landing" for the economy. Some Fed officials have lost patience with high inflation that has persisted for more than five years and worsened this summer due to tariffs and the war with Iran.

Follow along: MarketWatch's live coverage of the Federal Reserve's interest-rate decision

In his speech in at the Fed's Jackson Hole conference last month, Warsh expressed impatience with inflation, saying he wasn't impressed by cooler inflation readings in June and July. After a relatively hot August consumer inflation report, traders ahead of Wednesday's decision had seen a 90% chance of a hike.

One key in the Fed's latest decision was that it was unanimous, said Vincent Ahn, president and portfolio manager at SLW Investments.

The decision was always going to be in large part about restoring the Fed's credibility, and "a credibility move only works if the room believes it," Ahn told MarketWatch in an email. "A split hike says the Fed is still debating the problem. A unanimous hike says the debate is over."

As Warsh spoke at his news conference, the benchmark S&P 500 stock index SPX turned negative, after initially staying up following the Fed's move. The yield on the 10-year Treasury note BX:TMUBMUSD10Y was rising, topping the 5% level.

Joy Wiltermuth contributed.

-Victor Reklaitis -Greg Robb